Yesterday, I connected the end of the carry trade and stress on Australian bank margins. The point was that the withdrawal of global liquidity wasn't just affecting emerging markets in our interconnected global financial system. Australia is feeling it too, even though the Reserve Bank of Australia is on hold. Now let's look at the household side of things for a quick second.
The sources of stress on Australian housing
Here's a blurb from the Financial Times that encapsulates the problems borrowers are having:
Maggie Lu is one of thousands of borrowers hit by a credit squeeze, which has abruptly ended Australia’s housing boom and poses a risk to one of the world’s most successful economies.
“I got pre-approval for a mortgage last year but couldn’t find a house we could afford before it la...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.