I am quite surprised at the lack of speculation of interest rate changes so far this year. There has hardly been any coverage in the media.
Whats everybodys thoughts on this one…I can’t see that they will. Everything seems steady, employment, petrol, heat out of the market, no new big developments beinbg approved. I’m sincerely hoping they have learned a lesson from other times when the Govt figures have lagged behind reality and they haven’t realised the heat has gone out of the market and have kept interest rate pressure on too long, therefore creating a recession instead of a soft landing.
Fern
I think we’ll see a small .5% rise by Mid 2006. Thats my guess !!
Amanda
“It is better to be inconspicuously wealthy, than to be ostentatiously poor…”After the housing finance numbers today, this was put out by our Economics team:
New lending to owner-occupiers (number) rose 0.4% in November. Stripping out the impact of refinancing we find
that lending was also up 0.4% in the month, with an 8.5% rebound over the last four months – to be up 10.6%yr.
The spring bounce is evident in both the established sector (up 0.6% in the month and 9% over four months) and new construction commitments (down 0.6% month
and up 6.4% over four months). If this improvement is sustained, housing activity will switch from being a drag
on the economy over 2006H1 to a positive during 2006H2.A big part of the story is that first home buyers are coming back to the market in a major way, responding to improved affordability – with house prices flat to down and incomes
rising at a time of robust labour market conditions.Investor finance appears to be moving rapidly sideways, with low rental yields a negative for this segment. If investors remain on the sidelines, then it is more likely that property prices will continue to consolidate.
The RBA’s return to a tightening bias in November is also a potential negative for the housing sector. Although, at
least for now, market interest rates are not responding to the Bank’s rhetoric – with the 3 year bond rate trading
some 0.35% below the 5.50% cash rate.… that’s an interesting way to look at the housing finance figures. It’s totally different to my view though – I may have time to explain later. Remember though, interest rates are a blunt tool to control various forms of inflation, none of which include house prices in their basket. I’d look to oil prices etc before I looked at housing finance… up to AU$89 per barrell again today.
I agree with AmandaBS – 0.5%, but for the year, not the first half. This is far from certain though. I think we are going to see some very big economic news from the US this year, and if the political tensions with Iran escalate, all bets are off for the future of the world economy let alone the interest rates for a small island country at the *rse end of the world.
Cheers, F.[cowboy2]I am thinking due to petrol prices etc and the yes the housing market has slowed, but the fact is there are still some crazy prices being fetched for some properties.. I am thinking a rate rise is imminent….. it will be interesting to see…
You are obviously looking at the wrong media if you haven’t see anything on interest rate this year.
2006 first issue of FR Smart Investor, BRW and Your Mortgage Magazine all address Interest rates.With the bond rate below the Cash rate it may be a good time for those worried about a rate rise to lock in part of there loans at a fixed rate. The 3 year rate is about .3% below the standard Variable rate at the moment. which as some suggest may equate to .8% in the second half of the year.
Mal
Getting out of your comfort zone, can help you become comfortable
This is about the only thing I have seen in the last couple of months, and it was in Money Magazine December issue (ie came out early Nov)
“Property experts expect prices to continue flatlining in 2006 — but if interest rates rise, it could turn ugly, writes Terry Ryder.
Nobody is quite sure what to predict for real estate in 2006, because everything depends on interest rates.
Even a 0.25 percentage point rise will scuttle a recovery. The average mortgage has risen 30 percent in three years, so a typical borrower is paying $350-400 a month more than in 2002.
“The market is susceptible because borrowings are so much higher,” Sydney buyer’s agent Henry Wilkinson says. “It’s hard to see what will happen in 2006 because it depends on many variables, with interest rates number one.”
Louis Christopher of Home Price Guide says even a small rise will hurt affordability, deter investors and keep the market “under water”.
If rates don’t rise, most see the market flatlining in 2006 — neither rising nor falling.”
was looking at fixing half mortgage as was lower rate than variable, but by the time i got off my butt, the fixed had a gain gone back over variable rate.
Well had for my fanancier.
I would think .5% by year end
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