The RBA have control over house prices in the form of interest rates.
And I doubt the banks would be anywhere near as keen to lend against resi if they didn't have some sort of lever/control over lending for property.
I can see that these low rates will land some borrowers in big trouble if rates hike too quickly, as a major percentage took out variable loans over the past year, and are continuing to do so as fixed rates are pretty well ridiculous as opposed to whats available on variable right now. A sign of things to come, but I'm not 100% sure if they will really make it to 8% as some fixed rates are to borrow right now, nor will I pretend to be.
I'm really questioning what will happen with rates in the coming years as property prices soar to new levels and the RBA place the cap on prices in the form of interest rate rises.
Lifting rates too high will see prices fall, or at least stagnate due to financial hardship among many of the variable crowd, the banks don't want this to happen and know it's a real possibility. Which poses the question: Will interest rates track lower in the short to medium term, like they have in other economies? Only time will tell.
I really don't like to try and predict what may, or may not happen with interest rates in the future, but my guess right now would be lower interest rates in the short to medium term. I have no real idea what 'medium' term means, but am thinking 2-4 years until inflation has a chance to kick in.
I also think that for larger scale investors higher interest rates should be a major concern and risk mitigation should now be under-way, or already sorted. Don't wait until it's too late.
And I doubt the banks would be anywhere near as keen to lend against resi if they didn't have some sort of lever/control over lending for property.
I can see that these low rates will land some borrowers in big trouble if rates hike too quickly, as a major percentage took out variable loans over the past year, and are continuing to do so as fixed rates are pretty well ridiculous as opposed to whats available on variable right now. A sign of things to come, but I'm not 100% sure if they will really make it to 8% as some fixed rates are to borrow right now, nor will I pretend to be.
I'm really questioning what will happen with rates in the coming years as property prices soar to new levels and the RBA place the cap on prices in the form of interest rate rises.
Lifting rates too high will see prices fall, or at least stagnate due to financial hardship among many of the variable crowd, the banks don't want this to happen and know it's a real possibility. Which poses the question: Will interest rates track lower in the short to medium term, like they have in other economies? Only time will tell.
I really don't like to try and predict what may, or may not happen with interest rates in the future, but my guess right now would be lower interest rates in the short to medium term. I have no real idea what 'medium' term means, but am thinking 2-4 years until inflation has a chance to kick in.
I also think that for larger scale investors higher interest rates should be a major concern and risk mitigation should now be under-way, or already sorted. Don't wait until it's too late.