Well they say that rates will not rise that much in the near future but the CBA and ANZ have already gone up over 0.6%.
Who is the RBA they used to have influence over the banks but now the banks don't give a dam what the RBA says and they do what they like justifying every action.
Thank you Steve for the pre warning about the rate rises, you are very considerate in this area.
What is your opinion to where the rates will be before the end of the year and will the rises cause concern to TFHO and drop confidence again.
D
I dont believe rates will rise this year – probably a rate rise in 1st qtr 2010. Interestingly, the unemployment numbers are a little deceiving – there are simply showing more full time workers working part time meaning there are less people working a full time work with = less disposable income out working in the economy. I guess the RBA wants people to believe that rates are going to increase as quickly as they went down to stop a speculative bubble in property – they are managing perception imo. For all those FHB who get in now expect rate rise and build in a buffer of 2% for the short term but imo rates will stay low for at least 18 months.
Hi W4life, you seem very concerned about rate rises. The variable rates are so low it seems laughable to consider fixing & fixing for a year doesn't seem to have much wisdom. You're likely to pay the spread which is around 1.5% for 12 months just to come off the fix when rates go up.
The latest stock mkt jitters make it even more unlikely that rates will be put up soon.
KY
I think I'm paying 5.09% atm on my PPoR. If rates go up 2% (people seem to be forcasting 1% by end of 2010), then I'm still only on 7.09%, which is around where it was a few years ago when I took the loan, and historically speaking still a low rate. If I fixed it would be for 3 years but I doubt I will.
Interestingly I saw a sign at St George today offering 5year fixed term deposits at 6.5%, I think thats a fair indication of where they expect rates to move over the next few years.
Hi all
I read an article the other day (sorry, no idea of the reference) but it did say that sticking with variable will beat the fixed rate 83% of the time. Effectively that means that one out of every six times, fixing your rate is the best way to go. But when is that one in six exactly??
Stuffed if I know!
As people are saying, the spread between variable and fixed at the moment is so large that imo, fixing them is kind of pointless really.
I have seen some arguments that in the USA that rates are likely to skyrocket really quickly, because of all this money that their government has flooded the system must create high inflationary pressure which the fed will endeavour to curtail with the only tool at their disposal – ie, hike up rates faster than you could imagine!
However, I have also heard arguments contrary to that which basically say that the amount of bad loans written off, when combined with the massive falls in real estate and the stock market will more than make up for all the cash dumped into the system by the US government. Therefore when interest rates do inevitably go up again (from zero!) that they will only need to rise at a normal pace.
So which one will it be? Again I say – stuffed if I know!
Which leads me to a whole other point…. No-one knows really. Anyone can guess, but no-one really knows. Which kind of makes the entire financial prediction industry just about the biggest waste of money in the entire world!
Oh, that reminds me of a joke Harry Dent told me recently…. Economists are people who wanted to grow up to be accountants – but lacked the required personality!
Andrew
should only fix rates when they are on par with variable and want to lock in otherwise stick to variable and pay off your loan based on the fixed rate being offering by the bank – build up equity rather than give it to the bank!!
wealth4life.com wrote:Who is the RBA they used to have influence over the banks but now the banks don't give a dam what the RBA says and they do what they like justifying every action.In my opinion the financial crisis was a blessing to the major banks here is Australia. It wiped out most of the smaller non bank lenders that provided competition and kept rates in line with the RBA. Now they can move rates independently of the RBA and use that advantage to claw back losses they incurred during the meltdown and consolidate their power.
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