Economist's views on Australia

Interest rates are virtually zero. Well below inflation. What is needed is to restore investor confidence to get the economy moving. A government with the political guts to get interest rates moving upwards, upwards, upwards until investors are receiving a fair rate for the use of their money. Interest Zero ? Or minus? rates below 2%!!!!!! Just what rate is required to encourage business? Jesus, they are borrowing money for nothing now.

What about the poor home buyers the bleeding hearts will ask. Well, the home buyers need to work and save a decent deposit, 25% to 40% of purchase price. They will then have some equity in their purchase when things go bad. Stop buying flash new cars, overseas trips, renters full of expensive electronics, live and save hard like previous generations had to. A couple with two incomes? Well, save ALL the largest wage and live off the other. You will have your house deposit in a few short years.

Borrowers are receiving the privilege of using other peoples money and should have to pay a fair price for this privilege.

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Originally Posted by Bigbjorn

25% to 40% of purchase price.

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40% in syd is 400,000.


average syd wage is 68k.
assuming can save 40k per year, will take 10 years.
unrealistic

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

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Originally Posted by DiscoMick

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

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he's locked out of the market.

also with syd being a falling market, there is a higher risk, and he's paying for that in his deposit.

Yes, that's why our oldest son, who lives in Sydney, has instead bought an investment house on the Gold Coast.

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Originally Posted by DiscoMick

I read about a Sydney bloke with a good job who wanted to borrow $1m to buy a house and was told he'd need a deposit of $250,000.

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A fairly reasonable ask by a responsible lender.

I bought my first house in 1970 on a gross single income of around $75 per week which was a good earn at the time. House was $14000. Bank wanted $5000 deposit and sufficient to cover legals and stamp duty. Try saving $5000 (nearly two years net wages) on a net wage of around $60 per week. The bank that I had been with since boyhood flatly rejected my application. They said I was not earning enough to service the loan. I worked overtime, overtime, and overtime, and put everything into the mortgage. Owned it by 1975.

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Originally Posted by Bigbjorn

A fairly reasonable ask by a responsible lender.

I bought my first house in 1970 on a gross single income of around $75 per week which was a good earn at the time. House was $14000. Bank wanted $5000 deposit and sufficient to cover legals and stamp duty. Try saving $5000 (nearly two years net wages) on a net wage of around $60 per week. The bank that I had been with since boyhood flatly rejected my application. They said I was not earning enough to service the loan. I worked overtime, overtime, and overtime, and put everything into the mortgage. Owned it by 1975.

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I think we may be on the same page...."Put everything into the mortgage"?.....So did we!
Home ownership has always been very important to me, my Mum & Dad never owned a home, & when Dad passed away, Mum & I could've ended up on the street, were it not for a kind friend. I never wanted to be in that situation again, and so bought a house & paid it off as soon as I could.
We had to have a similar deposit to you & rates were around 7-9%, can't remember exactly. I would not want to be renting upon my retirement.
I quite agree with Banks asking for sizable deposits, jeez on the one hand the do-gooders hammer the banks for being too easy, then when they tighten up, the same do-gooders are now having a go for the very opposite reasons!!
I remember when I was young, if ya wanted to buy a car on hire purchase ya had to have a minimum of 25% deposit.
People complaining today need to "harden up",....home buyers & anyone else saying they "need more relief" with still lower interest rates etc are talking nonsense, imho of course.
Credit today, is still far easier to obtain than when I was young, we had to endure far higher interest rates, up to 18% when a particular Govt was in power, .....not saying conditions today are perfect,..when are they ever, but I reckon they're pretty good at the moment.
Pickles.

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Originally Posted by Eevo

40% in syd is 400,000.


average syd wage is 68k.
assuming can save 40k per year, will take 10 years.
unrealistic

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Simple solution - don't live in Sydney! [biggrin]
If people stopped paying ridiculous prices for housing that they can't afford, the market will come down.
Having 1.2 kids? Why need a 4 brm house. We had 7 kids in a 3 brm house - Mum and Dad (and baby, for a while) in one room, boys in one, and girls in the other.
How many bathrooms do you need? Given that each one has a similar maintence and water cost as a medium sized swimming pool, you can save lots, apart from the initial price of the house.
The house we're looking at selling is over a hundred years old, four bedrooms, one bathroom, sundeck, various sheds, on a full 1/4 acre, two blocks from a medical centre, three blocks from primary school, five blocks from high school. 10 minutes walk to town centre.
After we've finished tarting it up a bit, it'll be on the market for a bit under $250k
Plenty of work available, freshwater fishing and bush walking, 4wd parks etc.
Who needs a big city?

People want McMansions nowadays.

The first new house we owned and lived in (our first house was a rental investor we never lived in) cost $50k, 3 beds, one bathroom (which leaked). Mortgage hit 16.5% at one stage. We survived.

My son is purchasing a really nice home from Coral, 26squares on 540sqm.

Funny thing , the land costs more than the house.

It's all good assuming that houses are going to prop up the govt , but it ain't gonna happen this time round.

I have a friend who is an economist who says the current economic problems are easily solved but the gov't just won't listen to people like him.....there are reasons why.