Interest Rates to 7.25% by February?

[Blank1979]

So the interest rates have just gone up by 25 points to 6.75% and pundits are already tipping another .25% in December.

So why didn't they just do 50 points today?!? Maybe because it'd be a political handout to Labor or just a plain ol' killer to the Liberals?

But, just to freak out everyone with a mortgage, myself included, some are now tipping it'll be 7.25% by FEBRUARY! Matthew Johnson wrote it here: http://www.businessspectator.com.au..._It_may_be_725_by_February_8Q25C?OpenDocument

Very worrying indeed. What does everyone else think?

 

[prawn_86]

Re: Interest Rates to 7.25% by February!

They generally raise rates by 25 basis points at a time in order to ease the general mortage populus into it.

If they really wanted to cut inflation they could just raise int rates by like 1.5% straight away, but the financial stress that would place on people would be too great, hence the slow rise.

Thats my take on it anyway...

 

[numbercruncher]

Yes even quite a few speculating 10pc variable rate in the not so distant future !!


Average mortgage is like 320k so over 600 dollars a week in interest payments, very scary indeed. Must be geting close to being more cost effective to buy a mobile home and just go on permanent holidays ?

Good for savers though

 

[ROE]

Interest need to go to 20% before it affect me because I don't leverage that much.

High debt level or leverage can bring higher return
but it can probably bankrupt you as well so I take it nice and slow.

 

[ROE]

Re: Interest Rates to 7.25% by February!

They generally raise rates by 25 basis points at a time in order to ease the general mortage populus into it.

If they really wanted to cut inflation they could just raise int rates by like 1.5% straight away, but the financial stress that would place on people would be too great, hence the slow rise.

Thats my take on it anyway...

I actually prefer 1% rise at a time because if you put a frog into
a bow with water and slowly increase the temperature by 0.5% at a time
the frog will stay in and die but if you raise it by a few degree at a time it will jump out and survive.

Moral of the story, rise hard and fast and the one that cant handle it jump out and learn their lesson and go easy with their spending and borrowing.
rise it slowly they learn to adjust and make no attempt in changing their attitudes and spending pattern until they have no option but to go bankrupt

 

[ROE]

Well boo hoo and good for you. People like you that kept us 20-somethings out of the market, and now skite about 'I don't leverage that much'

How do you know I'm not 20 something and do something sensible rather
borrow to the till ?

People got no one to blame but themselves for borrow more than they can handle. If you cant handle a few percentage point rise you shouldn't borrow it in the first place, talk to any decent economist or financial advisor and they tell you to leave at least 2% point in your borrowing power.

Self inflicted injury no sympathy.

PS: if you want to know when I'm in my 20s not that long ago, I can borrow 400K when interest rate at 5% but I opt to save and save and only borrow 100K to buy a cheap place and then I save and save and do up the place and not taking holiday or drive a fancy car....
what are you doing but have a go at people like me who has sensible borrowing habit and save?

 

[numbercruncher]

Average mortgage is 330k - so at 8.5pc over 30 yrs repayment is 585 p/w plus rates/insurance/maintenance - so about say 650p/w.

So a sensible buyer really needs to add min 2pc buffer if they wish to buy so add like another 150p/w.

So 800 pw after tax available for housing is what folks need aim for.

Smell that ?? Troubled waters ......


What will happen, average wages up or average prices down ? Or just keep immigrating cashed up buyers ?

 

[Awesomandy]

I'm mid 20s, and over the past few months, I've been reducing leverage as well.

But anyway, back on topic, rates will most likely go up in December as well, and, since it would take at least a couple of months for the effects to show up in the stats, they might increase it once more after that for good measures. And that would make it 7.25%.

Still having said that, currently, the bet is between 7.00 or 7.25 by my birthday (in Feb).

 

[Rafa]

Re: Interest Rates to 7.25% by February!

I actually prefer 1% rise at a time because if you put a frog into a bow with water and slowly increase the temperature by 0.5% at a time the frog will stay in and die but if you raise it by a few degree at a time it will jump out and survive.

too true....

but the last time someone with guts raised interst rates to do that... and caused the recession we had to have, him and his party have been sent off into the wilderness branded as poor economic managers...

the sub prime crash was the perfect chance to clean out the system, but the US feds have started slashing rates

 

[BradK]

Just for the record:

I am 32, have a $200,000 mortgage on my own 3 bedroom house, and an investment property that I own outright. I have been doing build and sells since 2001 to 'get ahead'

I am speaking on behalf of my friends, work mates and others in SOCIETY who are trapped in this cycle.

I just don't like people who engage in finger pointing at the misfortune of others' mortgage situations when they can barely help it.

Although I am savvy with my money, I, unlike Howard and Rudd, still cling to the idea that we live in a SOCIETY as CITIZENS, rather than ECONOMIC subjects divided into haves and have-nots.

I am good with money. But my parents are NOT, and what if my daughter does not have great skills in this area? Is she a 'loser' who has to put up high mortgages and gets spoken down to whenever rates go up as if she is being called into the principals office?

We need to think about what kind of a society we want to live in very carefully, as I think we are at the cross roads. Not really where most investors or share traders heads are at... but I'm entitled to my opinion.

Cheers
Brad

 

[BradK]

I like what this guys says on www.news.com.au

Howard is a liar. Always have been. Always will be. Why are all you Howard supporters assuming that the Labor/Rudd supporters are lazy by nature and always wanting a 'helping hand'? I'm a Labor supporter and work hard for my money and have also been financially prosperous (and no I don't give credit to the Howard government for that fact). But look at the pattern that the Howard/Costello government is steering this country towards. We're becoming more and more like America where it's great if you have the money but treated like dirt when you don't. I want my kids to grow up in an egalitarian society where people care for each others welfare and not consumed by the selfishness and the wealth race. Let's make this 'lucky country' actually deserve that tag.
Posted by: Snipes of Melbourne 2:45pm today

 

[numbercruncher]

your right ofcourse Brad ....

The Howard team have created a divisive society and an economy based on a hole in the ground, they certainly seem to be modeling Aus on the US, which as can be seen unfolding now is looking like a dismal failure.

Crossroads are here, something has to give.

 

[nioka]

I am 32, have a $200,000 mortgage on my own 3 bedroom house, and an investment property that I own outright.
Brad

A mortgage on your home doesn't allow the interest as a tax deduction whereas one on the investment property does. How come you have it that way?

 

[son of baglimit]

this was the 1st of 6 rises in the next 2 years.

that'll teach them for handing out tax cuts.

then its lookout below - 2002 revisited.

 

[BradK]

A mortgage on your home doesn't allow the interest as a tax deduction whereas one on the investment property does. How come you have it that way?

Nioka,

It was the way it turned out as I was doing build and sells and managed to buy the investment property debt free before I built my own house.

I also had a deposit for my own house; and was advised that I could not switch to make my own house tax-deductible without a VERY good explanation to the tax department.

Its ok, as I am currently in the middle of another build and sell project, and that will take another chunk of my personal mortgage, and will have it paid off in about 3 years at the rate I am going.

Again, property has been good to me - but I was filthy earlier when I percieved that Roe was being disrespectful to people who, through the dream of home ownership, have got themselves into problems on the back of a government that accuses the other of rising interest rates - are we up to 10 now under this government? and 6 or 7 since his ill-concieved promise?

Apologise if I came across as shoulder chipped or p!ssed off.

Labor or Liberal have NOTHING to do with interest rate rises. The RBA is autonomous.

I just cant stand the audacity of Howard and others who want to take us down the path of the Americans. It is simply not the way for Australia to go. Can someone honestly point out the benefits? I am open to be persuaded. And I mean that.

There is an economic division in this country and it is growing. I'm sorry, but Howard MUST GO, and it would be my reward to see him lose his seat


Cheers
Brad

 

[BradK]

this was the 1st of 6 rises in the next 2 years.

that'll teach them for handing out tax cuts.

then its lookout below - 2002 revisited.

I agree Son of Bag,

IF politicians can be blamed its Howard and Rudd equally - $20 bucks per week for all in tax cuts! What bullsh!t. Bread and circuses, bread and circuses.

We are about to feel a sting in this country, and because Labor will be in Government, Howard and co. will be singing that trusty old chestnut - the 17% polka.

Brad

 

[numbercruncher]

Despite so many people actually needing the tax cuts to offset spiralling living costs it really needs to be spent on infrastructure, Hospitals, Education, Broadband, Water, Aging population, Renewable energy etc ... we really are walking towards that bananna republic.

I vote for no tax cuts and fix the country. Hopefully who ever gets in will break the pledge and actually do it

 

[BradK]

I agree - keep my tax cut.

I'm actually thinking of running for the House myself. Have you seen the size of those indexed pensions!?!?!?!

Oh, and if I can help my electorate in any way, I'll try that as well. But no guarantees.

Geeessshhh

 

[Kauri]

I agree Son of Bag,


We are about to feel a sting in this country, and because Labor will be in Government, Howard and co. will be singing that trusty old chestnut - the 17% polka.

Brad

Never forget ...The Right Honourable John Howard (federal treasurer in 1982 under Fraser when interest rates peaked at 22%) ..I hear tell he dances a mean Polka himself.. :beat:
Cheers
..........Kauri

 

[Flying Fish]

Never forget ...The Right Honourable John Howard (federal treasurer in 1982 under Fraser when interest rates peaked at 22%) ..I hear tell he dances a mean Polka himself.. :beat:
Cheers
..........Kauri

Those were the good old days. Jut throw your money in the bank and watch it grow