• lower nominal interest rates that came with the ..
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  • Interest Rates Australia, RBA Interest ..

Interest rates might be at record lows, but delinquency rates have hit record highs in Western Australia, Tasmania and the Northern Territory.

australian interest rates | Marquette Turner Luxury Homes

Do Higher Interest Rates Cause Lower House Prices? | …

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“Household debt is high and rising relative to disposable incomes, making borrowers sensitive to changes in the labour market and interest rates,” Fitch analyst Andrea Jaehne stated.

Australian interest rates have a ..


has forced Australian banks to hike interest rates in recent months following upward trends around the globe. But with significant levels of household debt, Australian households are going to feel the brunt of the rate hikes, more so than other countries with much more prudent household debt levels.

 

Australian Economy, Interest Rates, ..


Fitch also expresses concern about growing job losses. Abnormally high housing costs has forced wages sky high in Australia, making the country a high cost economy and one struggling to compete in a global free market. This has caused the closure of complete industries and accelerated the offshoring of an increasing number of jobs, the very jobs required to service the high levels of household indebtedness. Essentially, Australia has a significant misallocation of capital towards unproductive markets such as housing, and at great expense to productive sectors of the economy.


Australia’s property investors and debt slaves were in shock on Friday, when Westpac joined the ranks of smaller banks, significantly hiking mortgage rates out of cycle, on its fixed term loans.


Australian interest rates April 2017

With a fire raging in the Melbourne and Sydney property markets, incentivised by emergency low interest rates, negative gearing and capital gains discounts, APRA has announced it can no longer wait for Basel IV banking reforms. The regulator plans to implement a new round of stringent regulation starting mid year.

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As we have reported over the years, Australia’s big banks or IRB (internal ratings-based) banks – Westpac, Commonwealth, ANZ, NAB and Macquarie, have been abusing their size and status. As silly as it sounds, regulators thought these banks knew what they were doing, so they were given the power to risk rate their own mortgage books. As you can guess, in a bid to enhance profitability at the detriment of financial stability, the IRB banks rated the risks on their mortgage portfolios so dangerously low so as to not have to hold as much expensive loss absorbing capital. After all, the taxpayer would be at hand if they needed to be bailed out. A stress test conducted by the Australian banking regulator in 2014 found that the five IRB banks were insolvent, if they were unable to access further capital, after a moderate housing and commodities crash. Something had to be done.

Australian Economy is Growing - Interest Rate Impact

As part of the International Basel III accord designed to make banks more resilient, banks will have to start relying more on domestic deposits for funding, rather than the risky overseas wholesale markets. A global shock (brexit, Italy, Europe, China etc) could cause liquidity problems for rolling over short term debt. As Australia’s household debt rapidly grew, Australian banks relied more heavily on short term wholesale debt markets to get the much needed cheap funding to satisfy Australia’s craving for perpetual debt.

promoted by a global decline in inflation and interest rates, ..

A future with Donald Trump, leader of the free world, is the hardest to predict, but has attracted most of the blame for rising interest rates. Trump policy is largely expected to be inflationary with pro-growth, large infrastructure builds in the wings. His election win earlier this month has caused pandemonium in world debt markets, but there is some evidence to suggest bonds have been out of favor since August. Whether the bond market sell-off started in August, or November with the election of Trump, bond yields are heading in one direction, up, and is considered a good proxy for future interest rate moves.