EP. 1229 MORTGAGE INTEREST RATES... BE CAREFUL WHAT YOU WISH FOR!

Curious why your wallet feels different lately? It might be the rollercoaster ride of interest rates we're all strapped into. Step right up and listen as we, the ringleaders of finance chatter, along with our esteemed guest Trish White, dissect the latest trends in interest rates that have everyone talking. We're peeling back the layers of the economy's current state, examining the influence of tax changes, wage growth, and the ever-persistent inflation on the future of our finances. Grab a seat and join us for a conversation that promises to elevate your economic savvy and offer insights into the whispers and wonders of what's really going on with those pesky rates.

Let's face it, interest rates aren't just numbers—they're the heartbeat of our economic health. As we navigate the choppy waters of the financial landscape, we reveal a surprising statistic: a significant slice of Australians are riding this tide without a mortgage. How does this affect the broader picture? Engage with us as we share a multitude of perspectives on this complex matter, inviting you to contribute your own predictions. With Trish's invaluable expertise, our latest episode serves up a hefty dose of reality mixed with our trademark banter. You're in for a session that's as enlightening as it is entertaining – an economic analysis that's anything but dry.

Transcript

Speaker 1: 0:00

Are you ready to speculate Interest rates? We get asked all day, every day, what our punt is on what rates are doing. We're going to share our insights with you from people that we meet right now. Stay tuned.

Speaker 2: 0:29

I'm the ringleader, so what's it?

Speaker 1: 0:38

like. So what are you thinking Trish White going to do? That's the question.

Speaker 2: 0:49

What did you say? Off air, everyone has an opinion.

Speaker 1: 0:55

I think I used the arsehole word, but everyone has got their reasons, their rhymes and reasons as to what they think. Everyone loves to have a chat about this topic. I reckon it could be the most spoken about topic in relating to business in Australia that's being bantered around at the moment, so we thought it would be a bit silly not to bring it up in our morning minutes.

Speaker 2: 1:24

Yeah, do you know what I think is promoting this? It's, it's seeing it everywhere in the news like you can't miss it. And then this there's like good talk of, hopefully, rates coming down. And then there's like the odd, the odd article in there about rates. You know, hold it going up. And I think that, against the other articles, people are like what, where's this come from?

Speaker 1: 1:51

Yeah, and you know people take that article and they they hold it so close to their heart. It's very, very influential. But what I have to say on air and to everyone out there is be careful, what you wish for. So when I say be careful, what you wish for when we talk about interest rates in Australia is everyone wants them to go down. Now, historically, when they go down, the government's putting them down because things are bad. So, as a working example, when COVID was at its absolute deepest cut and the economy was hurting, the governments used lowering of interest rates to stimulate the economy. So I just think they really really care about this. I surely don't want them to go up and I really want them to go down in a way. But when that happens and if that happens, it sort of probably means our economy is not going to be doing too well- yeah, it's interesting.

Speaker 2: 3:02

I think the reason the news has started to talk about rates, you know, holding where they were Initially. We were being told that there would be at least two cuts this year in the sort of third and fourth quarter of this year. It just looks like that's holding out now.

Speaker 1: 3:23

I'd love to know people that are watching. We're a live show, so people that are watching, I'd love to know what you think about the rates, if you think they're going to go up. If you think they're going to go down, pop it in the comments below, because I definitely know it's a very open conversation. You can have this conversation with anyone you know or do not know, um equally, asking their opinion, and people are so passionate about it. What do you think they're going to do, billy?

Speaker 2: 3:47

I think they'll hold, I think we'll start to see rates maybe come off in the second half of sorry in maybe the first half of next year, 25. But the three big things that we're finding talked alongside these interest rates is some of the tax changes, wage growth and inflation, and those measures have not been where they thought they were initially when they were forecasting the two cuts, 2024. So the growth across quarter one this year has actually been above where they act, where they are expected, and the same for property prices.

Speaker 1: 4:28

we've had 16 months of continuous growth in property prices I think that's the most intelligent thing I've ever heard you say that last paragraph.

Speaker 2: 4:43

What did you have for?

Speaker 1: 4:44

breakfast. No, that sounded. That was like. I was like yeah, rich to you. Now we've got a comment here, we've got Luke. What's Luke saying?

Speaker 2: 4:58

Hold the rates Morning, Luke. That well to go up and not that bad to go down. I agree, Luke. I think we're in a happy sort of medium at the moment. It's hurting a little bit, but it's almost back to normal.

Speaker 1: 5:15

Yeah, look it's. These rates are pounding people. But bear in mind, out of the $10 trillion in property, there's about $2.5 trillion of those people have no mortgage. So about a quarter of Australians don't have a mortgage on their property. But it does feel, you know, in terms of to get a loan, there's a side of the physical cash to pay the loan back. It seems like people are managing, but to get the loan, the loans, out there, it still seems like people are managing. But to get the loan, the loans out there, it still seems like people are managing, but it's just so much harder because the barrier to entry, like you know, you're being assessed on an interest rate that's a shit tonne more than it was, you know, when it was 2%. So to borrow money these days seems to be that's so much harder, which is interesting out there. So, billy, you reckon, before we go, can you repeat that? Not that exactly, but can you tell us again your speculation? You think we're going to get what? Don't?

Speaker 2: 6:28

stress we're here for the short while, not a long while. Yeah, it's a short while. Don't stress, we're here for the short while, not a long while. Yeah, it's a short while. Um, I think we've been through the worst of it. Um, you know, on the back of the rises and, um, you know, there is light at the end of the tunnel now. But if it needs to, if it needs to hold out until, next year.

Speaker 1: 6:52

Um, you know then that that might be the case and I and I would say from me, from me, um with, after talking with everyone out there, like talking with, uh, you know, people that are educated and not educated, um in business, and taking an average between everyone, I think everyone is feeling like, yes, we're going to get it, we are going to get a rate reduction and we the word on the street I would say would be we're going to get one this year and we're going to get a couple next year. I'm just so shocked how resilient the property market is. Like 15 consecutive months, 16 consecutive months of rate of property values going up across the country. I'm just shocked that it's done that. So, on the back of that continuing, yeah, I think we won't get the rate cuts that we expected. As much Like I thought we were going to get 2.25s this year and 2.25s in the first half of next year. I'm probably 50-50 on that, but I certainly think we'll get a 0.25 this year.

Speaker 2: 8:12

One that, but I certainly think we'll get a 0.25 this year. Um one. What I will say is uh, property prices 6.6 percent more than they are from april 2023. So that's that's the 12 month growth we're talking about. Just wait until interest rates start coming down, like that's going to be, I think, a fiercer market to break into. If you are buying, I'd rather see you know, trying to buy now and you've already been serviced, I guess, on the top, and then you only work backwards from there yeah, and I think the house, the house buyers, sort of bit off a bit more than they could chew when those rates were nice and low.

Speaker 1: 8:55

So that house market performed really well on the back of interest rates. Now that interest rates are not two point something but they're six point something, I think there's a massive move to affordability. So strata, which underperformed, so that's units, townhouses and warehouses that are in strata schemes underperformed. So with that's units, townhouses and, you know, warehouses that are in strata schemes and stuff, I think strata's are cheaper and they are more affordable and they're going to perform better, um over the next 6, 12, 18, 36 months. So keep an eye out on strata property rather than torrens tile property, because I think you'll see that segment of the market perform better on the back of these rates being more affordable.

Speaker 2: 9:37

I reckon affordability that's the property class to be in at the moment, wherever it is and same with rents.

Speaker 1: 9:46

Do you know what I mean? I think, with property prices and with rents, it's that affordability. Striking that affordability cord is what we want to be doing.

Speaker 2: 9:56

Value there you go.

Speaker 1: 9:59

Billy, have a lovely day. Are you doing anything exciting today?

Speaker 2: 10:03

I'm trying to sell a property. I've got one that's offer accepted. Solicitor's a working with us at the moment Should be selling today and another one that's luck very exciting good luck.

Speaker 1: 10:17

How many export cool off expiries you got at the moment? Just one one. Okay, cool legend guys. Have a beautiful day, billy. Thank you for the show.

Speaker 2: 10:30

See you mark. Have a good one guys. Sarah cheese, love you. See you bye.