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April 10, 2017 by News

Low interest rates

Interest rates in Australia have been pushed to historically low levels post the GFC. A  result of international Governments flooding the banking system with cash (including recapitalising a number of insolvent banks overseas) these low interest rates have accelerated asset values here and abroad.

If interest rates return to historical averages of say 7% per annum, then asset values will be adversely affected as these current returns won’t justify there current values. Needless to say default rates on inflated asset values will cause considerable pain for the borrowers concerned and therefore the banks. 

Are interest rates likely to rise, and rise sharply, in Australia??  I believe very strongly, “Yes”!
There are a lot of internal and external pressures that make it inevitable, sooner rather then later. We can meet to discuss my reasoning and why interest rate mitigation will help any borrower.

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