Cause For Concern

Newcastle Herald

Saturday August 18, 2007

GR

ALL over the Hunter people are fretting at shrinking superannuation accounts, diminishing share portfolios and the alarming prospect of mortgage interest rates bring driven upwards by the international credit squeeze.

Borrowers with non-bank lenders such as the hard-hit Rams Home Loans have been phoning their mortgage brokers, trying to decide whether to fix or refinance.

Broker Mark Raschke of New Lambton said there were real worries about the position of non-bank lenders which had been raising capital on overseas markets.

The current credit squeeze means they must pay more for their money and may have to pass this on in the form of higher rates to borrowers. If they do, however, they will lose market share, squeezing their businesses from two directions.

Raschke said he feared the woes of Rams, which publicly listed its stock at $2.50 a share on July 27 and was on Thursday trading at 64 cents after it told the stock exchange that it couldn't raise $6 billion in short-term debt, might prove to be just the tip of the iceberg.

"I'm advising my clients to watch and wait a little longer before trying to make a decision, but there is certainly some concern in the marketplace," he said.

"Unfortunately at the moment nobody knows where this is heading and even the Commonwealth Bank is warning it might raise rates."

© 2007 Newcastle Herald

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