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There's been talk about the rising interest rates and various speculation about how much further they will go. What impact is it having on you, and what are you doing about it?
To kick it off, here's my plan:
My IP's are fixed for another 3 years so I'm not too worried about it yet. Of course if rates remain high / go higher then I'll be feeling it in another 3 years. I'll be able to ride out rates of about 10%, although things sure won't be cashflow positive at that level! Will be closer to neutral after tax, but I'm prepared to live with that knowing there will always be ups and downs over the long term.
My own house is on a fixed rate that will expire in a few months. I'm going to refix on the expectation that rates will be high for a while to come.
I'm also not actively in the market at the moment. I'm going to sit tight for a few more months, make sure my financial position is secure, then get serious about acquisitions again when others are feeling the pain of high interest rates.
The other thing that I've been doing from day 1, is doing calculations on any prospective properties at an interest rate of about 8% which (depending who you ask) is a long term average of rates over the last 10 years. I see so many people who do the calculation at todays best rate. Ok, so 8% may not be the average over the next 10 years but I'm happier knowing I've allowed for various ups and downs over the long term rather than just hoping for the best.
So, your thoughts?
Gerrard
To kick it off, here's my plan:
My IP's are fixed for another 3 years so I'm not too worried about it yet. Of course if rates remain high / go higher then I'll be feeling it in another 3 years. I'll be able to ride out rates of about 10%, although things sure won't be cashflow positive at that level! Will be closer to neutral after tax, but I'm prepared to live with that knowing there will always be ups and downs over the long term.
My own house is on a fixed rate that will expire in a few months. I'm going to refix on the expectation that rates will be high for a while to come.
I'm also not actively in the market at the moment. I'm going to sit tight for a few more months, make sure my financial position is secure, then get serious about acquisitions again when others are feeling the pain of high interest rates.
The other thing that I've been doing from day 1, is doing calculations on any prospective properties at an interest rate of about 8% which (depending who you ask) is a long term average of rates over the last 10 years. I see so many people who do the calculation at todays best rate. Ok, so 8% may not be the average over the next 10 years but I'm happier knowing I've allowed for various ups and downs over the long term rather than just hoping for the best.
So, your thoughts?
Gerrard
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