In particular we focus on getting the loan structure right the first time, choosing which lenders to use in the right order (yes this is important) and finally getting our clients the best deal possible.
Comparing interest rates (Western Democracies)
Marty McDonald
US to cut rates in mid-September
The US Fed has signaled they will cut rates at their next meeting in mid-September by 0.25% or possibly 0.50%. The market predicts US rates will get to as low as 3.50% in late 2025 (a full 2% reduction) and then 3.25% in 2026.
Australia’s turn?
After the US cuts, it will leave Australia as the only comparable country to not have started to lower their cash rate. As our cash rate was never as high as others you could argue we will be on hold for longer, but our current thinking is the RBA will be forced to act quicker than they are currently acknowledging / thinking.
All countries are linked, and we are not that special. The trend is for cuts, yet the RBA were still talking about raising rates last month (crazy) so it may take a few more months before they change their tune / align their thinking to the rest of the world! They will of course be wanting local data to back up any decision so the first possible date for a cut would be November (after Sept quarter CPI release) but we are thinking December or February next year is more likely.
Where will rates be in one years’ time?
Sticking to the theory that all Western countries are linked we are thinking the Australian cash rate will end up at around 3.60% pa in 12 months’ time. Somewhere near the US predicated rate. A 0.75% reduction to current.
This will give some much-needed relief to mortgage holders (self-included!) with variable rates ending up at around 5.40% pa. A modest relief in repayment of about $300 / m on a “typical” home loan.
About the Author: Marty McDonald is principal of mortgage broker “Mortgage
Experts”. Marty specialises in assisting active property investors with loan structuring advice and
implementation as well as helping credit worthy borrowers with slightly outside the box income and employment
situations. Find Marty on
Facebook and
LinkedIn.
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