With home loan interest rates reaching record lows I am receiving questions from clients on a daily basis about their mortgages and business loans. Whether you should have a fixed or variable loan, and offset account or a basic mortgage, and the tax impacts of negative gearing are all dependent on your personal circumstances and you should consult an expert to assist you.
What I do find particularly interesting is that many economists, including the RBA governor Glenn Stevens, have signaled more interest rate cuts in the future stating “further easing of policy may be appropriate over the period ahead”.
As a homeowner and property investor myself, I often refer to the ASX interest rate futures. The graph below reflects the current markets expectations of future interest rates over the next 18 month period. Essentially the graph is telling us the same thing that economists are; the market believes interest rates are unlikely to rise anytime soon.
ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve
http://www.asx.com.au/prices/targetratetracker.htm (12 May 2015)
Interest rates cuts are fantastic for home owners and investors, but long periods of low interest rates have a detrimental impact on retirees who rely on bank interest. Investors can also find that their investment property is no longer negatively geared and is now actually increasing their tax bill.
It is important that you speak to your accountant, financial planner or mortgage broker to ensure you are getting the best deal on your loans, whether it is your home loan, investment loan, car and equipment loans or overdrafts. Please contact us on (02) 4732 3844 to discuss how we can assist you.
This document provides general information only, is not investment advice and cannot be relied upon. Readers should seek their own professional advice in assessing the effect of the information on their circumstances.