45 Per Cent of Surveyed Australians Struggling to Meet Mortgage Repayments, Despite Record Level Low Interest Rates

Kevin RuddALMOST 12,000 Australians who took advantage of the ALP Government’s First Home Owner’s Grant are struggling to meet their mortgage repayments.

Adviser Fujitsu Consulting says 45 per cent of the 26,000 borrowers it surveyed, who had entered the market since mid 2008, were experiencing “mortgage stress” or “severe mortgage stress”.

Mortgage stress refers to a situation where a household spends a third of their income on home loan repayments.

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2010 to be Year of the Residential Rent Rise as Landlords Pass Interest Rate Rises to Renters

LAST year was the weakest year for rental growth since 2002, and the aftermath of the September 11 terrorist attacks, according to a new report by Australian Property Monitors.

The latest APM report shows a 2 per cent national increase for rents, down on the rate of 12 per cent, during the “boom” 2007 and 2008 conditions.

The winding down of the first home buyers grant, better employment prospects, strong house price growth and low vacancy rates will all contribute to a stronger year for rental growth in 2010, The Australian reports.

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Australians Borrow Less for Second Successive Month: ABS

HIGHER interest rates, and a winding-down of government grants for new homes, have contributed to a contraction of housing finance, for the second successive month in November, 2009 (released January 2010).

Strong population growth, pent-up demand, and re-interest in real estate, by investors, is expected to result in the RBA increasing interest rates when it meets next month – making it an unprecedented fourth straight interest rate rise since late last year.

It’s been speculated interest rates could rise between 1 and 3 per cent this year.

According to the recent ABS statistics, the number of housing finance approvals fell 5.6 per cent (seasonally adjusted) in November from October.

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RBA Lifts Cash Rate 0.25 Per Cent to 3.75 Per Cent at December 2009 Meet

Glenn StevensTHE Reserve Bank of Australia has given mortgage holders an early Christmas present, by increasing interest rates just 0.25 per cent this week.

The RBA meeting, the last one for what has been a strong year for major residential markets, will see the official cash rate increase to 3.75 per cent. The RBA meets again on February 2, 2010.

It’s the first time the RBA has increased interest rates for three consecutive months. Some analysts were speculating interest rates may increase by more than 0.25 per cent, on the back of strength in the residential sector.

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Banks Waste no Time Passing on Cash Rate Rise

AUSTRALIA’s major banks wasted no time passing on Tuesday’s Reserve Bank of Australia lift in the cash rate.

ANZ and the Westpac are reported to have increased their variable mortgage rate to 6.31 per cent, while Commonwealth Bank and the NAB rates will rise to 6.24 per cent.

The banks passed on the RBA cash rate increase by the close of business Tuesday. The RBA met at 2:30pm, raising the official cash rate 0.25 per cent to 3.5 per cent.

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Experts Warn Senate Inquiry Mortgage Holders Will Pay For Rudd’s $315 Billion Stimulus Spend

Kevin RuddAUSTRALIANS will pay higher borrowing rates than they need to, and any economic recovery may be slower than it could be, as a result of Rudd government’s recent $A315 billion spending spree.

RMIT University economists Steven Kates and Sinclair Davidson have joined a chorus of experts at a Senate inquiry warning the Labor Government’s decision to control fiscal policy, now puts it at odds with monetary policy, with mortgage holders one of the big losers expected to pay, moving forward.

The amount of public debt incurred by the Labor government’s program is unjustified, and the stimulus money is being spent on goods and services “that will give no economic momentum”, Professor Kates told the inquiry. 

“[Interest] Rates will go up because we’ve taken our national pool of savings and we’ve spent it”.

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RBA Leaves Rates Unchanged at 3% For Sixth Month in a Row

Glenn StevensAT its September 2009 meeting, the Reserve Bank of Australia has left the official cash rate unchanged at 3 per cent, for the sixth month in a row.

The decision to keep rates on hold was expected, but many analysts anticipate the RBA will start increasing the official cash rate before the end of the year. Most of the major banks have already started increasing fixed and variable interest rates independent of the RBA over the last few months.

The next RBA meeting is scheduled for October 6.

Below is the statement by RBA governor Glenn Stevens:

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Banks May Lift Interest Rates Independent of RBA, ANZ Warns

AMike SmithNZ Banking Group chief executive Mike Smith has warned mortgage holders that bank funding costs, and not the Reserve Bank of Australia’s position on official rates – will be the big influence affecting bank’s position on rates, moving forward.

Mr Smith told a crowd at the Australian British Chamber of Commerce function in Sydney: “I think that banks will have to raise rates if their (wholesale) funding rates get higher.”

“If that’s out of cycle, that’s out of cycle. It could happen.”

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NSW Home Repossessions Down 30 Per Cent Since Last Year

NEW figures from the New South Wales Sheriff’s office show home repossessions in the state have fallen substantially since last year.

The office figures show between January and July 2009, home repossessions were 30 per cent lower than during the same period last year. In total 300 fewer homes were forcibly taken from their owners.

The one big difference to the economic backdrop, is interest rates which have successively and sharply fallen over the past twelve months to be at record lows.

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Westpac, NAB Follow CBA and Lift Interest Rates

National Australia BankTHREE DAYS after banking giant Commonwealth Bank announced a surprise increase of its fixed interest rate, rival banks Westpac and National Australia Bank have followed suit.

Westpac yesterday informed its mortgage holders of interest rate increases of between 0.1 per cent and 0.5 per cent, for most of its loans. The bank’s four and five year loan rates have ballooned from 6.69 per cent to 7.19 per cent.

Westpac was followed by the National Australia Bank, which also lifted rates on its four and five year loans, by between 0.15 and 0.4 per cent.

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Interest Rates Rise For First Time Since Last July: CBA Statement

The Commonwealth Bank today announced that although its standard variable home loan interest rate will increase by 0.10 per cent per annum, its rate is still the lowest of the major banks.

Ross McEwan, Group Executive Retail Banking Services said, “This is a decision the Bank has made reluctantly.  During most of the past 18 months, Commonwealth Bank customers have had the benefit of the lowest standard variable home loan rate on offer from the major banks.  However, given our increasing funding costs, it has become necessary to make this increase.”

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