Interest Rates - those with short memories

S

sash

Just thought I would be cheeky and remind the "Gloom and Doomers" about my comments initally a couple of months ago seem a bit prophetic now, as per below posts in June and July 2008...;)

Could not find my back and forth commentary with Alex about interest rates dropping around Oct 2008....I think these posts have been cleared?


http://www.somersoft.com/forums/showthread.php?p=429925#post429925

http://www.somersoft.com/forums/showthread.php?p=421840#post421840

I feel the cusp of a boom in the air.....

Mr Gloom...what say you???
 
as mentioned in a nother thread:

I for one am praying that one .25% cut will not cause ppl to rush and by property and cause a boom.

I highly doubt this will happen anyway. Property in my opinion will move sideways for a few years till wages catch up

As others have posted, slow, steady and sustainable growth is what Im after.
 
I'm with you Andrew.. not quite ready to buy my first IP, so I don't want prices to take off without me on board! :)
 
i dont get it... the big banks were putting rates up even when the rba wasn;t

now the rba reduces rates, and the bank also reduced rates...

but there is still a big gap between the cash rate and the bank home loan rates.

Interest rates are still over 9% and it was not long ago they were 7.35%

I think people should also remember falling interest rates dont mean higher house prices. Look at the US, interest rates there are next to nothing, and in japan interest rates are also low, and rental yields are high, and that because house prices have fallen for the last 15 years.

It depends where you are buying obviously.
 
keneth said:
i dont get it... the big banks were putting rates up even when the rba wasn;t
Click to expand...

Apparently St George will be reducing their variable rates by 0.3% after today's announcement so hopefully we'll at least see some of this trend on the way down as well.
 
Hi Sash,

I heard Shane Oliver on the 7.30 report tonight saying that he expects another cut this year, and 3 next year. He believes the rates will be around 5.25% by 2010.

I thought of you when I heard this report!

We will have one loan maturing in early 2010 - just in time to catch the 5% rate!

Interesting times!

Regards Jason.
 
I remember seeing one post only 2-3 months ago saying that interest rates would be 12% by christmas...hmmmm they had it right.
 
Interesting times indeed.

I agree with Andrew that it would take a few more rate cuts and the jobs market stabilising before all other rush in....but for those of us Specufestors...we need to get in now....I am of the believe that we only have a 6-12 month window at best.

Would be great if prime rates got down to 5.25%....but I think 5.75% would be more realistic. That would mean the cheapest mortgages would be around 6.8%...whohoo!! This time I will lock in for 5 years when they reach that point.

Cheers
Sash:D


jingo said:
Hi Sash,

I heard Shane Oliver on the 7.30 report tonight saying that he expects another cut this year, and 3 next year. He believes the rates will be around 5.25% by 2010.

I thought of you when I heard this report!

We will have one loan maturing in early 2010 - just in time to catch the 5% rate!

Interesting times!

Regards Jason.
Click to expand...
 
To be honest I think you are dreaming if you really think there is another 'boom' just around the corner. I see another early 90's situation where property will sit tight or drop slightly over several years. Even with lower interest rates, I don't think wages would support another boom.
 
letiha said:
I remember seeing one post only 2-3 months ago saying that interest rates would be 12% by christmas...hmmmm they had it right.
Click to expand...

The trouble is that a few months ago a 12% interest rate sounded plausible in the not too distant future. Banks were raising rates independently of the RBA and no one knew how much further banks and the RBA would go.

Regards Jason.
 
sash said:
I feel the cusp of a boom in the air.
Click to expand...

sash

I don't know about a boom, however, I do expect prices at the low end (and particularly units) to start moving again as interest rates start coming down.

And why the low end I hear you say?

Because that's where the yields are currently highest and a few interest rates falls will be enough to make the difference between the cost of owning a home and paying rent, negligible.

Cheers
 
I agree....but booms might happen in unusual place....i.e. Sydney or Tassie......time will tell? ;)

My bet is on Sydney because there are areas in Sydney 15klms from town where you can get a unit for under 200k and houses for under 400k....sure everyone turns their noses up these up at the moment. But will be interesting to see what happens in 2011-2012!

Anyway...Hobo....all the best!!!....I am sitcking to my crystal ball hasn't done so badly to date! Maybe it is the few grey hairs and seeing 2 full cycles...being in my early 40s.

Cheers
Sash:D

hobo-jo said:
To be honest I think you are dreaming if you really think there is another 'boom' just around the corner. I see another early 90's situation where property will sit tight or drop slightly over several years. Even with lower interest rates, I don't think wages would support another boom.
Click to expand...
 
hobo-jo said:
To be honest I think you are dreaming if you really think there is another 'boom' just around the corner. I see another early 90's situation where property will sit tight or drop slightly over several years. Even with lower interest rates, I don't think wages would support another boom.
Click to expand...

Interestingly there are a large number of first home buyers and investors organizing loans at the moment. Many are waiting to see what will happen to interest rates and are planning to buy when rates move downwards.

Not sure what that will do to the market, time will tell...

Regards Jason.
 
Mate....great minds think alike....;)

Further to your comments....when you are getting $270pw rent for a crappy unit worth 180k in Sydney (15 klms out)....the buyers will be jumping into the market like lemmings. Do the maths and if rates hit 6.8%...then you are almost postive cashflowed!!

Cheers
Sash

BV said:
sash

I don't know about a boom, however, I do expect prices at the low end (and particularly units) to start moving again as interest rates start coming down.

And why the low end I hear you say?

Because that's where the yields are currently highest and a few interest rates falls will be enough to make the difference between the cost of owning a home and paying rent, negligible.

Cheers
Click to expand...
 
jingo said:
Interestingly there are a large number of first home buyers and investors organizing loans at the moment. Many are waiting to see what will happen to interest rates and are planning to buy when rates move downwards.
Not sure what that will do to the market, time will tell...
Click to expand...

Funnily enough I am one of the investors organising finance, but I still don't see now as the time to buy.

Purchasing property as we are about to enter a recession (or have already started) seems rather risky to me.

sash said:
Mate....great minds think alike....;)
Further to your comments....when you are getting $270pw rent for a crappy unit worth 180k in Sydney (15 klms out)....the buyers will be jumping into the market like lemmings. Do the maths and if rates hit 6.8%...then you are almost postive cashflowed!!
Click to expand...
6.8%? What's that another 8 cuts away?
 
hobo-jo said:
Funnily enough I am one of the investors organising finance, but I still don't see now as the time to buy.
Click to expand...

If interest rates are falling and property is coming off the boil, now could be a good time to enter the market as an owner occupier. There is less competition in the market place and a few over committed vendors willing to let go of their properties.

hobo-jo said:
Purchasing property as we are about to enter a recession (or have already started) seems rather risky to me.
Click to expand...

Not sure that a first home buyer purchasing their PPOR faces any more risk by purchasing now than people who are currently in the market.

First home buyers are currently active in the market. (Particularly in Melbourne). They are buying and large numbers of settlements are occuring daily.

Regards Jason.
 
hobo-jo said:
To be honest I think you are dreaming if you really think there is another 'boom' just around the corner. I see another early 90's situation where property will sit tight or drop slightly over several years. Even with lower interest rates, I don't think wages would support another boom.
Click to expand...

With many areas in Sydney remaining flat for the last five years. Your speculation would have Sydney ready for a boom in the next year or so.
But in saying that i tend to agree. Dropping rates will see values stabilise at current levels or say 10% lower. They will track sideways for a few years then maybe in five or so years we may see growth that could be described as the next boom. I do still feel that if you buy well now you will still do well long term.
 
troyhunt said:
Apparently St George will be reducing their variable rates by 0.3% after today's announcement so hopefully we'll at least see some of this trend on the way down as well.
Click to expand...

Troy, STG decreased rates by .30% because they increased more than the big 4 on the way up. Even with the extra .05% they cut off today, their variable rate is still more than CBA. So they're not exactly playing the role of Santa and being generous.

Sash, as for interest rates themselves and the market, well I didn't let the armageddon predictions stop me from buying when rates were rising, and little will change now. When my circumstances and desire allows, I find a good property and buy it. Whether rates are 3% up or down here or there doesn't make much difference in the bigger scheme of life.

As my signature says, life's too short to be small - don't let things stand in your way, interest rates or otherwise. That's my attitude anyway. ;)
 
I have no doubt buyers are sitting on the sidelines, I myself being one, however I think the masses have been spooked, and with many people thinking boom times are over, I'm not convinced any renewed interest in buying will cause significant momentum in raising house prices.

It will take more than investors to move the market, with yield meaning nothing to OO.

Also, lets not forget that many people are more maxed out than every before, and the rises in interest rates were a close call for many. By the time interest rates come down to comfortable levels, many people would have been hurting badly.

If we do see any drastic drops in interest rates, it will be because the economy is faltering, hence why I believe in that scenario, housing will remain mostly flat, for longer than 12 to 18 months .

In other words some good buying opportunities ahead :) imo.
 
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