Published:
Higher interest rates dampen hopes for more affordable houses
Every 50bp change in interest rates will lift average mortgage payments by 7% per cent, says CIMB.
According to CIMB, currently, they estimate that the average mortgage-to-income ratio is still healthy at 29%, within banks' lending threshold of +/-35%.
As long as interest rates stay low, CIMB believes the wealth effect will continue to keep buyers interested in hard assets. However, with average incomes rising merely 3-5% every year, we believe physical prices have little room for growth.
Assuming a 15-year normalised interest rate of 3.5%, the affordability ratio would breach an uncomfortable 41% at current prices, similar to levels in the 1997 downcycle.
Read Here
Advertise
Sign Up
