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From: Mike TheBloodyIdiot
http://www.smh.com.au/articles/2002/07/15/1026185160548.html
Fixed rates dropping can mean only one thing - RBA cash rate will start to drop in 2-5 months time. This is as sure as I am The Bloody Idiot.
Current boom is not exactly over. June auction clearance rate stands for Sydney at 71%. It is actually super amasing result for a winter. Rate drop will have exactly the same influence that bucket of petrol has on already raging fire.
BUT. Please remember - from the other side we have got troubled US share market. Last night bloody Dow Jones has tried to loose 439 points (which means it will loose it by the end of the week).
From one side it is good, because there will be more investors fleeing sharemarket into property. From another it is pretty scary, because if US goes over the edge of the cliff into depression, Australia will follow in no time.
Everyone has to review their position very carefully. This does not seem to be a good time to gear yourself to the teeth. Seems to be wise to maintain a buffer of available funds which will allow you to live for at least 6 months.
But. If you work for US owned company or in industry which is directly or indirectly relies on exports to US - build even greater buffer.
But. If you are in good position to buy - buy NOW. Catch the new wave. Even if in 6 month time everything goes down the drain, revalue your portfolio, redraw equity - and you well might be positioned to weather any storm with your pockets full of tax free money.
Of course, you should buy with cap growth in mind. There is no glory in buying something that will grow only 1.5% over the next boom.
In other words, out there is the worst time imaginable to waste your borrowing power on "cashflow positive", wraps and flips. If it comes to economic troubles, you will be stuck with a lemon which did not generate any cash, which is very hard to rent out/sell, with great possibility of rent/wrap defaults. Do not do it to yourself.
Hope this helps
Mike-TBI
http://www.smh.com.au/articles/2002/07/15/1026185160548.html
Fixed rates dropping can mean only one thing - RBA cash rate will start to drop in 2-5 months time. This is as sure as I am The Bloody Idiot.
Current boom is not exactly over. June auction clearance rate stands for Sydney at 71%. It is actually super amasing result for a winter. Rate drop will have exactly the same influence that bucket of petrol has on already raging fire.
BUT. Please remember - from the other side we have got troubled US share market. Last night bloody Dow Jones has tried to loose 439 points (which means it will loose it by the end of the week).
From one side it is good, because there will be more investors fleeing sharemarket into property. From another it is pretty scary, because if US goes over the edge of the cliff into depression, Australia will follow in no time.
Everyone has to review their position very carefully. This does not seem to be a good time to gear yourself to the teeth. Seems to be wise to maintain a buffer of available funds which will allow you to live for at least 6 months.
But. If you work for US owned company or in industry which is directly or indirectly relies on exports to US - build even greater buffer.
But. If you are in good position to buy - buy NOW. Catch the new wave. Even if in 6 month time everything goes down the drain, revalue your portfolio, redraw equity - and you well might be positioned to weather any storm with your pockets full of tax free money.
Of course, you should buy with cap growth in mind. There is no glory in buying something that will grow only 1.5% over the next boom.
In other words, out there is the worst time imaginable to waste your borrowing power on "cashflow positive", wraps and flips. If it comes to economic troubles, you will be stuck with a lemon which did not generate any cash, which is very hard to rent out/sell, with great possibility of rent/wrap defaults. Do not do it to yourself.
Hope this helps
Mike-TBI
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