No, but it shows that the general concensus is rates are coming DOWN..
I was fortunate enough to unlock my fixed rate yesterday at nil penality with CBA, so I will enjoy the rate cuts as well.. yay!
How much will rates fall?
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No, but it shows that the general concensus is rates are coming DOWN..
I was fortunate enough to unlock my fixed rate yesterday at nil penality with CBA, so I will enjoy the rate cuts as well.. yay!
Not sure what posts you read, but this form is full of future predictions - economic, social & political
certainly social factors are easier to forecast - they're often like glaciers - slow moving, but very powerful.
politics - well a week is a long time as they say, and you never know when someone will get caught with their pants down or fingers in the cookie tin.
but we're talking economics here. notorious for it's left field surprises (war, weather, etc), political interferences and, on occasion, idealogical shifts. maybe the debate is half the fun, i dont know, but you could have a round table discussion with wayne swan, dr ken henry and glenn stevens and pose this same question to them and even they wouldn't be able to answer you.
so what point the rest of you attempting to answer the unanswerable?
You'll never reach a consensus.
And this isn't "ask the audience" in "Who Wants to be a Millionaire" (there is no weight whatsoever in the popular consensus of this forum).
I don't think the poll was intended to demonstrate that Somersoft could accurately predict the future. I think it was just intended to get a feel for what people think might happen, and to generate discussion on the topic.
(Of course, my prediction is 100% accurate and absolutely guaranteed, but that's because I really do have a crystal ball...
)I predict that on average rents in inner city Brisbane will be higher a year from now than they are now.
Are you going to tell me that that is impossible to predict because its a medium term economic projection?
Done!
On the proviso that, regardless of who wins, the other gets to at least have a single nip on the rocks at handover...
We are both in Sydney after all!!
Cheers,
Michael
Boomtown
Directions tend to be easy to forecast.
Exact amounts far less so (and that was the question of the thread).
Besides, you're talking rents - not how the RBA will behave.
That's like like comparing a walk around the block with a trip to the moon and back. One is a little bit more complex with the other.
It doesn't take too much nouse to work out that rates will fall. But no-one, not even the RBA themselves, knows a) how much they will fall, and b) over which time period.
Directions tend to be easy to forecast.
Exact amounts far less so (and that was the question of the thread).
Besides, you're talking rents - not how the RBA will behave.
That's like like comparing a walk around the block with a trip to the moon and back. One is a little bit more complex with the other.
It doesn't take too much nouse to work out that rates will fall. But no-one, not even the RBA themselves, knows a) how much they will fall, and b) over which time period.
Looks like Glenn Stevens is still foreshadowing more cuts! Happy days!!
http://business.smh.com.au/business/rba-points-to-lower-rates-20080908-4bpm.html
Cheers,
Michael
http://business.smh.com.au/business/rba-points-to-lower-rates-20080908-4bpm.html
Bring it on, I love Scotch...Glenn Stevens said:
Cheers,
Michael
Looks like Glenn Stevens is still foreshadowing more cuts! Happy days!!
http://business.smh.com.au/business/rba-points-to-lower-rates-20080908-4bpm.html
Bring it on, I love Scotch...
Cheers,
Michael
Michael
And so he should, it's ridiculous having such high interest rates.
Did he forget to see that money market rates have now decoupled from the official rate?
If the rates we are paying don't come down soon they would drive people and the economy to the wall...
A 0.25% cut is nothing.
We need a more aggressive response and they better act fast because with reduced spending the surplus they were estimating to have will evaporate. State revenue is already down.
Cheers
Agree Bill,
But I've said that already, hence my strong position on rates continuing to be cut.
I note also on the front page of today's AFR that the new NSW Premier Nathan Rees said:
We can but hope that Nathan Rees decides NSW's take out of property is too high and looks elesewhere to fund the state budget. In time this might allow him to stimulate the state economy by reducing the take on property and driving investment back into NSW real estate. At least he acknowledges the budget is too dependent on property. That's a start.SMH article said:
Cheers,
Michael.
show caution on easing rates
By Richard Lindell
Posted 1 hour 23 minutes ago
Updated 46 minutes ago
The Reserve Bank is forecasting slower growth in the months ahead. (Reuters: Will Burgess, file photo)- Video: RBA Chief flags high inflation (ABC News)
- Audio: Rates won't keep sliding down: RBA governor (The World Today)
- Related Story: RBA governor defends rate rises
Reserve Bank governor Glenn Stevens is hosing down expectations of deep cuts to interest rates over the coming months.
Addressing the House of Representatives Standing Committee on Economics in Melbourne this morning, the Governor noted that the economy is slowing, but thinks the chances of recession are slim.
For the Reserve Bank, that reduces the need to ease policy quickly, particularly while inflation is expected to remain elevated for the foreseeable future.
"I think in the near term the question will be do we hold here or do we go down a bit more?" Mr Stevens told the committee.
"I don't think, unless something quite surprising happens, it seems to me unlikely that we'll be reversing course up again in the near term."
The Reserve Bank's key role is to control inflation, which is still rising and is forecast to peak at 5 per cent at the end of the year.
But Mr Stevens argues that on balance the Reserve Bank can show patience and restraint in its bid to tame inflation.
"Rather than trying to achieve that larger fall by pushing inflation down more quickly, the broad strategy is to seek a gradual fall but over a longer period," he said.
"This carries less risk of a sharp slump in economic activity, though it does require a longer period of restraint on demand.
"On the other hand, it carries the risk that a long period of high inflation could lead to expectations of inflation rising to a point where it becomes more difficult and more costly to reduce it," he added.
It is that balance between controlling inflation and maintaining growth that the Reserve Bank is now seeking.
It is the reason why the RBA moved to reduce rates last month, with the central bank now forecasting even slower growth in the months ahead.
"I don't think we're in recession now; I don't think there's the evidence to suggest that. We are in a period of slow growth, rather like two or three episodes of that nature that I can recall over the years," Mr Stevens said.
"I think it would be dishonest to deny that there's any possibility at all that you could have a recession. There's clearly some probability of that.
"But I think the most likely outcome continues to be the one that's in the outlook that we've put out over the last six months."
But unlike the "episodes" of slower growth in 1991 and 2001, where interest rates were slashed quickly, this time there is too much momentum in the economy to warrant similar moves in interest rates, says the chief economist at CommSec, Craig James.
"There is still the potential for the Reserve Bank to cut interest rates modestly but not decisively and what the governor has highlight is that inflation is still high," Mr James told ABC Radio's The World Today.
"The business sector and the government sector are still stimulating the economy and it's likely that we're going to see consumer spending recover in coming months as a response to the tax cuts, rate cuts and also lower petrol prices."
"The challenge, though, to get inflation under control is going to take quite some time.
"It's going to be a degree of time before we get inflation back in the target band. So certainly the Reserve Bank governor is not suggesting that we can cut interest rates decisively over the next couple of months."
Thanks for that link, willair. Glenn Stevens' response is pretty much as I expected it would be, and I can't see any large cuts to IRs for the foreseeable future. (I voted 100 pts - maximum, maybe less.)
As far as restoring confidence to the property markets goes, have been reading some interesting articles - several have pointed out that while the official interest rate might be heading down, several banks have increased rates on credit cards (Wizard by almost 3%). The articles suggested that a number of people who are hurting as far as home payments go probably won't get any real relief from lower housing IRs because they are using CCs to cover shortfalls and the increase in CC interest rates will ensure that the 'hurt' continues for many. (Sorry, can't give references - have thrown the newspapers out).
I think the recovery in the housing market may be a little further away than the RE institutes and property commentators are 'predicting'.
Cheers
LynnH
As far as restoring confidence to the property markets goes, have been reading some interesting articles - several have pointed out that while the official interest rate might be heading down, several banks have increased rates on credit cards (Wizard by almost 3%). The articles suggested that a number of people who are hurting as far as home payments go probably won't get any real relief from lower housing IRs because they are using CCs to cover shortfalls and the increase in CC interest rates will ensure that the 'hurt' continues for many. (Sorry, can't give references - have thrown the newspapers out).
I think the recovery in the housing market may be a little further away than the RE institutes and property commentators are 'predicting'.
Cheers
LynnH
Last edited:
LynnH,maybe people like me and you have seen it all before, the few upfront R-E that i have known for over 25 years think the same also but which ever way the rates go it's not going to worry me i invest in the Banks so the bets are covered both ways,and after a day like today on the ASX the Banks CBA is up over
7%..willair....... but which ever way the rates go it's not going to worry me i invest in the Banks so the bets are covered both ways,and after a day like today on the ASX the Banks CBA is up over
Good one, willair! Yes, we've got a bunch of bank shares, too!
Have always been a believer in having 'two bob each way' (with apologies to twobobsworth! ).Cheers
LynnH
Hi Willair,
Yep, I've seen this all before too...
Here's your link for those interested:
http://www.abc.net.au/news/stories/2008/09/08/2358416.htm?section=australia
And another related one:
http://money.ninemsn.com.au/article.aspx?id=627477
I don't care how long it takes, but I think rates will fall by more than 100bp before they tick back up again. I also think the next one will be before Christmas.
Cheers,
Michael
Yep, I've seen this all before too...
Here's your link for those interested:
http://www.abc.net.au/news/stories/2008/09/08/2358416.htm?section=australia
And another related one:
http://money.ninemsn.com.au/article.aspx?id=627477
It makes sense for Glenn Stevens to suggest he's got the rate setting about right. He doesn't want to come out and admit he went too far. And it also makes sense for them to ease slowly given high inflation levels at present, but ease they will!ninemsn said:
I don't care how long it takes, but I think rates will fall by more than 100bp before they tick back up again. I also think the next one will be before Christmas.
Cheers,
Michael
True and come to think of it they probably did consider the independent increases by the banks but if they did go for the 05% cut the banks would probably cry poor and keep half of it for themselves therefore a smaller cut might not be such a bad idea.
We will see what happens next month when they realise that the GST pot is not filling up.
Cheers
Michael, no problem real estate agents and property finders constantly talk the market up,the media takes extreme positions and are under pressure each day to get the next property market headline out just to sell their papers,and statistics only tell us what happened several weeks back,but i did hear a "rumour" about one Bank that will soon have 200-300 less staff next week,no one knows what it will be like in 12 weeks i wish i did,Michael not having a go at you in any way,just we all have different opinions in a FREE country..willair..Hi Willair,
Yep, I've seen this all before too...
Here's your link for those interested:
http://www.abc.net.au/news/stories/2008/09/08/2358416.htm?section=australia
And another related one:
http://money.ninemsn.com.au/article.aspx?id=627477
It makes sense for Glenn Stevens to suggest he's got the rate setting about right. He doesn't want to come out and admit he went too far. And it also makes sense for them to ease slowly given high inflation levels at present, but ease they will!
I don't care how long it takes, but I think rates will fall by more than 100bp before they tick back up again. I also think the next one will be before Christmas.
Cheers,
Michael
Fixed or Variable!!
Not sure if this link has been posted
From News.com.au
What you should do as rates fall
THE first Reserve Bank (RBA) rate cut in seven years was greeted with relief by borrowers last week. All the big banks and non-bank lenders agreed to pass on the 0.25 per cent cut in full -- and in record time.
Pressure exerted by Treasurer Wayne Swan before the announcement prompted the banks to respond within five minutes of the announcement last Tuesday.
The cut will mean a homeowner with a $300,000 mortgage will save around $55 a month in repayments, based on a 30-year term.
But the cut has also presented house-hunters -- and those looking to re-mortgage -- with a bit of a quandary. Should they stick with their variable-rate loan, or take some of the cheaper fixed-rate deals now on the market?
The typical bank variable rate will now be around 8.36 per cent, compared to the best fixed deals, which start from around 7.99 per cent -- an immediate saving for those who fix.
But economists say that the cash rate may well fall by as much as 1.5 per cent during the next year or two -- and that means variable mortgage rates could fall to around 7.11 per cent.
That lower rate, however, assumes that the banks will pass on all of the cash rate cuts -- and that is unlikely.
Last Wednesday, CBA boss Ralph Norris was emphasising that, although the RBA may well announce a series of rate cuts, the rising cost of funds on the international wholesale markets, where banks raise around one-third of their mortgage funds, means that the banks may not be able to pass on many more cash rate reductions.
"I can't guarantee anything,'' Mr Norris said. "At the moment, we have a situation where offshore funding costs have increased dramatically -- about eight-fold in margin over the last nine or 10 months, due to the overseas (sub-prime) crisis.''
It all makes the decision, for those in the market for a mortgage, much more complex even than usual.
Jennifer Nielsen, CEO of mortgage broker The Loan Market Group, says: "The cheapest fixes at the moment are around 8 per cent and you wouldn't want to fix yet. Variable rates are the way to go. The trick is to fix when you can see we are nearing the bottom of the cutting cycle -- and we are a long way from that at the moment.
"We are almost certainly looking at a downwards or, at worst, flat period in mortgage rates, so you shouldn't lock yourself into a fixed rate at current levels, unless you really need that peace of mind.''
"It all comes down to individual circumstances. The financial markets are pricing in an 80 per cent chance of another cut next month and are expecting a further two by next April, bringing the cash rate down to 6.25 per cent.
Frank Lopez, of financial data firm Cannex, says borrowers can get the cheapest variable rate, if they go for a deal with no bells or whistles -- just a clean repayment mortgage.
Wizard is offering a rate-breaker loan at 7.88 per cent, with a fee of $760. One Direct Home Loans is offering a rate of 8.61 per cent, but with a fee of just $60. These deals have minimal features, but also competitive rates.
"Many people who take mortgages with lots of additional features, such as redraw or payment holidays never actually use them -- or don't use them enough to justify the higher rate they pay for the privilege,'' Mr Lopez says. "Think hard before paying for any extra features at all.''
Savers
While borrowers may be celebrating the rate cuts, the future looks less rosy for those banking their pennies.
Savings accounts rates have already been falling and may fall rapidly as further cuts kick in. But there were some good deals available this week.
Many planners advised those who depended on savings accounts to boost their income to lock into a term deposit account before rates fell any lower.
Paul Bilson, of Woodward Nhill Financial Planning, said he favoured a mixture of term deposits and income funds.
"Sure, put part of your money into term deposits, but remember there will be penalties if you need to access your cash," he said.
Mr Bilson said most income funds, which primarily invest in mortgage debt, were returning seven to 8 per cent
"There is a little more risk," Mr Bilson said.
"They are not guaranteed - you have to make certain that the one you choose is very well rated."
He said companies including Mariner, Axa and Colonial First State all ran good funds invested in quality loans, fixed interest securities and cash.
Investors
Usually a rate cut is welcomed by the stock market because it makes the returns on cash less attractive and so forces more money into the stock market.
But after the cut on Tuesday, the market finished marginally down and fell further later in the week, stripping 5 per cent off Australian stocks.
It was the worst result since the major index fell 5.53 per cent in March.
Shane Oliver, chief economist at AMP Capital, said: "It is difficult to escape the bad news in the economy, which is going to make it harder for companies to grow their profits, and that will act as a drag on the stock market for some time."
He said retail and discretionary spending would be hit hard by an economic slowdown.
"Unemployment will rise, but these things do not last forever," Mr Oliver said.
Not sure if this link has been posted
From News.com.au
What you should do as rates fall
THE first Reserve Bank (RBA) rate cut in seven years was greeted with relief by borrowers last week. All the big banks and non-bank lenders agreed to pass on the 0.25 per cent cut in full -- and in record time.
Pressure exerted by Treasurer Wayne Swan before the announcement prompted the banks to respond within five minutes of the announcement last Tuesday.
The cut will mean a homeowner with a $300,000 mortgage will save around $55 a month in repayments, based on a 30-year term.
But the cut has also presented house-hunters -- and those looking to re-mortgage -- with a bit of a quandary. Should they stick with their variable-rate loan, or take some of the cheaper fixed-rate deals now on the market?
The typical bank variable rate will now be around 8.36 per cent, compared to the best fixed deals, which start from around 7.99 per cent -- an immediate saving for those who fix.
But economists say that the cash rate may well fall by as much as 1.5 per cent during the next year or two -- and that means variable mortgage rates could fall to around 7.11 per cent.
That lower rate, however, assumes that the banks will pass on all of the cash rate cuts -- and that is unlikely.
Last Wednesday, CBA boss Ralph Norris was emphasising that, although the RBA may well announce a series of rate cuts, the rising cost of funds on the international wholesale markets, where banks raise around one-third of their mortgage funds, means that the banks may not be able to pass on many more cash rate reductions.
"I can't guarantee anything,'' Mr Norris said. "At the moment, we have a situation where offshore funding costs have increased dramatically -- about eight-fold in margin over the last nine or 10 months, due to the overseas (sub-prime) crisis.''
It all makes the decision, for those in the market for a mortgage, much more complex even than usual.
Jennifer Nielsen, CEO of mortgage broker The Loan Market Group, says: "The cheapest fixes at the moment are around 8 per cent and you wouldn't want to fix yet. Variable rates are the way to go. The trick is to fix when you can see we are nearing the bottom of the cutting cycle -- and we are a long way from that at the moment.
"We are almost certainly looking at a downwards or, at worst, flat period in mortgage rates, so you shouldn't lock yourself into a fixed rate at current levels, unless you really need that peace of mind.''
"It all comes down to individual circumstances. The financial markets are pricing in an 80 per cent chance of another cut next month and are expecting a further two by next April, bringing the cash rate down to 6.25 per cent.
Frank Lopez, of financial data firm Cannex, says borrowers can get the cheapest variable rate, if they go for a deal with no bells or whistles -- just a clean repayment mortgage.
Wizard is offering a rate-breaker loan at 7.88 per cent, with a fee of $760. One Direct Home Loans is offering a rate of 8.61 per cent, but with a fee of just $60. These deals have minimal features, but also competitive rates.
"Many people who take mortgages with lots of additional features, such as redraw or payment holidays never actually use them -- or don't use them enough to justify the higher rate they pay for the privilege,'' Mr Lopez says. "Think hard before paying for any extra features at all.''
Savers
While borrowers may be celebrating the rate cuts, the future looks less rosy for those banking their pennies.
Savings accounts rates have already been falling and may fall rapidly as further cuts kick in. But there were some good deals available this week.
Many planners advised those who depended on savings accounts to boost their income to lock into a term deposit account before rates fell any lower.
Paul Bilson, of Woodward Nhill Financial Planning, said he favoured a mixture of term deposits and income funds.
"Sure, put part of your money into term deposits, but remember there will be penalties if you need to access your cash," he said.
Mr Bilson said most income funds, which primarily invest in mortgage debt, were returning seven to 8 per cent
"There is a little more risk," Mr Bilson said.
"They are not guaranteed - you have to make certain that the one you choose is very well rated."
He said companies including Mariner, Axa and Colonial First State all ran good funds invested in quality loans, fixed interest securities and cash.
Investors
Usually a rate cut is welcomed by the stock market because it makes the returns on cash less attractive and so forces more money into the stock market.
But after the cut on Tuesday, the market finished marginally down and fell further later in the week, stripping 5 per cent off Australian stocks.
It was the worst result since the major index fell 5.53 per cent in March.
Shane Oliver, chief economist at AMP Capital, said: "It is difficult to escape the bad news in the economy, which is going to make it harder for companies to grow their profits, and that will act as a drag on the stock market for some time."
He said retail and discretionary spending would be hit hard by an economic slowdown.
"Unemployment will rise, but these things do not last forever," Mr Oliver said.
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