The Sting in the Interest Rates Tail

This post is designed for discussion purposes of the article contained in the July newsletter.

Also welcome are posts about how many interest rates between now and December, and how much.

I'd also welcome discussion about what you are planning to do or change as a result of the new interest rate environment. For example, have you fixed interest rates, deferred spending etc.

Thanks,

Steve McKnight

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Remember that success comes from doing things differently.
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Hello Investors,

We understand that an interest rate rise will affect all investors but not so sure how this rise will affect Perth property prices where most of our portfolio is held.

For us the boom seems to continue and analysts are predicting a reduced growth rate rather than a decline.

Does anyone have any thoughts?

Cindy Henderson

Hi,
Can any suggest to me what I should do?
I have only just recently last 12 months accumulated my 1st real investment property which is rented out at the morgage repayment cost. But since purchasing this house I have lost my job, and struggled through for a few months living at my primary place of residance before deciding to rent it out (below the morgage repayment costs by $50 per wk) and move back in with my mum. I am struggling to find work and keep up to date with living (although its cheaper).
It has crossed my mind to refinance again (I have already done this when I bought the investment house last Nov), and fix the interest rates - but I'm not sure if this is the correct thing to do. Both my houses are now on interest only loans, to help keep repayments cheaper.
My other question is that I'm not even sure if a bank would look at refinancing my loans to a fixed interest rate seeing as I am only on a sole parents pension.

Any ideas as to what would be the best way to go about this would be appreciated. I would naturally prefer not to sell either of my properties, although the dearer one has been on the market, but I'm not really interested in selling.

Thanks
Marg

thanks for the news letter steve, it confirmed my way of thinking.
how it happened for me was at one of your seminars you said something like, you're either in the market in which case make a decision based on today or you're out of the market, or your sitting on the fence. that was a real aha moment for me. i made my decision and stuck to it. i must admit for a while there i was certainly in some doubt but now i'm sure that the decision i made earlier this year is the right one.
i look forward to getting even further cashed up and waiting for events to unfold.
cheers
shaun

Lead, Follow or get out of the bloody way

thanks for the news letter steve,
it confirmed my way of thinking.
how it happened for me was at one of your seminars you said something like, you're either in the market in which case make a decision based on today or you're out of the market, or your sitting on the fence. that was a real aha moment for me. i made my decision and stuck to it. i must admit for a while there i was certainly in some doubt but now i'm sure that the decision i made late last year is the right one.
since january i've sold off all properties both here and in nz, and am saving like mad, this has meant deferred spending as well as applying for high paying jobs in the public service so that i can save even more.
as for interest rates, i reckon 2 this year and maybe one early next year, depending on oil prices, instability in the middle east etc.
i look forward to getting even further cashed up and waiting for events to unfold.
now is the time to be prudent and make a plan and stick to it.
cheers
shaun

Lead, Follow or get out of the bloody way

hi steve
a very interesting position that we are in at the moment.
and the coin is in the air
to fix or keep the loans as flexible rates as they are know.
I have a couple of problems and they haven't been answered at the moment.
I think that there will be a 1/2% movement up but when that will happen not sure.
currently we have a flat market but a 15% increase in rents in the last 6 months and the rents are still rising as the stock of units is mopped up.
so it is a good enviroment to instead of fixing, using the flexability of the loan to gain product and then fix.
With the increase or possible increase of rates
this gets people that are over committed a bit more jumpy and so you can strike a good deal.
fixing rate is good but you can't move cash or equity so for me
its like jumping off a ship
you wait to the last minute and that time for me has not come as yet.
I think 1/2% max for me and it may even be 3/4 up and 1/4 back to show they are doing something.(cynical me)
as you can see from welcombe to my world I have not stopped spending.
The news at the weekend that sydney prices rose this month is not a shock either
when rents meet repayments or close to them people will buy because they have to, not because they want to.
the stock in the inner suburbs of sydney is a bit of a joke
as one real estate in leichhart has increased his rent roll 15% across the board three weeks ago and it has done nothing to stop his demand.
my .002

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