All Topics / Finance / Interest Rate Announcement

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  • Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    3 May 2006
    At its meeting on 2 May, the Reserve Bank Board decided to increase the cash rate target by 25 basis points, to 5.75 per cent.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958
    Skype – derekjones2113

    Profile photo of andymitchellandymitchell
    Participant
    @andymitchell
    Join Date: 2005
    Post Count: 67

    General consensus – is it best to fix now, or remain variable?

    If to fix – 50% or 100% (or other)?

    e.g. if Person A had a 450K mortgage…fix or not….

    Not looking for financial advice, just a query about what people here would do.

    Plus, how long before the banks pass on the rise in their rates? Does this differ for variable and fixed rates?

    Profile photo of DerekDerek
    Member
    @derek
    Join Date: 2004
    Post Count: 3,544

    Hi Andy,

    I am certainly not qualified to make ‘expert comment’ so please take my comments as they are intended – some rambling thoughts.

    Fixed rates are determined by and dependent upon a banks ability to ‘buy money’ in other markets at a suitable price. Most lenders raised their fixed rates about 10 days ago and as such fixing now is a little like closing the barn door after the horse has bolted for this round.

    A 50/50 split is not a bad hedge bet – it gives you peace of mind over the fixed portion of your loans and allows you to swing with the variable rate for the other portion of the loan. For someone with uncertain or limited income or minimal discretionary spending or even a large mortgage then a 50/50 (or even a full fix) is a good option.

    My experience with raising interest rates is that the upward movement tends to happen much much quicker than any downward movement. I would expect public announcements to start happening tomorrow or Friday at the latest with the movements in our accounts within a fortnight.

    Derek
    [email protected]
    http://www.pis.theinvestorsclub.com.au
    0409 882 958
    Skype – derekjones2113

    Profile photo of asaboveasabove
    Participant
    @asabove
    Join Date: 2005
    Post Count: 8

    I like to look at thinsgs on the bright side.
    higher interes rates should mean more barganing power when hunting for property.
    My pundit view is that they won’t stay high for long.
    world wide interest rates are low and historically fixed interest is rarely better than variable.

    asabove

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