The old days of being able to easily quote an interest rate are gone. It now depends on the Loan to Value Ratio (LVR), the loan purpose (owner-occupied or investment use), the repayment type (interest-only or principal and interest), and, to a degree, your credit rating.
Got this from one of my news sources (BusinessSpeculator)
Australia’s largest apartment owner and developer Harry Triguboff explained that the Chinese had been major supporters of the Sydney apartment market after higher interest rates reduced local buying. But the Chinese were no longer big buyers of Sydney apartments. They had retreated because their currency is virtually tied to the American dollar and the big rise in the Australian dollar has made our apartments too expensive.
Moreover the Chinese were frightened that their own currency would rise, reducing the value of their investment and they had become nervous of the level of Australian apartment prices.
Triguboff believes that apartment prices are therefore going to soften while interest rates remain high and the Chinese are absent from the market.
Given Triguboff’s position in Sydney apartments, this is not a forecast to be taken lightly.
A big warning for investors. New legislation in Queensland is now in place allowing landlords to only raise rents once a year for existing tenants.
I would strongly suggest that with this in place, you sign up your tenants for 6 month leases only to start with. This means that if we have another year where interest rates start to bite, you will have an opportunity to recoup your margins from rents that will slip if left to be only once a year. We all seek returns, and in this highly letigious environment, lets do simple things to cover our bases first.
A great statement from Terry Ryder that is so true, the strong determined ones will take action at the right times.
One of quirks of investor behaviour is the tendency to take action at the wrong times. Right now it’s clear the property market is coming to the end of its recent growth phase – not surprisingly, given the loss of consumer confidence amid poor federal leadership on both sides of politics, the calling of an election and the Reserve Bank’s earlier mistakes with interest rates. This is the time for investors to become active: price growth appears to have stopped, market activity has declined and interest rates are stable. This constitutes a buyers’ market. Most people, however, will do the opposite: they will retreat into their shells and refuse to come out until the market is raging again – which is the wrong time to be buying. Remember this: no one ever became wealthy by following the pack. The pack always runs in the wrong direction.
Now is the time of the year some people consider paying 12 months of interest upfront to claim the tax deduction in this financial year. If you have sold a property and have a capital gain liability, or have come into some money via a bonus or something, paying the interest upfront and claiming the deduction this year can be a good way to reduce the tax bill for the year.
Many lenders will offer a discount on the interest rate for paying in advance, for example Commonwealth Bank have an interest rate of 6.54% for paying 1 year upfront if you are on their professional package. This is less than the discounted variable rate, of course you are taking a risk as to what interest rates will do over the next 12 months.