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What if interest rates stay below 5% for 30 years; Would this be the lucky time to buy?
Topic Started: 14 Dec 2013, 09:17 PM (3,050 Views)
hoofarted
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Bardon
15 Dec 2013, 09:00 AM
Kieran Trass wrote a good book on the property cycle and in the book he concludes that interest rates are not a propety market cycle driver. From memory he sees sentiments as the biggest driver.

To answer your question if they did stay below 5% then I think it would be positive for my investments in the current context. There may be some long term unintended consequences that could creep in that could offset the positive outlook in todays terms.

http://www.amazon.com/Grow-Property-Cycle-Kieran-Trass/dp/0143019430
That was the point of my statement about the UK
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mel
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It's been clear that there is a new way of doing things for some time now. I suspect the US is already at the 'new normal' as are a few others. I also believe that now could be a good time to buy for the people who can afford to (in some markets).

APF - a place where serious people don't take themselves too seriously. There's nothing else like it.
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Dr Watson
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I think interest rates will remain lowish for quite some time. The private debt load is too high. If anything they may fall a little further yet before they bottom. And even if inflation picks up, it is likely a modest hike or two will bring it back down again.
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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hoofarted
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Dr Watson
15 Dec 2013, 07:02 PM
I think interest rates will remain lowish for quite some time. The private debt load is too high. If anything they may fall a little further yet before they bottom. And even if inflation picks up, it is likely a modest hike or two will bring it back down again.
Did you not read what I said? There is almost no chance of further rate cuts being passed on to the customer. This is the bottom.
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miw
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those
15 Dec 2013, 04:14 AM
I don't think it's as simple as low rates=good, high rates = bad.

Low and high rates are used to balance other things. E.g, low rates could also mean low inflation and wage growth, so large debts don't get easier to pay like they do when rates are high, inflation is high, and wage growth is high.
+1.

High rates are bloody hard to service, but if you can service the debt most other things are in your favour as a levered investor.
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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Catweasel
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Catweasel say low interest rate the society,

is a perfect for high the income, high the debt society,

like a Japan in a 1991,

after a pop pop,

and a debt the diminish,

and a salary go a down.

And a interest stay the low.

However,

in a Australia,

mouse expect a salary to increase by master pull lever,

and it expect a debt to a increase,

so mouse house orgy continue.

miw
15 Dec 2013, 09:13 PM
+1.

High rates are bloody hard to service, but if you can service the debt most other things are in your favour as a levered investor.
Catweasel say why mouse expect a wage inflate because of low inflate?

It can use historical precedent,

but naive to explain in a 2013.
Edited by Catweasel, 15 Dec 2013, 09:22 PM.
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peter fraser
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Bardon
15 Dec 2013, 09:00 AM
Kieran Trass wrote a good book on the property cycle and in the book he concludes that interest rates are not a propety market cycle driver. From memory he sees sentiments as the biggest driver.

To answer your question if they did stay below 5% then I think it would be positive for my investments in the current context. There may be some long term unintended consequences that could creep in that could offset the positive outlook in todays terms.

http://www.amazon.com/Grow-Property-Cycle-Kieran-Trass/dp/0143019430
One of the things that changes sentiment is a change in interest rates, so I believe that a sudden upward or downward change in rates will either make people less inclined or more inclined to borrow, and that affects the cycle.
Any expressed market opinion is my own and is not to be taken as financial advice
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herbie
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peter fraser
15 Dec 2013, 09:51 PM
One of the things that changes sentiment is a change in interest rates, so I believe that a sudden upward or downward change in rates will either make people less inclined or more inclined to borrow, and that affects the cycle.
Surely affects my sentiment! - I get all sad every time interest rates drop ... :re:

But there are obviously eff all people in the democratic Land of Oz like me ... :( :)

And as to Peter's statement "One of the things that changes sentiment is a change in interest rates" - Ferk Yes! (It's one of the most primary and fundamental reasons the 'dislikable persons' change IRs surely? With my suspicion being that while us not so financially savvy types can be and are driven by IRs, the more financially savvy types have ta be driven by QE when IRs aren't quite doing it for them maybe?)
Edited by herbie, 15 Dec 2013, 10:33 PM.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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Blondie girl
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Blah !!!
iR is just 1 component of the big picture, to have a crystal ball hoping to stay below 5 % for 3 decades is really a big big call...

Your repayments is determined by an individuals cash flow..not the min repayment required..hopefully..
Just because finance obligations involve 30 yrs to pay it off, it doesn't mean it has to take that long...

Being a disciplined saver is great but it's turning those savings into assets, that enables wealth to occur. ....leaving big savings in $$ when there's pittance in IRs is well downright crappy..
Newjerk? can you try harder than dig up another person's blog. My first promo was with Billabong and my name in English is modified with a T, am Perth born but also lived in Sydney to make my $$
It's Absolutely Fabulous if it includes brilliant locations, & high calibre tenants..what more does one want? Understand the power of the two "P"" or be financially challenged
Even better when there is family who are property mad and one is born in some entitlements.....Understand that beautiful women are the exhibitionists we crave attention, whilst hot blooded men are the voyeurs ... A stunning woman can command and takes pleasure in being noticed. Seems not too many understand what it means to hold and own props and get threatened by those who do.
Banks are considered to be law abiding and & rather boring places yeah not true . A bank balance sheet will show capital is dwarfed by their liabilities this means when a portions of loans is falling its problems for the bank.
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goldbug
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peter fraser
15 Dec 2013, 08:11 AM
Why do you call them emergency rates. the world has seen these rates before. What were the rates in 1932?
At the beginning of the depression? lol, you just put you foot firmly in the bear camp with that one peter.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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