excuses excuses, page-63

Warnie,

I think you misunderstood the purpose of my post. I am not blaming brokers for doing anything except making hay while the sun is shining, which is hardly a crime.

My point is that the credit crunch has drastically reduced competition amongst lenders. If someone wants a loan, it's on the bank's terms. The ease with which interest rates have been increased above the RBA rate is the best example of this.

I agree with you that rates have probably peaked for the moment. This doesn't mean credit will go back to being dirt cheap again. The cosy banking oligopoly is back, and it's here to stay for the medium term. Rate cuts will be handed back slowly and incompletely.

Even if the cost of borrowing went back to previous levels, which would seem unlikely due to the credit crunch, the base at which property is at now is in a totally different stratosphere to say three years ago. In Perth, prices have gone form being cheap to being very expensive.

Cheap interest rates + undervalued property = property boom

Relatively expensive rates + massively overvalued property + poor rental yeilds = property price falls and or stagnation.