According to the International Monetary Fund, the mortgage crisis in the USA will impact on other countries that rely on foreign borrowing, such as Australia. There have been a massive number of foreclosures in America already, and more are expected, the IMF report warning that:
“… with delinquencies and foreclosures in the US housing market rising sharply, and house prices continuing to fall, loan deterioration is becoming widespread.”
– Sydney Morning Herald
Economic growth is expected to slow in 2009, but that could be good news for homeowners as it could see the Reserve Bank cut official interest rates.
The bad news, or good news (it all depends on personal circumstance), is that falling property prices in the US could also spread, with the US market set to get worse before it gets better:
“At the moment, a bottom for the housing market is not visible.”
– IMF’s Global Financial Stability Report
House prices in Europe are also dropping, and although Australia may avoid the worst of it due to our high housing demand, that alone may not be enough. Interesting times lie ahead.