Expect the Unexpected

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  • The UK to leave Europe twice in four days
  • Australia to produce another hung parliament
  • Donald Trump as Commander-in-Chief
  • Interest rates starting from two per cent

Property investors certainly live in interesting times with things once considered far-fetched have now either happened or are likely. So what does that mean if you are thinking about investing in bricks and mortar?

Almost certainly interest rates will fall. Inflation is now below the Reserve Bank’s comfort zone and, coupled with political developments here and abroad, the RBA is likely to drop interest rates further – some commentators have even predicted two drops to 1.25 per cent.

The last time the RBA increased rates was Nov 2010 and it started dropping rates in in Nov 2011 which has encouraged investment.

So, as a borrower, what do you do now? There is no right answer – it just depends on what you want.

  • Sell – you could remove uncertainty and lock in your recent gains (but no credible commentator is predicting a crash)
  • Buy – today’s confusion creates hesitancy from buyers. Now could be an opportunity to buy – even though property’s stellar growth has probably passed.
  • Fix – fixing interest rates is like buying an insurance policy. You are paying a premium for the certainty of knowing what your monthly outgoings will be.
  • Variable – with rates likely to drop this year investors on variable rates are likely to have an improvement in their cash flow. But remember, most people fix for periods of three to five years. What will rates be in 2021?
Related:  Leap into the New Year with Leasing

Give us a call 1300 30 68 68 or send us a message online and our experienced brokers can guide you with the right finance solution for your needs.

Doug Daniell - Chan & Naylor

Doug Daniell

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.

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