Financial and Consumer Rights Council Chief Executive Officer Richard Foster said that those who are experiencing the effects of the rate hikes are not the holiday home owners and investors but those families who work hard in order to pay off their loan regularly. Because of which, those who are feeling the crunch might refinance to more affordable home loans.

This data by the Victorian Sheriff’s Office heavily supports the independent study done by financial services firm Fujitsu wherein mortgage stress affects 40 percent of the 270,000 property buyers since June 2008. To further back this claim, weekend auction rates fell to 78 percent. This is only the second time during the year wherein the rate fell below 80 percent.

Due to this data, Catherine Cashmore from JPP Buyer Advocates told that the bank’s fast adoption of the latest rate hikes of the Reserve Bank of Australia would have a negative effect to first home buyers, particularly those who shop for properties in the suburbs. Cashmore added that these people have tighter budgets that have no much breathing room for rate increases.

It has also been calculated that properties were being closed at the $3.5 million mark at the higher end of the market while lower end markets close properties for about $250,000. However, Robert Larocca of the REIV commented that the drop in auction clearance rates does not mean that property prices will drop for there are still more properties up for sale than potential buyers.

Homeowners will pay around $50 a month more on their mortgages after the RBA raised the official cash rate 25 basis points, on the back of strong underlying inflation and surging coal and iron ore prices.

Economic data released last week showed rising fuel, medicine and electricity costs forced headline CPI up 0.9 per cent to an annual rate of 2.9 per cent.

Economists said the rate hike was not unexpected, despite the ongoing problems associated with Greece’s sovereign debt travails.  Speaking about the inflation figures last week,  Bankwest’s chief economist Alang Langford said unless there was a steep pullback in share prices to trigger an erosion in household wealth, the RBA would continue to raise the cash rate towards 5 per cent.

Speaking about the RBA’s decision to lift the official cash rate again, Governor Glenn Stevens said the board continues to adjust the cash rate towards neutral levels.

“The board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago,” Mr Stevens said.

“The board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2 to 3 per cent over time.”

In the early 1990s, new rivals such as Aussie Home Loans, Wizard and RAMS sprung from the scorched landscape, before themselves being subsumed. Firstfolio a mix of mortgage broker, wholesaler, originator, processor and manager continues the perennial cycle.

Southern Cross Equities describes Firstfolio as a “bank in everything but name”, a vital distinction being that it has no need for capital to support loans… Read more…