How low can fixed rates go?

Discussion in 'Loans & Mortgage Brokers' started by Hebro, 2nd Apr, 2020.

Join Australia's most dynamic and respected property investment community
  1. Hebro

    Hebro Well-Known Member

    Joined:
    19th Feb, 2020
    Posts:
    108
    Location:
    Aus
    With the RBA at 0.5%, and they say they are not going lower, how low can fixed interest rates go?

    What margin do banks need on fixed rates?

    Leading to, what fixed rates would be a reasonable gamble, for OO or IP, for 1-5 years??
     
  2. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    15th Aug, 2005
    Posts:
    7,515
    Location:
    Gold Coast
    More brave talk than the truth

    ta

    rolf
     
  3. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    5,985
    Location:
    Australia
    In theory interest rates can go below zero. That includes fixed rates.
     
  4. Propertunity

    Propertunity Exclusive Real Estate Buyers Agent Business Member

    Joined:
    19th Jun, 2015
    Posts:
    3,472
    Location:
    NSW
  5. Morgs

    Morgs Well-Known Member Business Member

    Joined:
    7th Dec, 2017
    Posts:
    1,040
    Location:
    Sydney NSW
    melbourne171 and Lindsay_W like this.
  6. ToBeFree25

    ToBeFree25 Active Member

    Joined:
    29th Oct, 2018
    Posts:
    33
    Location:
    Melbourne
    Hi all,

    With all of the commercial, is it commonly bought based on interest rates ? i know there is other factors such as location, strength of tenant, lease length.

    We usually see an agent quoted 5% return on investment etc. and with the interest rate hitting almost 0%, can commercial price still goes up ? the only way i can see this going up if there is enough desperate people out there to bid the return down from 5% down to 4%,3% or lower.

    Is this means that we are reaching the ceiling for capital gains for commercial ? or residential as welll ?

    what are your thoughts on this idea ?
     
  7. Archaon

    Archaon Well-Known Member

    Joined:
    20th Mar, 2017
    Posts:
    1,846
    Location:
    Newcastle
    commercial is a no go, Tenants are refusing to pay rent with the government saying for the landlord and tenant to work it out, not sure what upside you are seeing in commercial property.
     
  8. ToBeFree25

    ToBeFree25 Active Member

    Joined:
    29th Oct, 2018
    Posts:
    33
    Location:
    Melbourne
    well that's my point.

    it looks like it is reaching a ceiling, and it wont go up any further.

    in saying that, i have a commercial, and my tenant is doing work for goverment and not affected by this shutdown, so business as usual.

    what i am try to gauge here, what other factors that will cause price of commercial to increase (apart from the % return per annum).

    are we reaching the end of bubble ?


     
  9. Archaon

    Archaon Well-Known Member

    Joined:
    20th Mar, 2017
    Posts:
    1,846
    Location:
    Newcastle
    well, what always increases prices, demand.

    I don't see much demand in the foreseeable future.