Ok, so we are locked in to start building a house in September, probably finished in July 2023.
So is that suggesting the interest rates offered by our bank will be around 1.5% higher than they are right now? more or less?
Rates really can only go up from here or stay the same.
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1.5% increase in less than 2 years would be kind of extreme though wouldn’t it?
Mid last year I moved 75% fixed until 2025 and the fixed is now 0.75 higher.
Paying more than variable at present but pretty happy as long as covid doesn’t kill me before 2025
Very extreme and won’t happy until wages start moving significantly and drive inflation further.
The quantitative easing was necessary but will cause problems for more than a few
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Basically…the market thinks that Australian interest rates are going to rise ~1.50% over the coming 18 months.
So, in my story above, I asked my margin lender for a 12 month fixed rate…and if I average the numbers at the bottom of the chart from February 2022-February 2023, it comes out at ~0.5% higher than today…so my margin lender’s offer was fair.
If you are building a house, my guess is that your interest rate might be slightly elevated due to the higher risk of financing a construction project…maybe once it’s built, you can refinance onto the cheapest rate possible, a no frills loan, with a finished property as security…maybe that can partially offset the interest rate rises.
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lol
1.5% isn’t much in different times.
would probably signal end of pandemic and end of cheap money.
Nab investment loan is cheapest isn’t it?
1.5% increase in 2 years wouldn’t be extreme given the present conditions, stimulus spending, inflation increases, the current stockmarket bubble and volatility. If it wasn’t for election season, there would’ve already been a 0.5% increase.
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6 movements of 0.25% would be 1 every 3 months to get to 1.5%. Not drastic.
If you want another way to see what the banks are predicting look at term deposits. If they are starting to pay more for longer durations then they are predicting interest rates to be higher in the future.
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Nice to see 4 out of 5 positive days on the ASX this week 
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I hope Super funds were not overloaded with Facebook/Meta shares. Can’t see that 20% coming back anytime soon, if at all.
Happy to see the decline of FB however.
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amazing that Amazon go up 20% just as facebook go down 20%
Pretty sure the government doesn’t get a say a in interest rates.
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I’d argue that the stock market has already corrected to price in interest rate rises, so maybe the Fed Reserve just talking about them has done the job, with only minimal increases required.
It’s also been questioned whether inflation has been caused by too much cash supply or other factors, like supply shortages, in which case interest rate rises won’t help soothe inflation.
I recall the fed’s latest comments were that they wouldn’t rule out a rate rise this year, and so I think 2 rate rises this year would be the most we would see given it’s already Feb and they’d need time to make the first rise, collect data and recalibrate before making a second increase.
Might just be wishful thinking on my behalf though.
I had a quick look and Westpac, for a 10k term deposit, is offering .52%pa for 12 months, .7%pa for 2 years and .9%pa for 5 years.
Not quite sure how to read that, how does it normally correlate to home loan rates? Seems like they are expecting rises, but not too much.
Or since it’s nearly doubling, can I expect home loan rates to double too?
It correlates to how long your money is locked away for.
0.9% for 5 years is criminal. At 4% inflation you are effectively losing 3% of your purchasing power a year for the next 5 years. It’s a huge opportunity cost.
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Yeah, I get that side of it, but I’m trying to work out what those fixed rate rises mean for home loan rates. 0.38% increase in 5 years would be a dream, but that’s not gonna happen.
Maybe 1.5-2% increase? 3% max increase? I know the banks will take more than they give back but what’s the ratio?
Can anyone remember what home loan rates were the last time the banks would give you .9% on a 5year fixed term?
Interest rates are obviously difficult to predict.
Inflation will put upwards pressure on rates, but at the same time the need to keep GDP growing to service our extremely high levels of national debt puts a ceiling on how high they can go too.
The Keating days of 10% + are gone, I reckon worst case the inter bank rate gets to 3%, which is hopefully serviceable for everyone.
as I bought more. They are doing very well, the share price is ridiculous. Still down on my initial investment as I bought at $1, just before they quickly rose to $1.60. Hopefully the shorters also nick off…
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First rate rise will ne March. The market is pricing in 5 rare rises in the US in 2022. Bank forecast range from 4-7 rate rises…Bank of America out there at 7.
Equites havent priced in 5 rate rises yet though i would suspect. The major reason is, yes, supply chain issues have added to inflation and will likely receed a bit…so while that remains a possibilty 2-3 rate rises remain a possibility. Once that goes thrn market still needs to rerate downwards.