House prices to keep rising for years

[lioness]

Don't underestimate that if %rates are dropped low enough, then it will create a new mini boom in property leading to a bigger crash in the end.

 

[nunthewiser]

A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?

thankyou in advance

ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive

 

[Passive]

A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?

thankyou in advance

ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive

Yes you still have to pay the penalty - often called economic cost to the bank - based on their cost of funds at the time you fixed your rate.

 

[Passive]

A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?

thankyou in advance

ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive

By the way , if you are not aware, the converse is that if your fixed rate is invariable lower than the prevailing rate it will go a lot easier on you - may be a standard fee payable for the breking of contract but economic cost usually does not enter into equation. Do your own research though.

 

[nunthewiser]

Yes you still have to pay the penalty - often called economic cost to the bank - based on their cost of funds at the time you fixed your rate.

thankyou.

so by this , it is only really viable in entering a fixed rate loan IF one has the intention of holding the property longer than the fixed term , ie locking in for 10 years and selling after 7 is a very costly exercise if rates fall further at time of sale ?

 

[Passive]

Yeah whatever -keep back pedalling and building those straw men! My views and outlook for the market have been clearly explained numerous times in this and the other thread and have been consistent.

Beej

Typical scenario - all the signs are there for a recovery in real estate. Yes, this time is very different but so is the stimulus in place. Like it or not rents are on the up, rates massively down, huge stimuli in market place, concessions to homebuyers massive, interest rates low and going lower, fuel prices plunging, unemployment low- -I have been a property investor through many cycles and this one is so different. Compare to 90s this is a walk in the park and the parameters are all in place for a massive resurgence in real estate. Even govt is ensuring all stops are pulled out to keep prices stable. People need to see this for what it is - a golden , yes golden opportunity to look to entering into the market. We will look back on this time and wonder why most could just not read the very obvious signals. Everything is going in favour of real estate big time!

 

[Passive]

thankyou.

so by this , it is only really viable in entering a fixed rate loan IF one has the intention of holding the property longer than the fixed term , ie locking in for 10 years and selling after 7 is a very costly exercise if rates fall further at time of sale ?

Agreed

Best used as a budgetary tool if buying and wanting to lock in costs. However if rates are down to 3/4% it is a low risk gamble to fix . I don't like to fix for more than 3 years personally - but if they go very low I am in and will take the risk of breaking contract cost if I sell. In the past the bank has not penalised me if I break early and fixed rates have risen as they save money and don't want to run the risk of losing my business.

 

[chops_a_must]

Somewhat ironically, it's actually YOU and your ilk that are arguing that "this time it's different". "Peak oil!!!" "Peak debt!!!" "Fiat monetary system is a sham!!!" "The sky is falling!!!!" etc etc blah blah.

The rest of us are merely predicting a normal housing cycle downturn (as has hapenned many times before - early 70s, late 80s, and even as recently as 2001), followed by a normal recovery.

Beej

This time it's not different though.

You are just doing it wrong.

Check the 30s as to what happened in widespread deflation...

 

[nunthewiser]

no worries , thankyou for your time , i only ask as i have my eye on a "distressed" listing at present and i know the circumstances ...... kinda being a bit insensitive to there plight but its all about the cash at end of day .... just tossing around options as "cheap money" can be good money if one uses it wisely

 

[wayneL]

This time it's not different though.

You are just doing it wrong.

Check the 30s as to what happened in widespread deflation...

'zackley

 

[juddy]

Who dug this thread up? More importantly, who in their right mind thinks we are going to see a short or medium term increase in house prices?

 

[juddy]

Compare to 90s this is a walk in the park and the parameters are all in place for a massive resurgence in real estate.

A walk in the park, how the heck do you work that out? The trouble hasn't even started yet. We'll see how you are feeling at the end of next year when it is just starting to kick in.

Boy, some people well and truly have their heads stuck in the sand.

You watch WA real estate, it is going to be walloped once all those 'new' investors start realising that property investing is actually a hard slog and not the 'dream' it has been in the last few years. They'll be undercutting each other just to get out with some type of profit.

 

[lioness]

This time it's not different though.

You are just doing it wrong.

Check the 30s as to what happened in widespread deflation...

Good point chops. Can you provide a link or direct to me where I can get deflation information such as the 1930's and what happened to asset prices.

 

[lioness]

Agreed

Best used as a budgetary tool if buying and wanting to lock in costs. However if rates are down to 3/4% it is a low risk gamble to fix . I don't like to fix for more than 3 years personally - but if they go very low I am in and will take the risk of breaking contract cost if I sell. In the past the bank has not penalised me if I break early and fixed rates have risen as they save money and don't want to run the risk of losing my business.

Passive, at what interest rate do you think it is worth fixing for 5 years??

I am looking at the same thing. My thoughts are 4.5% or lower will be worth it. What is your opinion please?

 

[robots]

Rents tumble in inner Sydney

Looks like rents in some parts of the lower north shore are down 15.9% in only three months. Plenty of double digit falls in other parts.

Hope Robots can continue to up the rent and he doesn't price himself out of the market.

hello,

sure will, i will get an extra set of bunk beds from Harvey's joint and cram a few more from the sub-continent, utopia for me and my tenants

doing my bit for society, cook them up some rice, fridge in each room so no dust-ups over the food in the fridge

lot of good landlords out there helping students etc

thankyou
robots

 

[IFocus]

A quick question .......... i know that if one trys to break a fixed intrest rate loan now to take advantage of lower rates there is a massive penalty/fee involved ..........my question is ......... If one has a fixed intrest rate loan and sells the house before the fixed period expires do the same massive penaltys apply or is it the normal fees involved ?

thankyou in advance

ps , just for the record i have not entered any fixed intrest loans as yet but will be looking at one in the future. lol perhaps at 2% when them printing presses hit overdrive

NC as per passive's comments I have used fix loans over the years, I haven't done it to save money or to beat the banks but just to lock in costs as a risk management tool, lets me sleep at night.

Haven't broken one yet but if I do its just the cost of doing business.

In a falling rate environment I wouldn't hurry but in a rising rate environment its good insurance. It can be a little like the market you are never going to pick the bottom when fixing.

Good luck

 

[Passive]

Passive, at what interest rate do you think it is worth fixing for 5 years??

I am looking at the same thing. My thoughts are 4.5% or lower will be worth it. What is your opinion please?

Would look at the prevailing economic conditions to decide. There will be time to decide as this economy has to show signs of improving before rates stabilise let alone rise. Until then variable. I reckon your estimate seems right though.

 

[Passive]

A walk in the park, how the heck do you work that out? The trouble hasn't even started yet. We'll see how you are feeling at the end of next year when it is just starting to kick in.

Boy, some people well and truly have their heads stuck in the sand.

You watch WA real estate, it is going to be walloped once all those 'new' investors start realising that property investing is actually a hard slog and not the 'dream' it has been in the last few years. They'll be undercutting each other just to get out with some type of profit.

Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem? We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference. Now is the time to start looking.Ben Bernancke is an expert on the Depression and is doing what it takes. Somewhere along the line it will change
and with lower interest rates most property investors are moving to strongly positively geared real estate. On one of my IPs alone I am $600 better off per month as a result of drop in rates. That is net income and most investors who are holders are discovering a new income stream!. All starting to look very attractive.

90s were high int, high unempl, etc etc. We have low rates, lowering further an IPs are becoming damn attractive to holders. One Einstein in the 90s , when some of us were buying - was predicting property would never rise by more than 1% pa - what a joke. Homes are to be lived in and soon it will be cheaper to buy and the banks and govt are doing everything to boost things. This will lead to another boom, then bust - I am not happy with this, would prefer a modest rise but as long as central bankers control fiscal policy as they do - nothing much will change. I have experience and profit on my side - that presupposes a positive attitude - I will not allow fear to scare me senseless! And I am WA based and do not share your view.

Look at todays AFR and look at the chart of property prices in the world - still up by a large majority - compare that to the share market - hail property!

 

[explod]

Head stuck in the sand is where I would say you are positioned. When in human history have you seen such a concerted and co-ordinated effort to lick the problem?

Ben Benanke has been bailing out and relieving the banks of bad debt and lumping it onto the US tax payers. They are now starting to follow the same principals here. And some time next year when they realise that pouring more fuel on the fire does not work the banks will raise rates at a huge rate. Read a few books by some reputable independant economist. Most bank economists started out as bank tellers and just got promoted to move them out of their previous incompetence.

Maybe your head is not in the sand but you are only taking in what suits your financial direction. Wish you luck but it often does not work.

 

[juddy]

When in human history have you seen such a concerted and co-ordinated effort to lick the problem? We live in an information age where you guys scare each other to death and economic impotency with every indicator. The rest of us show fortitude and get out there to make a positive difference. Now is the time to start looking.Ben Bernancke is an expert on the Depression and is doing what it takes. Somewhere along the line it will change
and with lower interest rates most property investors are moving to strongly positively geared real estate. On one of my IPs alone I am $600 better off per month as a result of drop in rates. That is net income and most investors who are holders are discovering a new income stream!. All starting to look very attractive.

90s were high int, high unempl, etc etc. We have low rates, lowering further an IPs are becoming damn attractive to holders. One Einstein in the 90s , when some of us were buying - was predicting property would never rise by more than 1% pa - what a joke. Homes are to be lived in and soon it will be cheaper to buy and the banks and govt are doing everything to boost things. This will lead to another boom, then bust - I am not happy with this, would prefer a modest rise but as long as central bankers control fiscal policy as they do - nothing much will change. I have experience and profit on my side - that presupposes a positive attitude - I will not allow fear to scare me senseless! And I am WA based and do not share your view.

Look at todays AFR and look at the chart of property prices in the world - still up by a large majority - compare that to the share market - hail property!

Have you ever asked yourself why there has never been such an attempt in history to rectify such a problem?

The government and RBA are throwing darts in the dark, just hoping to score. Really, how long can they really afford to prop up house prices? They have made it absolutely clear this is their biggest fear.

I can certainly see why you are defensive of house prices (you don't seem to have posted on any other thread since joining) as you are invested in the state most susceptible to a large decline.

You may be well ahead in your RE investments, doing it for years and therefore positioned to take advantage of what is happening, but don't kid yourself that everybody is (or has the desire to stay in for the long haul). Investing or even buying a first home in WA in the next 2 years (and in the last 2 years with no cap. growth) is/was an extremely risky move.