Do you think interest rates will DECREASE in the short-term, ie. next 1-2 years?

Do you think interest rates will DECREASE in the short-term, ie. next 1-2 years?

  • No

    Votes: 60 41.4%

  • Probably not

    Votes: 45 31.0%

  • Unsure/uncertain/undecided/fence-sitter

    Votes: 20 13.8%

  • Most likely

    Votes: 12 8.3%

  • Yes

    Votes: 8 5.5%
  • Total voters
    145
  • Poll closed .
JIT

JIT

Hi there,

Another poll and another interest rate thread, sorry!

I just want to see what the general view here is with respect to interest rates.

Specifically, do you think interest rates will DECREASE in the short-term, ie. next 1-2 years?

I've decided to fix the rate on about half of my loans for a 2 year period and leave loans on my highest growth properties at variable rates for re-financing.

I know there's a similar thread on this here now, but I thought a poll would be easier to get a feel for the views here as the some of these threads seem to go off on tangents.

Thanks.
 
Last edited:
2009/2010 seems to be a popular time frame for a drop in growth, i think BS released a forecast with these dates in it recently. No one knows of course.
 
My bet is that we are still in the upswing phase of the interest rate cycle, the economy is strong, consumption high and the $ strong so I can't see that changing in a hurry.

No cristal ball and little economics background but I think the general direction will be upwards rather than downwards for the next 2, maybe 3 years before they drop again to any significant degree.

Doesn't suit the strategies that I would like to pursue (ie. borrow more to invest while maintaining servicability) but I guess I just have to work harder to find the good deals (both property and hopefully soon shares / funds).

kaf
 
Both Labor and Coalition advocating more tax cuts into 2012 which makes it dificult for RBA to add fiscal stimulus by cutting interest rates unless off course we have another 9/11 or this credit crunch is worse than we thought. I really think not as markets have priced in a lot of the risk. A lot of CDO books have been marked down considerably, probably not worth that low but in the absence of a buyer, thats all you're going to get so its a tough job convinceing market risk and product control that these things are worth more. Announces such as Merrills right offs..etc.. are coming out of wood work now and we're probably out of the woods with this news. But if another 9/11 occurred or a pandemic of some sort, thats a different story.

I'm afraid at the current pace, we could end up with the route RBNZ has taken - 8.5% and possibly still rising!
 
Interesting, thanks for that Willair. I will love for prices to drop by 50%, it means I will be getting between 10-20% yields for some of my IPs. Who hoo!! Did anyone watch the ABC show on 4 corners about this recent credit crunch? There was a graph or price vs rents. The chart looked like one of the water rides in Waterworld with a massive divergence in the last 2 years. Theres no wonder they are in trouble. I think the key now is to hold on to as many well located but decent cash flow properties as possible. Time will be your friend - the tortoise, not the hare... :)
 
asdf said:
Time will be your friend - the tortoise, not the hare... :)
Click to expand...
Like i said he is only right 50% of the time,I don't care 1% there is no point worrying about events that you can't control, but i do get that creeping feeling that the window of opportunity is starting to open for those that are cashed up,and the dow jones is on the upwards trend again tonight..
willair..
 
Fixed rates

G'day All,

I notice that the 4 year and 10 year fixed rates from Westpac at the moment are sitting around 7.9%. Seems to me that the banks don't think there will be much change in the longer term. My 5 IPs are all fixed for 3 years then I'll make a decision when the term expires. Not for everybody but I'm not refinancing during this period - Might re-securitize tho' (pull a property out of the mix and go looking for finance elsewhere)

Cheers,

Pud
 
sorry to be flippant, but i have to say i don't really care...:p

the way i figure it, wherever the rates are at there is an opportunity to make a quid - and also the risk of losing a quid...it's all just a matter of how you manage your finances and how cleverly you track your portfolio (read - how much room you allow for rises in your serviceability calcs).

but my answer was no, i can't see them dropping short term.

UC:D
 
Tried to get the balance of our stuff away from Aussie and Firstmac a week ago and put it with Members Equity as a lock and forget for 5 years .

The day we applied they jacked up there rate.

The annoying bit is they didnt tell us until last night, so cutting it fine to get in now before RBA announcement.

Dave
 
JIT said:
Hi there,

I've decided to fix the rate on about half of my loans for a 2 year period and leave loans on my highest growth properties at variable rates for re-financing.


Thanks.
Click to expand...

depends on whether one's loans have restricted redraw or offset accounts.
If I had restricted redraw, I'd fix a % of the variable.......a % that catered for the amount of cash I could park in the redraw facility.

But of course, if a higher earning investment was around, then I'd have no need to park anything in an offset or redraw facility, so I'd fix 100%....
 
WinstonWolfe said:
depends on whether one's loans have restricted redraw or offset accounts.
If I had restricted redraw, I'd fix a % of the variable.......a % that catered for the amount of cash I could park in the redraw facility.
Click to expand...

My fixed rate loans will have restricted redraws (and the offset option is only a 50% offset, not 100% offset), but I am still fixing rates on these particular loans as I have enough cash/loan funds sitting in an unlimited redraw account and also a 100% offset account attached to separate 100% variable rate loans (about half of my total loans). Does that make sense? I think I follow what you were saying in your 'fixed rate lo-doc 15k redraw limit' thread now...
 
yeah makes sense.

although I see the inefficiency of parking money in redraws and offsets, there are times when it just isn't practical to keep your debt levels maxed out in high growth assets.

i.e. it is better to max your debt (on high growth assets) and use all available funds to service that, then to reduce debt via redraw and offset accounts.
 
This is a interesting read about interest rates..

ALP rates record is a concern | The Australian

one point of interest I found was:

Daily cash rate data from January 1979 to October 2007 shows the median interest rate for the Labor years is 11.75 per cent, compared with the Coalition years (including Fraser) of 5.5 per cent.

What happened to overseas interest rates during these periods? Were international interest rates (such as the US federal funds rate) higher during the Labor years?

The answer is yes, but not by much. The US median rate was 6.79per cent during the Labor years and 5.26 per cent during Coalition years. In other words, the data shows that even allowing for international factors beyond the control of domestic policymakers, Labor governments are associated with much higher interest rates than Coalition governments.

Much is made of three-month interest rates during the late 1970s and early '80s while John Howard was treasurer. We examined those figures as well, using data on three-month rates from January 1976 to October 2007. The median three-month interest rate for the Labor years is 11.75 per cent, compared with the Coalition years (including Fraser) of 5.5 per cent.

Short answer, if Kevin Rudd wins, we will pay more!!!
 
As long as there are more tax cuts then very good chances interest rates wont be coming down in a hurry.

Johny H. and Peter C. are playing some sort of a game. On one side we have the RBA rising rates after rates to control the inflation and on the other hand, Team Coalition is adding fuel to the fire by giving more tax cuts.

More Tax Cuts = More Disposable Income for the consumer = Higher Spending = More Presure on Inflation = More Interest Rate Rises.

Talk about being "good economic managers". Not that I support Kevin Rudd either but the Govt. seriously aren't helping their cause.

There is much more to calculating inflation but surely the two recent tax cuts are partialy to blame.
 
I agree.

The interest rate rise limits people borrowing capacity and hence purchasing / paying power.

Anyone who is cashed up and can purchase loan free should come up with some deals.
 
aspect said:
Anyone who is cashed up and can purchase loan free should come up with some deals.
Click to expand...

I wasn't thinking THAT extreme. Just having a lowish LVR, a job when other people don't, and a cash savings buffer will put you well ahead of the over-stretched population. Bank loans don't disappear even in a recession: banks are just a lot more stringent. I mean, properties still change hands even in a recession and surely people use loans for that. Your fringe borrowers are going to get forced out of the market, though.
Alex
 
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