Rate cuts and quantitative easing are going to see credit dispensation reaching hands which might not just be the right ones to earn from business. Credit off-take , in India, for example has been reportedly low despite all the talk of need to assist industry. That encourages lending to more risky borrowers as credit targets of banks have to be met. Given that the corporate entities could also financially dis-intermediate, here is likelihood of their tapping the stock market/ bond market directly bypassing the banking system. That really leaves the banking system with less than optimal borrowers. These huge chunks of liquidity need absorption and that could percolate to the riskier firms and persons. They could also flow in to riskier sectors like real estate.
Reserve Bank of Australia is cutting rates to boost an economy but the RBA has admitted to risks it foresees in the housing sector in cities like Sydney. The price of real estate has been abnormally high with median house prices rising to over half a million US Dollars.
With real estate creation but with occupants unable to afford, where are the credit flows going to?
Views expressed without risk or responsibility.
Reserve Bank of Australia is cutting rates to boost an economy but the RBA has admitted to risks it foresees in the housing sector in cities like Sydney. The price of real estate has been abnormally high with median house prices rising to over half a million US Dollars.
With real estate creation but with occupants unable to afford, where are the credit flows going to?
Views expressed without risk or responsibility.
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