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Westpacs analysis reckons the SVR will peak at 7.5-8% this cycle.

To move on slightly....... Today 5 yr fixed rates are ~7.5%. If you were offered a fixed rate of 6.25% for 5 yrs TODAY, would you fix ? If yes, then why didn't you fix at that rate 6 months ago ?

Absolutely. However, 2 points... If you can pick the right time to fix, you get to manage your risk and get a benefit from lower repayments over the term. You rarely see professional investors using variable rate loans. They don't have the luxury of putting in an extra shift or missing...

:confused: I'd say unemployment wasn't the key. I'd say higher unemployment was the result of other key events - low business & consumer confidence, low consumer spending. And employment will pick up again after businesses start hiring, which will be after they are more confident. I'd say...

Hi Peter, 4 months ago, the facts were - consumer & business confidence down, car sales trending down, retails sales trending down, ABS houses prices down, no-one knew if the stimulus was going to work or be enough, credit markets still difficult, all central banks had a strong easing bias...

The bond market is fairly good at looking 6-9 months ahead, after that it tends to assume that rates will tend towards to their long term averages. Back in Feb/Mar it expected D&G, today it expects a recovery, possibly sooner rather than later. Todays market suggests a ~2% rise in the cash rate...

:).... I too know of several employers that have seized the opportunity 'to let people go' ;). The unproductive ones have got the flick, the good ones may have had their hours cut.... no great loss. I'm getting the feeling that we have a 6 month window of opportunity, before the lemmings realise...

Kohler is a bit of a bear too..... but his car dealer mate doesn't agree.... And Stevens speech today has caused yields to move up again...... the markets are expecting more rises sooner, and a full 1% rise within 12 months.

Hmmm... I don't have references to hand. The ANZ job advert series is a good leading indicator for unemployment, the RBA no doubt watches that to attempt to preempt inflation. 'Normal' demand is expected to return. 2nd & 3rd round effects will occur - the money got spent somewhere, and will be...

I'm not saying "V" or "L", but I'd say "V" is a lot more likely than it was 4 months ago. Today, I'd say "W" is unlikely, however "L" & "V" are a bit stereotyped. More likely a steady (but volatile) grind upwards, after a possible steeper increase over the next few months as the masses realise...

... :) partial agreement. I think they'll rise by end of July 2010 by 0.5%-1%. After that, who knows how fast/much they'll go up... there's way to much uncertainty about the global recovery ATM. The possibility of a double-dip still makes the headlines occasionally, but I saw little in the Eye...

The RBA dropped the cash rate to its current historic low when all the headlines were screaming depression and that the world was 'on the brink of financial meltdown'. Today, only v. few believe that worst case scenario is still plausible. I would expect the RBA to adjust the cash rate...

I don't think anyone would ever say they are 100% guaranteed. It always comes down to a balance of probabilities. And I'd rather tag along with the smart guys. What/who do you trust ?

I'm not sure I understand the point you're trying to make. Are you saying that the bond traders (who drive fixed rates) are wrong ? and the cash rate will decouple ? The fixed rate market usually moves 6-9 months ahead of the variable rate. In March 2008 the fixed rate was still high (as was...

Hi HiEq, Maybe... back in 2008 the consensus was depression and/or 20 yrs of Japan type deflation - I think that's just as likely a reason why bonds yields fell. The ratings agencies today said it's unlikely that the US will lose its AAA rating & there's not even any question about Oz losing...

Have a look at post #573 in this thread..... I've repeated the main point here.... Not much has changed since that post (except the banks have lifted their fixed rates & the probability of early cash rates rises has edged up a little). As you can see the 5yr bond moved down 6-9 months...

Excellent point... the professionals always fix rates, when you're borrowing $Ms or $Bs and the RBA hikes, you can't simply put in for a extra shift to cover the extra interest. Professionals fix, ma & pa are more likely to go variable.

Ya better let all those bond traders (with their $B's at stake) know then Michael..... As of yesterday, they reckoned the cash rate will be 125bps higher within 17 months, with the first rise after 10 months, only only a possibility of a single 25bp fall in the interim. But maybe they all...

Hi Marty, The key word is 'unexpectedly'. The markets were expecting a big rise in unemployment (the consensus was an increase of 30K) and had priced that in. However, full time unemployment rose by 'only' ~26K and part time unemployment fell by ~24K, so the end result virtually flat...

Todays unexpectedly good employment figures have had an impact on the likelihood of variable rates staying low for an extended period. The SFE yield curve for today implies that we're unlikely to be getting any cut in the cash rate, and that the RBA may start increasing in December, and is...