If you have been listening to the so-called experts most were predicting interest rates to fall. Then most predicted they would rise. All the while they have remained steady and are now most likely to stay that way for the rest of this calendar year, and well into the new year.
Whilst the official cash rate has not changed since September 2016 the banks have independently responded by raising rates, particularly on interest only loans, which mostly are used by investors. Investors are now paying much more than a year ago.
In addition, the new bank levy imposed by the Federal Government on the big four in the recent budget is also likely to be passed on and, in fact, smaller and regional banks have already shifted rates higher in anticipation.
Given Bank interest rates already are on the up, and wages growth is the weakest on record, it would be a brave RBA governor who would contemplate a rise in the near future. Phil Lowe will let the banks do the work for him.
Regardless of when your existing loans are due for review, NOW is the time to consider your financing options.
With so many changes to lending criteria in the past few months, nobody quite knows where this will end. One thing is certain, however, that investors need advice right now to ensure they are correctly structured.
Many investors who are coming off their 5-year interest only agreement with their Bank, are going to get a rude shock when their Bank denies a further interest only extension of that loan. A possible solution is to apply for an extension today, whilst they are still eligible.
– Carl Thompson – Commercial Lending Specialist, Strategic Investor Group