Hi Steve & Deano, I understand.
The basic home loan rate is still only around 6. something - mine's 6.23 at the moment. There's another 4% to go. We're talking about a DOUBLING of interest rates at base.
And precisely Deano, Australia doesn't exist in a vacuum.
If other countries don't double the borrowing rates, why would Australia do so?
The 10% rates are for business loans, it happens to be a private loan.
KY
WHats to say they are not going to? It would be the CASH RATE. Already our rates are higher than most developed countries. Our interest rates are not tied to foreign interest rates. They are tied to the performance of our local economy!
Government spending around the world has been nothing short of massive. The amount of money thrown into stimulus alone means that the printers are running hot. Plus you have all the problems with the Euro and Greece, Portugal, Spain, Ireland, Iceland and now Latvia. Even Dubai was in trouble. There are more bailouts coming.
First we had private debt explode. And that has not settled yet by any means when you look at how many people are still defaulting in the USA. Commercial property is the next big wave to hit their banks.
Now we have a huge problem with SOVEREIGN DEBT. When governments dont have money, its up to the tax payers to sort things out. Not only that, but they have to increase interest rates to reduce inflation. Inflation it has created by flooding the world markets and banks with money.
Interest rates have very little to do with housing. People obsessed with housing will see interest rates as a something aimed specifically at that. At the end of the day, interest rates are used to control MONEY SUPPLY and in effect INFLATION. Housing is just caught in the tidal wave.
Interest rates are going to go up all over the world simply because of the amount of money that is being circulated now. So you will higher taxes, higher interest rates and reduced buying power for a while. The GFC was the start of something bigger, it was never the main event.