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Investors warned about debt structure

By Vivienne Kelly
2

A leading adviser has urged investors to reassess their debt strategies and cautioned that interest rates may soon rise.

Last night at the LJ Hooker Inner City Property Investment Evening, Noel Yeates, wealth adviser at Macquarie Bank, told investors that interest rates may have already reached the bottom of the cycle.

“If you’re thinking that interest rates should go lower, dream on,” he said, “because we’re about at the bottom of the cycle.”

Mr Yeates said that despite widespread speculation that the official cash rate will drop again this year, it is inevitable that rates will rise over the next few years – something investors need to be wary of.

“There is a significant risk that over the next 12 months that rates will go higher. So if you’re buying a property, factor that in – your interest rates may be higher within 12 months and certainly within two years.

“[You need to] think about the strategy you have on your debt. Think about how you structure your debt.”

Mr Yeates said investors need to think about where the variable rate cycle could go next, and speak to a mortgage broker about when and where to fix rates.

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