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Australian property owners to take another hit

Yet another situation which has happened in the United States is also likely to hurt Australian home owners.

In the US, the giant bank Bear Streans required help from the Federal Reserve and JP Morgan to stay afloat. It ran out of cash, literally, due to the massive fall of many of its housing related investments. Due to this need, the value of the bank's investments has fallen sharply. This also means that many Australian banks are going to be more likely than ever to raise rates yet again.

According to News.com.au, Rory Robertson who is the interest rate strategist at Macquarie Bank said, "Banks raise about half of the money they need from the wholesale markets, so they are directly exposed to events in the US. It's certainly possible we will see major banks raise rates again."

He also said, "It's hard because households have already been hit by the biggest financial shock in 15 years – with rates up by 1.25% in just seven months. That's a lot to swallow."

The Australian property market is  showing signs of trouble. Auction clearance rates there fell in most capital cities over the weekend. Brisbane saw a drop to 24%, which is less than half the rate of what it was in 2007. Sydney dropped to below 50%.

Most economists point to the falling clearance rates as a significant indication of the drop in consumer confidence within the country.

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