Interest rates
- Thread starter Brian84
- Start date
??? If its variable rate you would get SOME of the rate reduction. I wouldn't count on a .75% change to bank rates if the RBA cash rate drops .75%. Maybe .50% if lucky. I wont go into the maths but at 4.85% a drop to 4.35% may represent a massive reduction in profit to the bank since its margin becomes smaller as a % of the base rate..So to make same $$profits it cannot pass on the full cut. It must increase its margin to get same $ profits. And banks wont give away profit.
Fixed rates move independently of the variable rate. They could rise at same time as variable rate falls. Or remain constant. Especially longer term fixed rates ie 10years fixed rates.
Fixed rates move independently of the variable rate. They could rise at same time as variable rate falls. Or remain constant. Especially longer term fixed rates ie 10years fixed rates.
If the fixed rates drop further, it would be a great opportunity to lock them in via a fixed rate product. This assumes that you fix at the very bottom of course, which nobody can predict.
Only a few months the same people predicting the rate cuts were predicting rate rises. They might change their minds again in a few months.
As a general comment, it's always a good idea to have some loans variable. Fixed rates are very restrictive on extra repayments and generally you can't have access to offset accounts. A variable rate gives you access to these features, where you can store surplus cash cost effectively.
Only a few months the same people predicting the rate cuts were predicting rate rises. They might change their minds again in a few months.
As a general comment, it's always a good idea to have some loans variable. Fixed rates are very restrictive on extra repayments and generally you can't have access to offset accounts. A variable rate gives you access to these features, where you can store surplus cash cost effectively.
The way I see it, if rates drop, that opens the door for more property investors/owner occupiers to go the bank, knock on the door and plead "mmmmmm...give me some moola for a house pleeaase!".
The bank will reply "come in fellas, sign here, pay here". Now that's got to equate to more profit for the bank.
The bank will reply "come in fellas, sign here, pay here". Now that's got to equate to more profit for the bank.
Hey Brian - interest rate cuts will help increase your borrowing power. However, if your issue is 'deposit', rate cuts may not assist you in getting funding. I fear any further rate cuts will also occur with lenders being a little more cautious with their lending standards (being a bit pickier with who they lend to).
Cheers,
Redom
Cheers,
Redom
Hiya Brian
Reduced rates won't make it easier for you to get a loan - the lower repayments may assist with cash flow and future borrowing capacity but you still have to come up with the the funds to cover off the initial deposit/costs.
Also - there's a lot of talk around high LVR investment lends at present - and banks are already starting to shy away from these sorts of deals.
Cheers
Jamie
And kmart is all out of replacements?
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