I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80%. The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.
Maybe you should have a good think?
Further to my last it is revealed that the ANZ loan is fixed for 12 months. A bit like Harvey Norman, buy now and pay nothing for 12 months and you find the final cost is almost double that of cash.
Must be hard to get people to borrow so suck em in with a honeymoon rate.
Who needs to think.
hello,
good onya explod,
and the 5yr or 7yr fixed rate terms?
thankyou
robots
My advice to you is that be very aware of your recency bias and REAL about the history of economic first. Consider the advises that those "everyone" have been giving you. Try to look at it from an unbiased way. If you find a point that you do not agree, ask yourself why you believe so? Also try to consider where did you get your information from? From the media? From the real estate agents who claim house prices never fall? Or from "similar age" friends who has done this 2-3 years ago and is now better off? (in which you would automatically assume that history will repeat itself forever)
My observation has been that alot of young people, especially those who are very well educated, are very prone to being too confident of themselves and ignore information and history that they have not personally experienced before.
To give you my perspective, and a surprise as well, I am ALSO a Master educated 26 years old with a combined income over $100k with my girlfriend (not yet my Fiancée yet hahah). We decided to put off buying house until the whole global credit crisis mess has sort out itself and when the economy has go through it's recession (and hopefully not), a depression.
Regardless, if you don't really care about the investment aspect of owning your house and that your decision to purchase it is an emotion one where you would like your own home and avoid renting, and that you are VERY CONFIDENT of your ability (and your Fiancée) that you will not be out of jobs over the next several years, then go ahead and purchase it. However, do not expect your house prices do go up as much as what has been observed over the last 7-10 years. This once in a life time global credit boom will not happen for a LONG LONG time again.
Of course, I said to be wary of information from the media, and this is no exception. However, I would not look at the comments made by the journalists, rather, I would look at the data presented and find out if what was said is true.
As far as I'm aware no prediction is implied by the bank rates, they simply have a cost of money and add a margin on top of that. So you can't read anything into these movements other than a reaction to what has already happened. I would be interested in why they are any better at predicting rates than the average economist.I just walked past my local ANZ branch, they have lowered the 6 month term deposit rate from 8.15% to 7.80%. The banks are pretty good at picking which way rates are going to move, they wouldn't be lowering rates if they thought they were going up. It would suit me if they kept going up but I don't think they are going to.
Maybe you should have a good think?
As far as I'm aware no prediction is implied by the bank rates, they simply have a cost of money and add a margin on top of that. So you can't read anything into these movements other than a reaction to what has already happened. I would be interested in why they are any better at predicting rates than the average economist.
Tyson I'm saying I don't think the banks are making any predictions. Perhaps we both need to find some source material, I haven't researched this past a friend who is an economist and did some research on the subject himself; so I could be partially or completely wrong.generally if the banks are offering fixed rates at lower than the current varible rate then that is a sign that varible rates may be on the way down,... if fixed rates are higher than varible and increase as the term gets longer then that is a sign the banks believe rates will be trending up.
the banks can't predit future interest rate movements but they will form an opinion and set there interest rate stratergy accordingly
Credit crunch... where?
Just some small feedback from my own experience about credit at the moment. I'm moving some loans from one of the small fish that got squashed in the crunch to a major and am surprised how liberal credit appears to still be, throw in robust valuations and... it's still peachy, no guarantees how long that will ever last of course.
The majors appear to be loving all this new business, might well be a chance for their spreads to widen a bit on loans now the smaller players are dropping off, makes you take a closer look a the bank shares anyhow.
So LoDoc and credit are still viable, at least for me at the moment. No prediction about where that game is going.. but thought it might be interesting feedback for some, surprised me a little bit.
Nothing surprises. Looking at Domain dot.com awhile back (3 weeks) and a mob are still offerring 105% finance to approved customers.
And that John Bloke from /Aussie Home Loans has stepped down from CEO to concentrate on pulling small loan brokers together, probably those ones GE are spitting out of Wizard before they sell it off to the banks. Remember the old catch cry "AUSSIE WILL SAVE YA"
If fixed rates are lower than the SVR then it might well be a sign that rates are going down, just that I don't think the banks are in the prediction game in this instance. I believe they simply add the margin onto their cost of funding to determine rates, both fixed and SVR.
For instance if the bank is going to write you a 5 year fixed interest loan and they just add a standard margin of 2 % then over the 5 years the interest rate that the bank borrows moves up by 3% then the bank is losing money.
Auckland's largest real estate agency group, Barfoot and Thompson, has reported that its average sale price fell 5.3 per cent to NZ$497,479 in July from NZ$525,316 in June as sellers start to to adjust their price expectations.
The CDOs written on fixed rate loans can be written for a few years out, however margins aren't fixed (for example, margins are squezed when delinquincy rates are higher). Most loans are written on balance sheet at the moment (can't securitise much in the current market, regardless of asset/tenant quality) so losses on fixe rate loans is not just realistic, it's part of bank SOP. Fixed rates are seen as "loss leaders" to try and leverage profitable business off (insurance, short term consumer finance etc.)Really? I thought they bought a bond or some such with 5 year maturity and added a margin to it, so they're not exposed at all.
The best post for a long time on any RE thread.In the early 80'S I was at the age of many here.
Banks threw money at you much as they did in the late 90s early 2000s
I took it and held 7 figures of commercail property.
Interest went to 18%
Tennents went broke.
Property was vacant and the banks came knocking.
Missed bankruptcy by the skin of my teeth.
Market remained flat till the 1990's
Off it went again.
I went again but with residential.
Was in the position to go harder.
This time took some profit and geared
back from 80% to 38%
So it will go flat again.
It will all happen again.
If you cant gear below 50%
Then wait for the opportunity which will come again in 12-18 yrs.---if your young enough.
Just like trading there are times when you place all your chips and others when you best remove some or even ALL.
Things to look for in 12-18 yrs.
(1) Interest rates lower than seen for 10 yrs or so.In the late 90s this was the case--30 yr lows.
(2) Cheaper to buy an established house than buy new and fit out.(Landscape,Carpet,Curtain etc)
(3) Positive gearing is not only possible but almost impossible NOT TO.
This was the case in the late 90's
(4) get in early it will last 7 yrs.The earlier your on to it the more youll be able to gear for the first 4 yrs---use the last 3 to gear down.
(5) Commercial and Industrial will always follow 3-4 yrs later,so you get a second bite.
(6) (5) Lasts only 4-7yrs so be very quick
(7) Gear down but save the rest---the worm turns.
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