Households are prepaying their mortgages more quickly than when the interest rates were higher, another report in The Australian noted. Apparently, only about half of Australian households lowered down their mortgage payments when the interest changes happened.
It means that a considerable portion is making prepayments to end their debts early. Mr. Thurner and Dwyer, working at RBA's domestic markets department, found out different results from the two sets of data they gathered.
It means that a considerable portion is making prepayments to end their debts early. Mr. Thurner and Dwyer, working at RBA's domestic markets department, found out different results from the two sets of data they gathered.
Because of this, they decided it prudent to also undertake two different simulations.
Analysts expect the impact of the prepayments to be felt by middle of next year.
However, under the first stimulation, the effects of the partial prepayment will be tapered off by the expected strong flow in new loan applications.
Banks should make sure though that there will be new loans since if there only a small number of housing loans, it may not be able to taper off the effects of the prepayments.
In the second stimulation, the two authors pointed out that the cumulative effect of prepayments from the 165 basis point reduction in the standard variable rate--from October 2011 to June 2013--will cut the housing growth by 1 per cent.
No comments:
Post a Comment