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More news out today supporting the proposition that the RBA is on hold for the medium term: Minutes reveal RBA in no hurry to raise rates And, with a 2% plus rate differential between variable and fixed rates at present, I see no reason to rush to fix. 5% rates could be with us for...

More news out today supporting this proposition... Mixed economic outlook as retail demand slips, but consumer sentiment surges I still contend that regardless what happens with resi property price explosion to the upside, the RBA won't move on rates until they are confident we have a...

You little ripper! :D That's awesome as that's a very comfortable variable rate level. So why would anyone fix today at mid 7's if rates are going to max out at that level anyway? Just doesn't make sense. And I knew from my readings elsewhere that each progressive cycle lowered the...

And on the other hand, the IMF is stating that the RBA should consider more rate cuts! http://www.abc.net.au/news/stories/2009/08/10/2651432.htm I still think the RBA will hold rates steady for longer than most anticipate. Cheers, Michael

Completely agree Winston, which is what I pointed out in my reply to Evand Also agree, as I loosely alluded to in my initial post: Very interesting times indeed. By no means guaranteed that the RBA will move rates higher earlier on the back of this result, but the point I made is that...

Evand, You're a good guy who's contributions I really value so I'm bighting my tongue, but I genuinely think you're point of view is rapidly becoming the deviation to the norm... I'm not alone in reading the very strong job market results this month as a good indication of economic...

Wow! Now unemployment has stopped rising. Steady this month at 5.8%! Unemployment stays at 5.8% If this keeps playing out as it looks then we're in for some really solid economic upside in Australia. Keith might wll have called it correctly, but only time will tell... I'm still happy...

Hi Peter, I don't see that as a sad face outcome... ;) This was the point I made early on in this thread. If you stay variable then you win either way, either in strong market fundamentals driving your capital appreciation or in weak market fundamentals holding your interest rates down...

Hi Keith, I'm still thinking W is the most likely outcome, and if not a W then an L. V is a low probability IMHO. All just reading the tea leaves, but I think we've bounced too far, too fast and will either drop a fair bit from here or slow to an L shaped grind. But then again, I...

Lizzie, While I agree with the principle, I disagree with the math. Even if you had locked at 4.99% for 3 years a little while back, you wouldn't be banking 1% savings now. Most variable rates are still below that 4.99% mark today with no sign of rising any time soon. Mine certainly is...

Hi Guys, Some more support out today that Bond Yields have gotten ahead of themselves and that this might ease in coming months: Oliver's Insights: Where are we in the short and long term share market cycles? Cheers, Michael

Once again, Ross Gittins' thinking seems to be highly correlated with my own: Official interest rate more likely to fall Cheers, Michael

G'Day Keith, Bond yields are on the rise for two reasons. The first of those is the realisation that inflation may return at some point in the future, but the more dominant reason is a return to risk tolerance. Bond yields tanked at the height of the credit crisis as investors swarmed to...

You're right in that inflation has both demand side and supply side factors that can impact it. But it is primarily driven by the demand side factors against a static supply. i.e. When the economy booms more people with more money chasing the same amount of goods pushes the price of those...

Hi Guys, Some more support out today for my position that variable rates aren't going to head up anytime soon and hence my reason for staying variable for now. I see at least another 12-18 months at 5% variable rates so fixing at 7% and paying a 2% premium for half the lock period would be...

Well, whatever happens, I'm right, right? ;) i.e. I've stayed variable so have a win regardless what happens either in a discounted mortgage interest rate relative to fixed rates or in capital appreciation if the market takes off but at the expense of a higher variable mortgage rate. FWIW...

They wouldn't. That's the win/win scenario for the rate lockers. i.e. High interest rates and a booming economy driving capital appreciation. If I stay variable then I either get win/lose or lose/win, at least I win on one of either capital gain OR low variable interest rates. If I lock...

Great isn't it! That's where my thinking is at. Stay variable and its a win/win. i.e. The economy stays flat (as I predict) and you win on your mortgage rate versus fixing at a 150bp premium. OR The economy recovers quickly back into boom territory (which I doubt) and you win on your...

Hi Witzl, Interesting take. My personal take is that a 3 year fixed rate at 6.04% is probably going to cost you money versus staying variable. BIS published their property forecast today and their model assumes no rises in the variable rate until the start of 2011. That seems about right...

Peter, I agree completely as I've spelled out a couple of times. The current environment is not conducive to rate rises, period. They're at least two years off. Bank funding costs are falling and the recession is only just starting to unfold with the resultant job losses. Having said...