PHOTO: The Reserve Bank is hoping that higher house prices will make consumers feel wealthier and start spending again.ABC News: Graeme Powell
Ever had that sinking feeling you’re in over your head, that you’ll never be able to get on top of that mountain of debt?
And what about interest rates? How on earth would we cope if they ever returned to anything like normal?
The good news, at least for those mortgaged to the hilt, is that rates are likely to stay extremely low for a very long time. We’re talking years, perhaps even a decade. Maybe even longer.
The reason is that hiking rates would cause way too much pain and possibly trigger a recession even worse than the crisis that shook Western capitalism to its core a decade ago.
That’s because central banks globally have boxed themselves into a corner. They literally have nowhere to go.Australia’s house of cards
Australia’s housing downturn appears to be over … for now. But huge household debts leave the nation vulnerable to a shock.
They’ve encouraged so many individuals, corporations and governments to borrow so much, by slashing interest rates to their lowest level in 5,000 years, that any future rate hikes potentially could cause enormous damage.
Here at home, it’s all about housing. Real estate now drives our domestic economy and, rather than attempting to cool a runaway market, the Reserve Bank once again is fuelling another boom.
In fact, in the absence of further help from the Federal Government, it has thrown caution to the wind and is banking on housing as its main weapon to keep our sputtering economy from stalling.
READ MORE VIA ABC