Another rise – we may have a break from rises for a few months as retailer (especially of whitegoods and furniture) are having poor sales figures. But i believe that the rate rises will continue soon enough, barring an unexpected shock.
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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. 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. 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: Many errors were made from about Jan 02 to Dec 04 with staying variable, and from about Jan 07 to June 08 with people fixing for long terms. You can see on the charts that from Jan 07 to June 08 there was not much pressure for rates to go up further. However in Jan 02 to December 04 there was significant upward pressure on rates. This indicator could have assisted many borrowers at these times, to make a better decision on whether to fix or not. I wish I had a crystal ball, as it is possible that the US could respond to their problems in 2012 by printing money to “inflate” out of trouble. However I believe that the US still has plenty of borrowing power left and will not need to go down this path (The UK and Japan may be another matter). Well – the usual situation is that nobody guesses what will happen . . . There are four stages of a loan process when the rate may be locked in: Beware that sometimes there is a (rate lock) fee to lock in your fixed rate, rather than only having the rate locked in at settlement. |
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