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Rates won't be too painful

Discussion in 'Real Estate' started by Jacque, 25th Sep, 2006.

  1. Jacque

    Jacque Team InvestEd

    16th Jun, 2005
    According to St George bank, rates won't get to the unbearable stage just yet. Chief financial officer, Mr McKerihan, recently said St George expected some moderation in home loan credit growth from 13 per cent to around 10 to 12 per cent nationally in 2006/07, but households still generally remain in good shape.

    "Most people would probably see only one more tightening in this cycle, perhaps another quarter of a per cent, with it most likely only one.

    "I don't think you're going to see the absolute level of interest rates get to painful levels."

    Interesting what each individual considers "painful", I suppose :)
    Those who borrowed on 105% loans to 40% of their income back in 2003 might not necessarily agree.
  2. D&K

    D&K Well-Known Member

    14th Nov, 2005
    Add 20+ months interest free furniture and electricals (not paid until late), and a new car on credit / salary sacrifice to the 105% loan, and perhaps the banks might understand that painful and default are not far away for some. It's the combination that will get people.

    Of course, with an investing mentality I would guess most people here see the risks and work out how to manage these other offers (interest free periods, etc) to their benefit, but we're a minority of the population.

    I wonder what percentage of foreclosures are required to change "mild-discomfort" to "painful" for a bank? :confused: