Interest Rate Drop

Interest rates dropping will assist investors and their holding costs for property, and it could happen as

soon as February

The Westpac chief economist, Bill Evans still thinks February could be the best time for the RBA to start

cutting rates.

“In February it will only be by about 25 basis points.

“I think we’ll see another cut this year, at the moment I favour March.

“Because I think in the second half of this year things will be starting to look better. The world economy

will be starting to look a better place, particularly in China and the US.

“I think it will still be at 2%. But, by the middle of 2016 I think we’ll start to see things edging up.”

Is this a double edged sword?

Yes I believe so. There many investor novices buying more property or property already negatively geared

than they may otherwise have done. Interest rates have been at an average of 7.2% for 20 years.

Whilst it seems unlikely rates will get back there any time soon, it is likely that rates will go up at some

point in the next couple of years. Some believe back to 6%.

If investors have not calculated this consideration into their affordability or have not fixed their rates for

maybe 3-5 years then in a year or two they could be in serious trouble, too negatively geared for their

affordability capacity.

Investors really need to do 3 things

1. Seek advice from someone representing the buyer not the seller

2. Avoid Property Marketing Companies as these spruikers just sell from a stock list, and have vested

interests in one property over another

3. Model figures that are reasonable and not optimistic, this can only be done in my opinion by someone

representing the buyer, I would not trust a real estate agent or property marketing company to do this

for you.

“The number of home loans in November 2014 was 1.5% lower than October, but 4.6% higher than

November 2014, according to the Australian Bureau of Statistics.

For the three months to November,

loans for new homes were 7.3% higher than a year earlier. The Housing Industry Association said the

lending figures, coupled with building approvals which reached an all-time high in November, provided

further evidence that Australia’s home building industry would start 2015 on a strong footing. ” hotspotting

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