Another interest rate rise sees Howard apologise

HOMEOWNERS have been slugged with another interest rate rise, the first-ever during an election campaign, pushing mortgage rates towards a 13-year high.

The latest rise of 25 basis points takes official rates to 6.75 per cent and means variable interest rates will soon rise to 8.57 per cent, an 11-year high, up from 8.32 per cent.

On a $200,000 home loan over 25 years, repayments are set to jump $34 a month.

A grim Prime Minister John Howard apologised to people struggling to pay off their mortgages.

"This decision will have negative consequences for a lot of borrowers," said Prime Minister John Howard.

"I would say to the borrowers of Australia that I am sorry about that."

For full article read here - this rate wasn't a surprise to anyone I've been speaking too and already anticipated by investors and homeowners alike. Seems like not even a looming federal election is reason enough for RBA to put off the inevitable.

 

An interesting interview to watch is this one from the 7:30 report.

http://mpegmedia.abc.net.au/730report/av/podcast/20071107-730-keen_video4.wmv

 

I dont know if its going to make much difference actually.
The chronic undersupply over the next 2 years (at least) coupled with a very volatile sharemarket will see more investors return to property (not to mention increasing yields)....however those "Mortgage stressed" areas have more correction to come....

 

I tend to agree with you, Dave, and just from the activity I'm experiencing the middle-upper price bracket ($600K+) certainly doesn't appear to have been affected here on the northern side of Sydney. Yields are still low, however, hence the lack of activity for investors to jump back in right now. Interesting times ahead, though, with increasing low vacancy rates.