Aussie - Ajay Krishnan

Thursday, March 17, 2011

Rates on hold: John Symond’s view

Property owners breathed a sigh of relief earlier this month when the Reserve Bank left the official cash rate on hold at 4.75 per cent – the level it has been at since November.

Aussie Founder and Executive Chairman John Symond said the RBA is treading a very cautious path as it tries to find a balance between the booming mining sector and the ailing retailers.

“The Reserve Bank is very concerned about the consumer psyche at the moment,” he said. “They are saving more than they have in 20 years, they’re spending less so retail is down.”

Mr Symond said while mining is “going gangbusters”, retail struggles as consumers save their money or take advantage of the strong Aussie dollar to buy offshore.

“If you talk to retail, whether that is the corner store or Gerry Harvey (of Harvey Norman), they’re very concerned that if consumers stop spending for too long, it will then impact the economy,” he said.

“(The RBA) sees spending is way down and short-term that is a good thing, but they have expressed concern that if Australians keep their hands in their pocket that could cause the economy to slow down at a faster rate than what is needed.

Mr Symond said the good news to come out of the RBA’s March Board Meeting is the fact it has signalled that interest rates may stay on hold for some months to come.

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of http://blog.aussie.com.au/

Property of the week March 17th - #12

DEER PARK - $360,000

CAROLINE SPRINGS - $370,000

SUNSHINE WEST - $350,000

ELSTERNWICK - $440,000

Thursday, February 3, 2011

2011 interest rate predictions

With the 2010 end-of-year festive season well and truly in the rear view mirror, we’ve asked a few industry experts for their real estate market predictions for 2011.

Ross Greenwood, the Nine Network’s Business editor and host of 2GB’s Money News says:

“I really don’t think much will happen in the first half of the year. Perhaps by around May the mumbling will start that the Reserve Bank needs to raise rates again; and there will be evidence that parts of Europe (Germany especially and the UK as well) are starting to pick up.

The US also is showing signs of life, but our dollar should remain strong because of the amount of money the US has had to print for its Quantitative Easing.

The interesting thing to watch will be the banks. By mid-year most of them should be almost over their self-pronounced hump in rising borrowing costs. At this time expect term deposit rates to come off but also for out of cycle rate rises to ease off as well.

Barring a global economic catastrophe (which is hard to pick now, but Spain remains a worry and China must control its growth) 2010 will perhaps be as benign as we have seen.

All things being equal, rates should rise in the second half of 2011 because of the enormous capital investment in our resources sector underway, which will feed into economic growth and potentially inflation.”

AMP’s Chief Economist Shane Oliver says:

“We remain of the view that the RBA won’t start to tighten monetary policy until April next year at the earliest,” Mr Oliver told The Adviser.

According to Mr Oliver, the RBA is no longer under pressure to lift rates.

Inflation is presently under control and other data suggests the Australian economy is not improving too fast.
While dwelling starts fell sharply in the September quarter reflecting the earlier fall in building approvals and skilled vacancies fell in December, consumer sentiment edged up slightly and remains well above long term average levels, and new vehicle sales rose slightly in November, he said.

“While the NAB business survey showed that business confidence fell in November reflecting last month’s rate hike, business conditions actually improved slightly and both remain at levels consistent with reasonable economic growth,” Mr Oliver said.

Aussie’s Executive Chairman and founder John Symond:

Mr Symond believes interest rates will remain on hold until Easter, and possibly even until the middle of 2011.

“The RBA’s decision to lift rates on Melbourne Cup Day was a surprise and the subsequent move by the major banks to lift their rates higher than the 0.25 per cent has really done the some of the hard lifting for the RBA,” he said.

“Had that not happened, we could have seen the RBA increase by another 0.25 per cent in December.”
Mr Symond said he believed the RBA was comfortable with interest rates at the current level as evidenced by the Board’s comments released on December 21.

“Following the Board’s decision in November to lift the cash rate and the subsequent increases in lending rates, and taking into account the level of the exchange rate, monetary policy was judged to be mildly restrictive,” according to the Minutes. “Given the very high level of the terms of trade and the positive outlook for business investment, this policy setting was regarded as appropriate.”

Property of the week February 4th - #11

HOPPERS CROSSING - $325,000

TARNEIT - $319,000

TARNEIT - $345,000

TARNEIT - $325,000

Wednesday, December 8, 2010

Cost of funds just an excuse

A new report has found the banks’ interest expenses have risen by less than the RBA’s rate hikes.

According to the Australian Institute report, the major banks have been profiteering by lifting rates above the RBA’s official moves.

Australia’s majors have consistently claimed that their costs are rising by more than the official rate moves.
But senior research fellow at the Institute David Richardson said the banks’ profits have “unambiguously gone up”.

“There is no doubt that these banks are exploiting their market power to gouge excessive profits from their customers,” he said.

“This year, the big four banks earned pre-tax profit of around $1,300 per annum for every man, woman and child in Australia. The latest round of interest rate rises shows just how insatiable their thirst for profits is.

“Banking in Australia is essentially a rogue market in which a small number of winners take all. There is a clear case for government to take action with a combination of regulation, structural reform and improving competition.”

However, Australian Bankers' Association has strenuously dismissed the report.
The ABA's chief executive Mr Munchenberg said the RBA’s minutes released yesterday confirmed that costs of funds had in fact risen in the last 12 months.

“The RBA minutes recognise that funding costs have been slowly increasing. This gradual increase has had a cumulative effect over the past year that is significant. That’s why some banks and other lenders have announced increases on standard variable home loan rates by more than the 25 basis points cash rate increase,” he said.

“Banks have been absorbing these higher average funding costs for nearly a year, but there comes a point when these costs do have to be passed on.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of http://www.theadviser.aom.au/

Property of the week December 6th - #10 - LAST ONE FOR 2010...SEE YOU IN 2011

ALTONA - $700,000

DEER PARK - $360,000

WERRIBEE- $475,000

WILLIAMS LANDING- $460,000

Thursday, December 2, 2010

Tips for switching your home loan

The recent interest rate rises have received a substantial amount of attention in the media and, in Canberra, the focus has shifted to switching.

People angry over the CBA’s move on Melbourne Cup Day to lift their standard variable rate (SVR), and the subsequent lift by all of the other major banks to lift their rates higher than the Reserve Bank, now have people voting with their feet.

Aussie has received a huge jump of enquiries from homeowners looking to refinance and change lenders. But does refinancing always mean you’ll save money?

Aussie Newtown franchisee Sean Beavis said it will depend on an individual case by case basis, as many people may already be on a better rate then the banks’ SVR.

“The most important thing is to make sure there is actually a benefit,” he said.

“Make sure that you clearly add up the cost of switching and that the new interest rate is actually going to provide a saving over and above these costs within a short period of time.”

Mr. Beavis said it was worthwhile consulting a broker, who can search hundreds of loans in a short period of time to ascertain whether a homeowner is on the right loan for their circumstances.

“There is little point spending $1,000 to switch loans just to save $400 per year in interest,” he said. “Many borrowers often don’t realise what a given difference in interest rate means in “dollar terms” – sometimes it’s not much.”

“It costs nothing to do that research though and many people may be pleasantly surprised at what they discover.”

Sean’s five tips for switching:

Shop around (or get a mortgage broker to do the legwork)
Work out the costs of switching
Compare interest rates, fees and features
Ask yourself if the benefits of switching are worth the costs
Get a broker to do all of the above!