What will the rate cut mean for you?

Discussion in 'Property Market Economics' started by Bandita, 7th Oct, 2008.

  1. Bandita

    Bandita Member

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    Hi all,

    Well, the RBA rate cut of 1% was certainly a shock for us - but quite welcome!! I'm interested to see what the rate cut will mean to you?

    For us, this will mean around $7k in savings if this lasts at "todays rates" for 12 months. On the other hand, I expect it will make us less inclined to push up our rentals when leases end (for the good tenants :rolleyes: ). We will certainly keep them within market rates, but I won't have to worry about possibly losing a great tenant by increasing the rent - because if interest rates stay where they are, I probably won't do it!

    We've always had a strong buffer in place (with aimed neutrally geared properties), but I don't think we were the only one's wondering after the past 12 months of interest rate rises, doom and gloom - how much is enough for a buffer? We were always planning on buying again this year, and have made some offers -but now our confidence is that much higher that we don't have to worry so much about reducing our buffer when we use some of those funds for the deposit.

    If the doom and gloomers are right, and RE prices drop - we will have to live with that, but we aim for neutral geared properties so it really won't have too much effect since we're in it for the long-term. The buffers have always made it possible for us to stay in it for the longer term - and now with today's interest rate cut, our buffers are all that much stronger :D

    I am for one looking to buy (always was, but this interest cut has just helped with that SANF a bit more!!)

    What about you?

    Cheers,
    Jen
     
  2. craigb

    craigb craigb

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    a renewed confidence that our home might sell and give me an opportunity to forge ahead with the ips i/we need to gather in this softening market.
     
  3. allblack

    allblack Member

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    It means my 2 new ip's are that much closer to being c/flow neutral, way quicker than I anticipated. Once I can fix at 7% for 5 years they will be c/flow neutral, and rent rises will be the icing on the cake. I anticipated it would take 4 years for them to be c/flow neutral but it could all happen in 12 months. Plus on latest bank valuations I have gained 50k equity on the 2 properties since building them. All this in the outer suburbs of Perth which seem to get generalised as being in decline for investment purposes, when the truth is opportunities abound.
     
  4. boomtown

    boomtown Member

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    I may be squeezed by other LLs taking their foot off the accelerator on rent rises because Im 100% fixed. Hopefully its not enough to tip them all CF+ !
     
  5. santaslayer

    santaslayer Member

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    It means I can possibly borrow more than I anticapated for my first IP.
     
  6. vbplease

    vbplease Still on my L plates

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    more savings in my offset account to fund my next IP in 6months... i'm interested to see how sellers react to the drop in interest rates, and if more first home buyers, OO, and investors stimulate the market.

    If sellers see this as a reason to keep their sale price high, then bugger the IP, I'm buying a new plasma :cool:
     
  7. our obsession

    our obsession Amor est vitae essentia

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    Home sweet home...
    Our last 4 buys have been CF+ .... I have bought well, then added value, so we haven't been under any great pressure financially. The builds are about neutralishy....I think it just means keep shopping and buying well. :)

    We have a buffer too, it is a priority.

    I'm not real certain how much it will affect our loans, debt servicing rah rah...a bonus I think. Very much appreciated.
     
  8. sunshine

    sunshine Taking a ride...

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    For us it is a saving of $1700 per month. Massive relief and restores my SANF.

    Fear has been my friend until about 4 weeks ago, when I decided to enjoy and be proud of what we have achieved rather than worry about what may or may not happen to the portfolio.

    Will be watching the market and will probably pick up a renovator next year. Almost time to get back on the horse.

    Sunshine
     
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  9. units4me

    units4me Member

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    I'll use the saving to put staight onto our mortgages, so won't notice any extra in the pocket.

    Now in an even better position to buy the next ones when the time is right.
     
  10. want2bewealthy

    want2bewealthy Getting wealthier

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    Theres been a cut of 1%?
    Please inform me, I have'nt heard anything about it.
     
  11. Patosan

    Patosan Member

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    With all the international trouble going on daily an interest rate cut is almost forgetable. Sorry if i can't get all revved up and excited like most here ... of course cuts are better than rises but I see much, much more trouble coming and wouldn't be looking at buying anything till next next year.

    In the meantime I'll just get finance in order so that I can buy after all the dust has settled ... a long time from now.

    For me being in Japan the AUD overdue fall from grace is a supreme blessing ... in the eyes of Oz banks I've got a 30% salary rise over the last few months and can buy heaps more dollars now.
     
  12. battle on

    battle on Member

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    If you "Want2bewealthy" I think you need to keep up with the news. :D

    For me it has been a welcome announcement. With this and the AU Dollar dropping it will probably put an extra 2k+ a month in the pocket. I think I will let things settle a bit before rushing out to do anything though, but I will be looking for potential opportunities just the same.
     
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  13. want2bewealthy

    want2bewealthy Getting wealthier

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    Lol I like it :D
    I just read an article and they say the banks will pass on .80% to consumers, excellent news!
    should save me a few thou this year, plus help create near neutral holdings.
     
  14. vbplease

    vbplease Still on my L plates

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    Hi Patosan,
    Can you elaborate on what more trouble you think is to come?

    Do you think with a recession on the way there will be jobs losses, causing people to sell, in turn dropping house prices?
     
  15. BoatBoy

    BoatBoy Member

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    News travels slow to Darwin;)

    Dave
     
  16. BoatBoy

    BoatBoy Member

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    All Ip's were locked in a few years back so no difference there, but balance of PPOR debt was on variable so that'll be , woo hoo, $1300 a year.

    Better than a poke in the eye

    Dave
     
  17. Patosan

    Patosan Member

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    There's all this hope that a government action can resolve what has to worked thru by the market. Sure the bailout and our big rate drop will help but the basic stink will remain till a few more big boys are allowed to go to the wall.

    There's the issue of all the gov't intervention on an international level all this year which is now intensifying ... not good or natural and only rings larger alarms for me rather than sighs of relief. Finally the US printing more money to cover all the mess will take some time to wash thru the system ... totally undermining the value of the currency.

    Job losses, etc ... I'm not clever enough to predict the final outcome at that level but you'd have to be an overly optermistic person not to expect so. On a simple level uncertainty will kill any economy and there's plenty around atm that with credit being reined in will mean loans will be harder to get regardless of the interest rate ... so house prices will drop.
     
  18. Aaron Sice

    Aaron Sice Seldom Seen Kid

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    a 0.8% cut on top of the 0.15% last month puts me back inside my "buffer zone" on IRs.

    i didn't think they're get much higher than 8.5% for joe average, but they made it all the way to 8.97% for me.

    basically, this will free up some cashflow, allow me to pump that extra cash into paying off my CCs and puts me in an even BETTER position to buy a few places now construction of my PPOR is rolling along nicely (thankyou weather!).
     
  19. letiha

    letiha Member

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    Puts my interest rates back under 8%, its now 7.96% works out to be a saving of $180 a week in interest.
     
  20. crc_error

    crc_error The Rule of 72

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    less pressure now to increase rents.