Record low rates
Remember two years ago when steepling interest rates and funding costs were apparently going to crash the housing market?
Well, four weeks ago we saw the US 5 year bond yield touching a record low of 0.29 per cent.
And we've crashed through that level just now to fresh all-time lows.
UK 5-year gilts have fallen into negative territory this year for the first time ever.
The RBA noted this week that the Aussie government can borrow for 5 years for 0.4 per cent, and for 10 years at 0.9 per cent.
Source: RBA
These are the lowest borrowing costs since Federation, Lowe noted.
1-handle for mortgage rates
Property Observer recently reported Australia's first fixed rate mortgage with a 1-handle at 1.99 per cent.
As ever, consumers need to be careful to watch our for the bait and switch shag-u-later fixed rate products (apologies for the course language, but I don't know what else people call them).
Today the AFR reported the first variable rate mortgage of at 1.99 per cent, but also cautioned to be wary of comparison rates.
The price of credit is not an issue, more so how much of it is being accessed and by whom.
The volume of mortgage refinancing has soared through the roof, but this has had the effect of rather clogging up the flow of credit to new buyers.
