Report: Sydney housing bubble worries Treasury… RBA to back interest rate gap probe… Report: Australians borrowing, but stay ahead of debt
Treasury sends stark warning amid price jump
House prices in Sydney rose 15 per cent in May from a year earlier, prompting a warning of a price bubble in Australia's biggest city, according to an article from the Sydney Morning Herald.
"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney -- unequivocally," Treasury Secretary John Fraser said in testimony before a parliamentary committee in Canberra yesterday. "Frankly, whatever the data says, just casual observation would tell you that's the case."
Home prices in Sydney rose 15 per cent in May from a year earlier although they fell 0.7 per cent from April, according to Corelogic RP Data. Australia's major banks have said they will curb growth in home loans to investors after the country's financial services regulator asked lenders to limit expansion of these mortgages to 10 per cent a year.
"It does worry me that the very, very low – historically low – levels of interest rates are encouraging people to perhaps overinvest in housing," Fraser said.
RBA to back interest rate gap probe
According to an article in the Courier Mail, RBA financial system assistant governor Malcolm Edey acknowledged that banks may be charging high interest rates on credit cards because they considered such lending riskier than mortgages.
The Reserve Bank says it will back any probe into the record gap between the official interest rate and credit card rates, admitting the widening margin is “hard to explain”.
“I’m not here to defend the banks... to me the gap seems high and it’s hard to explain why it’s as high as it is,” he said to the Senate Committee, adding that trend was likely to be exacerbated due to the banks’ sensitivity to risk in the wake of the financial crisis.
“Housing markets are highly cyclical. The stock of dwellings people are bidding for doesn’t change quickly and as a result people want to get in before prices rise further,” he said.
Report: Australians borrowing, but stay ahead of debt
Mortgage customers have leapt 28 months ahead of their home loan repayments despite taking on record levels of debt, according to article from Perth Now.
Australians owe a whopping $1.46 trillion in household debt but the historically low interest rate period has allowed borrowers to scale ahead on their mortgages by eating into the principal at a faster pace. About $959 billion is owed on owner-occupied housing and $499 billion on investor housing, according to the piece.
“Households seem to be preparing for a rainy day, they are getting their finances into a resilient state and building in increasing financial buffers,’’ Tony Pearson, ABA director of industry policy, said.
“They are being very responsible in their use of debts and being very responsible in handling their household finances, it does indicate the Australian household is very canny when it manages its budget.”
He added that savvy home loan customers are parking extra cash into mortgage offset or redraw accounts — to help bring interest costs down — or they are being diligent and are paying down their loan directly.
House prices in Sydney rose 15 per cent in May from a year earlier, prompting a warning of a price bubble in Australia's biggest city, according to an article from the Sydney Morning Herald.
"When you look at the housing price bubble evidence, it's unequivocally the case in Sydney -- unequivocally," Treasury Secretary John Fraser said in testimony before a parliamentary committee in Canberra yesterday. "Frankly, whatever the data says, just casual observation would tell you that's the case."
Home prices in Sydney rose 15 per cent in May from a year earlier although they fell 0.7 per cent from April, according to Corelogic RP Data. Australia's major banks have said they will curb growth in home loans to investors after the country's financial services regulator asked lenders to limit expansion of these mortgages to 10 per cent a year.
"It does worry me that the very, very low – historically low – levels of interest rates are encouraging people to perhaps overinvest in housing," Fraser said.
RBA to back interest rate gap probe
According to an article in the Courier Mail, RBA financial system assistant governor Malcolm Edey acknowledged that banks may be charging high interest rates on credit cards because they considered such lending riskier than mortgages.
The Reserve Bank says it will back any probe into the record gap between the official interest rate and credit card rates, admitting the widening margin is “hard to explain”.
“I’m not here to defend the banks... to me the gap seems high and it’s hard to explain why it’s as high as it is,” he said to the Senate Committee, adding that trend was likely to be exacerbated due to the banks’ sensitivity to risk in the wake of the financial crisis.
“Housing markets are highly cyclical. The stock of dwellings people are bidding for doesn’t change quickly and as a result people want to get in before prices rise further,” he said.
Report: Australians borrowing, but stay ahead of debt
Mortgage customers have leapt 28 months ahead of their home loan repayments despite taking on record levels of debt, according to article from Perth Now.
Australians owe a whopping $1.46 trillion in household debt but the historically low interest rate period has allowed borrowers to scale ahead on their mortgages by eating into the principal at a faster pace. About $959 billion is owed on owner-occupied housing and $499 billion on investor housing, according to the piece.
“Households seem to be preparing for a rainy day, they are getting their finances into a resilient state and building in increasing financial buffers,’’ Tony Pearson, ABA director of industry policy, said.
“They are being very responsible in their use of debts and being very responsible in handling their household finances, it does indicate the Australian household is very canny when it manages its budget.”
He added that savvy home loan customers are parking extra cash into mortgage offset or redraw accounts — to help bring interest costs down — or they are being diligent and are paying down their loan directly.
