I came across this today:
Interest rates are coming down and for many investors, that could mean a saving of somewhere from $15 to $100 every week.
It also means the temptation to head straight to the local shopping centre and buy that handbag you wanted or that power tool for the shed. Even if it’s just a little bit of money you now have to spend, the reality is that these days, anything helps.
Damian Collins of Momentum Wealth says the cash rate is currently 4.5 per cent but the market predicts that could come down to as low as 3.5 per cent within 12 months.
But while it’s tempting to reward yourself with some early Christmas treats, Collins suggests the best thing to do right now is something a little less fun and that’s save, save, save. However, rather than save the cash in your bank account, he says you should make sure you save the money in a redraw facility that’s against your home loan.
“Always put it against the home loan,” Collins says.
“This isn’t necessarily a long-term strategy, it’s a pre-curser to using a deposit for the next property. You won’t get your next investment with an extra $50 a month but you can park your money there.”
Collins suggests investors should start considering locking in their interest rates.
“Fixed interest rates are around 6.3 per cent. If it gets down to six per cent fixed for three years, I would take it. Obviously you have to weigh up your personal circumstances, but people underestimate the mining boom.”
Paul Sparta of Hegney Property Group adds lower interest rates are likely to inject a bit of confidence back into the market, especially if there’s another interest rate drop or two.
“The big plus at the moment is that rental yields are firming,” he says.
“The tipping point will be mid next year. The real estate market will get more activity and you might get some price rises in some suburbs. Now is a really good time to buy.”
This information was gathered from:
http://www.apimagazine.com.au/api-online/news/2011/11/how-an-interest-rate-drop-helps-your-investment-portfolio
DEB BRADY
0405 570 903
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