BIS Shrapnel predicts rates to hit 9.4 percent & housing won’t crash

A report from BIS Shrapnel today predicts mortgage rates will climb sharply to 9.4 percent by 2013 as the RBA combats rampant inflation, but there is nothing to worry about as property won’t crash!

It makes the prediction that prices will stay steady “with some cities even showing moderate price growth over the two following years” while acknowledging the decline in house prices to date has been partly caused by rising interest rates. Perth is forecast to surge 19 percent in the next 3 years?

» Rate rises loom but home prices ‘won’t crash’ – The Sydney Morning Herald, 27th June 2011.
» Interest rates heading for 10 per cent, according to BIS Shrapnel report – News Limited, 27th June 2011.
» WA property experts slam 19% increase forecast – WA Today, 27th June 2011


  1. Well I don’t see a 19% surge in prices but I also don’t see a Housing Crash as long as the Negative Gearing Scheme stays unchanged.

  2. @LBS. Agree Totally.

    A small increase in rates (say 0.5%) will impact the housing market significantly as dept levels & interest repayments compared to nett income are the highest in history. I honestly can’t see this happening within 12 months without severe repocussions. (i.e. Increase in Unemployment and mortgage defaults)
    The fact is House prices are on the decline in every Australian State and housing supply is slowly increasing (up 20% average from last year), therefore any rate increases will just add fuel to the fire.
    Also, increasing rates will ultimately kill whats left of retail, manufacturing and small business in the country.
    They’re dreaming!

  3. Agree with all here with a few hyperthetical (or a position of ignorance) questions;


    Can the (Negative Gearing) system become unsustainable if the trends in the graphs continue?

    LBS agreed, and Domenic what would happen if interest rates decreased? Due to really bad circumstances this economy is already in, and has been for a while now.

  4. BIS Shrapnel have a lot of form for completely wrong predictions, and how on earth can they say housing wouldn’t crash if mortgage rates got to 9.4%. if that happened, there would be massive fallout, big price falls, bankrupt estates, divorce rate spikes, etc. 9.4% today is the equivalent of around 17% previously (now that banks are deregulated and throw credit around like confetti). housing has dropped 10-15% already, 20%+ drop is locked in this year alone.

  5. @Macca – totally agree!

    Irrespective of rates, DEBT is the problem and people with large mortgages are not going to start the spending spree again if rates fall. In my opinion they are / will pay off more debt as people are now more savvy, and unfortunately there is not much money left for discretionary spending, especially with increases in living costs like utilities. Even if there was consumers are more cautious or are buying online. (it is already happening in Myers and David Jones – items marked down to 40%, yet not many people are buying)
    Considering Retail (not mining) is Australias biggest employer and contributes 11% of GDP compared to 8.4% for Mining, we’re heading for difficult times. I would be very surprised if rates increased at all this year.

  6. That’s a good one guys!
    (Obviously some wicked ‘hydro’ being smoked these days!
    Where can we get this weed south of the Murray this winter?)
    I actually don’t remember a time when BIS Schrapnel were right.
    I’m sure they must have been right once or twice……yeah?

  7. BIS stands for “Blithering idiot service”

    This is another example of an institution being given creditability for getting it wrong AGAIN !!!!
    There is more chance of Ju liar Galah listening to the public than BIS getting it right.

    If our society continues its moronic path of passive non action. We are doomed to be debt slaves to the elite.
    Yoda refuse to be slave to banksters.
    Vote 1 for Max Keiser or Gerald Celente for new IMF chief. (International Mafia Fund)

  8. > 19% increase forecast

    Are they also predicting hyper-inflation, because that’s the only way this prediction can come true.

  9. They are all trying to put a happy fave on things but I can tell you know they are selling up and heading for the doors as we speak, who wants to be the last fool to see the truth? House prices are heading down and will keep heading down for the next 5 years.

  10. BIS Shrapnel are a cash for comment report writing service for vested interests masquerading as econometrics experts. They’re a facade and front for the RE industry, nothing more than that.

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