Interest rate advice

Cardy George

Piercing rural members since 1981
Our home loan fixed rate term has come to an end. Made the calls, talked to the people. Now we have to decide if we want:

3.03% for 2 years

or

3.14% for 5 years

I don't know enough about the economy to make the decision. Do we save cash in the short term, or have some security for a bit longer.

We were all set to go 5 yrs, but then Mrs George found this link

Markets are driving policy

The total loan is less than a Sydney/Melbourne deposit, so it won't ruin us either way, but the cash is better in my pocket than theirs!
 

Kerplunk

Likes Bikes and Dirt
Rates are very unlikely to rise in the medium term. Most likely 1 or more .25% cuts coming early next year. Most of the world is in a very low interest enviroment and Australia is now finally catching up.
Personally I would take the lowest variable you can get and pay down debt as fast as possible while rates are at a historic low.
If shit goes sideways with the aussie or world economy you really want your non-tax deductable debt as low as possible.
Interest rates have never been so low so you really have to think our economy is running on fumes atm. Out world beating run of no recessions has to end eventually..
 

pink poodle

気が狂っている男
Depending on your feelings about risk, I'd either follow the above advice to get the lowest rate you can with a re-draw/offset function and plough your spare cash into the mortgage to drive down the debt. If things start to move up you can always shop around to lock in. Or there's never been a better time to borrow and expand your asset base. You aren't getting anything for cash that is just sitting around so put it to work.
 

Haakon

Keeps on digging
As above. Its one of the great lies of the neoliberal "economic" policy that low interest rates are the solution - no one is spending and everyone is using the low interest rates to pay down debt. The writing has been on the wall for a long time - be in as little debt as possible when the music stops.
 

droenn

Fat Man's XC President
Not house, but my bank has lowered interest rates on savings account to 1.65% now.... so low its almost not worth it (well, its still something...)
 

Flow-Rider

Burner
They're forcing people to get it out of banks, you need to pay the banks in Europe to hold money in them. I can't see the interest rates going up in a hurry for years when so many are in a large debt situation and it will blow a large hole in the housing market.
 

Kerplunk

Likes Bikes and Dirt
They're forcing people to get it out of banks, you need to pay the banks in Europe to hold money in them. I can't see the interest rates going up in a hurry for years when so many are in a large debt situation and it will blow a large hole in the housing market.
That’s why the gov are introducing the 10K cash ban, no one will be able to do large transactions outside of the banking system. If you were tin foil hat inclined it will also protect from bank runs and force savers to pay banks to hold their cash.

Our economy is based on leverage/debt, the gov doesn’t want all that unproductive cash sitting there doing nothing and earning interest for nothing. They want it out leveraged up into investment properties that pump more taxes into the system. It is a shit way to run a country’s economy..
 

Haakon

Keeps on digging
That’s why the gov are introducing the 10K cash ban, no one will be able to do large transactions outside of the banking system. If you were tin foil hat inclined it will also protect from bank runs and force savers to pay banks to hold their cash.

Our economy is based on leverage/debt, the gov doesn’t want all that unproductive cash sitting there doing nothing and earning interest for nothing. They want it out leveraged up into investment properties that pump more taxes into the system. It is a shit way to run a country’s economy..
It’s a great way to run an economy if it’s a certain segment of the population you’re interested in supporting wealth growth for.
 

Flow-Rider

Burner
That’s why the gov are introducing the 10K cash ban, no one will be able to do large transactions outside of the banking system. If you were tin foil hat inclined it will also protect from bank runs and force savers to pay banks to hold their cash.

Our economy is based on leverage/debt, the gov doesn’t want all that unproductive cash sitting there doing nothing and earning interest for nothing. They want it out leveraged up into investment properties that pump more taxes into the system. It is a shit way to run a country’s economy..
It's still not going to stop people taking large amounts of money out, you can still do it electronically or by cheque but yeah you will not escape tax. If you really wanted to, you could just take a bit out at a time.

I heard a funny story where they tried to stop someone withdrawing $2000 dollars cash and it ensued with a big argument as they wanted written conformation as to what he was doing with it and he kept on telling the bank it was for private use, in the end he told them he needed it for Hookers and drugs. It's not what he really needed it for but said that to piss them off.
 

Kerplunk

Likes Bikes and Dirt
It's still not going to stop people taking large amounts of money out, you can still do it electronically or by cheque but yeah you will not escape tax. If you really wanted to, you could just take a bit out at a time.

I heard a funny story where they tried to stop someone withdrawing $2000 dollars cash and it ensued with a big argument as they wanted written conformation as to what he was doing with it and he kept on telling the bank it was for private use, in the end he told them he needed it for Hookers and drugs. It's not what he really needed it for but said that to piss them off.
Yeah getting it out of the banks ain’t the issue but it’s what you will be able to do with it once it’s under the mattress. The fine is huge for both parties and you can’t do mutiple $9999 payments or lots of smaller payments over 10k either.. Supposedly to stop tax dodgers but of course this cash ban won’t apply to realestate or the casinos. You will still be able to roll up and buy a house with a aldi bag of cash no questions asked. But not a car or bike.
This cash ban could work if they applied it fairly, but that would never be the case with our major parties..
 

Calvin27

Eats Squid
I heard a funny story where they tried to stop someone withdrawing $2000 dollars cash and it ensued with a big argument as they wanted written conformation as to what he was doing with it and he kept on telling the bank it was for private use, in the end he told them he needed it for Hookers and drugs. It's not what he really needed it for but said that to piss them off.
Bicycle acquisition syndrome?
 

pink poodle

気が狂っている男
If you're getting no reward for your savings...do something with it. You can spend and enjoy it or invest it in non-savings methods.
 

Calvin27

Eats Squid
The fine is huge for both parties and you can’t do mutiple $9999 payments or lots of smaller payments over 10k either
I rekon you could comfortably burn/wash $200k per person per year depending on how dirty the money was and how much of a loss you were prepared to take. A couple of quick and easy ways might include:

  • Property. No one gives a crap and checks the source of funds. I mean I was with my volume builder and there was an Indian couple counting out probably $50k in cash in an office. My client rep laughed and said this was really common.
  • Tradies. They are all happy to take cash and if found out, there will be so many cash jobies that your contribution will be inconsequential.
  • Private used cars. Easy way to legitimize the cash. Someone else washes it for you.
  • Bitcoin. Seriously government has no idea and it's no secret a lot of the dirty money coming from China at one point was via bitcoin. Very liquid and low losses.
-Cold hard gold. Asians love this and it's a good store of wealth especially with the current interest rates. 24k in jewelry is not tracked.
 

Flow-Rider

Burner
Yeah getting it out of the banks ain’t the issue but it’s what you will be able to do with it once it’s under the mattress. The fine is huge for both parties and you can’t do mutiple $9999 payments or lots of smaller payments over 10k either.. Supposedly to stop tax dodgers but of course this cash ban won’t apply to realestate or the casinos. You will still be able to roll up and buy a house with a aldi bag of cash no questions asked. But not a car or bike.
This cash ban could work if they applied it fairly, but that would never be the case with our major parties..
A lot of people will sill take cash and there's still lots of cash out there, you haven't heard of the buried cash found on the goldcoast block and they've since found more.

https://www.abc.net.au/news/2019-11-02/big-cash-find-at-runaway-bay-gold-coast/11666262
 

tubby74

Likes Bikes and Dirt
If you're getting no reward for your savings...do something with it. You can spend and enjoy it or invest it in non-savings methods.
just had to visit my accountant to sort out last years tax. SMSF returned over 15% last year on a decent spread of shares including ETF's. given the rate you can borrow money for, that's a ridiculous return. of course no promise it will do that again but it isn't a bad time to have debt provided you are ready to cover it if things go to shit again
 

hifiandmtb

Sphincter beanie
I rekon you could comfortably burn/wash $200k per person per year depending on how dirty the money was and how much of a loss you were prepared to take. A couple of quick and easy ways might include:

  • Property. No one gives a crap and checks the source of funds. I mean I was with my volume builder and there was an Indian couple counting out probably $50k in cash in an office. My client rep laughed and said this was really common.
  • Tradies. They are all happy to take cash and if found out, there will be so many cash jobies that your contribution will be inconsequential.
  • Private used cars. Easy way to legitimize the cash. Someone else washes it for you.
  • Bitcoin. Seriously government has no idea and it's no secret a lot of the dirty money coming from China at one point was via bitcoin. Very liquid and low losses.
-Cold hard gold. Asians love this and it's a good store of wealth especially with the current interest rates. 24k in jewelry is not tracked.
Yes but it's illegal - both from tax avoidance & NOW an actual transaction occurrence perspectives.

Who else lodged an objection???
 
Top