Interesting that the RBA dropped interest rates 0.25% today…….but the $A went up instead of down like it is supposed to.
Not sure what it means yet apart from……i’ll hold of sending more money home until it gets to $1.30+ like the last set of funds we sent home.
Oh and stay out of the Sydney auction market this weekend….calculator buyers will be out there over paying for at least the next month forgetting that a mortgage is for 25 years and not……this months rate drop. going to be a blood bath.
Yeah, had to laugh at Joe Hockey telling everyone that this is a great time to borrow and invest. Some people will though with no thought about interest rates going up. In a few years some people are going to be in great pain. Especially those negatively gearing properties.
I’ve got cash at the ready for when it happens.Hi Catalyst,
In a few years some people are going to be in great pain. Especially those negatively gearing properties.
For sure !!! The big thing with future rises will be how carefully the RBA cranks the IR’s up again.
See, with the exchange rates at 2%, if the RBA lifts to 2.5%, that is a 25% increase. The banks will feel it, and, though they kept a few points to themselves on the way down (e.g. RBA cuts 0.25%, banks cut 0.18% keeping 0.07%), they will be SURE to crank up the full 0.25% and even more on the way back up again.
If the Bank rates were (say) 4.5% and they crank upward 0.25%, that is really a 5.5% increase – do that twice, and it is an 11% difference to your costs, not 0.5% as the media says !!! No wonder things can get tight so quickly and yes, even more so if negative geared !!
The RBA will need to be SUPER CAUTIOUS on the way back up again (maybe using 0.1% increase as an option instead of the ubiquitous “0.25%”). I can only hope they can be more considered than their past history displays !! If not, the “way up again” will be far more troublesome than the way down was.
Benny
I’ve got cash at the ready for when it happens.
<i class=”rw-ui-like-icon”></i>1<i class=”rw-ui-dislike-icon”></i>0<i class=”rw-ui-info-nub rw-ui-info-outer-nub” style=”border-right-color: rgba(153, 153, 153, 0.5);”></i><i class=”rw-ui-info-nub rw-ui-info-inner-nub” style=”border-right-color: rgb(255, 255, 255);”></i>1 Vote
Aren’t you worried that the base purchase price will go up another 10-20% in the meantime from today, eg i don’t see a RBA rise happening for 18-20 months, if I waited for “the pullback” the purchase price may fall 15-20% but that still means I’m taking the risk of paying 5% more than I am today.
…..and there is the risk the pullback never happens.
Keeping in mind though that if you don’t borrow now your repayments can lower existing debt and help your LVR’s that might be worth more than the 5%.
Thoughts?
AMP was falling all over themselves a week ago calling loan customers encouraging fixing. One must ask oneself why the enthusiasm to do so. Perhaps someone at AMP knew that rate drop was coming.
Jacqui Middleton | Middleton Buyers Advocates
http://www.middletonbuyersadvocates.com.au
Email Me | Phone MeVIC Buyers' Agents for investors, home buyers & SMSFs.
Interesting that the RBA dropped interest rates 0.25% today…….but the $A went up instead of down like it is supposed to.
Not sure what it means yet apart from…
Interesting indeed @deancollins. The reason is because Glenn Stevens left the impression that there would be no more rate reductions by removing an easing bias from his statement Tuesday. I reckon he was showing caution to get a desired currency response without fueling more property speculation long term. But stay tuned for tomorrow’s statement. In light of the financial market’s snubbing, they are likely to reintroduce easing bias language in their economic outlook. That will likely cause an Aussie dollar sell off.
Jason Staggers | JasonStaggers.com
http://jasonstaggers.com
Email Me
You must be logged in to reply to this topic. If you don't have an account, you can register here.
