Mortgage Rates - What You Need To Know
Mortgage rates can directly affect the economy. This is because a higher percentage will usually affect the spending capacity of a borrower because his resources will also be limited. If cash flow is limited, this means that the people will not be able to spend more and provide for their basic needs. On the other hand, if the percentage is low, cash flow will increase and the people will have more spending power. However, this also means that there will be more pressure to the prices of various commodities and this can consequently affect inflation.
In general mortgage rates are determined by the Target Cash percentage and it is controlled by the Reserve Bank. This is done so that the government can influence expenditures in the economy. This is used to control inflation as a part of monetary policy.
One of the biggest problems in late 1980 is inflation. This is characterized by an increase in mortgage rates which reached an all-time high of 17 percent per annum. This is certainly huge as this can greatly affect the affordability of housing. This is the reason why it is really essential that these are well-managed. The only problem is that this is just a matter of political question although this is really necessary. This is the reason why the government is constantly monitoring any change in the economy so that extreme adjustments will be avoided.
If you are going to compare this figures with what Australia had, you will clearly see the difference. For the past 30 years, the percentages have spanned between 6 percent per annum and 17 percent per annum. This is relatively drastic although the results were not that great. Anyway, as mentioned, this can also be viewed as a political matter and it is just up to the government to have the political will. However, if you are going to look into the general picture, the current levels that we have are still generally low.
However, extra care should be taken so that the economy will not be blown out of proportion. The Reserve Bank has the responsibility to monitor every minute changes so that they can properly assess the current condition of the economy.
The increase of mortgage rates is essential for the stabilization of the economy. However, this should be taken with extra care so that the public will not be too badly affected by it.
In general mortgage rates are determined by the Target Cash percentage and it is controlled by the Reserve Bank. This is done so that the government can influence expenditures in the economy. This is used to control inflation as a part of monetary policy.
One of the biggest problems in late 1980 is inflation. This is characterized by an increase in mortgage rates which reached an all-time high of 17 percent per annum. This is certainly huge as this can greatly affect the affordability of housing. This is the reason why it is really essential that these are well-managed. The only problem is that this is just a matter of political question although this is really necessary. This is the reason why the government is constantly monitoring any change in the economy so that extreme adjustments will be avoided.
If you are going to compare this figures with what Australia had, you will clearly see the difference. For the past 30 years, the percentages have spanned between 6 percent per annum and 17 percent per annum. This is relatively drastic although the results were not that great. Anyway, as mentioned, this can also be viewed as a political matter and it is just up to the government to have the political will. However, if you are going to look into the general picture, the current levels that we have are still generally low.
However, extra care should be taken so that the economy will not be blown out of proportion. The Reserve Bank has the responsibility to monitor every minute changes so that they can properly assess the current condition of the economy.
The increase of mortgage rates is essential for the stabilization of the economy. However, this should be taken with extra care so that the public will not be too badly affected by it.
