Turn off your lights when you are not using them. The benefits are obvious.
Archive for the ‘Interest Rates’ Category
Locking in a fixed rate or switching your home loan altogether is top of mind for Australian borrowers as lenders slash fixed interest rates and continue to bring out special product offers.
The average three-year fixed term interest rate home loan (the most popular type) is the lowest it’s been low since October 2009 and new home loan deals are being released every other week.
Home loan lenders are reacting to changes to their funding costs, subdued home loan demand and uncertain economic conditions by repricing fixed rate home loans and continuing to bring out attractive home loan offers in the hope of boosting the flow of customers walking through their doors.
The key message to confused mortgage holders considering switching their home loan and/ or lenders is – the interest rate should not be the driving force in your decision. You should also consider exit fees for the current mortgage and compare all other aspects of the new home loan such as initial and recurring costs, ability to make extra repayments and redraw, flexibility, lender service and how long it will take to be approved.
If choosing a fixed rate home loan, investigate rate lock fees for securing today’s offers and be aware of possible break costs if you decide to switch again during the fixed period. Also consider how you will feel if you lock in and then watch interest rates fall down the track.
AUSTRALIA’S housing market is unlikely to suffer a “structural collapse” on the scale of America’s property rout, a new report says.
This is despite deep household vulnerability to further rate rises.
But the two-speed economy is a “serious problem” for the market, with confidence sliding as weak demand buffets employers in the retail, manufacturing and tourism sectors.
The report, by investment research group Morningstar, comes as Housing Industry Association data reveals that sales of new homes in April were down 10 per cent on the same month a year ago.
About 7700 new homes were sold nationwide – up 0.2 per cent on the March sales, but down from about 8600 a year earlier.
HIA chief economist Harley Dale said the rate of new unit sales was about half the long-term average, while new home sales were more than 20 per cent below long-term figures.
“That profile is an unfortunate indictment of the weak new home building conditions … but it’s nothing compared to what we’ll see if another rate hike bullet is fired,” Mr Dale said.
In research on the outlook for the banking sector, Morningstar’s analysts said uncertainty in share markets was also sapping confidence in the property market at a time when households were already highly geared.
But despite softening house prices, there was “no cause for alarm” for the banking sector, the Morningstar report said.
It comes amid speculation that professional investors are short-selling Australian banks as a means of betting that house prices will fall.
Short sellers effectively gamble on falling stock prices by borrowing shares and selling them, hoping to buy them back at a lower price.
Shares in all four major banks fell heavily last week and lost further ground yesterday.
The Morningstar research team, led by head of Australian banking research David Ellis, urged investors holding shares in the major banks “to be patient”.
“Despite widespread coverage and speculation we do not see sufficient pressure on the sector to change our positive view.”
The report nominated the banks’ reliance on wholesale funding borrowed from international investors as a “structural weakness, but one that is slowly becoming less important”.
A major slowdown in Chinese economic activity would put downward pressure on bank share prices, it said.
Interest rates will remain on hold for the rest of the year, NAB chief economist Alan Oster has said.
According to NAB’s latest global and Australian forecasts, the RBA is expected to keep the official cash rate on hold at 4.5 per cent until 2011, when rates will ultimately rise and peak at 5.5 per cent.
Mr Oster said while the RBA won’t look to lift rates until the new year, there is still the risk of a ‘November trigger’, where a bad CPI result in the September quarter could force the Reserve Bank to hike rates sooner rather than later.
If this is avoided, Mr Oster said he expects the RBA to lift rates by 25 basis points each quarter in 2011.
“We continue to see the RBA as starting the tightening cycle in February 2011 with rate rises of 25 points per quarter bringing the peak to an unchanged 5.5 per cent by late 2011,” Mr Oster said.
“However given the strong growth expected and tight labour markets we now expect cash rates to remain at 5.5 per cent during 2012 – where previously we had expected to see rates ease back towards 5 per cent.
“Despite slightly weaker near term growth we still see pressures on inflation with tighter labour markets being important. Thus we still expect to see core inflation around 2.75 per cent by end 2010 (same as the RBA) and remaining around the 3 per cent mark through most of 2011.”
Reserve Bank Interest Rate Announcement
The Reserve Bank has opted to keep interest rates steady at its board meeting today.
It was a widely expected move and will give mortgage holders another welcome breather from the six rate hikes they have endured since September last year.
“It looks as though the earlier interest rate hikes are already biting,” says Domain.com.au blogger Carolyn Boyd. “Auction clearance rates are down and house price growth is cooling. Real estate agents are also reporting there are less people looking to buy.”
Each 0.25 per cent interest rate rise adds another $50 to the monthly cost of an average mortgage. Australian mortgage holders are already paying about $300 more per month in repayments than they were in September last year.
Mortgage holders on variable interest rates are currently being charged about 7.4 per cent by their lenders.
Australian mortgage holders are a third time unlucky this year, after the Reserve Bank board today lifted interest rates by 0.25 per cent. It is the third rate rise in as many months.
Mortgage holders will be disappointed with the increase. After being told by the Reserve Bank Governor, Glenn Stevens, that rates were getting close to normal levels, borrowers would have been hoping the pace of rate rises had slowed. Today’s 25 basis point rise takes the official rate to 4.50 per cent.
It is the sixth increase since September and means mortgage holders are now paying about $300 a month extra for their mortgages than they were in the middle of last year, says Domain.com.au blogger and property author Carolyn Boyd. “There were a lot of mixed signals this month that may have had mortgage holders thinking they were in for a break. While inflation last week came in higher than expected, consumers have been spending less at the shops.”
Until today’s decision, mortgage holders on variable interest rates were paying about 7 per cent to their lenders. The rates that borrowers pay to their financial institutions are expected to normalize at about 7.5 per cent to 7.75 per cent by year’s end. That could signal there are still one or two more rate rises to come before Christmas.
Australian mortgage holders will have to dig deeper for their repayments after the Reserve Bank board decided today to lift interest rates by 0.25 per cent.
The increase will be of little surprise to mortgage holders, who have been bracing themselves for a higher interest bill after repeated warnings by the Reserve Bank Governor, Glenn Stevens, that rates are on their way up. Today’s 25 basis point rise takes the official rate to 4.25 per cent.
“This is now the fifth increase since September and means average Australian mortgage holders are now paying about $250 a month extra for their mortgages than they were in the middle of last year,” says Domain.com.au blogger and property writer Carolyn Boyd. “The property market has been running hot and the Reserve Bank will be hoping that today’s increase will take a little bit of that momentum away”
The rate has many more rises to go before it reaches the most recent peak of 7.25 per cent, which it hit two years ago, in March 2008.
Until today’s decision, mortgage holders on variable interest rates were paying about 6.75 per cent to their banks. The rates that borrowers pay to their financial institutions are expected to normalize at about 7.5 per cent to 7.75 per cent by year’s end.
- Property 'major risk for banks' February 6, 2012AUSTRALIAN banks are among the most vulnerable in the region to Europe's debt crisis, according to ratings agency Moody's. […]
- Tide turns as beachfront homes await sale February 4, 2012THE dream of owning a beach shack is still alive with a wave of run-down old beachfront homes sitting on the market waiting for the next tide of new owners. […]
- It cost $2.5m to build, it's on sale for $1.5m February 4, 2012FORMER used car salesman selling his five bedroom double-story beachfront mansion cheap. Interested? […]
- Online scam leaves renters out of pocket February 2, 2012POTENTIAL renters are being warned of an online scam that could cost them thousands of dollars. […]
- Building approvals continue to decline February 2, 2012ECONOMISTS expect the housing sector to remain soft for a while longer after new data showed building approvals continue to decline. […]
