A PERIOD OF STABILITY IN INTEREST RATES

At the April Reserve Bank of Australia meeting, the Board have kept the cash rate unchanged at 2.5% (http://www.rba.gov.au/media-releases/2014/mr-14-05.html). There’s no news there, as the RBA have been quite clearly stating we will have a period of stability in interest rates.

Their announcement states that inflation is expected to be consistent with target levels of 2% to 3% over the next two years. While parts of the economy require stimulus, the concern would be that dropping rates could overheat the already hot housing market. On the other hand, increasing rates could push the Australian dollar higher, which the RBA definitely don’t want.

At Golden Eggs Home Loans, we will continue to keep you informed regarding the interest rate environment and as always, if you wish to discuss what this means for you and your home loan, please contact us today.

Changes to credit reporting cold affect your ability to get a loan

Late repayments to bills and loans are now added to your credit report.

New laws regarding Australian privacy come into affect this month and one change involves extra information on your credit report – this could have positive or negative implications for you, depending on how reliably you pay your bills on time. A significant negative is that late payments could lead to future credit and loans not being approved.

What is a credit report?

If you have ever applied for credit or a loan, there will probably be a report about you with a credit reporting agency. Credit providers (for example, banks) use this report to assess your capacity to repay a new loan or credit card.

Your credit report contains information about your credit history:

* credit applications including loans, credit cards, utilities and phone/internet accounts

* who has accessed your report: i.e. each time you have applied or even just enquired about a credit card, loan or new account

* personal details: current and past addresses, employment, date of birth, licence number, etc.

What are the changes?

Up until now, a black mark was added to your credit report if you defaulted (also if you have been bankrupt or had court judgements, debt agreements or personal insolvency agreements in your name), but with the recent changes, any repayment that is more than 5 days late could now also be listed. You have likely started receiving notices from the banks about changes to their privacy policy which is related to this new legislation.

What does it mean?

To date, any defaults on your credit report could seriously impact your ability to get new credit. Even multiple credit applications or enquiries could impact how banks assess you when you apply for a loan.

The new changes could have far more negative implications as the bar has been dropped in terms of what gets reported. Late payments go straight to your report and can be seen any time you apply for credit in future, and could likely mean future loans are not approved.

All credit reports now come with a score (see example below) and it is possible that banks may start setting minimum scores for loan approval.

There is good news though for people who always make their payments on time – there has been talk of bigger discounts for those with higher scores.

There is one simple way to minimise negative marks on credit reports – set up direct debits for all loan repayments and minimum monthly repayments on credit cards.

Getting a copy of your credit report

If you would like a copy of your credit report, you can apply at http://www.veda.com.au/sites/default/files/docs/veda_free_credit_file_application_form_oct-13.pdf. If you can wait 10 days, this will be supplied at no cost. If you don’t want to wait that long, I can get a copy of your report instantly at no charge, contact us at Golden Eggs Home Loans today to find out more.

If you have any concerns about your report, please let us know and we would be happy to discuss with your further.

Also if you would like some tips on how to improve your credit score, contact us by email or call 02 8095 9251 for more information.

And finally, if you find these blogs informative, you can sign up to our newsletter at https://www.goldeneggs.info/newsletter/ to receive further information by email on a regular basis.

PROPERTIES SELLING PRIOR TO AUCTION

An award-winning property auctioneer  has credited mortgage brokers with contributing to his success by helping buyers be in a position to bid unconditionally at auctions (ref: http://bit.ly/NxUdAa). With many properties selling before auction, it’s buyers that have their finance in place that are best placed to make an offer.  If you would like to be in a position to secure your dream home or next investment property, contact Golden Eggs Home Loans today on info@goldeneggs.info or 02 8095 9251.

Are you an ANZ Customer?

You may have seen in the news that ANZ Bank has overcharged some home loan customers for interest repayments, and so are providing refunds where this has been the case. The bank says it is contacting customers around the country offering them an average refund of around $300, after errors that in some cases date back to 2003.

ANZ Bank is conducting a review of all accounts to ensure they are operating correctly. Impacted customers will be notified either by mail, phone or on their bank statement and will receive their refund between 20 January and March 2014.

The bank has set up a specialist call centre team to manage customer enquiries in relation to the program, so feel free to call 1800 602 843 (8am to 8pm (AEST), Monday to Friday) if you think you may have been affected. Also feel free to let us know if you have any questions.

WHAT IS IN STORE FOR INTEREST RATES IN 2014?

After the Reserve Bank’s first meeting of 2014, I thought you might be interested to hear what might happen with interest rates this year.

As widely expected, the RBA have kept the cash rate on hold. Their statement companying the announcement (http://www.rba.gov.au/media-releases/2014/mr-14-01.html) notes that “the global economy has been consistent with growth having been below trend in 2013 but with reasonable prospects of a pick-up this year”.

While the US Federal Reserve have started the process of reducing their stimulus measures, the RBA note that financial conditions remain very accommodative (i.e. economy-boosting).

The RBA are no longer saying the Australian dollar is “uncomfortably high” although they do state that “further decreases will assist in achieving a balanced economy”.

They expect growth to remain below trend “for a time yet” and unemployment to rise further before it peaks. Beyond the short term, growth is expected to strengthen, helped by low interest rates and the lower exchange rate.

They pretty clearly state that rates are at the right level for the moment and will remain there in a “period of stability” for the time being. Economic commentators mainly seem to think that there will be no further rate drops (with a few still predicting one more) unless there is some serious economic event, and the question is then, when will they start rising – some predict later this year and others early 2015.

Beyond that, the RBA have pointed out that long-term interest rates remain low. To give you an idea of current rates, 5 year fixed rates are in the range of 5.6% to 6%.

As always, if you have any questions about this or wish to discuss your situation, please let us know and we would be happy to call or visit.

NO CHANGE TO INTEREST RATES – DECEMBER 2013 RBA ANNOUNCEMENT

Well here we are, it’s almost Christmas! Today’s Reserve Bank meeting was the last for the year, and the board decided to leave interest rates unchanged (http://www.rba.gov.au/media-releases/2013/mr-13-25.html).

The RBA statement continues to note a mixed outlook, with growth still below trend, unemployment edging higher, and weak public spending expected. However household and business sentiment is improving, demand for finance by households is increasing and retail sales are growing.

At this stage it seems the RBA’s biggest concern is the Australian dollar, which remains “uncomfortably high”. The Reserve Bank would prefer for economic growth to be driven by a weaker dollar rather than further rate decreases and they have made a number of speeches in the past month to this effect.

With the official cash rate on hold, home loan variable rates are expected to be stable however a number of lenders are starting to put up their 3 and 5 year fixed rates. Contact us at Golden Eggs Home Loans today if you would like to look into at refinancing to take advantage of the current low rates.

NO CHANGE TO INTEREST RATES – NOVEMBER 2013 RBA ANNOUNCEMENT

The Reserve Bank had their monthly meeting and have left
interest rates on hold (http://www.rba.gov.au/media-releases/2013/mr-13-23.html).

The notes that follow the announcement had a new comment that “public spending
is forecast to be quite weak”. They also remark that “a lower level of the
exchange rate is likely to be needed to achieve balanced growth in the
economy”. Much as I am hesitant to make any forecasts, I can’t see rates being
lifted while this is the case and while inflation is expected to remain within
target for the next one to two years.

I have received some questions about the relationship between the RBA rate and
the rates that you pay on your home and investment loans, so look out for my
next newsletter which will have some more information for those that are
interested. I love getting questions, so if you have any queries of a general
nature or related to your personal situation, please let me know.

Call or email us today to find out more.

Rates on Hold – October 2013 RBA Announcement

As always on the first Tuesday of the month (except January), the Reserve Bank of Australia (RBA) Board meet to determine the cash rate. As
widely anticipated, today they decided to leave the cash rate unchanged at 2.5 per cent (http://www.rba.gov.au/media-releases/2013/mr-13-19.html).

With consumer and business confidence edging higher, and the property market recovering (in some areas more quickly than others), the expectation is that the RBA will continue to watch for further signs that previous cuts are having an impact on stimulating the economy.

You may have seen commentary in the past month discussing whether we are in a property bubble, particularly with the Sydney and Melbourne markets running hot. The RBA commented in mid September that this does not necessarily constitute a bubble, and that house prices have risen at a rate equivalent to or on average less than the growth of household incomes. Interestingly though, the RBA statement today does have a masked warning that “there is ample funding for creditworthy borrowers” (my emphasis), which is consistent with their recent public caution to banks to maintain standards when approving loans. In a low rate environment, it is important to also consider loan affordability with a buffer for when rates inevitably rise. At Golden Eggs Home Loans, we discuss this with all clients.

As to the future, there are a number of indicators still slowing the economy and the RBA note that “they will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes as consistent with the target”.

Call or email us today to find out more.

No change to rates – September 2013 RBA Announcement

The Reserve Bank of Australia (RBA) held their monthly board meeting today and have decided to leave the cash rate unchanged at 2.5 per cent (http://www.rba.gov.au/media-releases/2013/mr-13-17.html)

Most parameters appear relatively stable except global financial markets which have shown some volatility as the US considers tapering quantitative easing.

The RBA note that:

  • Global growth is still below average but has ‘reasonable prospects’ of picking up next year
  • Inflation in most countries remains ‘well contained’
  • The Australian economy continues to grow below trend, but is as expected due to lower levels of mining investment
  • The unemployment rate continues to edge slightly higher
  • Previous rate decreases have supported interest-sensitive spending and asset values
  • The Australian dollar depreciation has helped rebalance growth in the economy, and this will continue it the exchange rate depreciates further over time.

It appears that with no clear signs of deterioration or improvement, the RBA is taking a ‘watch and wait’ approach.

Variable rates are at historical lows and fixed rates even lower. For those with an existing mortgage, this is a good time to keep repayments the same, which will result in you paying down your loan more quickly. If you would like to know if your loan is still a good choice for you, please contact us. It is a competitive environment and the banks are vying for new business, so you may be able to make further savings. For example, one bank have just reduced all their variable rate loans by 0.22%, even though the Reserve Bank kept the cash rate steady. And a number of banks are offering rebates of between $700 and $1000 for loans refinanced from another lender. Call or email us today to find out more.

Rate Decrease of .25% – RBA Announcement for August 2013

Rate Decrease of .25% – RBA Announcement for August 2013

As was widely anticipated by surveyed economists, the Reserve Bank of Australia announced a decrease of 0.25% (http://www.rba.gov.au/media-releases/2013/mr-13-15.html), taking the cash rate to a low of 2.5%.

Governor Glenn Stevens had hinted at this in a speech last week, and today’s announcement notes that recent information on prices and activity were the impetus for the lowering of the cash rate. Unemployment has edged higher (and the latest mini-budget forecasts that trend to continue for the next one to two years), and with headline inflation weaker than expected, the RBA hopes to support demand and build business confidence and investment.

It is expected that the banks will to pass on all of the decrease due to lower funding costs.

If you would like to discuss what this means for you, please contact us