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Hey, Im looking at buying my first house now.. Whats the interest rates for a home loan these days after that 1% interest rate cut from the rba the other day which the banks said they would pass on.. if they do.

Hi Anubis,

With the reserve bank lowering rates on Tuesday a number of the lenders have already passed the rate cut on. You should be looking at a variable rate of around 4.69% and upwards, with that in mind in the coming days the banks will be playing around with their rates to ensure they are competitive. So depending on what type of features you require in your loan you should be able to get a loan with a mid to high 4% to a low 5%.

I would advise going to speak with a professional mortgage broker so they can show you all your options and explain them further.
I would be more than happy to help you with that.

James Grady
Mortgage Planner/broker

http://www.theNEXThomeloan.com

1300 660 107

What is expected to happen to short-term interest rates and long-term interest rates during the next year?
Why would it change, stay the same or rise?

I don’t see any way the fed is going to raise rates for a while. I don’t see a big cut coming either. My guess is that the fed cuts 50 basis points late this year. That drives down short term. My guess is long term rates stay flat.

Now that the Canadian dollar is at parity with the US dollar, I’ve been hearing in the news that the Bank of Canada will be hiking interest rates. What is the reason behind this? How exactly does the dollar affect the interest rate? Thanks!

The dollar does not affect the interest rate.

What the problem is, is the parity dollar, it makes exporting companies less competitive so the Canadian gov’t would really like a lower dollar.

But The Canadian gov’t also sees an overheated economy and is worried about inflation, and they will raise interest rates to stem inflation. Unfortuneatly this will attract more money to Canada and will raise the value of the dollar furthur

Like possible CDA/US 1.10/1 in a few years

During the 1970’s interest rates on basically everything including savings and CD were well into double digits. What caused this? In order for interest rates to be that high again where would the market in general be headed? I understand how the economy and interest rates generally work but 10,12 percent seems crazy. How bad would inflation be?

If interest rates went up it will decrease the purchasing power of the people, which would in turn lead to reduction in inflation as too little money will be chasing too many products.

It’s not made clear as to what sort of economic sectors the question refers to.

I know this much at least:

-Increasing interest rates
Higher mortgage costs
Lower CPI
Prevents inflation
Slows the economy (decreasing GDP)
Higher risk of recession

-Decreasing interest rates
Lower mortgage costs
Higher CPI
Steers economy towards inflation
Speeds up the economy (increasing GDP)
Lower risk of recession

what i don’t know is how this affects 2 different sectors of the economy.
Are different sectors affected differently at all?

Yes diffrent and Non diffrent.

I’m buying a house and I close on October 31. It’s a FHA loan and right now my rate is 6.375%. Should I lock in beforehand or should I wait for the bailout package to pass? What will happen to interest rates?

Rates aren’t based on the bailout, they’re usually based on the 10 year treasury bill, which is considered a safe investment since it’s guaranteed by the US government.

T-Bills have been popular lately due to their guaranteed return, so when their yields go up, rates go down.

Rates will probably increase since people will have more confidence in the market and start selling their T-Bills and buying stocks if the bailout goes through.

These are unprecidented times though and nobody can really predict what will happen with rates. I could be 100% incorrect. If you’re happy with 6.375% rate, I would definitely lock it in.