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  • Profile photo of David LaytonDavid Layton
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    @david-layton
    Join Date: 2008
    Post Count: 11

    The million dollar question, Will interest rates continue to rise? when will they fall?
    This is something that is close to all our hearts and pockets. I have investigated this a lot over the last few months and it seems that every expert has their own theory and none of them are the same.

    This is all very confusing even when you are in the industry. However i suspect that we may have seen the end of the interest rate rises, at least for a time.

    Westpac chief economist Bill Evans said the 23.9 per cent fall in the consumer confidence index over the past three months – as the Reserve Bank continued to raise rates to contain inflation – was the biggest in the 32-year history of the survey. "This indicates that the Reserve Bank's last rate hike, combined with further independent moves from the mortgage lenders, may have finally slowed demand such that inflationary pressures will ease,"

    this has been the most concrete information I have come across and believe he may be on the money.

    David Layton
    Wedgetail Finance & Investments
    [email protected]
    http://www.wedgetailproperty.com.au
     

    Profile photo of foundationfoundation
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    David Layton wrote:
    The million dollar question, Will interest rates continue to rise? when will they fall?
    Westpac chief economist Bill Evans said the 23.9 per cent fall in the consumer confidence index over the past three months – as the Reserve Bank continued to raise rates to contain inflation – was the biggest in the 32-year history of the survey. "This indicates that the Reserve Bank's last rate hike, combined with further independent moves from the mortgage lenders, may have finally slowed demand such that inflationary pressures will ease,"

    this has been the most concrete information I have come across and believe he may be on the money.

    I saw that too. I note that he also said:

    • "We do not expect that the Bank will raise rates again in the cycle," Mr Evans said. However, he said inflation will remain uncomfortably high, keeping interest rates around these levels until the second half of 2009 "at the earliest". (Link)

    Mind you, I don't have great faith in the foresight of banks and bank economists, given their track record over the last few years!

    Cheers, F. [cowboy2]

    Profile photo of tammytammy
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    And today I am hearing that irrespective of the RB's possible hold on interest rates, with the US situation becoming more of a concern, the big 4 are likely to increase the interest rate anyway. Any thoughts on if this is the case (RB holds but banks independantly increase), just how far the banks are likely to push it?

    Tammy

    Profile photo of RVPRVP
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    So how much have the recent interest rate rises contributed a month to the average home loan of say a quarter mil??

    Profile photo of v8ghiav8ghia
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    If you keep an eye on fixed rates, with both banks and non banks (much more $$ now) that gives you a reasonable idea of how the 'experts' feel rates are going to go.  It's hard to imagine them going more than another 50 basis points before the market stalls and the repair work begins. In my humbel opinion, they should be left alone for the rest of the year, but hey….?

    Profile photo of MacnattMacnatt
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    The last rise on a loan of $500 000 increase repayments by close to $100 a month.   

    Profile photo of marg4000marg4000
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    @marg4000
    Join Date: 2006
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    Today I was at the Commonwealth Bank renewing term deposits for my mother.

    Interest rate?

    7.75% for 3 months
    8.1% for 6 months

    This means that the CBA is allowing for another .25% rise in the next few months.
    Marg

    Profile photo of MITMIT
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    @millionaire-in-training
    Join Date: 2004
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    Hi all
    Well it matters not what interest rates are doing rather it matters whether your strategies fit the current market.
    If you take a look at Steve's thrid book he talks about the Property Wheel which helps one assess where in the cycle we are at and what sorts of strategies to apply in varying markets.
    Are you booked into the 3 day semnar in April, Steve is likely to give a great run down on where he thinks the market is at.
    If you missed tickets, I have a couple of spare tickets avaialble at $445 each.  Pm me if you re interested it is sure to be a great event and one I would not miss
    Warm Regards
    Sue

    MIT | Owen Real Estate
    Email Me

    Profile photo of BDMBDM
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    Post Count: 93

    Or perhaps the Million Dollar Question proposed by David here in this post could be re-phrased in Shakespearean form:

     "To Fix or Not to Fix – that is the question".

    I am in the process of refinancing a loan or two that is (unfortunately) expiring from the fixing I did three years ago.  At the time, three years seemed like a lifetime.  Now, with the benefit of hindsight, the 10 year deal at the time was a good one.  Never mind…..

    So, this time around, should I fix for another 3, or 5 years, or longer ?  Or not ? 

    Thanks,

    BDM

    Profile photo of David LaytonDavid Layton
    Member
    @david-layton
    Join Date: 2008
    Post Count: 11
    BDM wrote:

    Or perhaps the Million Dollar Question proposed by David here in this post could be re-phrased in Shakespearean form:

     "To Fix or Not to Fix – that is the question".

    I am in the process of refinancing a loan or two that is (unfortunately) expiring from the fixing I did three years ago.  At the time, three years seemed like a lifetime.  Now, with the benefit of hindsight, the 10 year deal at the time was a good one.  Never mind…..

    So, this time around, should I fix for another 3, or 5 years, or longer ?  Or not ? 

    Thanks,

    BDM

    Hi BDM,
    sorry it has taken so long to get back to you
    i believe you have it right in asking to fix or not to fix.
    I am not an economist but am still of the belief that due to the numerous issues the banks are facing overseas you would be better off fixing your rates right now.
    probably only for a short term though.
    however would be worth asking around for other opinions.
    thanks.

    Profile photo of Chris WhiteChris White
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    @chris-white
    Join Date: 2006
    Post Count: 65

    My personal view is to fix.

    Just fixed for 3 years at 8.49%.

    ANZ just put up their variable rate today by 0.10%, GE by 0.10% a couple of days ago.

    Westpac are cutting brokers commissions to ease funding cost pressures.

    RBA aside, the banks rates are still going up due to the rising cost of funds O/S.

    Kind Regards

    Chris White | Pillar Property
    http://www.pillarproperty.com.au/
    Email Me | Phone Me

    The Property Investment Specialists

    Profile photo of god_of_moneygod_of_money
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    Join Date: 2008
    Post Count: 970

    I would fix at 8.49%.. as the interest rates probably will not fall till next year.
    Current variable rate is sitting at 8.6-8.75% and I guess that it will last at least
    1 year before we can see a clear picture.

    I won't listen to the economists as their accuracy of predictions are reasonably porr.

    cheers

    Don

    Profile photo of Chris WhiteChris White
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    With all the contradicting headlines – I think that it is prudent for one to analyse their own situation and make the call based on their level of comfort and tolerance to their loan repayments increasing. It is also important to shop around for the best deals. 

    Fixed loans losing appeal

    Friday, April 18, 2008

    Homebuyers are turning away from fixed-rate home loans as economists forecast interest rate cuts next year, a mortgage broking group says.
    Mortgage Choice spokeswoman Kristy Sheppard said borrowers were switching away from fixed interest loans because they were less concerned about rising interest rates and did not expect the Reserve Bank of Australia (RBA) to hike rates again in May.

    "Economists have priced the prospect of another cash rate increase as being very remote," she said.But Australian Bureau of Statistics data out this week showed the proportion of fixed rate home loans increased in February by 1.5 percentage points to 23.8 per cent.

    The result was above the six-month average of 22 per cent.

    Forget interest rate cuts as CPI soars above 4pc

    Thursday, April 24, 2008

    Homebuyers can forget any thought of an interest rate cut this year after inflation jumped above four per cent – its highest level in nearly seven years.

    Worse still, the Reserve Bank of Australia's (RBA's) preferred measures of underlying inflation raced to a fresh 16-year high.

    But economists generally believe the RBA will hold off raising interest rates any further for now, although financial markets are pricing in a move for later this year if inflation pressures show no sign of easing.

    ANZ profit falls for first time in 10 years
    Thursday, April 24, 2008

    Big four lender, ANZ Banking Group Ltd, has seen its profit drop for the first time in a decade after suffering a $1 billion loss on bad debts triggered by turbulence in global financial markets.

    The seven per cent slide in half-yearly earnings to about $2 billion, comes despite ANZ, Australia's fourth biggest lender, having hiked its interest rates beyond moves in the official cash rate several times this year.

      

    Chris White | Pillar Property
    http://www.pillarproperty.com.au/
    Email Me | Phone Me

    The Property Investment Specialists

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