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 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. 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 times when a lender will not allow you to take a fixed rate home loan. Often when the full funds will not be drawn straight away, or when the lending is regarded as higher risk. The IMF has increased their expectations of Australian economic growth. I think this will filter through to higher interest rates in the 2 to 4 year term. I think there will be a slowdown in about five years from now, due to the timing of the next US election – so my five year is a bit lower than my four year. |
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