Terry McCann wrote an article in Sunday February 8 Courier Mail – very interesting. “As predicted , the Reserve Bank officially pressed its-and Australia’s – “reset button on Tuesday”
The RBA cut the interest rate to yet another record low of 2.25%. it all but signaled it would probably cut again. most of the banks have followed in cutting their home-loan rates.
This might be all good news for anyone with a home loan or wanting to get one – although it could also be a dangerous trap for some of those potential borrowers. But its bad news for savers. …
It could encourage young – or even not so young to buy an overpriced property. An example – You can afford a $400,000 loan to buy say a $500,000 home with repayments being approximately $1800 per month. if interest rates were to return to anywhere near the normal levels you could find the repayments suddenly leaping to say $2,500 to $4,260 per month. When you try and sell your home, you could find you may only get $430,000 to $450,000 plus costs. (This is an hypothetical example)
Remember be careful and do your research.