Is it too early to take bets on the interest rate cut in February?
- Thread starter Perth Investor
- Start date
If NZ Reserve Bank can cut their rates by 1.5%, I'm sure that the RBA could cut our rates by 1.5%. I think that 1% is a certainty with a chance that it could be as high as 1.5%. These are not normal times with the economic news getting worse every day.
I am going to be ballsy and go with 1.5%!!
NZ did 1.5%.....the economy in OZ will be in recession by June unless we see some dramatic shifts. The momentum of China and the USA is far too great for Australia unfortunately!!!
I am afraid we are in for a rough ride!! Those who hold commercial portfolios will need to be careful....as companies go bust you will be left holding the can if you don't have 1 years worth of rent as a surety!
Just yesterday Westfield took a $3bln provision....if this is happening to those boys who are at the top of their game and they run a tight ship. I am afraid to say this will affect the valuations on the smaller players. If you bought for $5m a couple of years ago for say $3m....and it went to $9m....then expect the same place be worth $4-5m....you are still ahead...but the rents will also reflect the pricing. So instead of rents of say $1m pa ....you might only get $500k if it is vacant! The real issue is what the bankers will do if something happens.....hope people don't have the loans tied to one lender!!!
Dazz, Nonrecourse......hope you are listening.....
NZ did 1.5%.....the economy in OZ will be in recession by June unless we see some dramatic shifts. The momentum of China and the USA is far too great for Australia unfortunately!!!
I am afraid we are in for a rough ride!!
Those who hold commercial portfolios will need to be careful....as companies go bust you will be left holding the can if you don't have 1 years worth of rent as a surety! Just yesterday Westfield took a $3bln provision....if this is happening to those boys who are at the top of their game and they run a tight ship. I am afraid to say this will affect the valuations on the smaller players. If you bought for $5m a couple of years ago for say $3m....and it went to $9m....then expect the same place be worth $4-5m....you are still ahead...but the rents will also reflect the pricing. So instead of rents of say $1m pa ....you might only get $500k if it is vacant! The real issue is what the bankers will do if something happens.....hope people don't have the loans tied to one lender!!!
Dazz, Nonrecourse......hope you are listening.....
Don't forget NZ official rate was still higher than Aust.
NZ cash rates peaked in back in September 07 at 8.25%. They started coming down in July 08. They are now at 3.50%.
Australia's peaked in March 08 at 7.25%. They started coming down in September 08. They are currently 4.25%.
Australia's peaked in March 08 at 7.25%. They started coming down in September 08. They are currently 4.25%.
True but the gap is rapidly closing as their economy has slumped a lot quicker than ours!
Ours is 4.25%....theirs is 3.5%....so a 0.75 margin. If we drop say 1%...otu margin is only 0.25%....the closest is has been for years.
Bear also in mind traditionally, NZ and OZ have had higher rates as smaller countries we have had to slightly more attractive rates to get Overseas investors invest.
I can't see our rates drop much past 1.5%-2%. That would mean a variable rate of 3.25 - 4.00%!!
Ours is 4.25%....theirs is 3.5%....so a 0.75 margin. If we drop say 1%...otu margin is only 0.25%....the closest is has been for years.
Bear also in mind traditionally, NZ and OZ have had higher rates as smaller countries we have had to slightly more attractive rates to get Overseas investors invest.
I can't see our rates drop much past 1.5%-2%. That would mean a variable rate of 3.25 - 4.00%!!
