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THE LATEST INTEREST RATE & ECONOMIC NEWS FROM MAJOR INDUSTRY SOURCES PRESENTED FOR YOUR INFORMATION.
The following links are provided for your information and research. All views expressed are those of the source and we do not necessarily agree with those views. All investment decisions made by you should be thoroughly researched from many sources, and are at YOUR risk entirely.
The various articles and videos below, present various views from respected industry sources. Sometimes these views are conflicting, but it is always worthwhile listening to those with education and experience in the industry. At the end of the day it is up to you to determine whether or not to make a house or investment property purchase, and the value of that purchase should be seen as a long term investment and not as a short term profit making venture. Whilst that can happen, the best results are generally achieved in the long term.
August 2008
21st August 2008 - NAB Rate Cut - The NAB has indicated that it will pass on all of the September RBA rate reduction, assuming that reduction will happen. The CBA and other banks have been vague on this issue, and have said that they may not be all able to pass on the full rate cut. That will no doubt many of their clients and the current government, especially so soon after the CBA announced another record profit approaching $5 Billion Aussie Dollars. Most banks have reduced their fixed rates for loan with rates fixed between 1 year and 5 years. This is tangibile evidence that the banks do expect a rate reduction.
BIG RATE REDUCTION REQUESTED BY WESTPAC CHIEF ECONOMIST - One the country’s major banks believes the official interest rate must be slashed by half a percentage point next month to have an immediate impact on economic growth. Money markets are fully pricing in a quarter of a per cent rate cut following the Reserve Bank of Australia’s September 2 board meeting and a further reduction before the end of the year after a series of strong hints by the central bank that lower rates are needed.
But Westpac chief economist Bill Evans says there is a case for a larger cut to kick off the “easing cycle”, given the rapid slowdown in the economy and deteriorating global market conditions. “That seems a more effective strategy than current market expectations of two consecutive 0.25 per cent moves,” Mr Evans said. “Regardless of the size of the first move, a significant easing in rates is now required.”
Mr Evans expects the RBA to cut rates by a full percentage point by early 2009.
RATE CUTS LIKELY IN SEPTEMBER. Will the RBA cut rates by 0.25% or 0.50% seems to be the question at the moment. That there will be a rate cut seems to be taken for granted by the market. The RBA is expecting the economic slowdown to continue and unemployment to rise. If we get rate cut of 0.50% then this would decrease payments on the average $300,000 loan by $125 per month which will help struggling families. Banks have already reduced fixed term rates, so it will be interesting to see whether they reduce variable rates by the full RBA decrease or just pass on a portion of that cut. Politically they will be very unpopular if they don't, however they do raise money overseas and rates in Australia don't affect the global market. We expect that interest rates and the broader economy will remain volatile and difficult to predict for at least until early 2009.
July 2008
Crisis in the UK property & mortgage market
Following the start of the credit squeeze and the collapse of UK lender Northern Rock, building of new homes in the London region has virtually ground to a halt in what has been described as the biggest housing crisis since the great depression.
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When will the credit crisis end? Have your say
The credit crunch has seen an unprecedented fall in the availability of funding for mortgages all around the world causing many lenders to shut up shop and batten down the hatches.
What has this meant for you? Brokers, lenders, mortgage managers or anyone at the coal face of this liquidity meltdown - tell us your story.
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Property Perspectives
Rod Cornish and Angela Galvin with regular real estate updates
Economists suggests RBA is at end of hiking interest rates
Interest rates might be at the peak of the cycle after the Reserve Bank of Australia (RBA) talked up the prospects of a slowing economy, while leaving rates on hold.
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Borrowers given hope that interest rates may have peaked
Borrowers have been given some hope that the next move in interest rates may be down amid suggestions the central bank may have done enough in its efforts to curb inflation.
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New home sale slump in NSW as Reserve Bank meets
The sale of new homes across NSW slumped more than nine per cent during May, new figures show as the Reserve Bank meets today to consider a further rate rise.
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RBA leaves key rate unchanged at 7.25 per cent - In an accompanying statement with the rate decision, RBA Governor Glenn Stevens said considerable uncertainty remained about the outlook for demand and inflation.
"While the inflation outlook remains concerning, the board's assessment continues to be that demand growth will be moderate this year," Mr Stevens said.
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June 2008
ANZ says August rate rise still on the cards
One of the country's biggest banks still believes an August interest rate increase is on the cards, despite signs of a slowing economy and an unexpected drop in employment.
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Credit Ombudsman urges WA borrowers not to delay seeking financial hardship relief
In view of recent events in Western Australia, the Credit Ombudsman, Mr Raj Venga, has urged its non-bank lender members to be particularly mindful that some Western Australian workers may be stood down in certain industries or face temporary job loss.
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Hundreds indicted in US mortgage fraud crackdown
More than 400 real estate industry players have been indicted since March, including dozens over the last two days, in a crackdown on mortgage fraud stemming from America's housing crisis.
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19/06/08 - We have received two troubling reports from major global players about the state of the credit market and worldwide financial system. We suggest that you read these two reports and make up your own mind as to the accuracy of the predictions.
MORGAN STANLEY REPORT - Warns of Catestrophic Event.
ROYAL BANK OF SCOTLAND - Global Stock and Credit Crash Alert.
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13th June 2008
First fall in jobs in 19 months takes pressure off RBA
The Reserve Bank of Australia (RBA) may keep interest rates on hold after first fall in job numbers for 19 months indicated a slowing economy, economists said.
more (Refer our editorial comment below.)
June 12th 2008 - Editorial - From discussions with prominent real estate agents in both the residential and commercial markets, it is clear that demand for houses has fallen significantly, and demand for commercial premises for both purchase and lease has also fallen well away. With an expected migrant intake of 300,000 over the next 12 months, clearly this will put upward pressure on residential rentals in an already undersupplied market. As at this moment we see the immediate future for house sales as becoming difficult and expect prices to fall in many areas, especially those areas that previously enjoyed higher than average price increases, but house rentals will climb further. COMMERCIAL PROPERTY - As business begins to struggle with the higher price of fuel and the cost of capital there is a real danger that commercial, industrial, and retail property sales will decline, and as demand reduces rental income will also decline. It looks as though the RBA has overcooked the interest rates, and if another rate rise follows in August this could cause a major economic slowdown at a time when Australia should be enjoying economic growth. If you are buying property now, you should be looking for bargains, as some will appear over the latter half of this year.
Odds of another interest rate shortens as GDP climbs to 3.6%
The Reserve Bank of Australia may have put another interest rate hike on hold, but the odds of another interest rate rise in the near-term just got shorter.
more
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ANZ senior economists tell - "the hold on interest rates is a momentary reprieve."
Home borrowers may be breathing a little easier today following the Reserve Bank's decision to keep interest rates steady at 7.25% for the third consecutive month but ANZ senior economist, Katie Dean told Lending Central that she expects another rise in August.
more
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Home loan market under renewed scrutiny
The federal government has ordered an inquiry into the home loans market with a view to increasing competition between banks and non-bank lenders.
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The June edition of Herron Todd White's 'Month in Review' is now available on the link below. This link is provided courtesy of Westpac. It covers residential, retail, commercial and industrial properties in all Australian Capital cities as well as major centres. See how your area is pereforming from a valuers perspective.
http://www.htw.com.au/Downloads/Files/192_June_2008_Month_in_Review.pdf
RBA keeps rates on hold but another rise possible, economists
The Reserve Bank of Australia (RBA) has left interest rates on hold for the third month in a row but economists say rates could rise in August if domestic demand fail to slow fast enough.
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Financial services reforms to replace "dog's breakfast":Rudd
The federal government has proposed a shake-up of financial services regulation it says will protect consumers from rogue mortgage and finance brokers. You can rate this as well as have your say on this subject.
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MFAA welcomes Federal moves to protect consumers from rogue brokers
The Mortgage and Finance Association of Australia (MFAA) has come out in support of the Financial Services and Credit Reform Green Paper
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BREAKING NEWS 3rd June 2008 - The RBA has left rates on hold this month.
Property Perspectives
We are currently seeing some softening in real estate yields as a result of financing costs. At the same time we are still seeing rising rents due partly to very low vacancies. This is quite different to previous cycles where softening real estate yields were accompanied by falls in rents. Rod Cornish, Head of Research, Macquarie Real Estate Group discusses this issue. (Video link)
Note the actual video can be a bit difficult to locate, but it is on the site that you will be re-directed to.
May 2008
Ex-RBA boss Fraser says inflation target may need re-think
Former Reserve Bank of Australia (RBA) governor Bernie Fraser says there may be a need to re-think the way the central bank attacks inflation, if rises in food and fuel prices persist. Read more on his thoughts about the Reserve Banks method of fighting inflation.
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Troops to get mortgage interest subsidies
Defence personnel will qualify for subsidised home loans after four years' service as part of Rudd government moves to boost retention rates. more
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Home borrowers will be worse off, report says
Families are spending close to 40 per cent of their income on home loan repayments as buying the Australian dream gets harder, a report says.more
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April 08
Forget interest rate cuts as CPI soars above 4pc
Homebuyers can forget any thought of an interest rate cut this year after inflation jumped above four per cent - its highest level in nearly seven years.
more
Fixed loans losing appeal
Homebuyers are turning away from fixed-rate home loans as economists forecast interest rate cuts next year, a mortgage broking group says.
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Home loan slump biggest in four years
Home loan approvals have suffered their biggest fall in four years, adding to confidence that interest rates will stay put. Economists say the decline in new mortgages is an early sign domestic demand is slowing amid gloomy consumer confidence.
more
Property Perspectives - View Current and past Video Update on Real Estate in Australia - 15/04/08
Economy Matters - View Current and past Video on the Aust. economy from Macquarie Bank 15/04/08
Home loans lower if government guarantees mortgage backed bonds
Home loans would be cheaper if the federal government guaranteed a mortgage-backed securities (MBS) market, an industry body says. The Australian Securitisation Forum (ASF) is proposing that an independent government agency, similar to the Canada Mortgage and Housing Corporation, be set up to guarantee the MBS market.
more - view this video
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Housing credit resilient, but business feels the credit crunch
The February financial aggregates released by the Reserve Bank of Australia (RBA) this week, show housing credit growth continued to hold up, reflecting rising housing prices continue to provide support for home lending despite interest rate rises.
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Swan says he's 'in step' with RBA
The bank's governor Glenn Stevens is facing mounting media pressure because of what some newspapers see as his indifference to pain being felt by mortgagees, particularly in the poorer suburbs of major cities.
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Weaker demand for credit shows rate hikes biting, economists say
Weaker demand for credit in February indicates the Reserve Bank of Australia's (RBA) recent interest rate hikes have started to slow the economy, economists say.
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RBA Financial Stability Review focuses on US subprime effects on Australia
The RBAs latest Financial Stability Review focuses on the US subprime crises and its impacts in Australia and although the Australian financial system is in good shape compared with many other countries, the Financial Stability Review highlights challenges to the system.
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Employer confidence drops for first time in two years
Confidence among Australian employers has dropped for the first time in two years, with global credit market turmoil hitting the finance sector especially hard, a survey finds.
MARCH 2008
FNN Weekly Real Estate Report
In this week’s Real Estate Report AMP’s Dr Shane Oliver comments on the recent released dwelling commencements data, and we’ve found a place in south east Queensland boasting strong capital growth.
more
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Residential property no longer a safe haven from bear markets
In the past an escape trail from the wrath of bear markets has been property, traditionally viewed as a stable and strong performing alternative to falling equity prices. However, pundits say the rules have changed. The world's stock markets are suffering because of the current fall out from the US sub prime lending crisis and the global credit crunch.
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US teeters on recession, eurozone could weather crisis - OECD
The US economy is teetering on the brink of recession but the eurozone economy could pull through the global financial crisis without special measures, the OECD said.
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Further signs homebuyers may be spared another rate rise
There are further signs the economy is on the brink of a slowdown, suggesting homebuyers may be spared the pain of another interest rate rise, economists say.
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CBA Norris sees rates remaining high, costs passed on
Commonwealth Bank of Australia Ltd chief executive Ralph Norris has warned interest rates are likely to remain high this year and that the major banks may have to continue to pass on higher funding costs to their customers.
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Housing affordability not just hurting young: report
Australia has one of the least affordable housing markets in the English-speaking world and it is not just hurting young people wanting to buy their first home, new research shows.
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FNN Weekly Real Estate Report
In this week’s Real Estate Report we look at the Property Trust Index with the help of some technical analysis, and we look at whether you can claim back the costs of travelling to your investment property.
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Lending Central exclusive interview with Michael Pascoe
Desist with the bank bashing, says Michael Pascoe, one of Australia’s most experienced and respected finance and economic commentators as he talks exclusively to Lending Central.
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House prices rise 12pct nationally
An average Australian house will set you back around $471,000, about 12 per cent more than it would have cost a year ago, a report shows.
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Exclusive interview: Saul Eslake, Chief Economist, ANZ Bank looks at the Labor Government’s economic challenges ahead
The ANZ’s Chief Economist, Saul Eslake believes that instead of the 12 “gentle” rate rises that the Reserve Bank of Australia has inflicted on the community since 2002, a more effective way to curb consumer spending and cool down the economy may have been a couple of hard-hitting hikes with increments of more than a quarter of a percentage point.
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FNN Weekly Real Estate Report
In this week’s Real Estate Report Craig James talks about the impact of higher interest rates on the economy, and we look at how to deal with the cost of pest inspections when looking for an investment property.
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ANZ economists suggest RBNZ could cut rates sooner
A bearish economic outlook has prompted the ANZ to suggest the Reserve Bank could cut interest rates sooner than expected -- but adds it may not help home owners.
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Home sales show two-speed economy
Australia has a two-speed economy when it comes to new home sales, with the resource-rich regions posting rapid growth as the biggest states struggle.
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Media Release: BankWest raises deposit rates: Regular Saver now at 9.00% p.a.
BankWest has once again announced it will pass on the cash rate increase to deposit customers offering 9.0 per cent p.a. on its market leading Regular Saver account and increasing its TeleNet Saver and Business TeleNet Saver by 25bps
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FNN Weekly Real Estate Report
In this week’s report - Do increases in interest rates actually add to inflation? And in this week’s tax tip we look at the costs involved in opposing a building development in the area around your investment property.
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FNN Weekly Real Estate Report
In this week’s report - Shares vs. property? Dr Shane Oliver compares both assets classes; and what difference does a swimming pool make to an investment property? And is the asset depreciable over time? We have the answers for you.
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FEBRUARY 2008
Video - FNN Weekly Real Estate Report
In this week’s report we begin a two week series with Dr Shane Oliver comparing the property and share markets, and we look at a regional NSW suburb with an impressive rental yield.
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Analysis-Creeping wage inflation sure to strengthen RBA resolve
Wage inflation, the monster lurking beneath the bed of every central banker, is creeping higher. If you hold the figures at arm's length and squint you can convince yourself the trend is actually flat. But it isn't.
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Housing boom over but rents soar, REIWA
Perth's housing boom has ended but rents have soared to match those of the traditionally more expensive capitals, the real estate industry says.
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We hope that the above information has been of some assistance.
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