Interest rise we had to have
By DAVID MOASE
REAL estate agent Greg Atkinson says yesterday's rise in interest rates is the third punch in a 'triple whammy' for property investors.
Rather than doing something to help a flat property market, Mr Atkinson said, the Reserve Bank had 'kicked us while we are down' by lifting its bank rate by 0.25 percentage points.
With the bank rate now at 5.5 per cent, and lenders likely to immediately pass on the rise, home owners with a $200,000 mortgage will have to find an extra $33 a month.
Mr Atkinson, the principal of Atkinsons Real Estate at Sawtell, says the rate rise will extend the flat period the property market is experiencing.
"Initially, I think it will have an effect on the market," he said. "Along with the State Government's exit tax and land tax it is a triple whammy for investors.
"The exit tax has taken all the investors out of the market and this will do nothing to entice them back."
More Property and Real Estate principal Steve Little takes a more positive view, saying things are still very good for buyers.
"There will be a perception of 'woe is me' in the short term but we need to put it into perspective," he said.
"On a $200,000 mortgage, it means about $32 a month ? that's a cappuccino every three days or a slab of beer a month.
"If you can't afford that, you shouldn't have borrowed money in the first place."
Mr Little said real pain would not be felt until rates had risen by about one percentage point.
"For now, we still have the cheapest money of all time," he said.
Mortgage broker Warren Sanger does not think the 0.25 percentage point rise will have much effect on people paying home loans but they will have to think about curbing their spending in other areas.
"All lenders have a default rate that is above the normal rate to allow for rises in interest," he said.
"It is what people do once they have bought their new house that can stretch them.
"They might buy a new car, or a new fridge to go in the new kitchen and all those other things can affect them."
News of the rate rise met with a mixed reaction around the nation.
Real Estate Institute of NSW president Rowen Kelly said home buyers had been anticipating the rise for 14 months and predicted it would not have much effect on the property market.
The NSW Farmers' Association took a far darker view, with its Economics Committee chairman Peter Comensoli saying rates should have remained on hold because recent indicators show a natural slowing in the economy.