Why we have been holding off?

Why we have been holding off?

Hi, and its great to be in touch with you again to impart our thoughts on where interest rates are headed. I have recently attended the National Alliance of Lenders and Commercial Brokers Conference in Orlando Florida, the largest Commercial Finance Broking event in the US and this gave me a great insight to where possibly rates will head in the short to medium term. 

Firstly their is a view that US interest rates will rise steadily over the next 12-24 months, and may come earlier if the Trump planned tax cuts come into effect at the end of December 2017, which they are all hoping will spur growth and jobs. The caveat here is North Korea, and if a conflict did occur it is possible rates will continue to remain low as Global recovery would be stalled. Lets hope this doesn’t happen!

Many commercial brokers that I have talked to are confident on the business outlook for the US economy, should rates remain low, and consumer confidence strengthens. If the US economy does strengthen, it is possible our dollar will trade lower providing some scope for a possible interest rate rise. Watch for the signs via news channels on this in the coming months.

What does this mean for us in Australia?

The Global markets have a significant impact on our economy and on interest rates. There is a current view that the economy is still in low gear, meaning interest rates will continue to remain low for the immediate future. However this could all change depending on what happens in the US and the actions it takes.

How can you de-risk your debt?

If you want some insurance and have no plans in moving home or office or selling your investment, I would suggest you lock at least half of your debt into some pretty attractive principal and interest fixed rates.

I know that some of our customers have spoken to me recently about their interest only loan rates rising. Whilst interest only loans are great to free up cash flow and are an effective means for a tax minimisation strategy, they won’t reduce your debt. The regulator wants the lenders to force investors in particular to move across to Principal and Interest. I have done this with my investment loans and suggest you re-think your strategy as the attractiveness is with rates being some 50 basis points below that of interest only lending loans. I think this will continue to be like this for some time until ASIC are comfortable with the percentage of debt levels in the interest only market.

The best way to know your getting a great deal is for us to provide you with a health check on your existing loans and our contact details are below if you want to get in touch with us.

My last word – introducing our newest Senior Broker, Rob Scozzafava. 

It is with great pleasure I introduce Rob to our growing team of Senior Brokers. Rob has over 10 years of Commercial and Residential finance experience in both the Major Bank and Broker markets. Rob will be taking care of our newest market, Wollongong Region and the NSW South Coast.

If you are located in this part of the world and would like to meet Rob and obtain a interest rate health check, I would be happy to make an introduction.

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