I know things always look worse than they are (just like they always look better than they are)
I know the experts were predicting double digit rates by this stage and they were out by a little bit, so i'm not confident about their predictions of a further 2% in cuts.
I think the banks are busy pricing in the next 1% cuts into their fixed rates right now. That is to say there will be changes over the next couple of weeks. However after this we won't see these fixed rates change appreciably even after the reserve meets in February (or January...
) It would require much further rate cuts, or surprises in February to see the fixed rates change.
I know the banks will be very nervous about the speed at which the printing presses are working over at the Federal Reserve, and that this will lead to inflation, which will push rates up. Which means even short term reductions in rates won't necessarily transfer into cheaper long term interest rates in the retail market as the banks get concerned about funding costs in 2010 +
I think 5 years rates could probably fall below 6, but not by much. I think you're mistaking "stimulus required" with "banks setting long term fixed rates and whatever the hell price they think will make them the most money."
That's a good mixture of what I think and what I know. Best case I'm wrong and about March sometime I'm going to cash in. Worst case I'm right and these rates that we start to see over the next couple of weeks are about the best we are likely to see.
