2 more interest rates rises in 2008 likely...

[Property Meister]

http://www.news.com.au/business/story/0,23636,22883832-462,00.html

ok..

so we now are expecting 2 more in 2008, although its not fact...

lets assume it is fact, what do people expect?

 

[alexlee]

I expect our actual mortgage rates to rise by MORE than whatever the RBA increases its official rate by.

The buying window is opening..... BRING IT ON!!!

 

[Property Meister]

that was a quick response... had a response before I submitted the poll!!

 

[steveadl]

I'd be surprised if there's only two rises in 2008.

 

[Dis]

I expect Alexlee to have 6000+ posts before interest rates rise!

 

[FHB]

Interest rates to be up by .5%-1%, but that really won't affect house prices. A significant rise in unemployment, dropping economic growth rate and a lowering of sentiment would have an effect on asset prices, but then I wouldn't be expecting interest rates to be going up if that were the case.... I think the best time to buy may be when interest rates are dropping.

 

[kaf]

The recent rates rises have done nothing to stop our recent little boom in Brisbane so I think it'll be business as usual in 2008, although I don't think we get another 20% growth overall in the area next year.

kaf

 

[BayView]

I voted no.3.

If you throw enough mud, some sticks. There is so much neg press going around about the interest rate rises that it will slow down the mad rush, especially after everyone who is currently in the market to buy has bought.

Around the middle of 2008 I reckon for the slow down (if it hasn't already happened). The media talks about booms still happening, but we've established that it is only in certain suburbs, and at certain price points. It's not 'across the board'.

 

[pi2012]

Voted number 1.
I believe the prices will just go up at a normal pace.

 

[buzzlightyear]

I voted no.3.

If you throw enough mud, some sticks. There is so much neg press going around about the interest rate rises that it will slow down the mad rush, especially after everyone who is currently in the market to buy has bought.

Around the middle of 2008 I reckon for the slow down (if it hasn't already happened). The media talks about booms still happening, but we've established that it is only in certain suburbs, and at certain price points. It's not 'across the board'.

LAA, not sure if that's the case in Melbourne. Based on feedback around from various sources, going to auctions, there has been very broad-based rises across the market. Some more than others obviously.

The test (at least for melb) will be the demand in March when the auction season kicks off again. Have seen many auctions this month, even up to the 22nd, which is a bit later than usual. Still plenty of demand/money around.

 

[evand]

I voted option 4. The effects of the previous interest rate rises have yet to kick in fully and when they do it will dampen demand. (early- mid 2008?)

It will take another 3-6 months after the 2008 rises to have an affect but when they do, i think demand will really drop off in the mid - lower markets (compounding the effects of previous 07 rate rises). Of course this is all speculation, but i've invested through a couple of booms and busts and very high interest rates and seen it before.

And FHB, i definitely agree with your statement "I think the best time to buy may be when interest rates are dropping"

 

[Andrew_A]

Central banks are dancing together again, how about the option for two interest rate cuts?

The contrarian ducks are lining up for a great trade.

If the centrals are lowering or pausing then what is the RBA supposed to do when faced with a rising AUD and potentially slowing economy?

Like everyone else I don't know what will happen, just that it really is a nice contrarian thought at the moment.. After personal consideration I'm staying 100% variable anyhow.

 

[BayView]

LAA, not sure if that's the case in Melbourne. Based on feedback around from various sources, going to auctions, there has been very broad-based rises across the market. Some more than others obviously.

The test (at least for melb) will be the demand in March when the auction season kicks off again. Have seen many auctions this month, even up to the 22nd, which is a bit later than usual. Still plenty of demand/money around.

I hope you're right Buzz; it'll be all good news for us Vics.

 

[yieldmatters]

There's a possibility that interest rates will go down.

USA is on the way down to try and rescue the economy. The UK has cut interest rates as the economy appears to be slowing there (and the housing market). The European Central Bank is concerned about growth but left rates steady as they are also concerned about inflation.

If the rest of the world slows it will put a dent at the margins in China I expect. The question is whether this will slow up demand for our commodities. If so, then I see Australia heading the same way as the USA and the UK with interest rates heading down.

 

[alexlee]

The big question is what happens to inflation. After all, the RBA's stated purpose is to target inflation, and it's been pretty on-message so far. While oil prices have settled down a bit, food prices are still high. An ironic component of inflation if rent. So as economic activity falls, and property prices stagnate, rents will go up because there will be a lower supply of IPs. The resulting increase in rent will actually drive inflation up.

I don't believe the RBA will react to exchange rate movements. It didn't when the AUD was trading at 50 US cents.

The RBA will cut rates not necessarily when a recession hits, but when inflation falls. But because official inflation is such a messed up calculation, and with things like rising food prices and rents clouding it, I don't see rates going down in the short term.
Alex

 

[yieldmatters]

High prices aren't a problem - it is the rate of change that is the problem. So if food, and rent, and oil all go up 20% and then they settle at that new high level you will see low inflation in future periods and the RBA will still be relaxed e.g. 160 cents per litre moving to 161 cents per litre in the next quarter is only 2.5% inflation annualised but both prices historically are pretty high.

If there is inflation because people expect inflation and it begins to compound every quarter - that is the evil they are trying to stop. Not necessarilly high prices.

 

[cougar_01]

The cycle of life

Plan for best case scenario, Be prepared for worst case.
have a safety net in place, and surf it through.

 

[addbe]

After oil, we gonna have inflaton break-out in the world factory: china.

the actural chinese CPI will be double figure, a serious sign of mis-match of supply and demand in basic goods. See, this is how bad when everyone is making money

The problem is, if we don't import these stuff from china, we don't have enough factory to produce locally either. Our manufacturing industry switched direction to avoid head-on collusion with cheap-imported goods from china long time ago. so the underling inflation pressure from overseas is inevitable. India will go through the same path. just a matter of time.

can we find other cheap goods maker? yes, but not enough. African remain undeveloped, however war kills it.

we are now not only sharing the US inflation pressure because we use USD to buy oil, but also china comes into play, soon india will join. then the rates will go up, up and up.

however, australia is still booming. slow down a bit does't hurt. quick money is really draining the resource from future.

 

[HandyAndy888]

Its hard to stay optimistic with Labour...

More and more bargains will pop up on the market, therefore we will see some stagnation in prices...as I see it, our usual pre-Easter price increase may not occur in 2008, but hopefully the September period will push prices again...

 

[Mofra]

Its hard to stay optimistic with Labour...

Forget the coalition claims. As a comparative function of western economies, we generally have higher rates under Liberal governments.


I'm expecting stagnation as the latest rate freeze measures by the US government still have to play out in the middle of the highest ARMs reset months in H1 08. CDO selling still has the handbrake on at the moment, so funding for lenders will still be tight until the start of the 2nd qtr at least.