Thankfully the RBA has decided to leave the Cash rate at 6.25% so we have another month up our sleeve.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
.
Nodoc / Lodoc loans from 7.15%Richard Taylor | Australia's leading private lender
Good news for the time being. But its just delaying the inevitable.
Yer I bet May is going to be the month. I’d be fixing most of my loans now if you haven’t already done so.
Yes I'm pretty happy…can't see them moving in the next couple of months with an election on the way!
Dont mean to sound like a noob, but what are the effects of a interest rate rise besides an increase in repayments for home owners. I ask because in steves recent newsletter he says that the forecasted increase in interest rates shows that the property market is about to boom again.
The usual immediate effect of an interest rate rise is the normal "mums and dads who must spend every cent on doodads" consumers pull their financially illiterate heads in for 5 mins.
Sorry; had to get that off my chest!
The idea is that the rate rise will slow down consumer spending, which puts a dampener on the "demand" side of the "supply and demand" equation, thus keeping inflation in check.
Steve may be right; the Fed may be worried that house prices are about to take off again, so a few small rises close together usually nips that in the bud pretty fast.
Personally, I can't see a lot of increases in house prices in the near future; especially in the middle price range. It seems that the well off aren't affected much by house price rises or interest rate rises, and the the first home owners and investors will always be looking for purchases at the lower end. I think the extremes of the market will continue to keep moving while the middle groung stalls for a while. i.e houses well under the mean or average, and well over the mean or average will see some action.
The Fed is probably targetting consumer spending more than housing booms with these rate rises in my opinion.
The good news for investors is the impact of every rate rise is decreased due to our tax deductions on the interest on our loans.
One thing will be for sure though; if there are more rate rises in the next few months there will be no property market boom. Why? because the affordability of housing is very bad right now, and further rate rises will make it worse.
Interest rate fluctuations do play on some investors and home buyers minds largely as a result of changing affordability (real and/or perceived).
To me the bigger issue is maintaining focus on the bigger picture and accept, and work with, interest rate variations along the way.
As interest rate changes (and costs commensurately increase) it may be time to change tactics somewhat, as distinct from someone who throws the hands in the air claiming it is all too hard.
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