Thread: Fears of housing 'fire sale' as interest-only loans roll into principal plus interest

Originally Posted by Saitch

What is a median interest rate these days, 7%?
How will people (and property) fare if interest rates increase to around the 1980's rate height of +/- 17.5%, which a lot of members here and the wife and I had to endure.

I'm not going to rehash the "How bad we had it" theme but my wife and I certainly thought things through before we purchased anything. We only had one bed in our first, three bedroom house for quite some time and no telly for a couple of years!

How I long for interest rates of 17.5% again, you get pittance in the bank now.

That certainly is the flip side for us retirees! But low interest rates should mean low inflation- but it sure doesn’t seem that way.

Originally Posted by cuppabillytea

Make a budget. Your bills, tucker and some for entertainment, then stick to it.

Mention the word "budget" and peoples eyeballs tend to roll to the back of their heads. For some reason every one seems to think a budget needs to be or is restrictive in spending, but thats no always the case. I prefer to call it a spending plan, as thats excatly what it is. Having a good budget certainly goes a long way to living within your means

Originally Posted by shanegtr

Mention the word "budget" and peoples eyeballs tend to roll to the back of their heads. For some reason every one seems to think a budget needs to be or is restrictive in spending, but thats no always the case. I prefer to call it a spending plan, as thats excatly what it is. Having a good budget certainly goes a long way to living within your means

Yes ago you would see quiz shows and people would sneeze at $10 k prizes, comments like it wouldn't even pay the credit card off.
Now people always want to go on a holiday instead of paying off debt with the money. For some it's once in debt means a life time of debt.
They need to be accountable for their choices and not whinge and say it''s every one else's fault.

Originally Posted by Roverlord off road spares

How I long for interest rates of 17.5% again, you get pittance in the bank now.

x2

but the country would be in an absolute mess.

Just imagine the 'fire sales'

I have a rellie who some years ago (about 12) decided to sell his very well regarded smash repair business. Wannabees queued up to buy it all with guaranteed bank loans approved for the price (in the millions) he wanted.
In the end he just auctioned everything (plant and machinery) off (buildings already sold) as he said "Between the insurance companies and the banks, those with big loans to pay off didn't have a chance".
Yes he could have flogged it off to the bloke with the biggest bank loan but he wouldn't do it. Man with a conscience.
Beware the banks, their only interest is their bottom line.
And many of our pollies have been bankers or aspire to be when they're chucked out of politics....
AlanH.

Originally Posted by Roverlord off road spares

Now people always want to go on a holiday instead of paying off debt with the money. For some it's once in debt means a life time of debt.
They need to be accountable for their choices and not whinge and say it''s every one else's fault.

Spot on - SWMBO has asked why we don't go on overseas holidays like some of her friends - I told her to ask her friends where the money was coming from - yep, credit cards or redraw on the mortgage...

I'm trying to work out when we can do a tree change and be debt free - I think I'm about 2 years away. Then I can almost do what I like and not have to worry about supporting huge debt. No way I'll be in the city working for the man in a few years to pay for those sort of follys that SWMBO friends will have to. When we travel OS it will be with my own money.

Originally Posted by Homestar

redraw on the mortgage...

not such a bad idea given the interest on mortgages, compared to credit cards.