Interest rate drop?

Discussion in 'Property Market Economics' started by MTR, 2nd Mar, 2020.

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  1. MTR

    MTR Material Girl Premium Member

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  2. PandS

    PandS Well-Known Member

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    or give market free fall some confident the government got their back :D
    margin call today I suspect some real bargain start to show up
     
  3. Harris

    Harris Well-Known Member

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    Its on a 95% certainty according to economists for a cut tomorrow - question now is if its a 0.25 or 0.5% cut
     
  4. marmot

    marmot Well-Known Member

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    It will make absolutely no difference to business , just creates more speculative investment and the IR drops will do more damage , as we have just found out with the big increase in margin loans on the expectation that the stock market would continue to increase , and who was it that said "When the tide goes out , you find out who has been swimming naked."
     
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  5. MTR

    MTR Material Girl Premium Member

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    Indeed
     
  6. Speede

    Speede Well-Known Member

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    0% chance at 0.5%
     
  7. MTR

    MTR Material Girl Premium Member

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    Really
    So this tells us our economy is softening? Not complaining....
     
  8. PandS

    PandS Well-Known Member

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    That the way of the market, the over leverage end up selling to the guys with cash at the bottom of the market at rock bottom price, this is not the first time it happened hundred of times in human history.

    the real question is how can you take advantage of such opportunity
     
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  9. MTR

    MTR Material Girl Premium Member

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    wondering whether this may drive property prices further north??? Or south??
     
    Last edited: 3rd Mar, 2020
  10. Harris

    Harris Well-Known Member

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    I would imagine the analysts at GS might have more insight than you?


    Goldman Sachs sees RBA rate cuts in March, April
    William McInnes

    Goldman Sachs says it expects the cash rate in Australia to fall to 0.25 per cent by the middle of the year, forecasting back to back cuts in March and April amid the growing concerns over the spread of coronavirus.

    The investment bank said the outbreak had deepened the further downside risks to global growth, downgrading its forecasts for domestic growth in 2020.

    "While we don’t expect technical recessions in either Australia or NZ, in both economies this is now a very close call," said chief economist Andrew Boak.

    "We expect both the RBA and the RBNZ to ease by 50 basis points in Q2, with back-to-back 25 basis point rate cuts starting in March. We note that a 50 basis point rate cut by the RBA at this Tuesday’s meeting cannot be ruled out."
     
  11. Harris

    Harris Well-Known Member

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    Not yet but its intended to offset the expected softening since there could be a lot of damage done in the next 30 days in absence of any easing / stimulus by the RBA.. Whilst equities are getting hammered, the jury is out on what it means for the prop markets..
     
  12. Lacrim

    Lacrim Well-Known Member

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    Hope so...if I can get 3% P&I on all my investment loans I'm fixing for as long as I can (5 years if possible). It could drop further but for me personally, its low enough to take a punt.
     
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  13. Gen-Y

    Gen-Y Well-Known Member

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    I have learned my lessons to never take 5 years fixed loan in Australia.
    Given where the projection will be for the next 10 years bond yield. It can only mean 1 thing - lower rates.
    3 years is maximum I will fix at any period.
     
  14. Lacrim

    Lacrim Well-Known Member

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    Yeah, I've been burnt too but given my situation, I'm after surety rather than beating the market. Something with a 2 in front for 5 years would have exceeded all my expectations a mere 12 months ago. And I'll probably fix 80% of my loans but not all for flexibility, offsets etc. Having said that, I'm guessing 5 year rates won't go that low and if so, I may settle for 3 yrs.
     
  15. paulF

    paulF Well-Known Member

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    I think they will wait till April and reassess. Not much gain in cutting now and it will probably spook the markets more than anything.
     
  16. Gen-Y

    Gen-Y Well-Known Member

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    The horse have already bolted out of the gate.
    Bit late to slow the rates drop. just get on with it will you?
     
  17. Harris

    Harris Well-Known Member

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    NAB sees rate cuts in March, April
    William McInnes

    NAB has joined ranks with Westpac, forecasting two rate cuts in the next two months as the Reserve Bank of Australia seeks to offset the rising economic threat of coronavirus.

    Group chief economist Alan Oster brought forward the bank's original forecast of a cut in April and a cut in June, noting a 50 basis point cut tomorrow was a possibility.
     
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  18. Chotu

    Chotu Active Member

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    Plenty of media reports speculating high chances of a rate cut tomorrow. Let's just wait 24 hours and we shall have the answer :)
     
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  19. paulF

    paulF Well-Known Member

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    It sure has but taking down rates to close to zero is not a trivial matter and has many negative consequences. Below is a good read from the RBA in regards to low rates and its effects on financial stability
    https://www.rba.gov.au/publications/confs/2017/ellis-littrell.html
     
  20. MTR

    MTR Material Girl Premium Member

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    GDP forecast for 2020 1.3%, why we are seeing cuts