The Brains Trust - 2021, page-940

@daveironore Interest rates, I suspect I have a few years on you LOL. Mny here will not even know that back in the 70's/80's when I bought first homethe government put a cap on first mortgage loans of 12.5% .... yes 12.5%. I remember when they spiked up to around 20% (maybe early 80's???). You could relatively risk free returns on your cash for around 10% ..... amazing times hey.

In simple terms I think many young Ozzies have a balance sheet today something like.

Assets
Home $1 million
Other close to zero (I dont count the leveraged new car they are driving; lets ignore that.)

Debt
Home loan $900,000

Cash flow
Income 2 wages say $200,0000

Outgoings;
Other stuff but Home loan at 3% = $27,000

Conclusion = manageable = equivelent to rent - YOU HAVE TO LIVE SOMEWHERE?

A simple 2% interest rise = 66% increas remember

Home loan at 5% = $45,000 ...... oooooh thats getting squeezy

Lets not think what 10% + would do???? Said house above would be "ON THE MARKET" in a nationwide / worldwide fire sale and the 10% equity could disappear in the blink of an eye ......
Can't happen?

What tools can Reserve Banks throw at that scenario? All they seem to know is printing $$$$ and that will be oil on the fire.

JUST SAYIN'