Just wondering what OZB community thinks about the home loan interest rates going up this year..
Are you prepared for the worst, would it impact you..
Interested to know what others are predicting, planning etc..
I know media exaggerates a bit, I personally think they would slightly go up by mid 2018..depending on how our economy and stock markets are going.
ask 10 people and you'll get a dozen different answers
You need to specific one answer per person - that's where you're going wrong
"If" they go up, it won't be by a material amount for standard variable owner occupier loans … maybe 50bps. Read the comments of the RBA Governor on the direction of interest rates this year.
If you accept that the RBA is going to have a neutral outlook on rates for the year, you then look at the swing factors.
Fixed rates … these could move as rate expectations change, even as a way for banks to extract some margin away from the "headline rate".
Rates for investment loans, interest only loans, "non-standard" loans … these could move as regulatory action unfolds.
Banks will be under the spotlight with the Royal Commission this year so won't be keen to make too many moves they are not forced to this year.
Of course, if something happens … stock market crash, other economic "crisis", etc., then all bets are off.
so are you saying if interest rates go up by .5%, it will not be passed on to variable owner occupier loan?
i thought it should be the other way round
What I'm saying is that if the RBA goes up by 50bps, standard rates will move by 50bps (give or take) … but the RBA is basically saying they won't be moving this year.
cool, got it now.
Towards the end of the year, but only small amounts.
Interesting read
http://thewire.fiig.com.au/article/commentary/opinion/2017/1…
RBA don't have the balls
They know it's game over once rates goes over 6% , even 2 years from now.
Most they'll raise is 0.5% by end of this year but unlikely.
I believe individual banks (the big 4) will increase rates even if the RBA do not and the smaller lenders will follow suit.
Australia's overall debt is getting higher and it will cost more to access international funding for loans.
Due to a fierce competition in home loan market, I doubt this happening. They will rather lower the interest rate for the saving accounts.
They can only lower so much before people start looking at alternative options for their $.
As soon as one of the big 4 do it the rest will follow negating the competition. You might still be able to get a better rate from smaller lenders but I don't think the big 4 would care much.
Not sure about the RBA but just wait for the banking royal commission to conclude then the banks will raise on their own
Highly likely, but It will be a very reluctant move by RBA.
Let me get my crystal ball
Just 1? I was gonna consult my crystal balls
2 balls
8 ball
Chances are it will rise by 0.25% in May/June period i reckon the RBA will have to do the wait and see how the economy handles and rate rise for at least 3-6 months before considering any further action.
The low interest rates has lead to over-spending and a huge increase in debt for ordinary Australians via this over priced housing market.
The issue is it is easy for prices to go up fast but dangerous if they go down at a similar rate.
So if you ask me it is highly likely there will be a rise but the reserve bank are scared of the mess they have made making too much 'cheap money' into the economy they probably should of left the cash rate at 2% and wouldn't be surprised if this time next year that is were it will be.
One would think the only way is up from here.
Having said that our governments have for the most part lost monetary policy as a mechanism to control the economy, they cannot bump up rates to say even 5% because of how much debt Australians already have, and 5% is low.
The RBA won't but the banks will
Source : Me. My friends call me a banker.
I don’t think they will. I also think that there would be a huge number of people who are on the cusp and if interest rates increase even a small to slightly moderate amount would be in dire straits, it’s very distressing as there’d be a lot of younger Australians also affected if that took place. I do think if interest rates are going to go up that the RBA will be giving Australians a fair warning, at least I hope that’s the case.
As an aside that ad, the one on Telly from The Smith Family saying 1 in 7 Australian kids are in poverty is that fair dinkum?
The RBA won't put up rates this year - they won't have to. Rising bond yields in the US (which have moved from around 2% to 3%) will increase the cost of overseas funding for the banks, who borrow a significant amount from foreign capital markets. If you have a business market rate loan with a bank you might have already noticed that the rate has increased by about 25 basis points in the past few months. Households can expect the same through the course of this year.
So yes, the interest rate you pay on a variable mortgage will go up this year (around 25 to 50bp I imagine), but it won't be due to the RBA hiking rates (inflation is too low for the RBA to move rates higher).
Seems like you ask 10 people and you'll get a dozen different answers on this one. I fixed for 2 years late last year mainly because it helps me with budgeting and I'm not constantly fretting about interest rates hikes etc. Probably won't save me any money but it was worth it for me for the mental burden of not thinking about it anymore