Here is a graphical representation of the mees that is the European Economy at the moment.
What a mess!! There is currently over $6 trillion, yes thats $6,000 billion worth of sovereign debt floating around in the basket case European economies at present. The global impacts of this are only just starting to be felt and have likely been the cause of the recent drop in the Aussie Dollar and the slight strengthening of the US Dollar which is still seen as the currency of choice in global trade.
There is a very real risk that we may see a second downturn globally, although this time centred on Europe which is likely to have a lesser impact on the Australian economy. Australia is still firmly tied to China and to a slightly lesser extent now, the USA, but the mess in Europe will still have a global impact.
The main impact for us will be the fact that it will be harder for business and individuals to obtain credit. The reason is our banks, funders and larger businesses often look to foreign markets to raise funds that they can then lend in our market. However, when markets downturn or get nervous it gets harder to access funds and even if they can be obtained, they come at a higher cost. Consequently the main impact for the average Aussie business or consumer will be much tighter credit criteria and generally more hoops to jump through to access debt funding.
However, don’t despair. There is still plenty of competition out there and even if you get knocked back for credit don’t give up. Shop around or use the services of a good mortgage broker to assist you. At times like this a mortgage broker can be worth their weight in gold!!
Filed under: Finance Tips, Global Economy, Home Loans & Mortgages, credit, debt crisis, Europe, finance, greece, home loan, ireland, mortgage broker, portugal, spain
