Interest Rates



Interest rates have always played a major role in the affordability of investment in the

Residential Property Market. The good news is they have never been lower in living

memory. The further good news is they are very unlikely to rise much, if at all, in the

foreseeable future.


Most of the independent economists of good repute actually see rates

falling further. There is a very good chance that the Official Cash Rate (OCR) may end up in

negative territory in the new year. This is not good news for those relying on bank deposits

for income, but very good news for those with mortgages. The Reserve Bank is determined

to keep interest rates low (even lower than they are now). They are using a number of

measures to ensure this, including setting the OCR at a lower rate.


For Mum and Dad investors the low interest rate environment is an ideal opportunity to

leverage into an investment property with positive cash flows (positive gearing). Providing

they meet the criteria of responsible lending, this opportunity to achieve financial goals

through investing in newly constructed residential property is undeniable.


Procrastination is the biggest hurdle to financial success. To overcome this hurdle, if it

applies to people, is to go through the financing and fact finding process. This is where

Journey2 is invaluable to potential investors. They can examine your individual financial

position and establish the appropriateness or otherwise of investing to achieve your

medium and long term financial goals (dreams, given a time frame and dollar amount).

Procrastination often leads to people remaining in approximately the same financial

position through their working lives. It explains why some people succeed financially and

most don’t.


The cost of delay (a subject worthy of it’s own blog) is measurable and can’t be

undone. The only thing you can do is change your financial future. This requires action. The

opposite to procrastination. Interestly, most people’s financial future is not dependant on

levels of income. If this were not so, then people would become wealthier as their incomes

increased.


So back to the beginning. A major cause of procrastination revolves around fear of interest

rates rising. In simple terms this is normally related to inflation rising. There is little

prospect of this happening globally to any great extent. Therefore we should be remaining

in a low inflation/low interest rate environment for the foreseeable future. Returns on

saving have disappeared. Returns on investment are the key!


To discuss this further and see whether you can overcome your procrastination, why not

contact us for a no obligation/ no downside conversation!! Or you can continue to watch

others succeeding while you continue to increase the cost of delay. Your choice!



Greg

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