I am interested in the likely movement of Australian home loan interest rates in the next 6-12 months. Does anyone know where i can find what economists are predicting will be the likely future interest rate changes?
I’m thinking about fixing my mortgage and would like to consider the risks of moving from a variable rate to a 1,2 or 3 year fixed rate.
Any information on this would be greatly appreciated, or if anyone has any tips on where economists publish their forecasts, i would be really grateful
Economic Outlook on Interest Rates
LRog626 on 22/04/2020 - 08:03
Comments
1) Translation: We're totally going below .25% :)
2) "Unless our economy continues to deteriorate …." The FED, the IMF and the RBA have all predicted numbers on par or greater than those that occurred in the 1929 depression so at this point I see it as a forgone conclusion. I hope I'm wrong for the sake of all the innocent people who will suffer but at this point I'm not seeing any other outcome (outside of a popular grassroots uprising but I can;t see that happening much TBH).
I find this very hard to understand.
Your comparison to 1929-1936 (Bulk of Depression years) where interest rates were much higher than they are today. Also it was under the control of the Commonwealth Bank as the RBA didnt exist.
At the lowest point treasury bills were 1.75% in 1935 (6 years into the depression - not at the beginning). These were 6% at the start whereas ours were more like 2%
We are in uncharted territory here because the RBA wasnt prepared for such a rapid economic shutdown of this magnitude, and has very few bullets left. A bit like the hospital system which had small reserves of PPDs or Ventilators.
Fair enough. I wasn't looking so much at interest rates, rather unemployment and projected unemployment rates being as high or higher than the last depression. Yes, back then we had a true Commonwealth bank (before it was sold to private interests)but if you re read my comment you'll see I was talking about current RBA predictions and not what effect the non-existent RBA might have had 100 years ago :). Admittedly I haven't studied the effects of unemployment on the economy 'that' much but as it's normally a key indicator I reckon it has a big role to play. Interest rates can be adjust at whim..for the most part. None of us know the future for certain though, but I'm fairly confident the next few years are going to be VERY interesting and could go either way but at this point it looks to me as if the bad guys are winning. :)
We have been in a recession for a long time even though the government and government-friendly media will not admit to this. If the economy was "that good" we would not have had ongoing decreases in official interest rates to try and encourage spending to stimulate the economy. Covid19 is just co-incidence that we are now in a recession, expect more pain moving forward and I am, selfishly, totally OK with this. Will rates go any lower? RBA says no but given that Covid19 has made a majority of the population panic and scared, in addition to the relentless saturation of the news by governments with negative messages - I anticipate more economic pain.
On a call with analysts from the NAB yesterday. They didn't expect a move in the interest rate until 2023 at the earliest, and then slowly upwards if at all. House prices expected to decline by 15% over the next 12 months. They suggested even before covid that 20% of properties were negative equities. The NAB are seeing a flood of cash deposits, presumably from smaller banks, and people selling equities and keeping balances as cash. That suggests for them the the cost of deposits is pretty low along so rates should be flat.
Many thanks all for your advice. It is much appreciated
I will contact my bank and take action.
Thanks again
Personally don't think it will drop much more (if at all).
1) RBA said they won't be dropping cash rate below 0.25%
2) All the fixed rate offers you are seeing right now are due to a special $90bn funding arrangement the RBA set up for all banks, for them to borrow at 0.25%. Unless our economy continues to deteriorate more than it has so far I doubt this would be repeated with something better.
I'm also in this situation of currently variable (2.59%) and looking to fix at 2.29% for 1 or 3 years. I'm probably going to go with 3 years after talking to my bank about the potential break costs, which should be minimal in a rising interest rate environment