Home loan rates will be pushed up by those that would win your vote
16/03/2012 
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Home affordability and your home loan mortgage interest rates are caught in the crossfire as politicians outbid each other to win the election.
The home loan rate forecasts are made in a report from consultants Access Economics to be released today, which also found business fundamentals were “fairly rosy” in Queensland despite expansion problems.
“[Queensland's] economy continues to look the picture of near perfect health – capacity is tight . . . and business investment spending is impressively high,” Access Economics said in its June quarter report.
It found one factor boosting national economic fortunes was recent rain for farmers – notwithstanding southern Queensland’s drought.
“No. 2 [factor] is a phase II of the China boom,” Access Economics’ Chris Richardson said.
He said a slowdown in China was a risk, but the first year this could take place was 2009.
“China’s boom isn’t ending any time soon, so the resultant galloping global growth, great profits and strong financial markets will continue to reverberate through different sectors,” the report said.
Access also warned homeowners, home buyers and businesses borrowing money could face an interest rate rise on fears “the coming federal election campaign could become a spending free-for-all”.
“The promises will sound grand but the butcher’s bill for votes I suspect will be high,” Mr Richardson said.
A home loan interest rate rise could come after the election, he said. Access also questioned the level of government debt to finance projects.
“National fiscal deficits are for dark times – not for now in the full bounty of a boom,” it said.
Queensland had benefited from a commodity boom, business investment was high and tourism could recover, the report said.
“[But] the state is struggling to service its growing population in the southeast and its export infrastructure further to the north,” it said.
However, with Sydney house prices now looking “less stupid” relative to those in Brisbane and on the Gold Coast, the flow of interstate migrants into Queensland is expected to ease.
While the US economy was slowing, Mr Richardson said the global economy was growing.
“The US is much more important to financial markets than global economic strength,” he added.
He said the fundamentals such as decreasing unemployment were strong globally.
“We’re having an industrial revolution in over half the world and that’s leading to the best burst of growth we’ve seen since the 1960s,” he said.
But global finances were jumping at a disproportionate amount, he said, citing “bubble-like proportions” in areas such as the Chinese sharemarket.
Source: Courier Mail
Rick Adlam has been helping clients with home loan finance since 1985 when he was home consultant with AV Jennings. Rick started Equity Home Loans in 1996 to help homeowners become property investors. Rick currently consults in the development of Mr Mortgage for mortgage brokers and HomeMate for new home buyers.
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