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Best guess at interest rates over next 5 years

Discussion in 'General Property Chat' started by Seal, 28th Apr, 2016.

  1. Seal

    Seal Well-Known Member

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    it seems 5 year fixed interest rates are around 4.5-5.0%

    1. What do you think will happen with interest rates over this time?
     
    Last edited: 28th Apr, 2016
  2. MarkB

    MarkB Some guy on the internet Premium Member

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    6 months is a long time in economics.

    5 years is an eternity.

    If you're worried about rate rises (and most probably aren't, the long term outlook for rates - as it stands currently - is very flat) then fix your rates.

    Fixing rates isn't about beating the bank (they make their money when you fix).

    It is about providing yourself insurance cover for that aspect of your business.
     
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  3. spludgey

    spludgey Well-Known Member

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    I think that unless something very significant happens, rates are unlikely to move up any time soon. The levels of debt are just too high for the government to allow this. A 2% increase in the reserve rate would send many people broke.

    So I think that rates are much more likely to come down than go up, but I just fixed most of my loans at 4.19% for two years. This is because I want certainty on what my spend is going to be and it's actually going to be much less work over the next two years knowing that I don't have to worry about reassessing them.
     
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  4. Seal

    Seal Well-Known Member

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    yes, we've fixed some rates already.

    Just trying to work out what is wise with buffer for serviceability in the future
     
  5. spludgey

    spludgey Well-Known Member

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    By the way, TMBank is offering 4.34% for five years with an offset account for OO. It's a bit niche, but good value if you qualify.
     
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  6. jins13

    jins13 Well-Known Member

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    I think after the FY period, and I make some more purchases (I will be out of the game for a little while) going to consider fixing some of my loans for peace of mind.
     
  7. Plucka

    Plucka Well-Known Member

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    Government doesn't control interest rates so don't quite get that comment. 5 years is pretty much a guess but my guess is they will remain fairly flat. AU and world debt is so high any raising of interest rates would cripple economies. Risk is some kind of out of control inflation scenario/GFC2. Otherwise overseas funding costs increasing to our banks (regardless of RBA rates) causing them to raise rates, but probably counteracted by the RBA anyway. Probably more chance of rate cuts than rises in the medium term although don't think they will drop much further. I just fixed for 3 years 4.05%, guess time will tell if that was a smart move or not.
     
  8. spludgey

    spludgey Well-Known Member

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    You don't think that they have any control over the RBA? If you go to their website, they do seem to have a .gov.au URL.
    APRA didn't start the crackdown on their own accord either.
     
  9. Nick Valsamis

    Nick Valsamis Well-Known Member

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    Best guess is that rates won't increase until 2018-2019. But it's too far ahead that even the RBA don't know.
     
  10. MarkB

    MarkB Some guy on the internet Premium Member

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    They're owned by the Government (hence the .gov.au website).

    But they're like a dog on a long leash and they have a lot of freedom to move within the limit of that leash.

    However, if matters of RBA policy ever amounted to a material difference of opinion between the RBA and the Treasurer, then the Treasurer has them by the short and curlys (after all she/he is part of a government that has been elected to manage the economy - the RBA are just public servants). But (afaik) it's never been really put to the test (not in recent years - not even during the GFC).

    Keating used to manipulate the RBA big time - especially when his man (Fraser) was in charge. But they've been a lot more independent for 20+ yrs.

    APRA is a little bit different, in that their instruments aren't as blunt as the cash rate.

    When the RBA doesn't want to fiddle with the headline interest rate, it can use APRA to do some of its dirty work.
     
  11. larrylarry

    larrylarry Well-Known Member

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    As much buffer as you can possibly build.
     
  12. ATANG

    ATANG Well-Known Member

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    They should really be having different interest rates in different states or even cities, for example having higher rates in Sydney and Melbourne and have lower rates for Perth, ADL, Hobart & Darwin with lower rates.
     
  13. JDP1

    JDP1 Well-Known Member

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    i wouldn't quite say their are 'controlled' by the government- id rather say they are 'influenced' by the govt...:)
     
  14. joel

    joel Well-Known Member

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    With housing as the last market standing.. interest rates will slowly climb (damn banks) while RBA rates slowly fall.. thats my bet anyway.