even if the banks cut interest rates to home lenders to 0.25% P.A you cant go out and borrow a million dollers.
you have to understand these interest rates are EXTREAMLY LOW and not normal by any stretch of the imagination.
interest rates will go back to normal levels ie 6 - 7% and they can go higher again
you borrow money to buy a house on average for 25 - 30 years.. not 25 - 30 months so what the rates are today are not what they will be in 5 - 10 years..
as such you need to borrow factoring in interest rates can and will go up some at some point.
that is the misteak people made recently they over borrowed and paid too much for their home. then when interest rates rose with inflation no one could afford the prices and BANG you get a recession as no one has money anymore because its all going on large debts.
Banks lend money to make money. they dont lend money to be charitable. why lend money out at 4% to people buying homes when you could invest that money in somthing else making more money.
low interest rates will not last.. if property is going to go up 50% from these leves at some point, inflation HAS TO kick in to increase wages, which means interest rates WILL be higher than inflation.
like i have said before, go to the RBA website, and find a point in time where interest rates were lower than inflation, even when inflation was 12% etc.. you wont be able to.
when I buy in a year or so, even if interest rates are 3% i will be borrowing what i can afford at a interest rate of 15% just incase.
