Can anything be done about these recent rate rises for investors?

Discussion in 'Loans & Mortgage Brokers' started by TMNT, 20th Aug, 2015.

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  1. Perthguy

    Perthguy Well-Known Member

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    There are things you can do.

    1) fix your interest rates. they can't be increased during the fixed period
    2) increase the amount of funds in your offset accounts (subject to availability ;))
     
  2. DaveyB

    DaveyB Well-Known Member

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    huh?
    did you lower rents on the way down?
     
  3. The Y-man

    The Y-man Moderator Staff Member

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    Assuming the profits are not being retained and distributed, maybe look at becoming a part owner of the bank. ;)

    The Y-man
     
  4. dabbler

    dabbler Well-Known Member

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    Seems to me, govt has had talks and given green light to do all this.

    What can you do ?

    Goes like this, cough up, or sell up, or they will do it for you :)

    If you used many lenders, you could go and live in each IP for a time, legit I mean. Otherwise, party is over rates wise, for now, and if it went back, prob mean even more global problems.
     
  5. euro73

    euro73 Well-Known Member Business Member

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    Whats your basis or experience for making such a statement?
     
  6. Air_Bender

    Air_Bender Well-Known Member

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    I can confirm this as I just got off the phone with my banker. Luckily I've already been given conditional approval and I'm just waiting on the Valuation to come back tomorrow. But CUA have now ceased all form of investment lending.

    Interesting times indeed.
     
    legallyblonde likes this.
  7. Big Will

    Big Will Well-Known Member

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    Supply vs demand has been accounted for.

    If interest rates were at 7% or 3% higher than right now, less people would be able to afford to hold or hold as many (depending on incomes) so there is less supply of rentals but still the same if not more demand from tenants as people need to live somewhere.

    If interest rates went down to 1% or 3% lower we would see rents soften even more as there is now more supply of rentals but less demand from tenants as more can afford to buy.

    Supply vs demand accounted for...

    This doesn't happen overnight but rents over the last couple of years have actually gone down in both $$$ but also on a yield perspective, however the cost of holding has also gone down.

    I know someone who owns a block of 4 units and they were getting $380-$390 for each unit about 8 years ago. Today they rent them all for about $340-350 pw If we use the best numbers on both it was about $81,000 in rent 8 years ago and today about $73,000.. Nearly $10,000 loss in rent p.a.! Ouch!

    However that is only half the picture, lets say it was $1,000,000 debt (I cant recall what they paid but the debt would be around here IIRC). Back at 7% interest that is $70,000 but today at 4% it is $40,000.

    So effectively they are $20,000 p.a. better off with the lower interest rates and dropping their rent by about 10%. These units are in Brisbane which has hardly been effected by any growth and I feel is a great example of showing how an interest rate can play apart. This didn't happen overnight of rents dropping from $390 to $350 but it happened over the years.

    If you flipped the situation the holding cost of person goes up by $30,000 the options are;
    Deal with the pain
    Sell
    Increase income

    These increases are not overnight but it does happen, $5 here $10 here all add back up.

    So yes accounted for supply and demand and no monopoly required.
     
    Beelzebub likes this.
  8. neK

    neK Well-Known Member

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    Buy more property :)
     

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