Crunch: Forget That New Mortgage!

Rising interest rates are already putting more pressure on households and now banks are reducing their ability to lend at high multiples with an effective reduction of “Borrowing Power” of up to 20%. Combined, this will put more stress on property owners and renovators.

APRA has written to the banks stressing the importance of sound mortgage lending. Better late than never!

WA may well see some of the biggest changes.

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Caveat Emptor! Note: this is NOT financial or property advice!!

Written by Walk The World


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  1. I still hold the view that rates won't go anything like as high as people think. I reckon if you want to buy a property, you'll need to time a V-shaped pullback before it's off to the races with ultra-low interest credit all over again. Central banks are pushing on a string to tame supply-side restrictions and people will forget about inflation as soon as recession hits hard. My caveat has been funding rates for our banks, but the same thing is going to happen elsewhere. USA probs in recession already and will pivot or pause within 3 months. What do you think ?

  2. Sydney is one of the world's most inflated property bubbles, if it properly pops this is not going to be a quick few years down turn this will be a historic crash that could take generations to recover from

  3. OK Mr. North, credit is drying up. That is the 1st stage. But if prices fell 30% they would only be falling back to where they were 2 years ago, right? Only those who purchased since the pandemic will find themselves underwater, yes? Can you see it yet? It's not the size of the fall, it's the effect of the fall on balance sheets and that corresponds to the point in time a person took on the mortgage. No need to wet yourself, yet.

    The banks will constrain the prices that can be paid for property from here. Remember, it is just whining right now. Perhaps that silly woman who took on that large mortgage should have thought about it a little more before she took it out?

    Remember once more, it's is household balance sheets that are important when their largest asset collateralises so much economic activity. What's the value of property sold since 2020? Those silly people are screwed, but everyone else is still floating and simply getting nervous. Understand those superficial 'sentiment' numbers now?

    Sure, the stupid fixed and stuck there head in the ground. Now, they're blaming someone else, anyone else but themselves. But remember the anatomy of this unfolding crisis depends upon all these fictitious valuations spilling over into the real economy, i.e., you know that economy where people earn their incomes to pay their debts. Remember the components of national income and the definition of aggregate demand? Once these rate rises squeeze credit and start lowering prices to say 2017 levels, or lower, the shit starts hitting the fan. The banks start calling to 'have a chat'. Once aggregate demand is affected, which is why inflation is so disastrous now, it affects employment and with 1.1 million people employed in the construction industry that is the time to put on your diaper. Not in September Mr. North, not in a moron's fantasy of an RBA printing to oblivion and unleashing hyperinflation. That is laughable and should embarrass anyone who even utters such rubbish.

  4. Insightful video Martin, thanks for putting it together. I’d love to see you interviewing some of those “property experts backed by Data” who keep saying the property market is solid and will continue booming in the next 2-3 years. All their claims seems to be backed by pretty charts and stats. I would have given you names of those experts (mainly buyers agents) but one search on YouTube and I’m sure you will be able to find them all.

  5. I got out of the building game. I was chasing around renovation work in a market that did not want to pay trades people their salary. I moved into training and qualifying apprentices in Tiling and waterproofing for 2 years. The HIA was scared of how many apprentices, brickie and plasterers, that were not being picked up. My trade school did not get replacement apprentices for the ones we qualified.
    I retrained for the health sector and am now secure like never before. This has been years coming and I'm not the only one to have seen and experienced the slow oncoming mud slide we have now

  6. after inflation it will go down to deflation… there are a lot of deflationary elements moving towards us…
    im calling it a "spook" so people run out and lock in… " hurry, you might miss out" "you better lock in"
    when have they had our interests (no pun) before but now they care? watch the FED rate….

  7. Sadly, many, many young recent home owners will walk away from their homes devoid of their home equities. The vanishing trillions of dollars
    is the inevitable consequence of continually rising interest rates. Inflation is enemy number one, which must be tamed asap. Rents will also fall, but not as quickly as the doomed excessive real estate values. Airlines are offering very generous fares as they wish commuters to remain with them. Their share values will also
    plummet when regular travellers lose their well paying jobs interstate.
    It’s been 32 years since this somber scenario last occurred which persisted for 3 years, but this time it’s worse.
    Of course, the essential motor vehicle will also drop in value in a few months as people offload their expensive vehicles for a cheaper alternative.

  8. If someone locked in an ultra low interest rate during the pandemic, when the fixed rate expires, do they automatically go to current interest rates or can the banks hit them up for a greater rate to make up for losses on the fixed rate

  9. Don't get stuck with these fake tears. Rates should be higher enough to cut inflation down. Mortgage game, profiteering housing industry all needs to end for the betterment of the country. It's needed for our kids future. Maybe more important than green rubbish

  10. One of the most amazing charts I saw recently was one showing interest rates over the last 40 years. It showed that from the previous high, they could only go back up 50% before things slowed down rapidly and that was during a deflationary period. It amazing to see where they are now because of inflation. They are above their last high and n sign of abating. These are interesting times

  11. Unless it is a "distressed seller" or someone that has a "delinquent mortgage", buy at a known fair price. The "last to buy" are the "first to fold". Mortgage lenders have most reasonable buyers stitched up. The last in the bunch are the ones most tricked and deceived.

  12. Hi Martin. Love your work. Amazing how hard you work. Could you answer me a question. Probably dumb of me.
    If there was no inflation at all. All prices stayed totally the same as the previous read and inflation was 5% on the previous read . Is inflation now 5% or zero. Or something else.

  13. Excellent update thank you. Holy cow who even earns $200k for a coupke to earn $400k to borrow on your table’s highest rung? We have had house price inflation due to deliberate migration policy and other policies because rising house prices feed CGT (fed) and Stamp Duty (state) revenue. Want to get rid of rising house prices? Get rid of CGT and Stamp Duty and don’t replace them with anything. Got by just fine without that tax on inflation in 1970, 60 and 50. Suddenly govt policy no longer jemmies up house prices. Too much migration put downward pressure on wages which is why they are $60k for my job same as 2000 when i first started. Food price inflation is due to external energy, fertiliser, food price shocks (could have been mitigated with domestic energy reservations from mining companies but wasn’t)

  14. How can rising interest rates have any impact on inflation caused by supply shocks caused by (1) short sighted gifting of resources to kining companies who export the lot leaving us no energy (2) war in ukraine squeezing world energy /food /fertiliser supply and (3) china supply chain disruptions (because we exported all manufacturing) 

    How can rising interest rates possibly change the rising prices caused by too few essential things? It is not like people can stop eating because their interest rate on their mortgage rose. Food price will only rise more due to fertiliser price rises now, there is a lag.

  15. Martin can borrowers who have significant rate hikes this or next year sue Philip Lowe, arguably the most qualified and informed financial planner in Australia, for repeatedly stating interest rates will not rise before 2024?

  16. Thanks Mr. Martin…well since interest rate increases the highest property listing areas in NSW are The Shire and The Southern Highlands…Hmmm…could this be… "birds of a feather flock off together"…hmmm…?…Oh yes true believers of this Tory Liberal miracle interest rates do and will go up…how about that…eh?

  17. I was only able to fix for 2 years because my LVR below 45%. They would offer me all the good 5 year fixed if only I would borrow a few hundred k's extra. It seems that poor behaviour is rewarded.

  18. Unless I'm missing something, pre-tax income means nothing. Rates should be based on take home pay as some have super to pay which is not factored in these calculations regarding what people can afford.

  19. These people who bought well over what they could afford have nobody to blame but themselves, don't blame the bank, blame your own greed, everyone wants the best these days, what happened to get what you could afford and then pay it off quicker save and then buy your dream home.

  20. 20% falls, I’ve heard this on your channel before Martin, 2 years ago, we held off buying because it logically made sense, but chose to bite the bullet and pay the extra 200k last year because we are tired of betting against the house. Thankfully we’ve been able to build up a large buffer, but the waiting for this preached ‘blanket 20% fall’ ain’t going to happen in this country, even if it logically makes sense to.

  21. I just spent $400 on groceries and $350 on fuel today and I don't have a mortgage and on a modest income. How are people going to afford there mortgages once their fix interest rates finish.

  22. Getting a 1.5 Million dollar mortgage with a 10 percent deposit is, was and always will be – foolishness.
    And to "Assume" anything is – as the saying goes – to make an Ass out of U and Me

  23. I've gone from 2.65% to 2.9% to 3.4% very very quickly. Very low impact as loan is small but speed is frightening. Those with big loans in trouble.

    Martin – how exposed is bank of mum & dad?

  24. Whilst I sympathize with the couple on the ABC but there have never been guarantees. Houses have not dropped much yet anyway, they have every opportunity to sell now to avoid the problems. My guess is they won’t because they want the government to bail them out

  25. As a foster carer I have a different indicator for hard times. Older foster carers tell me that when times are tough the phone rings off the hook and more and more affluent families aren't doing right by their kids.
    Had two kids from fairly decent private schools this week and my phone won't stop ringing for me to take more.

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