RBA Decision

Well .. the rates are phenomenally low at the moment, but the Banks are tougher on what they'll let through.

So it might be around the 6% mark at the moment .. but its usually been as low as it will get. Historically it tends to bounce back up.

You'll do damage to yourself if you take on the prospect of lower inflationary numbers and cheaper variable rates with an investment proposition .. heck .. even a home loan. These rates at the moment are ABNORMALLY low. Take advantage of them .. yes .. but fix them for a greater level of years .. because .. like any lifetime opportunity .. it only passes your way the once.

I'm expecting inflation .. i'm seeing it in food prices and services already. That has gotta be reflected in the overall picture. You cant keep lowering rates, and have petrol prices climb to $1.60 and not see that passed on in the supermarket .. and any business that relies on transportation for goods.

If you can do things at the moment .. grab onto something solid .. go for a medium to longer term fixed rate arrangement .. and hold on tight. We will be in for a VERY bumpy economic ride in the coming years.

Oh yes .. the other thing. Make sure you arent pushing yourself with edge gearing (90% or higher). Market drops 10% or more (not unheard of) .. you'll be owing the banks. Sure edge gearing works .. but .. again its all a matter of timing. And now is not that time.

There are some things that just shouldn't be put in the public arena Jamie – think of your career reputation.

Since the banks seem to be making up their own rules on interest rates passed to the mortgage holder, it probably doesn't matter much what the RBA decides! 

I have to agree with xdrew on all points,

In terms of inflation going down cant see that happening

australia has become a expensive place to do business 

i work in shipping an it's cheaper for me to move one pallet from china to Melbourne then Melbourne to NSW

Interesting to see what the RBA do next month as there is no meeting in January.

If they stay unchanged, it might suggest that we're at or close to the bottom.

Cheers

Tom

Bang on 2.30pm Terry, yes.  Since the value of a currency is affected by movements in interest rates, it is always a very good time to be paying attention not only from a mortgage interest rate perspective, but also a foreign currency exchange rate perspective.

About 4 years ago there was a very splendid window of opportunity of 48 hours between UK interest rate announcement and AUS interest rate announcement.  It was around the time people had started quivering over something called a GFC that was apparently on its way.  Anyway, at that time, the exchange rate charts looked like a rollercoaster for 48hrs, and then the golden window of opportunity closed and returned to boring small incremental changes.

I have decided to have a crack at the "really low offers" strategy.  Make your money when you buy and all that.  I just put in an offer of 20% below asking price and the selling agent neither laughed nor complained.  Now let us see if I can get it across the line.

I phoned an agent today to discuss a property I'm keen on, he revealed he was in Melbourne (the property and the agents office are in Qld) and judging by the rowdy behaviour I could hear in the background I'm guessing he was having a coldie at the Melbourne cup. He without hesitation told me about a previous offer on the property and also the vendors counter offer which was about 10% below asking price price ( and I believe market value). What a great position to start negotiations from. Can't wait to give him a call once he's sobered up and get started.

No doubting that, but considering how poorly things actually are out there at the moment, and the RBA isn't pulling the trigger knowing they still do have a lot of room to move, one must wonder what it actually will take for them to cut further?

A total meltdown? Financial Armageddon? That would definitely do it. What else?

Cheers

Tom