The Reserve Bank of Australia has decided to slash rates by a further 25 basis points, pegging the country’s benchmark rates at 4.25 percent. The change is designed to soften the blows of external factors including the unresolved debt debacle in Europe, China’s economic slowdown and the patchy but weakening domestic economy.  The cut will provide savings of around $50 a month on an average $300,000 mortgage.

Extract of a statement by Glenn Stevens, Governor Monetary Policy RBA.

“Growth in the global economy has moderated this year after a strong performance in 2010. Some of the slowing reflected temporary factors, and as these passed, the pace of expansion in the United States and much of Asia began to pick up around mid-year. China’s growth has been slowing, as policymakers there had intended. Trade in Asia is now, however, seeing some effects of a significant slowing in economic activity in Europe”.
 

Westpac, Commonwealth, NAB join ANZ in passing on festive rate cut.
All four of the major banks have now responded to Tuesday’s central bank rate cut by passing on the full reduction to home loan borrowers with Standard Variable Rates as follows :

ANZ - 7.30%
CBA – 7.31%
NAB – 7.22%
Westpac  – 7.36%

However this is not the whole story, most clients would be eligible for further rate reductions on larger loan balances. Ray Backhouse Financial Services advisors have recently negotiated up to 1% below standard variable in additional loan discounts for our clients ! Additionally we have arranged fixed rate loans at an incredible 5.8% when packaged with other loans. Don’t miss out on these opportunities, ring now for an obligation free loan review and see how much more we can save you on your mortgage !

Positive News, Australia’s Growth Rate Predictions
There has been a real contest amongst economists in predicting Australia’s overall growth for next year. The latest forecast from Organisation for Economic Co-operation and Development (OECD) insists Australia is among the world’s top economies with a forecast of four percent on Gross Domestic Product (GDP).  Other economies enjoying similar growth are Chile and South Korea.

With the RBA reducing rates to 4.25% and Australia’s growth set to be among the world’s top economies for 2012, this would be an opportune time to contact Ray Backhouse Financial Services on (08) 9340 9340 or email : enquiries@raybackhouse.com.au for an obligation-free financial review !

Homeowners can breathe a sigh of relief with the Reserve Bank leaving interest rates on hold for the ninth consecutive month. The RBA continued its cautious approach in safeguarding the Australian economy keeping the official cash interest rate unchanged at 4.75 per cent at its recent October meeting.

 So what does this means for interest rates? Currently the average standard variable rate is 7.79% however a number of larger borrowers are receiving significant discounts with some paying as little as 6.8%.

 Home loans generally have either a fixed or variable interest rate, or a split rate – a mixture of both. A fixed rate home loan is taken out for a set period with a set interest rate; when this period ends you can fix the rate again, or switch to a variable interest rate which fluctuates with the market.

 Variable and fixed rate loans become more or less appropriate in different financial environments, and rates can differ for each lender and term. Traditionally fixed rates tend to be at or slightly above the standard variable rate however with competition, fixed rates are being pushed considerably lower than the standard variable rate, with some 3 year term fixed rates being quoted at 6.29%. 

 A number of experts suggest that fixed loans are a better option if there is an expectation of interest rate rises in the medium to long term. However, with such a rate variance  it could pay to switch from a variable to a fixed rate loan. As with any home loan advice, the key is to examine your own financial situation, and only consider a change if the fees to make the change are outweighed by savings benefits.

 Some experts point out that fixed rates rarely fall below the standard variable rate for a long period, and when they do it is usually a good idea to fix at least a part of your loan. Remember that you don’t have to fix all of your home loan, but you can split the loan between fixed and variable rates with a split rate loan.

 With fixed rates now below the standard variable rate, it may be a good time to call a mortgage broking professional at Ray Backhouse Financial Services and make an appointment to discuss.

PLASTIC MORE POPULAR THAN CARDS
Interesting numbers from the RBA show many people are abandoning conventional credit cards in favour of debit cards. Both movements are in record numbers. The biggest drop is in the use of credit cards to borrow money and the biggest upturn is in the use of EFTPOS ­ often with a request for a cash-out.

Congratulations to Ray Backhouse for his nomination for the AFA Advisor of the year award 2011

Congratulations to Ray Backhouse for the award for 3rd place AFG Loan Writer of the Year 2011

The board of the Reserve Bank of Australia (RBA) on Tuesday left the cash rate steady at 4.75 per cent – where it’s been since November 2010.

The decision was expected, with all 11 economists surveyed by AAP predicting the RBA would keep rates on hold.

RBA governor Glenn Stevens says underlying inflation has been in the bottom half of the two to three per cent target range, though a gradual increase is expected over time.

“Year-ended CPI (consumer price index) inflation is likely to remain elevated in the near term due to the extreme weather events earlier in the year,” he said in the statement accompanying the board’s decision.

“However, as the temporary price shocks dissipate, CPI inflation is expected to be close to target over the next 12 months.”

The central bank says it will continue to “assess carefully the evolving outlook for growth and inflation”.

The move will help overcome unfairness in the tax system where low-income earners do not get a tax break, or are sometimes taxed at a higher rate, when they put money into super.

The refund, which will provide up to $500 a year extra super for low-income workers, would be worth about $35,000 by retirement

RBA GOVERNOR MISUNDERSTOOD?  

The Governor of the Reserve Bank of Australia (RBA), Glenn Stevens, is understood to be annoyed at the way the daily financial media used his monthly address last week to claim interest rates are set to rise in August. This, the RBA insists, is both misleading and misses the most important point of the speech which praised the overall state of the economy amid mainstream media reports of mainly gloom.

ALL EYES ON NEXT WEEK  

Monday June 27th may be just another day for most of the population but for the economics community, it is when the next set of official inflation figures are released. And if they are too high and outside the RBA’s stated comfort zone of three percent, then the RBA is certain to include them as added pressure to lift the basic cash rate in early July or August

LOST SUPERANNUATION