I think the world is moving towards a synchronised double dip recession – US, Europe, China, UK . . . . I think variable interest rates could possibly end up below 5% by July 11. I don’t need to write much else.
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I think this will lead to a fall in the interest rates of fixed loans, or will mean no increase in what is being offered for a while. I still think variable rates will go up another half a percent in the next four months. I have updated my main post I have just jumped on betfair and managed to make a bet for a quarter percent rise at 1.85 to 1 odds. I am not 100% sure that there will be a rate rise – but am more than 75%, so my odds are OK IMO. This is because inflation has hit about 2.1% for the year just passed, according to the TD Securities/Melbourne Institute monthly inflation gauge. I think that the market will start to factor in more rate rises very quickly. So don’t sit on your hands if you want to be fixed. However if you plan to fix just to save money, my predictions suggest you will end up about square on a three year fixed. And behind for the rest. My guess is there is a 50% chance of no change, 45% chance of a 0.25% rate change, and 5% chance that it will go up half a percent. If you want to be fixed, then maybe sooner is better than later, as I believe increases in fixed rates will flow through within the next two weeks. If you make extra repayments on your loan, redraw allows you to pull all or some of those extra repayments out again. If you have not made any extra repayments, you will not be in the redraw club I’m afraid. So you will see that the interest is accrued without being charged until a certain date where it is billed all at once. This is called interest calculated daily and accrued monthly. Excuse me if I state the obvious here! There are times when a fixed rate home loan can provide some certainty over a period of extra financial or emotional stress. Interest rates can move further than you expect. It may be worth considering fixing a significant part of your borrowings in the following circumstances: |
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