Sustain Posted March 29, 2016 Share Posted March 29, 2016 What would be the affect on your finances? With a majority of home owners making payments at 40% of their disposal income With interest rates at 4% to 5% 2% on 5% being 40% increase ??? Link to comment Share on other sites More sharing options...
Gbye grey sky Posted March 29, 2016 Share Posted March 29, 2016 Strictly that would only be a 40% increase on the interest element of the mortgage payment. As a chunk of the payment is repaying the capital this element would remain static. Still a big increase but not 40% overall. We have no mortgage so would welcome increased interest on our savings. Link to comment Share on other sites More sharing options...
kevsan Posted March 29, 2016 Share Posted March 29, 2016 A rise can change your situation pretty quickly though Thats why the mortgage we just signed for is fixed rate and just over 25% of net income. Link to comment Share on other sites More sharing options...
Skani Posted March 29, 2016 Share Posted March 29, 2016 We have no mortgage so would welcome increased interest on our savings. Ditto. Link to comment Share on other sites More sharing options...
newjez Posted March 29, 2016 Share Posted March 29, 2016 What would be the affect on your finances? With a majority of home owners making payments at 40% of their disposal income With interest rates at 4% to 5% 2% on 5% being 40% increase ??? For that to happen you would have to have a massive reduction in oil price leading to a collapse in exploration which would then come back to haunt as an oil price shock in a few years time causing unprecedented inflation... Oh hell... Link to comment Share on other sites More sharing options...
Wooba Posted March 29, 2016 Share Posted March 29, 2016 In Canada many people would be absolutely screwed (the property market here is very similar to Oz). I think in Vancouver the average person is spending something like 157% of their income already. It's insanity. The big difference here (I think??) is that mortgages are typically only done for 5 years at a time. So when it's up for renewal, those barely making payments would be in deep trouble. Link to comment Share on other sites More sharing options...
flag of convenience Posted March 30, 2016 Share Posted March 30, 2016 A return to more normal conditions would be welcome, although a 2% increase would still be on the low side. It should have happened yonks ago of course to tame the housing market. It will likely impact those that live dangerously, but anybody with sense would surely have known interest rates (like the boom in WA) are not permanent fixtures and factored that in accordingly. It will assist in correcting the housing market excesses for one thing. I expect them to be introduced slowly though in an attempt to blunt the impact. Like another poster here, a rise in interest rates will be highly welcome on a personal level. Link to comment Share on other sites More sharing options...
NicF Posted March 30, 2016 Share Posted March 30, 2016 We are currently overpaying on our mortgage every fortnight to the extent that a 2% increase in interest rates would just bring the required payment up to what we are currently paying anyway. Link to comment Share on other sites More sharing options...
Guest Posted March 30, 2016 Share Posted March 30, 2016 We are paying 4x our mortgage currently. So would just delay mortgage free day. Link to comment Share on other sites More sharing options...
Parley Posted March 30, 2016 Share Posted March 30, 2016 No possibility of a rise for years. A further cut likely on the cards mid year. Link to comment Share on other sites More sharing options...
Sustain Posted March 30, 2016 Author Share Posted March 30, 2016 Strictly that would only be a 40% increase on the interest element of the mortgage payment. As a chunk of the payment is repaying the capital this element would remain static. Still a big increase but not 40% overall. We have no mortgage so would welcome increased interest on our savings. Having said that a large percentage of montages written over last 7 years were interest only for first 5 years Link to comment Share on other sites More sharing options...
flag of convenience Posted March 30, 2016 Share Posted March 30, 2016 No possibility of a rise for years. A further cut likely on the cards mid year. Reminds me of the never ending resource industry boom. No change for years. Lowering interest rates have been showing to be a blunt instrument with banks likely to not even pass on anyway. Remind me, but of late it has been upward movement brought on by the banks themselves. Negative rates have been showing to be ineffective in other parts. Link to comment Share on other sites More sharing options...
flag of convenience Posted March 30, 2016 Share Posted March 30, 2016 Having said that a large percentage of montages written over last 7 years were interest only for first 5 years Far less so now I believe. Link to comment Share on other sites More sharing options...
dmjg Posted March 30, 2016 Share Posted March 30, 2016 I figured out the other day, that if the OH doubled her hours to full time, and we put all that extra into the mortgage, we would pay the whole thing off in five years. Link to comment Share on other sites More sharing options...
newjez Posted March 30, 2016 Share Posted March 30, 2016 No possibility of a rise for years. A further cut likely on the cards mid year. I would estimate two years. Fortunately I have no debt, so not really bothered. But I could go to rented and wait, because the UK is due a housing correction. Link to comment Share on other sites More sharing options...
Keith and Linda Posted March 30, 2016 Share Posted March 30, 2016 We are currently overpaying on our mortgage every fortnight to the extent that a 2% increase in interest rates would just bring the required payment up to what we are currently paying anyway. I was listening to John Symonds on the radio last night and he said that something like 40% of mortgages are some 22months in advance. he was also quoting some other good numbers on Equity and the like, an overall rosey picture. ................cue flag! Link to comment Share on other sites More sharing options...
Guest Posted March 30, 2016 Share Posted March 30, 2016 I think a lot of debt stats don't factor in offset mortgages either. Link to comment Share on other sites More sharing options...
Keith and Linda Posted March 30, 2016 Share Posted March 30, 2016 I figured out the other day, that if the OH doubled her hours to full time, and we put all that extra into the mortgage, we would pay the whole thing off in five years. Couldn't the OH do some over time too? squeeze a holiday in then:cool: Link to comment Share on other sites More sharing options...
Paul1Perth Posted March 30, 2016 Share Posted March 30, 2016 For interest rates to rise we would have to see improvements to the economy and a rise in inflation. Neither seem to be on the horizon. Interest rates in Oz are higher than just about anywhere else at the moment so if there's a move it will more likely be down. Won't make any difference to us, we've paid off the mortgage but keep a small loan going at the same rate. Link to comment Share on other sites More sharing options...
robfromdublin Posted March 30, 2016 Share Posted March 30, 2016 Yes lots of people go interest only and use an offset for tax reasons. I wouldn't take interest only as being indicative of mortgage stress. Link to comment Share on other sites More sharing options...
robfromdublin Posted March 30, 2016 Share Posted March 30, 2016 If interest rates went up 2% we would put a smaller fraction of our income into savings. I don't think that is a likely scenario though. More likely is a recession which would raise the unemployment rate and put people into mortgage stress that way Link to comment Share on other sites More sharing options...
Peach Posted March 30, 2016 Share Posted March 30, 2016 the UK is due a housing correction. There were some that told me the same thing in 2003 when I first bought a house. I am glad I ignored them.. Link to comment Share on other sites More sharing options...
Keith and Linda Posted March 30, 2016 Share Posted March 30, 2016 For interest rates to rise we would have to see improvements to the economy and a rise in inflation. Neither seem to be on the horizon. Interest rates in Oz are higher than just about anywhere else at the moment so if there's a move it will more likely be down. Won't make any difference to us, we've paid off the mortgage but keep a small loan going at the same rate. We have a line of credit mortgage (the best thing since the invention of the wheel) which is in credit but comes in useful as prevents overdrawn charges in normal account. However on the 6th May this will be transferred onto our investment property which means for the first time at the age of 61 I will fully own my own house which will be totally unencumbered, ok it comes with a wife, but other than that it's:cool:. Hang in there folks and you will get there, hopefully in a shorter timeframe than me. Link to comment Share on other sites More sharing options...
Keith and Linda Posted March 30, 2016 Share Posted March 30, 2016 There were some that told me the same thing in 2003 when I first bought a house. I am glad I ignored them.. and 1998, 1991, 1988, and.............. or there abouts Link to comment Share on other sites More sharing options...
Paul1Perth Posted March 30, 2016 Share Posted March 30, 2016 We have a line of credit mortgage (the best thing since the invention of the wheel) which is in credit but comes in useful as prevents overdrawn charges in normal account. However on the 6th May this will be transferred onto our investment property which means for the first time at the age of 61 I will fully own my own house which will be totally unencumbered, ok it comes with a wife, but other than that it's:cool:.Hang in there folks and you will get there, hopefully in a shorter timeframe than me. Sounds like you're doing fine with an investment property too. Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.