WCC 4: Interest rates won’t rise for years

Good morning, good morning. Morning, everybody, Jason here. Hopefully everyone’s well, on this fine Thursday. Hey listen, Josh Frydenberg. It was Frydenberg, anyway, somebody important, came out and said, yup. Yup, we acknowledge that interest rates Interest rates will be low and you know, not rise for many, many, many years. Something that’s pretty cool, as a property investor is having a low interest rate because your cashflow as a property investor becomes more reliable. Hey Warren, how are you mate? Morning Trina, low interest rates, more reliable cashflow, the safer you are as a property investor. When you invest, if you can, mourning Danielle, if you can understand, you know, your future costs because in, you know, the big risk about owning anything, owning, morning Naraj, owning asset is, you know, is there a risk in my future? And what risk is that? No, really the risk for most property investors is the one that we don’t really control is, you know, will banks and other people put interest rates up and down. morning Justin, I look forward to catching up to you too, bro. So interest rates are not gonna go up. I’m gonna call minimum five years minimum, but a bit longer interest rates are gonna stay low, Australian bonds and American bonds at all time lows, interest rates are at all time lows, bond yields are all time lows, what is that mean to us, morning Nicole, morning Canal, what does that mean to us as property investors? But you know, not only property investors were putting, we’re taking our money, we’re putting it into the market and you know, what can we take from that? Well, listen, one thing that I do know, and I think my, my wonderful friend, Andy here, we, we sit and do one of wisdoms on a Friday. I think he’s on this morning. You know, we talk about, well, you know, money has to find a place to go to work guys, like, you know, you think about this right now. There’s trillions and trillions of dollars that were invested in things like cash, cash is a defensive asset. We’re invested in things like government bonds, defensive asset, and now literally they are worthless. They are worthless. And let’s say you’re a medium you’re, you know, you’re an okay self-funded retiree right now with two or $3 million, 3 million bucks in the bank. And you know, you might be 70, a defensive asset cash. Oh, you know, not getting you much money. So listen guys, there’s a silent, there is Silent boom going on. I don’t know if Andy could probably mention right now that the Australian stock market is back up at a certain point. You know, went down a long way and then back up to where it was before, and then, you know, there’s a lot of carry on malarkey with property right now, I don’t know if any of you guys have attended auctions to the corner real estate agent or lined up and tried to buy a house of recent times. People are paying over, over what the asking price is less certainly in the places that we’re in right now, in places in Melbourne and in places in Brisbane, there is a solid burn going on, I’m trying to buy and subdivision right now. Always trying to buy it just before covid hit, you know, the vendor, got a stay of execution from the bank that he didn’t have to pay his mortgage for a while, and now, now the, the builder’s boost he’s put his price at 500 grand on me, alright, So he was willing to drop his price, and I was, I felt I had, I’d bought a bargain before COVID and now he’s putting his prices up. Interest rates are gonna stay low, the marketplace is solidly riding along with good quality stuff, you know, where are you right now as a property investor? Are you sitting around waiting? I, you know,lot of people talking about are you wait till September, you wait till September, it’ll all be pear-shaped then, rubbish. The government is not going to let that happen. they’ve already extended the $150,000 right off the small businesses, they haven’t spent as much money as they budgeted for in the job keeper and job seeker, they’ve got plenty of, plenty of tricks up their sleeve, they going to soften the landing in every way, shape or form they can. And it’s not like the GFC or anything like that, you know, where they said, well, you know, let’s just let that play out in this way. There’s going to be softening. But right now, what a lot of people aren’t really grasping or aren’t really thinking about is, is sure unemployment is high 7% at the moment, I think might be on its way to 10%. But guys, you know, flip that question around, flip, there’s 90% of people still employed. And a lot of those people who are employed are in, you know, fairly solid jobs, I speak with them every day in our mentoring program, fairly solid businesses, fairly solid incomes and so on. So they’re, those ones who had, who haven’t had their incomes affected, are out there buying assets smartly with low interest rates, they’ve got solid jobs, so the banks will lend to them and you know, those who are fearful and unfortunately ignorant of the facts, of the marketplace are selling the assets for some of them, you know, maybe when they should be keeping them. And so morning Steve, you know, for me, low interest rates into the future, what’s that gonna look like for you right now, getting a hold of your equity and building your portfolio has never been cheaper, never been less expensive, never been less risky as a property investor, right? The gap, the spread between an interest rate and the yield right now is in a capital city, the biggest I’ve ever seen in my life, 20 years of paying attention, in capital cities for property investing and the interest rate spread, you can get a 3% loan for an investment property, which is 90% interest only. And you can get a 5% rental yield at 2% positive cashflow spread, depending on whatever your costs are, your overheads, you know, your maintenance and your rights and whatever. Most people are needing a percent of full percent in their pocket and then still getting their tax back after tax more tax back, from a cashflow in a property. So I’m pretty pumped, interest rates are going to stay low. And my question to you guys, is what are you gonna do about it? at first time buyers Wow, Michael, I see you watching this morning again, first time buyers and the builder boost, you know, now I’ve done the math on those who could borrow at 95% and qualify for the LMI grant from the government they’re putting between 15 and $20,000 of cash in their pocket after owning a home. And it’s cheaper than their rent, so gang, let’s say maybe a little bit woefully this morning, but I was just pontificating about the interest rates. They’re gonna stay low, what are you gonna do about it? Because for me as a property investor, the risk has never been less and, you know, buy a good asset right now, locking a low interest rate. You’re gonna be nice and solid for three to five years with decent cashflow, decent cashflow, better than what I’m saying in 20 years in my life. Anyway, that’s it this morning, I think I’ve had my coffee or maybe not enough coffee. Hopefully everyone’s well and fired up and maybe Donald tomorrow, we’ll have another little chat. See what pops up on my radar during the day, but stay well. You know, if you wanna catch up with us, if anyone is watching here, haven’t met me before coaching property investors, over 18 years investing in property 20. And listen, if you wanna find out a little bit more about us, we do webinars and coaching and stuff like that. So track us down on our Facebook page and maybe we can catch up some time, alright. Take care. Everyone, have a good morning, thanks Nicole. Thanks everybody, and have a good day. Alright, chat soon, bye, bye.


About the Author
From a small town boy growing up in the remote outback of rural Queensland, to becoming the founder of Australasia’s most powerful property wealth creation engine – Positive Real Estate Group CEO Jason Whitton is on a mission to change the way we look at wealth.