Seems like rates will stay at record low for longer than we predict

And that is meant to be good?!?!
I have a business loan, some investment debt and a bit of a loan on the current PPOR for the building over-run, so it's fan-frickin-tastic.

The last 2 cuts have meant quite a number of thousands saved per year for me.

YAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHOOOOOOOOOOOOOOOO!!

Keep em coming, I say.

I've ramped up the repayments as much as I can on as many as I can and am loving seeing those Principles drop every week.

KOWABUNGA, DUDES!!
 
Correct me if I'm wrong, but you would reckon that if the rates are so low, and getting lower, that businesses would start to borrow more for various improvements and redevelopment, extensions, expansions and so forth - which you expect would all lead to more jobs...

Yet; unemployment is still up, and not going down anytime soon.

What does that tell you?
Well, if your in business, say for instance you sell shoes, if they gave you zero interest, would you borrow and build a warehouse and fill it with stock if there was no way your going to sell that stock ?

If you did, even at no cost loans, there is ongoing new costs with doing such. You also need the turnover to repay even zero percent loans.

Business also needs to need expansion to borrow and grow or improve, they also need to know short term idiotic government who only thinks of now wont start changing the goal posts every 5 minutes & that is what everyone has done for a long time now. There are no leaders with vision, just people bickering and protecting the self.

I really think they could go to zero and it wont matter much, it is not the lever it needs to be & all it seems to be doing is potentially going to cause headaches for those with housing if they keep cutting.
 
Yippieeeee, bring on some more unemployment, says all property owners.
I don't know of anyone here (or anywhere else) who has said that.

The dropping interest rates do not cause unemployment; they are a side effect of it.

I don't think the unemployment rate as a factor has much to do with the RBA decisions to adjust rates up or down; it is the wider economy revenue, spending, housing market, etc.

Even the housing market has proven to not be a major factor in and of itself - look at this year so far; recent booms and stronger interest around the Country generally, yet rates are still falling.

Unemployment rising is a result of a weaker wider economic and business climate.

FWIW; if rates go down again, and my financial situation continues to improve as a result; I will start to think about possibly employing another staff.
 
Well, if your in business, say for instance you sell shoes, if they gave you zero interest, would you borrow and build a warehouse and fill it with stock if there was no way your going to sell that stock ?
Probably not. They may increase their stock levels a bit if they have been running them lower of recent times.

There are a number of reasons why lower rates currently might help stimulate businesses to spend/borrow while the rates are low.

It depends a lot on how the business is travelling, staff levels and so on. There may be businesses who would like to refurbish their premises, buy a much needed new piece of equipment - which they couldn't afford due to cashflow issues, put more money into advertising. Lower rates help in these areas; it may be small, but it also may be a large difference. Lower rates may simply mean a business can catch up on their tax debt etc; decrease overall debt and improve cashflow - they may not necessarily borrow anything.

In my case; this is exactly the benefit of the lower rates - I can smash my debt more quickly, and improve cashflow - even without any improvement in my turnover.


If you did, even at no cost loans, there is ongoing new costs with doing such. You also need the turnover to repay even zero percent loans.
If I could borrow money at zero percent right now, I could buy a bit more stock, a bit of new equipment etc. Obviously I would need to be careful of the amount, but because it is zero percent, I have no pressure to repay it in a short time.

Business also needs to need expansion to borrow and grow or improve, they also need to know short term idiotic government who only thinks of now wont start changing the goal posts every 5 minutes & that is what everyone has done for a long time now.

There are no leaders with vision, just people bickering and protecting the self.
Totally agree, and this is one of the reasons why businesses are not expanding/buying extra stock/employing more staff etc, and why folks are not spending; there is little confidence about the next 5 years.

I personally think we need to have 5 year terms of Government, with no possible Leadership changes in that time (unless the PM is arrested for something, or impeached, etc) - much like the USA.

Hopefully then, we would actually see something get done, instead of one year of campaigning and wasting loads of dollars, a second year of trying to get something done (and failing), and the third year of gearing up for the next elections and spending a shiddload more money again on the next campaign..

The Senate has to be dispanded as well; so the Gubbs of the day can get stuff through - it might the wrong thing they get through, but at least give something a good crack and see what happens. It can't be much worse than what we are currently having to put up with every bloody year.

Currently they are continually treading water and achieving stuff-all, and then blaming each other for their failures, and then spending half their time trying to pacify the disillusioned public and justify their level of inactivity with lies and half truths and avoidance of truth....pathetic situation.

I really think they could go to zero and it wont matter much, it is not the lever it needs to be & all it seems to be doing is potentially going to cause headaches for those with housing if they keep cutting.
The issues with housing as a result of rates fluctuations have always been there. This is part of the whole game of r/e. Rates went up to 18% several years ago, and many folks got badly hurt, yet the rates kept going up.
 
The dropping interest rates do not cause unemployment; they are a side effect of it.
Actually, dropping interest rates is supposed to help reduce unemployment by increasing economic demand.

I don't think the unemployment rate as a factor has much to do with the RBA decisions to adjust rates up or down
Not true.

The RBA's duty under the Reserve Bank Act 1959 is to contribute to the stability of the currency, full employment, and the economic prosperity and welfare of the Australian people. (emphasis mine)

Housing affordability is NOT one of its main duties. It is the side effect of its decisions.
 
I guess even if interest rate go to 10% in 3 years time and from a investor point of view meaning there is going to be less people can afford to buy (due to harder to get loans) and therefore increase rental demand and higher rental return?

it will only impact on those hugely negatively geared?
 
I guess even if interest rate go to 10% in 3 years time and from a investor point of view meaning there is going to be less people can afford to buy (due to harder to get loans) and therefore increase rental demand and higher rental return?

it will only impact on those hugely negatively geared?
The policies will change with the times. Just as they've tightened them as the markets have warmed, they will loosen when they get cold. Nothing is ever concrete. You will not see these same serviceability policies in place if rates hit 10%. It's always a balancing / re-balancing act.
 
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I have a business loan, some investment debt and a bit of a loan on the current PPOR for the building over-run, so it's fan-frickin-tastic.

The last 2 cuts have meant quite a number of thousands saved per year for me.

YAAAAAAAAAAAAAAAAAAAHHHHHHHHHHHOOOOOOOOOOOOOOOO!!

Keep em coming, I say.

I've ramped up the repayments as much as I can on as many as I can and am loving seeing those Principles drop every week.

KOWABUNGA, DUDES!!
Surely as a business owner, you'd rather have normal interest rates & a better economy / more customers?

Apologies if my view is a little simplistic.
 
Otherwise Africa would solve poverty with 0% interest rates or by printing lots of money and giving everyone gazillion dollars.

Who knows... maybe that'll change, but a country's prosperity starts with its people and what they do, not with this artificial thing called money (ie pieces of paper) or how much it costs to get this paper.

I don't like being academic about these things.
I'm sorry but there's nothing scientific about your claims. Much of economic theory has more in common with pulling a rabbit out of a hat type magic tricks than anything based in evidence or fact.

Africa is actually a very wealthy continent. It is rich in many and varied resources. Being "lazy" has nothing to do with their economic situation. Colonialism and IMF structural adjustment policies and the like played (and continue to play) a much bigger role in keeping these countries poor than the attitudes of the people who happen to live in them.

From Wikipedia:
The continent is believed to hold 90% of the world's cobalt, 90% of its platinum, 50% of its gold, 98% of its chromium, 70% of its tantalite, 64% of its manganese and one-third of its uranium. The Democratic Republic of the Congo (DRC) has 70% of the world's coltan, a mineral used in the production of tantalum capacitors for electronic devices such as cell phones. The DRC also has more than 30% of the world's diamond reserves. Guinea is the world's largest exporter of bauxite.
In addition, Nigeria is the 6th biggest oil exporter in the world and almost a quarter of the top 20 oil exporting nations are African. Yes, this region certainly produces nothing of value to anyone. :rolleyes:

And please don't mention aid either as that's largely a scam. No country has ever historically developed as a result of aid and most countries in this region that receive significant amounts of aid actually lose more wealth from their country to imperialist nations than they get back in any sort of aid.

Behaviours like dumping also completely destroy local industry and agriculture as a cover for the feel good imperialism of the West.
 
Surely as a business owner, you'd rather have normal interest rates & a better economy / more customers?

Apologies if my view is a little simplistic.
I don't know that the two are synonymous.

If you could guarantee more customers with rising rates, then yes.

But the extra customers might only negate an interest rate increase. More work; no gain.

Like everyone; I want more gain; no work.

A really bad scenario right now (for me) would be higher rates, but still no consumer/business confidence therefore higher costs without the improved turnover/profits.

Commentary this morning on the wireless - indicated more economy woes in the immediate future despite the rate drops and R/E booms.

My turnover is what it is now, and has pretty much leveled off (from it's fall), so any further rate cuts are my win.
 
I'm sorry but there's nothing scientific about your claims. Much of economic theory has more in common with pulling a rabbit out of a hat type magic tricks than anything based in evidence or fact.

Africa is actually a very wealthy continent. It is rich in many and varied resources. Being "lazy" has nothing to do with their economic situation. Colonialism and IMF structural adjustment policies and the like played (and continue to play) a much bigger role in keeping these countries poor than the attitudes of the people who happen to live in them.

From Wikipedia:


In addition, Nigeria is the 6th biggest oil exporter in the world and almost a quarter of the top 20 oil exporting nations are African. Yes, this region certainly produces nothing of value to anyone. :rolleyes:

And please don't mention aid either as that's largely a scam. No country has ever historically developed as a result of aid and most countries in this region that receive significant amounts of aid actually lose more wealth from their country to imperialist nations than they get back in any sort of aid.

Behaviours like dumping also completely destroy local industry and agriculture as a cover for the feel good imperialism of the West.
So are you saying 0% interest rates will solve poverty?
 
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