According to the latest news coming from various economists, there is the increasing likelihood that the Reserve Bank may announce another rate cut in early February.
And this is more great news for many mortgage holders. (more…)
Interest Rates
Another rate cut – what could you do with that money?
Wednesday, January 25th, 2012When interest rates were eighteen percent
Friday, December 16th, 2011Talking to some older folk over the last week about times when interest rates were around eighteen percent and I am reliably told that there are many watching with almost amusement at the goings on in relation to the continued will they/won’t they pass that rate cut onto borrowers guessing game.
Because it was back in their day that a bank not passing on a rate cut was almost the rule, rather than the exception.
And with interest rates getting up to eighteen percent around that time, that was a whole lot of sweat going on!
So that generation can certainly add some perspective to what’s happening in the current times.
But there is one difference now. Thanks to competitors such as non-bank lenders, credit unions and building societies continuing to be a force in the mortgage marketplace, rate cuts are now more routinely passed on in full to borrowers.
And the reality is, this pattern now is largely due to the continuing existence of alternative lenders, combined with people exercising their right to choose.
After the 1990’s, benchmark rates came down by almost two percent after non-bank lenders such as Resi entered the market and have remained lower largely because our sector of the market continues to be around.
Sure – the big banks will continued to be pressured, whether it’s by government, borrowers or through the existence of other alternative lenders to more carefully consider their decision on rates, so that won’t change.
But at the end of the day, borrowers are now in a position where if they don’t like what’s happening, they can take their bat and ball and… move.
What else does the unemployment figure say?
Thursday, October 13th, 2011With the latest seasonally adjusted unemployment figure released by the Australian Bureau of Statistics showing 5.2%, there is now (well – for this week at least) speculation that an official rate cut by the Reserve Bank is less likely.
But apart from the potential impact a jobs figure has on inflation figures and their subsequent interpretation by the Reserve Bank, what else does that figure actually tell us about what’s happening here in Australia?
What it does tell us is that if we look at what is actually trending in the job market, the situation is actually quite static.
And for those with mortgages, a static job market may also provide additional evidence that people are exercising more conservative financial behavior so they can knuckle down and try to better manage their situation with what they have.
After all – we’re no longer in the same job market that we were even five years ago before the GFC when many people felt comfortable changing jobs just to chase a bit more money.
Times have since changed – and it’s still very much a moving feast for committed consumers, most of who are keeping their cards very close to their chest indeed.
Why cheaper is the new black
Friday, October 7th, 2011There’s a change in dinner party banter occurring around many dining tables in Australia.
Gone are the conversations which centre around property prices and interest rates – only to be replaced by what good deal you can get on your internet, utilities, phone, groceries, petrol, car, insurances and basically anything that constitutes household spending.
In fact, it’s routine for someone to talk up which company or website they found their bargains through and how much they have saved in the process.
How times have changed. (more…)
Rate Watch – it’s a 24 hour job
Monday, August 29th, 2011Thanks to a 24 hour news cycle, we now have rolling updates on everything from around the world, if we choose to keep glued to our TV and computer screens.
And for some it’s quite addictive. Because just as reality TV has capitalised on people’s fixation to watch the good, the bad and the ugly of people’s everyday lives - so too has society’s appetite grown for watching global events unfold before our very eyes.
If we need a recent example, who can ever forget the Japanese tsunami?
But this has had more serious implications on matters of economic importance such as what might happen to official interest rates, because expert’s predictions can now change from da- to- day.
Just take the events of the last few weeks…
In early August analysts were tipping rates to rise because of higher than expected inflation figures for the June quarter. And then… as global sharemarkets all took a huge tumble thanks a still tenuous US economy and the economic situation in Europe, a rate cut was then being more widely predicted.
And most recently, RBA Governor Glenn Stevens last week told a parliamentary committee, that Australia is well positioned to tackle any further weakening of international conditions and that inflation data is “still concerning,” easing speculation they will cut interest rates.
It’s a bit like watching a tennis match, with volleys going back and forth. When really, all consumers want is some semblance of stability - which is difficult to attain in an information rich world where everyone can so easily promote their opinion.
So for borrowers, this abundance of information can be overwhelming and needs to be balanced out by starting to think about their goals again so that no matter what happens, you have a clear path to follow.
Keep your eyes on the prize, but remember that too much information can sometimes be a dangerous thing. And perspective is a wonderful bedfellow.
Avoid the Panic
Tuesday, August 9th, 2011With global markets still in turmoil from events emanating from the US and news reports suggesting this is the beginning of the end, it’s easy for property investors and borrowers to panic.
But that’s the last thing you should be doing.
If – and I use the term ‘if’ – the current slide in our sharemarket and currency puts our economy in the doldrums for any amount of time, as a property owner, one of the last things you would want to do now is panic and sell.
Why?
A buyer can spot a nervous seller at 100 feet and is likely to result in you getting far less than you would if you bunkered down to ride out the storm.
No one is really prepared to say exactly how this current turn of events will manifest over the short to medium term for Australia but there is now certainly more talk that official interest rates may indeed be cut in September.
So that being said, if your repayments are likely to decrease, it makes sense to hold onto that property the loan is against because it’s now costing you less – and wait for things to calm down.
And that’s because the property market – like interest rates – is cyclical by nature.
An opportunity may even exist for some borrowers to keep their repayments at the same level they are currently at now (if rates do go down) and take the opportunity to pay more off their mortgage while they can.
Rather than being convinced it’s all doom and gloom, there may be some silver lining in that cloud.
What can borrowers get excited about?
Friday, May 20th, 2011The news seems to be getting worse for borrowers over the last week. (more…)
The double edged sword of a strong $AUD
Friday, April 29th, 2011Watching the Australian dollar continue to rise against the US dollar is a bit like watching your favourite sporting team not only beat the opposition – but actually give them a bit of a flogging.
And like any one-sided match, there are always clear winners and losers, but there is also usually good reason why one team is winning so well. (more…)
Mortgage waters run calm and still
Thursday, April 21st, 2011You may have noticed there hasn’t been a lot of speculation lately about cash rates and what as a consequence may happen to mortgage rates.
Sure there have been a slew of reports on the government’s abolishment of exit fees, now set to be introduced on July 1 –and the possible effect on borrowers, but not much about interest rates themselves.
And that’s largely because, generally speaking, there’s not much to report. (more…)