20:05 PM, 3rd January 2011, About 12 years ago 4
I’m not really into fancy graphs, I don’t have a private school or university education and I don’t have a posh accent so if that’s what you were hoping for this post might dissapoint you.
However, I have been investing in property since 1989 so I have come to trust my own intuition and and read beyond the sensationalised headlines, the political BS and the boffins who seem to create charts and opinions simply to justify their existance.
As I see it there won’t be too much movement in interst rates in 2011 or indeed the first half of 2012. However, when the banks have repaid the government and some order has been restored to the lending markets that’s when I think things will start to change. Once the banks take control of their own businesses again they are going to have to start lending as there’s only so much they can do to keep increasing their profits by increasing their pricing.
New lending will provide the banks with a dilemma as competition for it will drive margins back down again and people will start refinancing deals they’ve done over the last two years for better rates. Therefore, the banks are going to have to do a lot of lending simply to tread water. This could re-ignite the housing market which in turn could re-ignite the economy. That’s when interest rates will start to rise in my humble opinion but lower margins are likely to maintain the status quo, i.e. pay rates of 4% to 6%.
If you’re using the threat of higher interst rates to improve your cashflow, good on you. That’s a good thing whichever way things turn out.
If you’ve got cash and you’re prepared to put the effort in you can make money regardless of what the market is doing.
I’m grateful for sensationalised press and the boffins with charts because they create confusion. That makes my life much easier because it means that many people have different beleifs and perspectives. Buying property is a numbers game and by that I don’t mean the more you buy the better. What I mean is, the more silly offers you make, the more likely somebody will accept one of them and hey presto, you’re making money.