My question, “are we there yet?” is not one which the kids normally ask after a long trip in the car or plane, but one focused on if we are at the bottom of the interest rate cycle. My view over the next 3-6 months is that we will see rates stay steady and possibly go further down, all this dependent upon global economic factors. The US Fed were thinking of increasing rates late last month however it didn’t happen and this tells me that there is still some cautiousness across the world in terms of the economics. I think we won’t understand where rates will be heading until we know who the new President of the USA is, although the Chinese economy is showing positive signs and this could help our growth figures locally and possibly see rates rise.
My view is to stay on variable rates for the immediate future although if you are very cautious or conservative you may want to lock in for a term of 3-5 years for part of your debt as some of these rates are lower then what is being offered on variable rate. This is also another sign the lenders are taking a view rates will go lower.
Interestingly some of the major banks have come down harder on reducing their interest rates through negotiation over the past month and the only way I can give you hope is by refinancing, as many of the other 35+ lenders we deal with are offering some very attractive interest rates.