Posts

Recent Changes to Interest Rates

/0 Comments/in

As published in the news recently, CBA, ANZ and Westpac have announced some small home loan interest rate rises along with Suncorp and some other smaller Lenders, all independently of any Reserve Bank / Cash Rate movement. The Cash Rate has not changed since July 2016.

We monitor this closely to ensure our customers’ loans remain competitive. To summarise our general feeling around this, it is that all banks/lenders are expected to do the same thing, and therefore the competitive landscape is unlikely to change.

However if you would like to discuss your specific situation please feel free to call us any time on 03 9882 2500.

Why are rates increasing?

The Cash Rate has not changed since July 2016, however unfortunately (for borrowers) or fortunately (for investors) in 2018 it costs a bank/lender quite a lot more to raise the funds needed to lend to borrowers, than it did in the past.

This Australian Bureau of Statistics chart shows the margin banks make on loans over the past 18 years:

 

 

 

 

 

 

 

 

 

 

 

Much of the source of loan funds comes from deposits, and as we know, deposit investment rates (eg. term deposits) remain low, which has caused deposit growth to slow in Australia. This means banks must find other ways to source funds to meet borrower demand, including borrowing from institutions and each other.

The increasing cost of funds is also demonstrated in the Australian Bank Bill Swap Rates (BBSW):

Summary

Whilst the recent changes represent an added cost of around $40 per month on an average loan of $400,000, it is unlikely any bank or lender is immune to these cost pressures, and it is also unlikely that your loan will become unsuitable as a result of these changes.

We will continue to monitor these changes, and we are always here to answer any questions you may have about your loans. So please feel free to contact our office on 03 9882 2500 if you would like to discuss these issues.

 

Interest Rate Update – August 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

The past few months have seen an improvement to our GDP growth to 3.1%, a drop in the unemployment rate, a brightening outlook for mining investment, strengthening non-mining investment and a strong growth in export volumes.  However, we are also experiencing the continuing weak growth in wages (and inflation), reducing property prices in Melbourne and Sydney and the uncertainty driven by the US-China trade war.  This mixture of positive and negative economic data are an important reason why the RBA has decided to remain on hold for the foreseeable future.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

Interest Rate Update – July 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

Whilst the RBA is comfortable to wait until possibly well into 2019 before they next raise the cash rate we have seen (since February) an escalation in wholesale funding costs, primarily influenced by a stronger US economy and rising interest rates in that country.    The major Australian Banks raise only about 20 per cent of their funding on short term wholesale markets but their net interest margins will be squeezed and this adds to the Banks funding pressures from tighter capital requirements. The past couple of weeks has seen Bank of Queensland, Suncorp, AMP Banks and ME Bank increase their lending rates between 0.4 per cent and 0.12 per cent.  The major Australian Banks have been willing to absorb the costs in a bid to build market share but if the increased funding costs are sustained the Banks may be forced to raise interest rates independently from any change in the official cash rate.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

Interest Rate Update – June 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

Yesterday we heard that retail sales increased by a better than expected 0.4% in April (against an anticipated 0.3%) and company profits rose 5.9% in the March quarter, influenced in particular by a 11.0% increase in mining profits.   Tomorrow we should see Australia’s GDP figures for the March quarter lift by 0.8% or 0.9%.    Notwithstanding these positive results the RBA remains comfortable to remain on the sidelines, possibly until well into 2019, until we see an increase to both our inflation rate (currently 1.9%) and wages growth.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

 

Interest Rate Update – April 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

The RBA is confident Australia’s economy will be boosted this year by stronger LNG exports as new projects come onstream. In addition, non-mining investment will likely rise solidly, buoyed by population growth, low interest rates and dynamic global economic activity. However, sluggish wage growth, declining productivity and high levels of household debt will continue to weigh on the economy. GDP growth of 2.3 percent for 2017 is further evidence the RBA’s expectations for a pick up to 3.25% this year will be challenging.

We continue to believe that the RBA will maintain the current cash rate until wages growth and core inflation are on a sustained upward trend.  This is not expected until later this year or early 2019.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

 

Interest Rate Update – March 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

A raft of economic data recently released continues to show a slowly improving domestic economy.  Company profits during the final quarter of 2017 increased by 2.2 per cent across the majority of industries, with mining company profits increasing 4.2 per cent due to higher demand for commodities such as iron ore.  Approvals for the construction of new homes rose 17.1 per cent in January which far exceeded the anticipated 5.0 per cent improvement. These results come ahead of December’s gross domestic product figures, due to be released tomorrow, with most Economists expecting a quarterly growth rate of 0.5 per cent.

The positive economic data is not restricted to Australia with strong growth throughout many of the US service industries.  The planned tariffs on steel and aluminium may start a more aggressive trade policy (globally) but the specifics remain unknown at this stage.

Notwithstanding the improvement in the Australian, US and other global economies, together with the current uncertainty of the US tariff situation, the RBA remains keen to take a cautious approach with monetary policy with no change to the cash rate expected for some months.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

 

Interest Rate Update – February 2018

/0 Comments/in

Cash Rate – No change

The Reserve Bank of Australia (RBA) has just announced it will maintain the official cash rate at 1.50%.

The last half of 2017 and the commencement of the new year has seen an improvement in our domestic economic and employment growth. We have seen more buoyant business conditions, strong non-mining investment and increased business and consumer confidence.

However, with the headline inflation at 1.9% (below the RBA’s target range of 2.0% – 3.0%) and wages growth remaining low, the RBA is comfortable to retain the Cash Rate at current levels.  The recent strengthening of the Australian dollar to over US80c, albeit on the back of a weaker US dollar, is another reason why we do not expect any change to the Cash Rate until well into 2018.

Inflation in the US also remains low but investors have interpreted Friday’s employment figures, which have shown US wages rising at strongest rate since June 2009, as evidence the US economy is heating up. This has influenced higher bond yields and, together with concerns of rising inflation, has caused today’s large global sell-off in stocks.  2018 will certainly be a dynamic year.

For more information, or if you would like a free review of your residential, commercial or SMSF loans against other competitive products in the market please contact Peter, David or Simon via this email, our phone: (03) 9882 2500, or visit www.firstpointgroup.com.au

Interest Rate Update – September 2017

/0 Comments/in
Read more

Interest Rate Update – August 2017

/0 Comments/in
Read more