lastest from the professor you love to hate..., page-17

newtothegame

from your reply it sounds like you think low interest rates will be here for the next 20 years? you will be lucky if the variable rate stays this low for 3

I think it is clear from what you write that you do not understand why the central banks are cutting interest rates so low.

Interest rates will go up a couple of time in the life of a mortgage, if you over spent on a property then it will be a problem, this is something you should factor in when buying is can you afford the higher rate when it comes.

The price of the house has to come down because of a few reasons
1) its over valued by about double

2) there is going to be a over supply of housing. look on the ASX when people buy a stock hard (like housing this decade) the price shoots up, but then you run out of buyers and profit takers kick in and you end up with a supply as a result bringing the price back down

3) house prices cant go any higher as it is physically imposible, surly you have done the maths now to see that peoples salarys can not support even a 40% growth from here.


yes debt levels are falling, but remember, banks make money from peoples debts charging them interest, thats why the banks did so well this decade, as people cut back on their debts and mortgages forclose on people the banks will lost lots of revenue and and the costs of lending people money will go up.. which will be on charged in higher interest.

housing can not win in a recession, and a comodity that doesnt change and is static, liek housing can not have its price inflated for every, it comes back to supply and demand, and you are now entering a low demand / high supply period of time