For a basic start, don't fix your rates yet contrary to what some brokers are saying.
So you're basically calling further rate cuts?
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For a basic start, don't fix your rates yet contrary to what some brokers are saying.
So you're basically calling further rate cuts?
further rate cuts by RBA even down to 0% now would not be surprising at all.
Sings:Let's see how it evolves as the latest GDP data set is released on Wednesday anf after the RBA meeting on Tuesday.
Exactly - yesterday was ~80% chance. Today the market expects a ~100% chance of a single cut to 1.75% at some time in the next 12 months.
So based on the currently available information, do you stand by your call of a 1.0% cash rate ? or can we agree that it's garbage ?
I agree entirely. Rate cutting probably isn't over, APRA will put a lid on house prices while the RBA is free to stimulate business/investment.I didn't say it's gonna fall by 1%. That's how tabloid journalism works, put a controversial figure and the put a question mark on it. Who knows it could fall by 1.25% even. But clearly the RBA easing cycle is not over, that's my point. More cuts to come! But I won't be surprised if data evolved to a point where a 1% cut is required as we enter into a recession.
I agree entirely. Rate cutting probably isn't over, APRA will put a lid on house prices while the RBA is free to stimulate business/investment.
When tabloid journalism raises it's head here I think it's right to robustly debate it. There are some here who regard SS as a haven from the garbage that appears in the tabloids (inc business spectator).
However, we support the view implied in the RBA?s bias that the risks to rates remain to the downside. In particular, any slippage in household expenditure growth ? which would dampen prospects for a recovery in non-mining investment ? would affect growth forecasts for 2016 and substantially increase the risk of lower rates.
Still, we expect the timing would be later than current market thinking (first move in November at the earliest) and the extent of the cuts would be a total of 50 basis points rather than the market?s current 25 basis points expectation.
Bill Evans is Chief Economist at Westpac.
Based on the current economic situation the RBA is likely to cut by 0.25% some time in the next 10 months.You really think people are pricing in another cut into asking prices for resi property? Or do you mean lenders pricing in another cut into their rate floor calcs for applicants?
Agree, I have a lot of respect for his views. Although its his Westpac Weekly Bulletin is reproduced by BusSpec - he isn't an employee of theirs.Except maybe Bill Evans' Weekend Economist articles on Bus Spectator.
Re; mortgage brokers asvising fixed rates
In the current climate its not due to a belief rates will go lower
Its merely self interest on their behalf
In a market thats hot like Sydney with some people flipping instead of holding the brokers lose their commissions.
Fin institutions have claw back arrangements with brokers if the loan gets paid off in in a certain period of time theg will clawback the commission
So brokers now try lock people into fixed to weed out the flippers
Bill Evans was one of the first in 2014 going against the crowd to predic cuts in 2015. Indeed it happened.
The other economists were saying it's gonna go up, the next move is up (perhaps they think it's too low it cannot go lower). Same with my broker last year trying to convince me to fix my rates because it's never gonna get lower.
Thankfully I read the Capex, UE, CPI and GDP releases seriously. When I analysed the data, there's no reason for rates to go up -- rather it's gonna go down contrary to what the results were of the rates survey among economists.
The other economists were saying it's gonna go up, the next move is up (perhaps they think it's too low it cannot go lower). Same with my broker last year trying to convince me to fix my rates because it's never gonna get lower.
Hi unloadmymind,
Would you mind sharing the websites/sources that you follow to read up on Capex, UE, CPI and GDP releases ?
What key points do you usually note when analyzing the data ? i.e what key factors would influence a rate cut or increase etc ?
Many thanks for sharing.