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Big banks are poised to repeatedly raise mortgage interest rates, potentially putting marginal borrowers in a world of trouble, warns an international investment expert. “Australian homeowners and retail investors should prepare for higher mortgage rates and slower house price growth,” said Isaac Poole, global investment manager for Oreana Portfolio Advisory Services, in a new report update. “We are confident that standard variable mortgage rates will increase. It could reach 100 basis points (1 percentage point) over the next 24 months.” Burnie-based Dr Poole said it would be a challenge for the home “The risks are that mortgage rates are going up even faster than expected,” he said, Dr Poole said, said household indebtedness had increased and that a sharp increase in mortgage rates could pose a considerable challenge for marginal borrowing households. “The downside risk is that an increase in defaults or non-performing loans leads to a tightening of credit standards, a reduction in credit availability and a correction in house prices,” he said. . Dr Poole said Oreana did not expect rates to drop. means that individuals should think carefully about their mortgage structure, âhe said. âFixing rates over a longer period may be an option for those looking to secure loans. “It is important to note that we do not expect housing prices to fall in the short to medium term.” Dr Poole said residential real estate in growth areas had reached new highs and price increases were starting to spread “beyond growth areas into the suburbs”. He said Australian house prices rose almost 7.5% in 2021 and there was still upside potential for prices. The rate hikes he was considering would be independent of the Reserve Bank. The Reserve does not expect to increase the official cash rate anytime soon. “It will not increase the cash rate until real inflation is durably within the target range of 2-3%,” Reserve Bank Governor Philip Lowe said on June 1. âFor this to happen, the labor market will need to be tight enough to generate significantly higher wage growth than it is now.â This shouldn’t be until 2024 at the earliest. âWhy not subscribe for a subscription to The Advocate? Sign up here.
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Big banks are poised to repeatedly raise mortgage interest rates, potentially putting marginal borrowers in a world of trouble, warns an international investment expert.
“Australian homeowners and retail investors should prepare for higher mortgage rates and slower house price growth,” said Isaac Poole, global investment manager for Oreana Portfolio Advisory Services, in a new report update.
âWe are confident that standard variable mortgage rates will increase.
“It could reach 100 basis points (1 percentage point) over the next 24 months.”
Dr Poole, based in Burnie, said it would be a challenge for home owners in Australia, especially in regional areas.
âThe risks are that mortgage rates are rising even faster than expected,â he said.
Dr Poole said household indebtedness had increased and a sharp rise in mortgage rates could pose a considerable challenge for marginal borrowing households.
“The downside risk is that an increase in defaults or non-performing loans leads to a tightening of credit criteria, a reduction in credit availability and a correction in house prices,” he said. .
Dr Poole said Oreana didn’t expect rates to drop.
âThis means that individuals should think carefully about their mortgage structure,â he said.
âFixing rates over a longer period may be an option for those looking to secure loans.
“It is important to note that we do not expect housing prices to fall in the short to medium term.”
Dr Poole said residential real estate in growth areas had reached new highs and price increases were starting to spread “beyond growth areas into the suburbs”.
He said Australian house prices rose almost 7.5% in 2021 and there was still upside potential for prices.
The rate hikes he was considering would be independent of the Reserve Bank.
The Reserve does not expect to increase the official cash rate anytime soon.
“It will not increase the cash rate until real inflation is permanently within the target range of 2-3%,” Reserve Bank Governor Philip Lowe said on June 1.
“For this to happen, the labor market will need to be tight enough to generate significantly higher wage growth than it currently is.
âIt is unlikely that it will be before 2024 at the earliest. “
Why not get a subscription to The Advocate?register here.