anyone else feel like throwing their beer at the TV whislt watching the ACA report tonight?... first of all we had a lady on a Liberty loan that thought she had the best rate available and was surprised that she could do better by shopping around and she couldn't possibly afford an extra $12 a week, then we had a single mother with a $300k mortgage paying somethng like $2200 a month in repayments who was baulking at... can't recall but it was about $20 a week I think she said was her breaking point. the numbers may not be exact but seriously who is at fault here? the borrowers? the lenders? they seemed to blame the govt (that's 2 votes for Rudd)
IR rises - on the breadline
- Thread starter Ausprop
- Start date
It amazes me how reactive people are to the slightest uprise in interest rates and petrol prices. It shouldn't have an impact (or, at least a major one).
Obviously they are almost "up to pussy's bow" the whole time.
What a way to live!
Financial education for the masses is an absolute necessity. It's a pity they don't want to be educated.
Obviously they are almost "up to pussy's bow" the whole time.
What a way to live!
Financial education for the masses is an absolute necessity. It's a pity they don't want to be educated.
Yeah, the lady with the Liberty loan is already paying an interest rate of above 9%! What the??!! After the broker found her a rate of 7.6%, she said something about not to be too "loyal" with banks and lenders.
although - to look on the other side.
yes, a rate rise will mean another $20/wk, but we've had - what - 5 rises this year (or something like that) which totals around $100/wk.
add in the rising cost of fuel and food totally perhaps an extra $100+/wk for the family and all of a sudden, in the last 12 months, your outgoings are an extra $200/wk.
okay - maybe they did overcommit, but perhaps they thought a $200/wk buffer might have been enough at the time.
$200 a week is a lot of money for many households.
fair to be fair - this last rise might just be the straw that breaks (having been running red line for the last 6 weeks myself).
yes, a rate rise will mean another $20/wk, but we've had - what - 5 rises this year (or something like that) which totals around $100/wk.
add in the rising cost of fuel and food totally perhaps an extra $100+/wk for the family and all of a sudden, in the last 12 months, your outgoings are an extra $200/wk.
okay - maybe they did overcommit, but perhaps they thought a $200/wk buffer might have been enough at the time.
$200 a week is a lot of money for many households.
fair to be fair - this last rise might just be the straw that breaks (having been running red line for the last 6 weeks myself).
Makes a difference to me. Probably because pro rata $20 bucks is not peanuts to me.
Paying a mortgage is a stretch when starting out. So I feel the sting of an extra $20. Likely it will further impact my already basic grocery budget.
"What a way to live!" Yeah, it's tough. But so am I
Sounds like that lady reached her limit. Everyone's got one.
Mine is ACA ads, I couldn't possibly endure the show!
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I think they were both beyond that, IR rise or not.
Is it just me or does anyone else think that if one is going to cut it close, then perhaps one should fix ? Or at least fix half..
yes and no - predicting future interest rates is all a gamble really.
i am young (or is that old) enough to remember back in the late 80's when interest rates were around 18% ... people were fixing them at 15% and then rates suddenly plunge down to around 10% and those fixed at 15% were really furious. it can go both ways.
I don't know how you can watch that crap.
I see your point, but I think it's a bit different at these levels. At 7-8% the rates are still relatively low. So if you lock in, sure they could go down to 5% and you'll miss out a bit, but there is much more room for them to move up to 10/15/20%+.
On the other hand, if rates came to 15% again, unless the economy really start stuffing up chronically from that point, you generally assume they'll head back down, and I would'nt be locking at 15%. In general, at those levels, they're not going to go too much higher (yes I realise there have been exceptions), but there is plenty of room for them to fall.
ACA (et al) portray people like these as the norm. Anyone who is in a position like this either hasn't sufficiently taken risk into consideration or accepted the risks and shouldn't be whinging about it. Darwin mentioned survival of the fittest..... applies to the finance world too.
Makes a difference to me. Probably because pro rata $20 bucks is not peanuts to me.
Paying a mortgage is a stretch when starting out. So I feel the sting of an extra $20. Likely it will further impact my already basic grocery budget.
"What a way to live!" Yeah, it's tough. But so am I
Sounds like that lady reached her limit. Everyone's got one.
Mine is ACA ads, I couldn't possibly endure the show!
Having a 6 year old, my tv these days is SpongeBob SquarePants (a great show by the way), Cartoon Network, Jimmy Neutron and Hanna Montana.
$20 is money to most people. It's a week's petrol for me. But with mortgages, it's par for the course to cop a rate rise now and then.
I think that if paying a mortgage is a stretch when you start out, and you haven't factored in rate rises AFTER you start, then you are in denial or financially uneducated (probably both) and have taken on more than you should have.
I reckon that a lot of people do this, and either don't want to drop their standards and get a cheaper house, or are just hoping that things will be o.k.
It doesn't apply just to low the income earners either; there are plenty of high income earners out there trying to impress Mr. Jones and get into hot water over it. It's a pity Mr. Jones doesn't care what they drive or how big their house is.
I read an article a few days ago saying that on average most people are worse off fixing rates. I think the number they quoted was 83% would have been better to leave their rates as variable. The main advantage it gives you is certainty. Since I can absorb any rate rise pretty easily, I'm happy to leave things as variable
Unfortunately, this is the ugly side to free-markets and captalism..
Many people bought at the top and stretched themselves with expectations that prices would continue to rise in the future at same rate as the past few years... and continue to do so ...
call it extrapolating if you like ... lookign at a nice graph going up, and assuming the next years will be the same and calculating potential profits... In the end its about fundamentals and understanding those...
We are in a global inflationary cycle ... EVERYTHING that is not produced in China or another developed country is rising ... oil, food, shelter, water, electricity/energy, local labour costs (apart from some blue collar workers), money supply ...
expect IR to go up more unless US has a recession ...
US would also be raising rates if it werent in such a bad position.. The IR rises may be prolonged due to rising AUD negating inflation, but its a matter of time.. Dont mean to a D&G, just being realistic...
Many people bought at the top and stretched themselves with expectations that prices would continue to rise in the future at same rate as the past few years... and continue to do so ...
call it extrapolating if you like ... lookign at a nice graph going up, and assuming the next years will be the same and calculating potential profits... In the end its about fundamentals and understanding those...
We are in a global inflationary cycle ... EVERYTHING that is not produced in China or another developed country is rising ... oil, food, shelter, water, electricity/energy, local labour costs (apart from some blue collar workers), money supply ...
expect IR to go up more unless US has a recession ...
US would also be raising rates if it werent in such a bad position.. The IR rises may be prolonged due to rising AUD negating inflation, but its a matter of time.. Dont mean to a D&G, just being realistic...
