I'm not with CBA. Plus the were 0.1% cheaper than everyone else so makes sense they increase it.
5 year fixed rates thread
- Thread starter JIT
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I'm not with CBA. Plus the were 0.1% cheaper than everyone else so makes sense they increase it.
Didn't the unemployment figures rise?
The news I saw mentioned unemployment was up and expected to rise.
What am I missing?
Regards
Marty
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. Looks like employers are cutting hours, rather than jobs. Unemployment is still expected to rise, but just not as quickly/as much as expected.
The smart bond guys were sceptical of green shoots, but v. quickly accepted they were wrong and repriced the probability of the RBA raising the cash rate sooner/faster.
For the insomniacs, see what the St George and Westpac economists think.
Cheers,
Keith
Love the media
We are reaching - more part time jobs offsets less fulltime jobs is a green shoot
We are reaching - more part time jobs offsets less fulltime jobs is a green shoot
^I agree. Green is apparently the new black; haven't you heard?
Very hard to reconcile the peak rates & the steepness of the yield curve with reality. Even the optimistic RBA has (last month) forecast underlying inflation of 1.5% by end of 2011. There is a great chasm between that sentiment & the inflation breakout required to justify these rises.
Very hard to reconcile the peak rates & the steepness of the yield curve with reality. Even the optimistic RBA has (last month) forecast underlying inflation of 1.5% by end of 2011. There is a great chasm between that sentiment & the inflation breakout required to justify these rises.
^I agree. Green is apparently the new black; haven't you heard?
Very hard to reconcile the peak rates & the steepness of the yield curve with reality. Even the optimistic RBA has (last month) forecast underlying inflation of 1.5% by end of 2011. There is a great chasm between that sentiment & the inflation breakout required to justify these rises.
Hi Green Girl, re the Aussie yield curve, I agree with Gary Dorsch (SirChartsalot)
The Mystery behind the Parabolic Yield Curve
and others who proffer the Aussie yield curve is just following the US's .....which is being slapped around by the bond vigilantes, not so much due to Bernanke's green ganja dream, but to an evasion of risk associated with US hyper Quant Easing inflation and dollar devaluation.
So even though Australia's fiscal position isn't as dire as the US's (thanks China, no thanks Swan), our yield curve gets slapped around in synch with theirs.
Obama's 'feel good' QE Dem spending spree cannot possibly be financed by any realistic increase in their GDP, so the US deficit will climb and more interest will flow OS. The bond vigilantes are trying to put a brake on Obama's foreign borrowing dependent QE, which is driving up their rates.....
So Obama's dream has backfired because higher rates will adversely impact recovery.....the same rate pressure won't help Australia either, though our exports to China might ease the pain.
As always, these things are a balancing act of vested interests. This year, China, Japan, Russia, Sth Korea, Saudi et al have revised down their view on how much additional debt the US consumer will be able to service, so they are scaling down the vendor financing they are prepared to offer the US consumer by way of a higher US trade deficit.
edit: and the US catch 22 is their trade deficit can only grow from recent lows as the price of oil goes up and the USD weakens....
Getting back to where Aussie fixed rates might go, you got to hand it to the yanks. They take their financial interest more seriously than us. Some guys have been messing around with regression equations and come up with a coefficient of determination of 0.9731 for the relationship between US 10 yr bond yields and their 30 yr fixed mortgage rate.
It would be interesting to know if such a strong correlation existed between any of the Aussie bond yields and our fixed rates.
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ah fudge - looks like i've missed the boat.
sh*t sh*t sh*t sh*t sh*t.
still, i'm on 5.04% AFTER the 0.10% rise, i might just ride it out and see what happens...no point fixing UP over 200bp and missing out on the saving in between now and then.
at least now i can budget for it.
sh*t sh*t sh*t sh*t sh*t.
still, i'm on 5.04% AFTER the 0.10% rise, i might just ride it out and see what happens...no point fixing UP over 200bp and missing out on the saving in between now and then.
at least now i can budget for it.
Here is the Westpac Fixed rate changes effective tomorrow - 3yr and 5yr up 0.5%
FIXED RATE UPDATE
These changes are effective 16/6 see below table
Term Current Rate
(Stand Alone)
% New Rate
(Stand Alone)
% New Rate
(Premier Advantage Package)
% Change
%
1 year 5.39 5.49 5.29 + 0.10
2 year 5.79 5.99 5.79 + 0.20
3 year 6.09 6.59 6.39 + 0.50
4 year 6.69 7.19 6.99 + 0.50
5 year 6.69 7.19 6.99 + 0.50
6 year (IPL only) 7.29 7.79 7.59 + 0.50
7 year 7.29 7.79 7.59 + 0.50
9 year (IPL only) 7.29 7.79 7.59 + 0.50
10 year 7.29 7.79 7.59 + 0.50
12 year (IPL only) 7.29 7.79 7.59 + 0.50
FIXED RATE UPDATE
These changes are effective 16/6 see below table
Term Current Rate
(Stand Alone)
% New Rate
(Stand Alone)
% New Rate
(Premier Advantage Package)
% Change
%
1 year 5.39 5.49 5.29 + 0.10
2 year 5.79 5.99 5.79 + 0.20
3 year 6.09 6.59 6.39 + 0.50
4 year 6.69 7.19 6.99 + 0.50
5 year 6.69 7.19 6.99 + 0.50
6 year (IPL only) 7.29 7.79 7.59 + 0.50
7 year 7.29 7.79 7.59 + 0.50
9 year (IPL only) 7.29 7.79 7.59 + 0.50
10 year 7.29 7.79 7.59 + 0.50
12 year (IPL only) 7.29 7.79 7.59 + 0.50
Look's like NAB's 5yr has gone up 0.3%
http://www.nab.com.au/wps/wcm/connect/nab/nab/home/Personal_Finance/6/1/?urid=1241651916725
http://www.nab.com.au/wps/wcm/connect/nab/nab/home/Personal_Finance/6/1/?urid=1241651916725
i was REALLLLY lucky i got in and locked with CBA on friday.
Locked my PPOR at 6.44% for 4 years, and IP#2 for 6.04% for 3 years.
Locked the PPOR for longer to provide a longer period of security, and did IP#2 for 3 years as its still close enough cashflow neutral at that rate, and rents will most likely have increased a bit after 3 years.
Happy days i made it in before the increase!
Locked my PPOR at 6.44% for 4 years, and IP#2 for 6.04% for 3 years.
Locked the PPOR for longer to provide a longer period of security, and did IP#2 for 3 years as its still close enough cashflow neutral at that rate, and rents will most likely have increased a bit after 3 years.
Happy days i made it in before the increase!
4yr up 0.35%, 3yr up 0.4%.
I paid the rate lock fee last Friday on the 3 year fixed rate. Didn't expect things to change by Monday.
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 to me as the economy is going to stay flat for at least the next 18 months or so.
If that's the case then a variable rate funding model would see you paying 5% for two of those three years. In order to make locking at 6% a cheaper option, you'd need the variable rate to spike to 8% from 5% on day one of year 3.
I know this flys in the face of the cash rate forecast in Keith's chart, but I think its something to consider. I personally don't see the variable rate coming off this current low for a good 12 months at least. Just my personal take and I could be way off.
Cheers,
Michael
Have to agree with your outlook Michael.
Whilst there are pressures on banks interest rate margins and those might cause some increases (eg CBA last Friday), in that environment, the RBA have more than enough scope to mitigate these increases in cost of funds if these rate hikes become more prevalent and potentially derail the slow recovery.
Ultimately, I am really looking at (un)employment forecasts which if accurate, are going to continue to mean more jobless & underemployed for the next 12 months, which to me, makes increasing cash rates from the RBA illogical in that environment. More part time jobs to even offset fulltime jobs still means reduced income and consumer demand. Inflationary expectations are also pretty sedate at this stage as well. It will only be when unenmployment rate stabilisers that I expect interest rates will eventually start increasing as a sustained recovery becomes more fact than prognosis.
As for the interest rate futures market, they were way off in predicting 2008 rates back in 2007. I don't see them as anything other than an outlook on rates in the very short term, which can be easily influenced through changes in economic news. My feeling is that they are going to be wrong again and there seemingly optimistic oultook in 2010 may be a bit ahead of schedule.
Hey, but if I am wrong, bring on another property price surge.
Whilst there are pressures on banks interest rate margins and those might cause some increases (eg CBA last Friday), in that environment, the RBA have more than enough scope to mitigate these increases in cost of funds if these rate hikes become more prevalent and potentially derail the slow recovery.
Ultimately, I am really looking at (un)employment forecasts which if accurate, are going to continue to mean more jobless & underemployed for the next 12 months, which to me, makes increasing cash rates from the RBA illogical in that environment. More part time jobs to even offset fulltime jobs still means reduced income and consumer demand. Inflationary expectations are also pretty sedate at this stage as well. It will only be when unenmployment rate stabilisers that I expect interest rates will eventually start increasing as a sustained recovery becomes more fact than prognosis.
As for the interest rate futures market, they were way off in predicting 2008 rates back in 2007. I don't see them as anything other than an outlook on rates in the very short term, which can be easily influenced through changes in economic news. My feeling is that they are going to be wrong again and there seemingly optimistic oultook in 2010 may be a bit ahead of schedule.
Hey, but if I am wrong, bring on another property price surge.
