There have been speculations whether or not the RBA (Reserve Bank of Australia) would cut interest rates once again to boost Christmas sales. The speculations have already been cleared as the RBA has already decided. The RBA Has Announced Their Official Cash Rate In Time For Christmas during its last meeting of the year held on Tuesday (December 2, 2019) to hold official interest rates steady as it waits to see if the economy closes out 2019 on a positive note.
The bank decided to hold the official cash rate at a record low of 0.75% in line with the financial market and economist expectations.
The market has already expected that the RBA to let its rates steady with the prediction that the bank would wait to see how the Christmas and New Year spending activity will affect the economy, before making another decision early next year. This just explains that there are still open possibilities for future cuts if the low cost of borrowing and tax cuts fail to stimulate the economy.
RBA Governor Philip Lowe has stated, “Outlook for the global economy remains reasonable”, adding that “while the risks are still tilted to the downside, some of these risks have lessened recently”.
“Given these effects of lower interest rates and the long and variable lags in the transmission of monetary policy, the board decided to hold the cash rate steady at this meeting while it continues to monitor developments, including in the labour market, and is prepared to ease monetary policy further if needed to support sustainable growth in the economy, full employment and the achievement of the inflation target over time,”
“The main domestic uncertainty continues to be the outlook for consumption, with the sustained period of only modest increases in household disposable income continuing to weigh on consumer spending,” he added.
He also noted that “The low level of interest rates, recent tax cuts, ongoing spending on infrastructure, the upswing in housing prices and a brighter outlook for the resources sector should all support growth.”
Property prices and investors appear to have been the biggest beneficiaries of the RBA’s 0.25% interest rate reductions in June, July, and October.
Investing in the property market requires you to maximize your budget, especially if you are planning to buy a new home for your family. Joining in the property market would cost you a lot. You will have accountabilities such as legal expenses, deposits, and some other costs adding up.
But, nowadays, anyone can already reach their dream of having their own home in a cost-effective way. To find a home loan that is perfect for your budget and lifestyle, you need the help of a mortgage broker.Continue reading
There are 6 lenders with variable Home Loan Rates with a 2 at the beginning, according to a report from RateCity.
They are expecting 6 to climb to 20 at the next RBA (Reserve Bank of Australia) cut if banks pass on at least 0.20 % to borrowers.
Sally Tindall, the RateCity research director have stated that the owner-occupier rates beginning with a ‘2’ could become the new norm if the central bank made 2 more cuts to the cash rate.
“With 2 more rate cuts on the cards, we could see the lowest variable rate drop below 2.60, maybe even below 2.50%.”Continue reading
A Savings rate is defined as the value stated as a percentage or ratio, that an individual can deduct from his or her net income for the purpose of saving it for retirement. That particular amount of money is usually put invested in very low-risk investments such as money market funds or for a retirement account.
Savings rates tend to reduce as populations age. In this case, they chose to spend their money rather than saving them. Interest rate policies can also affect the decision of the people. Some other factors include:
Consumer confidence can affect the savings rate. If the households could feel negativity towards the economic opportunities, consequently, they will prefer to save more and focus on paying off their debts.
When a credit crisis happens, credit can’t be obtained easily. Therefore, financing will decrease, and people will choose to focus on saving. On the contrary, a greater chance of credit, and an increase in work productivity can cause a lesser chance of saving.
Another factor that can lower savings rates is the increase in wealth. People usually save to buy properties such as their own home. The housing market has a big influence on saving in Australia. Increasing house prices promotes mortgage equity withdrawal, and at the same time, an increase in spending. Conversely, a decrease in house prices has the opposite effect.
Savings rates can be affected by wage growth. Negative net income growth will result in a decline in the savings rate. As a result, people will spend through financing and from their savings.
Economic experts believe that a higher interest rate can lead to lower overall expenditures and higher savings. It is because the substitution effect outweighs the income effect.
Lower interest rates substitute saving for spending. It implies that a cut in the interest rate also means a drop in income as these people receive lower income payments. It will attract consumers to hold their cash rather than spending it. For instance, if a pensioner relies on interest payments from saving, he may decide to save more with the intention of maintaining his target income from his savings.
The amount of spending is based on income. Lower interest rates make saving less attractive. However, some consumers may react to lower interest rates by saving more so as to maintain their standard of living. On the contrary, some consumers may spend more if their income increases and they may spend less if their income drops.
Based on the latest news from RateCity, ANZ and NAB have reduced their savings rate again. The cutting of the savings rate intends to make financing at a lower cost for consumers and businesses. It also promotes spending and strengthening the economy.
The effect of lower mortgage rates will fail to stimulate lending within Australia unless banks will ease their credit policies, which were tightened in the midst of investigation from the banking royal commission.
Managing director of the Finance Brokers Association of Australia (FBAA) Peter White, has said Reserve Bank of Australia’s rate cuts isn’t enough to stimulate the housing market on their own, especially as banks use unrealistic credit criteria to push legitimate buyers out of the market and disadvantage borrowers.
During the FBAA’s annual conference, White said, “We need a more considered approach to credit policy because right now there are borrowers with the capability to pay a mortgage that is being rejected for a variety of reasons.”
White stated that banks are beginning to take action as they continue to lose business, citing Commonwealth Bank’s recent decision to lower its floor rate the second time in four months as an example.
“Banks are being forced to act because the market is flat, and we will no doubt see that other banks will follow,” he added.
“The FBAA has said before that the buffer used by banks is ridiculously obstructive to borrowers.
“In no way am I suggesting we loosen the credit criteria, but in an economy that needs stimulating, interest rate cuts are only a part of the solution.
He then concluded, “Denying legitimate and credible borrowers a loan due to credit policies that make no sense doesn’t help anyone.”
A broker’s association in Australia, the MFAA (Mortgage & Finance Association of Australia) has launched a Social Media Marketing Guide intended to help its brokers to take advantage of their online brand presence and better engage with their customers and attract new prospects.
The Finance Brokers 101 Guide to Social Media was developed based on broker feedback. It was developed to help their members overcome the challenges of branding among the social media platforms, and on how to create relevant content. Real-life examples were given with a couple of advice from fellow award-winning brokers.
Stephen Hale, the MFAA’s head of marketing and communications, has stated that the guide aims to help brokers “overcome the pain points of establishing and maintaining a presence on social media, and provide actionable tactics that help brokers to implement low- cost marketing solutions for their business.”
“Great social media strategies are now a mandatory requirement to grow your business, so it is important to know your target audience and to get the foundations right from the start, Personal branding is one of the best tools you have to distinguish yourself from your competitors and show potential customers and referrers what you have to offer,” Mr. Hale added.
This Marketing Guide is also designed to help brokers understand the differences between each social media platform, how to target particular niches such as first home buyers or investors, and how to create relevant content for each marketing channel. It is important for brokers as it will keep them up to date with the social media trends to serve the different market segments.
“Social media should be a platform to educate or entertain, not sell. It is important to create relevant educational posts that are of value to get traction from your target market. This guide can help brokers learn how to create valuable social media material and information intended to build relationships rather than generating leads,” Mr. Hale concluded.
Payment methods for goods and services have been evolving over the years. Going back to the old days where the barter system is used as a method of exchange before the use of money was introduced. Then after several years, Credit Cards was introduced followed by Debit Cards. Up to now, people still make use of Debit and Credit Cards. However, a new method of payment has been launched- Online and Mobile Payments. While more and more people use mobile phones in almost everything they do, this new mode of payment has been “the thing” in this generation.Continue reading
The ABA (Australian Banking Association) is calling on governments across Australia to establish new laws to protect people from Elder Financial Abuse, as new research shows that 87% of Australians believe that they can do more at a government level to eradicate this form of abuse.
The ABA launched a campaign to Stop Elder Financial Abuse with the support of Bauer Media to fight against elder financial abuse with a new campaign reporting that 57% of Australians are concerned that someone they know will be the victim of Elder Financial Abuse.
The Stop Elder Financial Abuse campaign, which is backed by a petition, calls on governments across the country to take a stand that would protect people and provide support from this kind of abuse as well as establish a National Power of Attorney (POA) register to confirm if POA documents are legitimate and current and assign a safe place to report elder financial abuse.
According to the ABA, 1 in 10 older Australians experience elder abuse in any given year.
The ABA is now inviting on groups, major organizations, and individuals to take part in addressing this major issue.
There are stories from bank staffs that there have been situations wherein they sometimes attempt to prevent when they see money being drained out from the accounts of the pensioners. They think that something is happening behind those transactions as the money is being used for items that are not in line with the elder’s needs and wants. Their pensions are being used for holiday getaways or expensive jewelry. However, the victim is unwilling or does not take any action to report what is really happening.
Russell Westacott, the CEO of Seniors Rights Service, has expressed his support on the new campaign. He stated that at least 2 to 3 elders every day are a victim of this abuse. Most of them take the blame that they let it happen and are often used by their son, daughter, or grandchild.
The Stop Elder Financial Abuse campaign relies on the work that the ABA has been using to lessen Elder Financial Abuse. This follows the ABA’s update of their Banking Code of Practice to introduce a higher standard of customer care when dealing with individuals and small-business customers.
The Broker and Banking industries have agreed on a standard procedure to identify the signs of financial abuse in a co-borrower arrangement. Started on the 1st day of July, those in the mortgage market are obliged to take extra care with clients who may be vulnerable. It includes age-related impairment, cognitive impairment, elder abuse, family or domestic violence, financial abuse, mental illness, serious illness, and any other personal or financial situation causing significant disadvantage.
While disability, dependence on others, and dementia can represent vulnerability for older people, it is the combination of other factors, such as poor-quality relationships or low social support, that can increase the risk of Elder Financial Abuse.
The RBA (Reserve Bank of Australia) has announced their August cash rate. The central bank has kept its Cash Rate on hold its record low of 1.0% as they wait for the effect of the rate cuts from the previous months (June and July) on the economy that with two 25 basis point cuts totaled to 50 basis points.
The basis point cuts came after almost 3 years without any changes, and it was linked to the weakening of the labor market and for the low inflation rate. Whereas the cash rate hold today was already expected because economists have been predicting to have up to two more cuts before this year ends.Continue reading