Richard Anderson just forwarded me an update on 2009’s Interest Rate Announcement days, so I thought I would update everyone who is interested. The government Key Policy Interest Rate Announcements are the updates on whether interest rates are going up, down, or staying where they are. For investors this information helps guide long term planning on Real Estate investments such as whether to look at variable rate mortgages or whether it is time to look at fixed rates.
For business people it is an indication of how much it will cost to borrow money for credit lines to grow their business and how it will affect the cost of any credit lines they may currently have. With our current extremely low interest rates this helps push businesses and individuals to hopefully spend a bit more which helps the economy to spend its way out of a recession, in theory anyway. Current speculation is that rates will drop a bit again on the 20th of this month in an effort to continue to spur the economy on.
The only hindrance is with all the recession talk, is that while money is cheaper than ever to borrow, the banks are consistently cranking up the requirements for people to borrow money. Mortgages are requiring more information and higher credit ratings, businesses require consistent profits and during all this many banks are holding the rates on their internal interest rates and pocketing even more profits. The rationale from the bank perspective is they have to protect their interests during these tougher times. This is irony at it’s best as the government lowers rates to help individuals spend and the banks make it harder while making more money.
Here are the dates for this year’s announcements, so mark your calendars!
- Tuesday, 20 January 2009
- Tuesday, 3 March 2009
- Tuesday, 21 April 2009
- Thursday, 4 June 2009
- Tuesday, 21 July 2009
- Thursday, 10 September 2009
- Tuesday, 20 October 2009
- Tuesday, 8 December 2009
So is it time to lock in my floating rate mortgages?
Hi Vaughn,
With the current rates so low and potential for them to drop later this month you would probably be better off to hold on at this point.
Considering your variable rates can be one whole point lower than a fixed rate if not even more, rates would have to rise considerably before you lose any traction. Do be aware when you lock your variable rate mortgage in, they do not lock it at the current rate you have, but a higher fixed rate, there should be information in your mortgage documentation regarding the percentage higher, or whether they go with the banks current rates on that particular mortgage.
Just to follow up on this, if your variable rate mortgage is over a year old, your current mortgage rate could be as much as 2% lower than a fixed rate right now.
It should take quite a while before rates increase enough to make a locked in rate attractive if you are this low.