Rate Club: Rate Prediction August 2022

The media are excitedly predicting a rate increase on Tuesday. What are the results of a rate increase? It is a massive transfer of funds from you and me and businesses to the bloated banking sector. They are already sitting on funding at .04%. What a great profit margin!

Lowe has proved to be the best governor we have had and should stick to his guns and not raise rates until 2024. If higher mysteriously lowered inflation, why did CBA raising rates a year ago not lower inflation? It simply increased CBA's profits. Why repeat Governor Steven's mistakes from 2009?

Property Club from 2009 campaigned monthly outside each RBA state office, calling for lowering rates to 2.25%.

We were right in 2009. We are right now!

Raising rates now will bring back the high rate madness Property Club experienced 29 years ago! 9.75% interest rates and a massive 7% rental return. There were fewer investors in the market at that time. Property Club injected over 22,000 investment buyers. Property Club supply bought rents down.

Now rents in one year have climbed from an average of 4% to 5% and are now well on the way to 7%! That is a 50% rental increase in 18 months. We are at a dangerous tipping point. RBA should hold rates. Already inflationary items are coming down, including fruit, vegetables and transport. Lowering rents requires more supply by investors. High mortgages reduce supply.

What can you do?

When you look over your finances, please make sure you look at how interest rates are tracking. With the current economic environment and your circumstances, you may need to build a buffer for any increases that might affect your repayments.

I would suggest contacting your broker or booking a free consultation with a Club approved broker, as it may also be worth looking at consolidating your debts and renegotiating your current interest rates to protect yourself from future increases.

If you have any questions or want to speak to a mortgage broker, don't hesitate to contact enquiries@propertyclub.com.au.