Should I buy a house?

[Outbackjack]

Originally Posted by XR06T

is the fixed interest rate being offered by banks a reliable indicator in which way the variable rate is going to go?

Usually yes. But even the banks can't predict what is goint to happen someplace in the world. Keep an eye out for the "Straight of Hormuz" in the press. If you have never heard of it, you soon will.

[GRNKPR]

Originally Posted by Outbackjack

Usually yes. But even the banks can't predict what is goint to happen someplace in the world. Keep an eye out for the "Straight of Hormuz" in the press. If you have never heard of it, you soon will.

????? oil or land or war ???????

[Grasshoppr]

As stated by others speak to as many finance people as possible to get yourself into the house. Renting is dead money thats one certainty!!

In regards to fixed or variable there was a report in Investment Property Magazine which showed that for the last 20 years you are actually worse off by fixing your rate! Fixed rates serve a purpose (heck I am on one now for my investment property) but don't ever rush to lock one in especially after the reseve bank slaps us with another increase (which will most likely happen this year at least).

You see this all the time with investments in shares - the market turns down and the "herd" mentality of less educated investors start to sell off to avoid loosing money, rather than sticking with their investment and watching it rise again to new hieghts!

Last thing to remember - on averages over the past 50+ years - property doubles in value every 10 years so thin about owing the bank approx $150,000 for this home and it being worth approx $400,000 now there is some equity to invest into your car, another property etc etc

[Outbackjack]

Originally Posted by GRNKPR

????? oil or land or war ???????

It's difficult to separate the three. In that particular part of the world, think ocean.

[4.9 EF Futura]

Originally Posted by robs_ls1

: People who think this is true always make me laugh.

So brainwashed are ye by the rabid right that you'll believe anything.

Here's an interesting article for you: What's wrong with Australia's monthly unemployment figures?

Funny in world in which we live. Govts have been changing the definitions of unemployment figures for decades, i believe the ALP was the first to do so.

But its a moot point. Sure, unemployment percentages arent "apples with apples" on a time series basis, but even the raw numbers show more people work now and a higher percentage of the population participates in the workforce - regardless of the various definitions. But the "they tinker with the measure" argument obviously not keen to bring that to anyone's attention now, are they? Prob because most people who put this argument up have a vested interest in seeing people lose their jobs.

is the fixed interest rate being offered by banks a reliable indicator in which way the variable rate is going to go?

Yes and no. A look at the current yield curve is as such (source Westpac):

1 year 7.35% pa
2 year 7.35% pa
3 year 7.19% pa
4 year 7.39% pa
5 year 7.25% pa
7 year 7.39% pa
10 year 7.39% pa

Let's ignore comparison rates for the purpose of this excercise.

It's not really a punt on the variable rate of the time (not much money in that for the banks). It's really just a reflection of the direction the market believes interest rates are headed. That is, a representation of the yield cirve. Of course its essentially based on statistical probabilities and the collective will of the market (this is the point where you ask yourself... "can i outsmart the market?").

Easier to read here than for me to explain the yield curve:

http://en.wikipedia.org/wiki/Yield_curve

In my opinion, Westpac probably think the rate will be LOWER than 7.39% in 10 years time. But this is what they are offering the borrower. For if the standard variable rate come that day is at 6%... but you've got someone locked in at 7.39%... well... that's a license to print money lol (it can also work against the banks, referred to as interest rate risk and many people have devoted their lives to the management of this risk).

It also relfects the supply/demand aspect of credit markets. Westpac cant offer 10 year fixed at 7.39% if Commbank down the road is offering 7% flat... they need to be competetive.

You see this all the time with investments in shares - the market turns down and the "herd" mentality of less educated investors start to sell off to avoid loosing money, rather than sticking with their investment and watching it rise again to new hieghts!

One man's crystallised losses are another's gain

[Outbackjack]

It is also very important to haggle with your bank man. Be prepared to say, "sorry, I can get better at XXXXX" As I said earlier I have just locked my loans at 5 years. The rate I managed to get is %6.45 over 5 years on just over $1 million spread over 6 loans. Haggle with them, be aggresive with your business. They need you as much as you need them.

Cheers and good luck Mr Nitro.

[RIPGMH]

Originally Posted by robs_ls1

: People who think this is true always make me laugh.

So brainwashed are ye by the rabid right that you'll believe anything.

Here's an interesting article for you: What's wrong with Australia's monthly unemployment figures?

When you screw a country as royaly as the labour govt did this one, people tend not to forget too quickly. As for unemployment figures, if you can't find a job in this country now then there is something pretty wrong.

[Casper]

Bzzzzzzzzzzz.. another political washout, will you all ever learn?