[booboo]

http://www.propertyo...d/2012010552968

Some interesting quotes....

Quote

The government could bring back the first-home owner’s boost scheme as early as this year to help stimulate the property market and win 2013 election votes, according to Aussie Home Loans founder John Symond.

Symond says it is generally true that “in any run-up to an election the government throws money around”.

Anyone swallow that big bit of bait which says that the FHOG makes it easier for FHBs?

But Symond's logic in the following is what truly dumb founded me.

Quote

Regardless of that, he says the market is looking good for first-home buyers, with “all the ducks lining up – lower price values, lower interest rates, makes it easier to save and easier to get into home ownership”.

Once again we have the usual spruiker logic that lower prices will spur activity, which is not the case.

The most amazing thing is his belief that lower interest rates "makes it easier to save" - er, how does earning less interest on my money make it easier to save?

[zaph]

booboo, on 06 January 2012 - 02:27 AM, said:

http://www.propertyo...d/2012010552968

The most amazing thing is his belief that lower interest rates "makes it easier to save" - er, how does earning less interest on my money make it easier to save?

saving is borrowing. didn't you get the email?

[urchin]

booboo, on 06 January 2012 - 02:27 AM, said:

The most amazing thing is his belief that lower interest rates "makes it easier to save" - er, how does earning less interest on my money make it easier to save?

because he is obviously under the impression that all non-home owners are as indebted as he is. he assumes we have all sorts of other loans (car, credit card, etc.) that might be affected by interest rate shifts. well, if asked to justify himself i'm sure that's the answer he would give. how much difference will a 0.25% drop in interest make on a credit card or car loan (assuming that they move at all, which is unlikely)? i doubt it would be measurable.

in the end it's the old spruiker tactic of lining up a lot of words and tacking "buy now!" at the end of them. he's operating under the (largely correct) assumption that people really do believe everything they read. sad, isn't it?

[Bernard L. Madoff]

Quote

“all the ducks lining up

Are those lined up ducks the FHBers?

[Mr Medved]

Honestly, I find the "lower interest rates means a great time for buying" line a bizarro world comment.

• If you buy at the peak of the low point in interest rates, it means repayments will only get harder (and prices may be peaking to the high side).
• If you buy at the peak of the high point in interest rates, it means repayments will only get easier (and prices may be peaking to the low side).

Anyone think the same, or differently?

[tor]

Mr Medved, on 06 January 2012 - 07:46 AM, said:

Honestly, I find the "lower interest rates means a great time for buying" line a bizarro world comment.

• If you buy at the peak of the low point in interest rates, it means repayments will only get harder (and prices may be peaking to the high side).
• If you buy at the peak of the high point in interest rates, it means repayments will only get easier (and prices may be peaking to the low side).

Anyone think the same, or differently?

Also there is that chart showing that high real interest rates (in my opinion) have a pretty strong correlation to house prices. When the interest rates are high the houses are cheaper.

[Smart Money]

urchin, on 06 January 2012 - 03:11 AM, said:

in the end it's the old spruiker tactic of lining up a lot of words and tacking "buy now!" at the end of them. he's operating under the (largely correct) assumption that people really do believe everything they read. sad, isn't it?

Yes hopefully consumers read forums like Simply Sustainable and other forums to gain insight into blatant spruiking and the craziness of the marketers statements.

Here's another good example of spruiking and statements that are incongruent.
Simply absurd.

Go to the prominent magazine Australian Property Investor and the article on " Got equity? Perhaps you need a line of credit… "

The classic quote is " This means anyone with equity in their property right now should be obtaining lines of credit. In other words, now is a good time to have some cash in your bank account in case those bargains appear next year".

The lie is ..... a line of credit = cash

Rubbish a line of credit = debt

Yeh just pile up your debt you loser
Hang on isn't that how the US and Europe got into the current pickle


Cheers

[mattau]

tor, on 06 January 2012 - 09:52 AM, said:

Also there is that chart showing that high real interest rates (in my opinion) have a pretty strong correlation to house prices. When the interest rates are high the houses are cheaper.

Interesting opinion that "When the interest rates are high the houses are cheaper." That's probably true - I'll read more into that. You wouldn't happen to have the URL of the chart that you mentioned?
I guess when sprukers claim low interest rates is the right to buy, it can actually be in your favor (and others who think differently, and don't believe eveything they read).

[tor]

mattau, on 06 January 2012 - 12:59 PM, said:

Interesting opinion that "When the interest rates are high the houses are cheaper." That's probably true - I'll read more into that. You wouldn't happen to have the URL of the chart that you mentioned?

It is on this forum somewhere. Foundation had it from memory. I'll do some searching but if anyone else can remember it that would be good too.

Wow I found it: http://www.simplesus..._1148#entry1148

I can't remember what the second graph was.

This post has been edited by tor: 06 January 2012 - 08:59 PM

[Mr Medved]

mattau, on 06 January 2012 - 12:59 PM, said:

Interesting opinion that "When the interest rates are high the houses are cheaper." That's probably true - I'll read more into that. You wouldn't happen to have the URL of the chart that you mentioned?
I guess when sprukers claim low interest rates is the right to buy, it can actually be in your favor (and others who think differently, and don't believe eveything they read).

You could also pull up ABS and RBA stats and make your own chart if you can't find it.

Anecdotally the beginning of the 80s, early 90s and mid 90s were periods of high(er) interest rates and lower house prices (in real terms).

Of course what the spruikers don't say, is if you buy outright as opposed to renting from the bank (mortgage) then you don't give a stuff about interest rates and only care about price.

[ummester]

Mr Medved, on 06 January 2012 - 07:46 AM, said:

Honestly, I find the "lower interest rates means a great time for buying" line a bizarro world comment.

• If you buy at the peak of the low point in interest rates, it means repayments will only get harder (and prices may be peaking to the high side).
• If you buy at the peak of the high point in interest rates, it means repayments will only get easier (and prices may be peaking to the low side).

Anyone think the same, or differently?

I think the same. Trouble is, I've been waiting for over 10 years for IRs to start getting high again.

[staringclown]

Mr Medved, on 06 January 2012 - 07:46 AM, said:

Honestly, I find the "lower interest rates means a great time for buying" line a bizarro world comment.

• If you buy at the peak of the low point in interest rates, it means repayments will only get harder (and prices may be peaking to the high side).
• If you buy at the peak of the high point in interest rates, it means repayments will only get easier (and prices may be peaking to the low side).

Anyone think the same, or differently?

Makes sense to me. You can't borrow as much when rates are higher so prices should (theoretically) come down.

If you're heavily leveraged and you borrowed when rates were low you're risk is much greater.

Quote

I think the same. Trouble is, I've been waiting for over 10 years for IRs to start getting high again.

An extra 2% on current rates would be considered high now that the prices are in orbit. There's a whole bunch of dudes hoping the dollar stays high.

[urchin]

yet i don't think we will see high rates and low prices now that residential housing has been made into such an integral part of the economy. if we are going to see a substantial correction in prices (i.e., something in the general ballpark of a reversion to historical trends) it will come in the form of low prices and low interest rates, as the RBA and the gov't will be doing all they can to prevent that drop. they certainly won't allow IR to go up in a weak housing market.

[Pr0]

I really don't think there is too many people out there to make up the numbers for the FHOB's, over a long period of time. It is about time the media wake up to these people and stop peddling their interests!

[tor]

urchin, on 07 January 2012 - 03:21 AM, said:

yet i don't think we will see high rates and low prices now that residential housing has been made into such an integral part of the economy. if we are going to see a substantial correction in prices (i.e., something in the general ballpark of a reversion to historical trends) it will come in the form of low prices and low interest rates, as the RBA and the gov't will be doing all they can to prevent that drop. they certainly won't allow IR to go up in a weak housing market.

Real interest rates are rate - inflation right?

So 1% interest rates with 10% deflation would be high real interest rates.

Which would mean that we could quite easily have low prices and high real interest rates.

[urchin]

tor, on 08 January 2012 - 06:40 PM, said:

Real interest rates are rate - inflation right?

So 1% interest rates with 10% deflation would be high real interest rates.

Which would mean that we could quite easily have low prices and high real interest rates.

true enough. 10% deflation would be a pretty drastic scenario but the point is taken.

[tor]

urchin, on 09 January 2012 - 05:25 AM, said:

true enough. 10% deflation would be a pretty drastic scenario but the point is taken.

Yeah I think a sustained 1 or 2 % deflation would be enough to petrify the economists. I was just grabbing numbers out of my arse to illustrate the point.

If you consider that inflation has been about 3-4% for ages then a 2% deflation would be the equivalent of a 6% change in interest rates. Bigger change than we got during the GFC.

10% deflation would be almost like the reverse of the late 80's interest rate spike.

[ummester]

But in a deflationary environemt, wouldn't the bank have to pay more to get the funds to lend?

I'll still wager, that even though the RBA may get rates down under 2% before all is said and done here, the lenders won't follow suit at all - they won't be able to afford to.

[tor]

ummester, on 09 January 2012 - 07:06 AM, said:

But in a deflationary environemt, wouldn't the bank have to pay more to get the funds to lend?

Yes and so I think they will be much more cautious with their lending. So you take away a lot of peoples desire to borrow and then also make it harder to borrow and suddenly house prices go down.

Effectively I suspect it is the same end result as jacking interest rates to the moon.