The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.75%. But will the banks pass on the interest rate cut in full to you?
RBA Governor Philip Lowe said this third rate cut in five monetary policy meetings was made to support employment and income growth.
“The Board also took account of the forces leading to the trend to lower interest rates globally and the effects this trend is having on the Australian economy and inflation outcomes,” he said in a statement.
“It is reasonable to expect that an extended period of low interest rates will be required in Australia to reach full employment and achieve the inflation target.”
The RBA previously cut the official cash rate on July 2, just one month after making its first rate cut in almost three years (since August 2016). (more…)
Three-in-five prospective first home buyers intend to buy soon with a smaller deposit, rather than wait until they have saved a 20% deposit. So how do they plan on doing so?
It usually takes between seven to 14 years for first home buyers to save a 20% first home deposit, according to a new report by Genworth on recent and prospective first home buyers (FHBs).
With that in mind, it’s no wonder that 59% of prospective FHBs are eagerly exploring their options to buy now in the current market, rather than risk waiting until house prices rise.
Indeed, about two-thirds of recent and prospective FHBs are of the opinion that property prices will stabilise or increase over the next 12 months.
So what options are available for prospective FHBs with a deposit of less than 20%?
More than one-in-five SMEs are having cash flow problems due to business loans being rejected, according to new research.
The report, by market analysis firm East & Partners on behalf of Scottish Pacific, also shows just one in 10 SMEs believe they are on top of their cash flow.
One of the main culprits?
More than one-in-five business owners cite being rejected from a lending product as the main reason for their cash flow issues, the report states, and a similar proportion of SMEs were unable to take on new work because of these cash flow problems.
“[This] is a massive wake up call to SMEs and their advisors to make sure they are funding their business in a way that optimises cash flow,” says Scottish Pacific CEO Peter Langham.
“A business struggling with cash flow can only stretch working capital so far before something has to give.”
Imagine buying your first home with only a 5% deposit and not having to pay lenders mortgage insurance (LMI). Well, that dream is one step closer to reality after the government introduced legislation to implement the First Home Loan Deposit Scheme.
Currently, people with a deposit of less than 20% usually have to pay LMI.
But under the scheme, some first home buyers will be able to borrow up to 95% of the value of their property without forking out for LMI.
The result: first home buyers stand to save up to $10,000 in LMI, allowing them to enter the property market earlier than they would have otherwise.
Now, the scheme is due to commence on 1 January 2020.
But here’s the catch: it’s limited to just 10,000 first home buyer loans each year.
That number is less than 10% of the 110,000 Australians who bought their first home in 2018.
Lending to Aussie households spiked 3.9% in July, the strongest growth seen since October 2014, according to the Australian Bureau of Statistics (ABS).
The bumper month follows a 1.9% rise in June 2019, suggesting the tide has finally started to turn in the lending market.
“Whoa. Quite the surge in housing credit in July,” remarked CoreLogic’s head of research Tim Lawless, “haven’t seen numbers like this since 2015/16”.
Lending for investors rose 4.7% in July with rises across all states and territories, while lending to owner-occupiers also recorded substantial gains at 5.3%.
Meanwhile, home loans to first home buyers rose 1.3% in July. This is the fourth consecutive month of growth for this segment.
One in 10 consumers have switched credit products in the past year, according to new research, with Millennials and women in particular pouncing on offers from small banks, credit unions and building societies.
The financial landscape is shifting.
Over the past 12 months, 10% of consumers have switched credit providers, according to the Australian Consumer Credit Pulse 2019 report from Equifax, as once-loyal customers increasingly check out what lenders outside the Big Four banks have to offer.
Businesses that put off paying large tax bills for too long may soon find that the Australian Taxation Office (ATO) has notified credit reporting bureaus.
The proposal is part of The Treasury Laws Amendment (2019 Tax Integrity and Other Measures No.1) Bill, which was recently introduced into parliament.
The Bill will provide the ATO with the discretion to disclose to credit reporting bureaus when a business has a debt of $100,000 for 90 days or more. (more…)
Reckon you could scrounge together an extra $50 each week to pay off your mortgage? If so, latest modelling shows the average household with a $400,000 loan could save $46,992 and pay off their home loan four years faster.
This week we’re going to look at the benefits of paying just a little bit more off your mortgage each week.
Now, this is quite a timely subject because the RBA has just delivered back-to-back cash rate cuts, so even if your monthly repayment amount has been reduced, there’s a lot to be gained by sticking to the same amount you’ve been paying over the last few years. (more…)
Great news for home buyers – housing affordability is the best it’s been since 1999, according to new data released by the nation’s peak housing and building body.
That’s right – housing affordability is comparable to the days when the Y2K bug had us fearing for our lives, Nokia Snake was the pinnacle of mobile gaming, and median house prices in Australia ranged between $112,000 (Hobart) to $272,000 (Sydney).
These days, however, median prices range from $420,000 (Hobart) to $840,000 (Sydney).
But here’s where it gets a little interesting.
For a home buyer with an average income purchasing a median-priced dwelling (assuming a 10% deposit), mortgage repayments will consume the smallest proportion of their earnings since 1999, according to the Housing Industry Association (HIA) Affordability Index.
Hang on, how is this possible?
Whenever the Reserve Bank of Australia (RBA) changes the official cash rate we all hear about how it will impact home loans. But it affects many other areas of finance and the economy, which we’ll look into today.
The RBA has cut the official cash rate to a new record low of 1%, just one month after lowering it to 1.25% – which was the first rate cut in almost three years (since August 2016).
Now, whenever this happens we all hear about what it will mean for mortgage-holders.
But it also has a flow-on effect for many other areas of finance, which we’ll look into below.
