How long before Interest Rate starts going up?

Reserve Bank governor comments on Rate Rise

After a meeting of the central bank’s board on 7th July, the RBA left its cash rate at 3 per cent, a 49-year low - the same rate that has applied since its last cut in April in response to a slowdown in the economy. Investors and analysts predict official interest rates will reverse course within a year, with markets pricing in a half-percentage point increase to 3.5 per cent by July 2010. Until now most of the economists were predicting that the rates are not going to go up in the near future. However only last week Mr. Glenn Stevens said, “I have never seen written down a rule of thumb that says we wait until unemployment has peaked before we raise the cash rate. It depends what else is happening, and also depends how low we went.”

Well of course it depends on those things. And if the RBA is to continue to give due regard to “what else is happening”, it does not at all follow that the bank’s board is poised to initiate rate rises totaling 2 percentage points over 12 months, thereby pushing standard mortgage rates back up above 7 per cent. Yet within a short time of Mr Stevens uttering his none-too-committal remarks, futures trading were predicated

By Navjeet Singh Matta

on the assumption that rate rises of that order were on the cards. Should you go for Fixed Rates now? Well, that is still a burning question being asked. The fixed rates currently are around 1.5 to 2% higher than the variable rates, depending on the number of years you want to fix it. Looks like the variable rates have bottomed out and they are not going to go further down. But who knows the future, and that is why, whenever you go for fixed rates, there is a calculated risk you have to take and that is why people split the loans into 50/50 which is part-fixed and part-variable. Last 12 months have been such a roller-coaster ride as far as the interest rates are concerned. They have fallen from a peak of 9% to a low of 5%. The fixed rates were really good when the rates were falling but nobody knew how low the variable rates will go so not many people were interested in them but now it looks like it makes sense to go for fixed rate but not for more than 3 years. Still, there is no guarantee that you are going to save; the only guarantee is that you know the actual repayments!

We at Gain Home Loans specialise in structuring the mortgage to suit everybody’s situation. Call us on 9676 3417 to discuss your situation.

Don’t miss out on your Free Property Report

We have now made it much easier to access your property report. All you have to do is to send us an email at info@gainhomeloans.com.au with the property details, your name and contact number, and a free report will be e-mailed to you in 24 hours. This report can help you in many ways. Let’s say you are interested in a property and the asking price is $350,000. You would like to know how much it’s really worth? The next thing you would like to know is what offer you should place on that propertyyou don’t want to offer too much; yet on the other hand you don’t want to offer so low that you’d lose that property to another prospective buyer. This property report will outline all the past sales of similar property and also properties for sale in that area and in the range you are buying.

Through this article, I want to thank all those people who sent me e-mails and also called me to discuss their situation. Please continue to call, not only to get your free property report but also advice on which home loan suits you. We don’t charge any fee as we get paid by the lender. In return you get the best deal as per your situation and the product which can make you debt free sooner!

Contact us at GAIN HOME LOANS, Lvl 1, 9 Flushcombe Rd, Blacktown, visit our website or call us 7 days a week on 02 96763417. Our services are absolutely free!

Disclaimer: Advice given in this article does not take into account the personal needs and objectives or financial situation of the reader. The reader should consider the appropriateness of this and seek professional advice before making a decision whether to acquire or continue the products and services mentioned.

Tiranga goes globetrotting

• On August 22 1907, Madam Bhikaji Rustom Cama was the first person to hoist Indian flag on foreign soil in Stuttgart, Germany.

• The Indian flag was hoisted on Mt. Everest, the highest peak in the world, on May 29 1953, along with the Union Jack and the Nepalese national flag.

• In 1971, the flag went into space on board Apollo-15. It flew as a medallion on the spacesuit of cosmonaut Wing Commander Rakesh Sharma, during the Indo-Soviet joint space flight in April 1984.

• The first Indian Antarctica Expedition planted the first Indian flag over Dakshin Gangotri on January 9, 1982.

• The Indian flag was hoisted on the South Pole on January 17, 1989 for the first time by Colonel J.K. Bajaj.

• On April 21, 1996 Squadron Leader Sanjay Thapar, holder of many national and international records in parajumping and skydiving, jumped from an altitude of 10,000 ft from an MI - 8 helicopter and hoisted the Indian flag on the North Pole.

• On September 28, 1985, the Indian flag set out on a world sailing expedition on board Trishna under Colonel T.P.S. Chowdhry, and successfully returned home on January 10, 1987, cruising the high seas of the world and covering over 30,000 nautical miles in 470 days.

And may the list keep growing longer each. A very happy Independence Day to all!