Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
SUBSCRIBE TO OUR NEWSLETTER SIGN UP
Risky investment strategies on the rise
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Risky investment strategies on the rise

Staff Reporter 1 minute read

While low interest rates are tempting to borrowers, Consumer Affairs Victoria has warned homebuyers they must consider their long-term financial future after an increase in risky ventures.

“There’s more to calculating how much you can afford than just looking at current interest rates,” Consumer Affairs director Claire Noone said.

The warning coincides with a report by the Reserve Bank of Australia that said the low interest rate environment was prompting people to take more risks with their investment strategies.

“While increased financial risk-taking is an expected outcome of lower interest rates, it is important that households understand, and appropriately account for, the financial risks they take,” the Reserve Bank’s (RBA's) Financial Stability Review 2013 said.

“Given that household indebtedness and gearing are still around historically high levels, continued prudent saving and borrowing behaviour would help support households’ ongoing financial resilience,” the RBA report stated.

Advertisement
Advertisement

Dr Noone urged property buyers to consider what they could afford in the long-term.

“Carefully assess your financial situation and desired standard of living, including any likely future changes, such as starting a family and interest rate rises,” she said.

Buyers were told they should also factor in costs such as conveyancing fees, loan establishment fees, stamp duty, GST and building inspection fees, she said.

“Using online tools such as loan simulators and getting independent financial advice could help avoid any nasty surprises,” Ms Noone said.

Risky investment strategies on the rise
default
TheAdviser logo
default
FROM THE WEB
more from the adviser
Financial system is ‘more resilient’ thanks to APRA, finds review

APRA’s “rigorous and effective” intervention and management...

Outlook strengthens for house prices and rents, finds NAB

While current property sentiment among property professionals rem...

Arrears to ‘stabilise’ in response to rate relief

Home loan delinquencies have declined and are expected to further...