The Reserve Bank Of Australia has decided to keep the official cash rate on hold at its meeting today. Great news for all mortgage holders. More great news may be ahead, as the Reserve Bank Governor, Glenn Stevens also indicated a possible rate reduction in his statement today.
With all the turmoil in the financial markets at the moment, like the sovereign debt issues in Europe and the United States, some small concerns over growth in Asia and share market volatility, inflation in Australia seems to have abated somewhat.
Real concerns by many Australians of a possible increase in unemployment, house value declines and uncertainty with the global economy has seen spending cut back and an increase in savings. These factors have contributed to inflationary pressures abating, and may give the RBA some real consideration and scope for an easing of current monetary policy (a rate decrease). Lets hope so. Certainly many businesses would welcome a rate decrease, especially those in the retail sector, which have been hit hard by a decrease in spending in recent times.
The official statement by Glenn Stevens, Governor: Monetary Policy Decision –
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.
Conditions in global financial markets have continued to be very unsettled, with uncertainty increasing about both the prospects for resolution of the sovereign debt and banking problems in Europe, and the outlook for global economic growth. While temporary impediments that had contributed to a slowing in growth in some countries over recent months are lessening, recent data suggest a continuing period of soft economic conditions in both Europe and the United States. Moreover, the uncertainty and financial volatility have reduced confidence, which could result in more cautious behaviour by firms and households in major countries.
It will take more time for evidence of any effects of the recent European and US financial turbulence on economic activity in other regions to emerge. Thus far, indications are that economic activity is continuing to expand in China and most of Asia. Nonetheless, recent events have led forecasters to reduce their estimates for global GDP growth, which is now expected to be about average this year and next. Prices for commodities have declined over recent weeks, though in general they remain high.
Australia's terms of trade are very high, which has increased national income considerably. Investment in the resources sector is picking up very strongly and some related service sectors are enjoying better than average conditions. In other sectors, cautious behaviour by households and the earlier rise in the exchange rate have had a noticeable dampening effect. The impetus from earlier Australian Government spending programs is now also abating, as had been intended. While there remain good reasons to expect solid growth over the medium term, the indications are that the pace of near-term growth is unlikely to be as strong as earlier expected, due both to local and global factors, including the financial turmoil and related effects on business confidence.
Underlying inflation stopped falling and began to increase earlier this year. The Board has been concerned about the prospect of a further pick-up over the period ahead, but over recent months has been weighing the question of whether a period of weaker than expected conditions would contain that pick-up in inflation. Recently revised data show a pick-up to date in the underlying pace of price rises that was less sharp than initially indicated. Moreover, with labour market conditions now a little softer and households more concerned about the possibility of unemployment rising, the likelihood of a significant acceleration in labour costs outside the resources and related sectors is lessening.
Taking into account all the recent information, the path for inflation may now be more consistent with the 2–3 per cent target in 2012 and 2013, abstracting from the impact of the carbon pricing scheme. This assessment will be reviewed on receipt of further data on prices ahead of the Board's next meeting. An improved inflation outlook would increase the scope for monetary policy to provide some support to demand, should that prove necessary.
The Board noted that financial conditions have been easing somewhat, with interest rates for some housing and business loans declining slightly due to increased competition and the fall in some funding costs in financial markets. The exchange rate has also declined from the very high levels of a few months ago. Credit growth remains low, however, and asset prices have declined.
At today's meeting the Board judged the current cash rate remained appropriate. As always, the Board will continue to assess carefully the evolving outlook for growth and inflation.
If you have any questions or comments, please leave below. If you would like some mortgage information, or to speak to a qualified mortgage broker, please contact me anytime.
Showing posts with label blog. Show all posts
Showing posts with label blog. Show all posts
Tuesday, October 4, 2011
Sunday, July 3, 2011
Why Get Pre Approved Mortgage Finance?
This is an email question from Thom in West Leederville. His question asks – I am considering buying an investment property, and I am wondering whether I should get pre approved mortgage finance? What are the benefits if I do? And what cost is involved?
This is a good question, and one I get asked all the time. Ok, firstly lets look at what pre approved mortgage finance is.
With pre approved mortgage finance, you would generally meet you’re your mortgage broker, and learn how much you could borrow. Then once you have decided on how much your pre approved home loan will be, you will need all the paperwork required to get a home loan.
Most banks or lenders, with pre approved mortgage finance, check the paperwork, do a credit check, and then, hopefully pre approve your mortgage application. Also too with pre approved mortgage finance, the pre approved home loan limit, is an up to amount, so if you find a cheaper property, or don’t need to use the full pre approved home loan limit, then that is fine. For example, if you have a $400,000 pre approval in place, but only need a $250,000 home loan, then that is ok, as your limit you applied for was $400,000.
If you need more than your pre approved limit, provided you have talked to your mortgage broker beforehand, and have ascertained how much you can borrow, you should be ok to increase the pre approved amount, with your application.
Pre approved mortgage finance, with most banks and lenders generally has no cost, and the pre approval lasts on average for 3 months, with most lenders. It is important when you are speaking to your mortgage broker to know all the possible costs associated with any pre approval mortgage application.
If your pre approved mortgage finance expires, it still generally costs nothing with most banks and lenders, to apply for another pre approval.
There are many advantages to pre approved mortgage finance. Some advantages include –
You know how much you can borrow
You have the peace of mind knowing that you finance is pre approved.
A real estate agent may take your offer more seriously, knowing that you have pre-approved finance in place
The pre-approved finance may give you more negotiating power on the property you are thinking of purchasing, as your finance has been pre approved, giving the seller more confidence in your finance application.
Because you have a pre approval in place, most banks and lenders, will be quicker assessing your home loan application, as they have already done part of the work with your pre approval application.
A pre approved mortgage application doesn’t always mean that your home loan will be approved, once you have found a property. The bank or lender will still generally speaking value the property you have brought, re check your paperwork, and do employment checks. Generally speaking though, if your home loan has been pre approved, your formal finance application (when your find the property),. Should be more than likely approved.
If you have any comments, please leave below. If you would like more personal finance information, or to use my services as a mortgage broker, please contact me anytime.
This is a good question, and one I get asked all the time. Ok, firstly lets look at what pre approved mortgage finance is.
With pre approved mortgage finance, you would generally meet you’re your mortgage broker, and learn how much you could borrow. Then once you have decided on how much your pre approved home loan will be, you will need all the paperwork required to get a home loan.
Most banks or lenders, with pre approved mortgage finance, check the paperwork, do a credit check, and then, hopefully pre approve your mortgage application. Also too with pre approved mortgage finance, the pre approved home loan limit, is an up to amount, so if you find a cheaper property, or don’t need to use the full pre approved home loan limit, then that is fine. For example, if you have a $400,000 pre approval in place, but only need a $250,000 home loan, then that is ok, as your limit you applied for was $400,000.
If you need more than your pre approved limit, provided you have talked to your mortgage broker beforehand, and have ascertained how much you can borrow, you should be ok to increase the pre approved amount, with your application.
Pre approved mortgage finance, with most banks and lenders generally has no cost, and the pre approval lasts on average for 3 months, with most lenders. It is important when you are speaking to your mortgage broker to know all the possible costs associated with any pre approval mortgage application.
If your pre approved mortgage finance expires, it still generally costs nothing with most banks and lenders, to apply for another pre approval.
There are many advantages to pre approved mortgage finance. Some advantages include –
You know how much you can borrow
You have the peace of mind knowing that you finance is pre approved.
A real estate agent may take your offer more seriously, knowing that you have pre-approved finance in place
The pre-approved finance may give you more negotiating power on the property you are thinking of purchasing, as your finance has been pre approved, giving the seller more confidence in your finance application.
Because you have a pre approval in place, most banks and lenders, will be quicker assessing your home loan application, as they have already done part of the work with your pre approval application.
A pre approved mortgage application doesn’t always mean that your home loan will be approved, once you have found a property. The bank or lender will still generally speaking value the property you have brought, re check your paperwork, and do employment checks. Generally speaking though, if your home loan has been pre approved, your formal finance application (when your find the property),. Should be more than likely approved.
If you have any comments, please leave below. If you would like more personal finance information, or to use my services as a mortgage broker, please contact me anytime.
Sunday, June 26, 2011
Why Compare Your Mortgage?
This is an email question from Steve in Leederville. His question asks - I have had my home loan for a couple of years, and have noticed that some banks are offering cheaper interest rates. My question is, should I compare my home loan?
It is important to know what your home loan interest rates are. It is also important to know if you are paying monthly or annual fees, and the features that your current home loan has.
You may be able to save a fair bit of money too, if another or new home loan product has come to the market, and may suit your current needs better.
A call or email to a mortgage broker, may help you get through the maze of comparing your home loan. Mortgage Brokers are paid commissions by banks or lenders, and most mortgage broker do not charge a fee (I Don’t, if your not sure, just ask your broker).
A good mortgage broker, should compare your current home loan, to other products on offer, plus the possible costs associated with either switching your home loan with your current lender, or switching to another bank, versus the savings you may receive.
It really costs nothing to compare your home loan, just a little bit of your time. In the case with Steve, the email question, we were able to switch his home loan to a different mortgage with the bank he was with, saving any possible exit fees. Steve’s interest rate was reduced from 7.4% to 7.1% on his $300,000 home loan. His savings were approx $66 a month, which is quite a significant saving. The bank fee, to switch his loan was $300, so the fee to switch the loan, will be repaid within the first 5 months of starting his new home loan.
If you would like a home loan health check, or to speak to a qualified mortgage broker, please contact me anytime.
It is important to know what your home loan interest rates are. It is also important to know if you are paying monthly or annual fees, and the features that your current home loan has.
You may be able to save a fair bit of money too, if another or new home loan product has come to the market, and may suit your current needs better.
A call or email to a mortgage broker, may help you get through the maze of comparing your home loan. Mortgage Brokers are paid commissions by banks or lenders, and most mortgage broker do not charge a fee (I Don’t, if your not sure, just ask your broker).
A good mortgage broker, should compare your current home loan, to other products on offer, plus the possible costs associated with either switching your home loan with your current lender, or switching to another bank, versus the savings you may receive.
It really costs nothing to compare your home loan, just a little bit of your time. In the case with Steve, the email question, we were able to switch his home loan to a different mortgage with the bank he was with, saving any possible exit fees. Steve’s interest rate was reduced from 7.4% to 7.1% on his $300,000 home loan. His savings were approx $66 a month, which is quite a significant saving. The bank fee, to switch his loan was $300, so the fee to switch the loan, will be repaid within the first 5 months of starting his new home loan.
If you would like a home loan health check, or to speak to a qualified mortgage broker, please contact me anytime.
Monday, May 30, 2011
How Much Deposit Do I Need To Buy A $375,000 Home In Western Australia
How Much Deposit Do I Need To Buy A $375,000 Home.
My next article, with the how much deposit do I need series, is looking at how much deposit do you need to purchase a $375,000 property in Western Australia, both as a first home buyer, and non first home buyer (buying your second, third home, etc or investment property). We will look at the approx fees and charges too, to give you a guide to how much deposit you need to purchase your next home.
Lets look at how much deposit you need to purchase a $375,000 property in Western Australia, both as a first home buyer, and non first home buyer. We will look at the minimum deposit required, which with most banks or lenders is 5% of the purchase price, plus the associated fees. Of course the more deposit you have the better, and generally speaking your 5% deposit, has to be saved over at least 3 months in a bank account (this is called genuine savings). The deposit can also come the sale of shares, sale of a previous home etc.
Ok, lets look at fees, and the minimum deposit you will need to purchase a $375,000 property in Western Australia (unless you have a guarantor for your home loan, which you may not need a deposit at all) -
First Home Buyers ($375,000 Property).
Property Purchase Price - $375,000
Transfer Stamp Duty - $0
Settlement Agent Fee - $1,400 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)
Total including Fees - $379,350 (Including The Fees)
Deposit Required $18,750 (5% of $375,000)
You will need $18,750 deposit, as a first home buyer to purchase a property costing $375,000 in Western Australia.
To work out your how much your home loan would be, as a first home buyer purchasing your home for $375,000 in Western Australia –
Purchase price (including fees) - $379,350
Minus Your Deposit - $18,750
Minus The First Home Owners Grant - $7,000
Home Loan Required $353,600
When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.
Based on purchasing a $375,000 property, with a $353,600 home loan, the mortgage insurance fee would be approximately $11,277 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -
Home Loan $353,600
+
Mortgage Insurance Fee $11,277
Total Home Loan $364,877
Your approx repayments on a $364,977 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2452.09 per month,
Buying Your Next Home Or Investment Property ($375,000 Property).
If you have already purchased a home, or you are buying an investment property, you may not qualify for the first home owners grant. You can still purchase a home with as little as 5% deposit, and you will still require 5% genuine savings (this can come from the proceeds of a sale of property, savings in the bank, sale of shares). The biggest difference is you will have to have the funds to also pay for the transfer stamp duty, settlement agent fees, balance of the shire and water rates.
Also too, please note that if you have equity in your current home, and you are buying another property, you may not need a deposit at all, as the equity in your current home, may be able to be used as deposit to fund your new property. You also may not need a deposit either, when buying your next home, if you have a guarantor for your home loan. If using a guarantor for your home loan, you also may be able to borrow the associated fees, so you may require no deposit at all.
Lets look at how much deposit you will need to purchase a $375,000 property, if you are buying your next home or an investment property in Western Australia –
Property Purchase Price - $375,000
Transfer Stamp Duty - $11,828
Settlement Agent Fee - $1,400 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)
Total including Fees - $391,178 (Including The Fees)
Deposit Required $18,750 (5% of $375,000)
Plus Fees (as above) $16,178
Total Deposit Required $34,928
You will need $34,928 deposit, as a non first home buyer to purchase a property costing $375,000 in Western Australia.
To work out your how much your home loan would be, as a non first home buyer purchasing your home for $375,000 in Western Australia –
Purchase price (including fees) - $391,178
Minus Your Deposit - $34,928
Home Loan Required - $356.250
When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.
Based on purchasing a $375,000 property, with a $356,250 home loan, the mortgage insurance fee would be approximately $11,361 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -
Home Loan $356,250
+
Mortgage Insurance Fee $11,361
Total Home Loan $367,611
Your approx repayments on a $367,611 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2,470.46 per month.
This is an approximate guide to how much deposit you will need to purchase a property costing $375,000 in Western Australia. If you are unsure, or would like more advice specific to your own personal situation, please contact me anytime. I am a mortgage broker, based in Yokine, with many years of experience. If you have any comments, please leave below, I enjoy reading your feedback.
My next article, with the how much deposit do I need series, is looking at how much deposit do you need to purchase a $375,000 property in Western Australia, both as a first home buyer, and non first home buyer (buying your second, third home, etc or investment property). We will look at the approx fees and charges too, to give you a guide to how much deposit you need to purchase your next home.
Lets look at how much deposit you need to purchase a $375,000 property in Western Australia, both as a first home buyer, and non first home buyer. We will look at the minimum deposit required, which with most banks or lenders is 5% of the purchase price, plus the associated fees. Of course the more deposit you have the better, and generally speaking your 5% deposit, has to be saved over at least 3 months in a bank account (this is called genuine savings). The deposit can also come the sale of shares, sale of a previous home etc.
Ok, lets look at fees, and the minimum deposit you will need to purchase a $375,000 property in Western Australia (unless you have a guarantor for your home loan, which you may not need a deposit at all) -
First Home Buyers ($375,000 Property).
Property Purchase Price - $375,000
Transfer Stamp Duty - $0
Settlement Agent Fee - $1,400 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)
Total including Fees - $379,350 (Including The Fees)
Deposit Required $18,750 (5% of $375,000)
You will need $18,750 deposit, as a first home buyer to purchase a property costing $375,000 in Western Australia.
To work out your how much your home loan would be, as a first home buyer purchasing your home for $375,000 in Western Australia –
Purchase price (including fees) - $379,350
Minus Your Deposit - $18,750
Minus The First Home Owners Grant - $7,000
Home Loan Required $353,600
When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.
Based on purchasing a $375,000 property, with a $353,600 home loan, the mortgage insurance fee would be approximately $11,277 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -
Home Loan $353,600
+
Mortgage Insurance Fee $11,277
Total Home Loan $364,877
Your approx repayments on a $364,977 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2452.09 per month,
Buying Your Next Home Or Investment Property ($375,000 Property).
If you have already purchased a home, or you are buying an investment property, you may not qualify for the first home owners grant. You can still purchase a home with as little as 5% deposit, and you will still require 5% genuine savings (this can come from the proceeds of a sale of property, savings in the bank, sale of shares). The biggest difference is you will have to have the funds to also pay for the transfer stamp duty, settlement agent fees, balance of the shire and water rates.
Also too, please note that if you have equity in your current home, and you are buying another property, you may not need a deposit at all, as the equity in your current home, may be able to be used as deposit to fund your new property. You also may not need a deposit either, when buying your next home, if you have a guarantor for your home loan. If using a guarantor for your home loan, you also may be able to borrow the associated fees, so you may require no deposit at all.
Lets look at how much deposit you will need to purchase a $375,000 property, if you are buying your next home or an investment property in Western Australia –
Property Purchase Price - $375,000
Transfer Stamp Duty - $11,828
Settlement Agent Fee - $1,400 (Approx)
Balance Of Water Shire Rates - $2,000 (Approx)
Mortgage Registration / Legal Fees - $350 (approx)
Bank Application Fee - $600 ( Some mortgages have no application fee)
Total including Fees - $391,178 (Including The Fees)
Deposit Required $18,750 (5% of $375,000)
Plus Fees (as above) $16,178
Total Deposit Required $34,928
You will need $34,928 deposit, as a non first home buyer to purchase a property costing $375,000 in Western Australia.
To work out your how much your home loan would be, as a non first home buyer purchasing your home for $375,000 in Western Australia –
Purchase price (including fees) - $391,178
Minus Your Deposit - $34,928
Home Loan Required - $356.250
When you borrow more than 80% of the property value, you will pay a once off mortgage insurance fee, which with most banks can be added to the home loan.
Based on purchasing a $375,000 property, with a $356,250 home loan, the mortgage insurance fee would be approximately $11,361 (this fee will vary between the lenders). This fee can generally be added to the home loan. The more deposit you have, the cheaper the mortgage insurance fee will be. Lets add the mortgage insurance fee to the home loan and see what your total home loan will be, and the monthly repayments -
Home Loan $356,250
+
Mortgage Insurance Fee $11,361
Total Home Loan $367,611
Your approx repayments on a $367,611 home loan over 30 years, at an average mortgage interest rate of 7.1% is $2,470.46 per month.
This is an approximate guide to how much deposit you will need to purchase a property costing $375,000 in Western Australia. If you are unsure, or would like more advice specific to your own personal situation, please contact me anytime. I am a mortgage broker, based in Yokine, with many years of experience. If you have any comments, please leave below, I enjoy reading your feedback.
Thursday, February 17, 2011
Banks And Lenders Increase Discounts And Fee Waivers
More positive news yesterday with some more banks and lenders offering fee waivers and increased interest discounts to new mortgage customers. This is good news for mortgage holders, if you are thinking about refinancing your home loan, or anyone thinking about a home loan for the first time.
Some banks have increased their interest rate discounts, especially if your home loan value is less than 75% of the property value. Some banks and lenders are waiving application fees, some offering to compensate some exit fees from your current lender, if you are thinking about refinancing your home loan.
Another Bank too, has announced, lenders mortgage insurance fee waivers on home loans between 80% and 85% of the property value (conditions do apply). This could be a significant saving, if you qualify.
Competition between the banks and lenders is certainly heating up. It may be a good time to consider comparing your home loan, to see if you could save some money. My service as a mortgage broker is free (I am paid commission by the banks or lenders) and totally obligation free, if you choose not to proceed. These are the banks and lenders I deal with, so there are quite a few, including the big four banks. Comparing your home loan costs nothing, and can be done via email, and may save you thousands of dollars. Contact me anytime for an obligation free home loan health check.
If you have any comments, please leave below, if you would like more personal home loan information, or to use my service as a mortgage broker, please contact me anytime.
Monday, January 31, 2011
The Reserve Bank Of Australia Leaves Rates Unchanged.
With their announcement today, the RBA have left the official cash rate on hold. This is welcome relief for all mortgage holders. In his statement, RBA Governor, Glenn Stevens noted that inflation was at medium term level objective, at around 2.25%, and that the bank expects inflation over the year ahead, to remain in the 2-3 percent target.
Global output grew strongly in 2010, notwithstanding the relatively subdued performance of several of the major economies. The Chinese and Indian economies in particular have recorded very strong expansions, and price pressures, particularly for food and raw materials, have picked up. Concerns about sovereign creditworthiness in Europe have remained prominent and uncertainty from this source seems likely to persist for some time. Overall, however, the global economy continues to look strong going into 2011. Commodity prices have remained high and in many instances have risen further over recent months.
Australia's terms of trade are at their highest level since the early 1950s and national income is growing strongly. There have been further indications that private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and an increase in the saving rate. Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend.
Employment growth was unusually strong in 2010. Most leading indicators suggest further growth, though most likely at a slower pace. After the significant decline in 2009, growth in wages picked up somewhat last year. Some further increase is likely over the coming year.
Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. Recent data show underlying inflation at around 2¼ per cent in 2010. The CPI rose by about 2¾ per cent, reflecting the once-off effect of the increase in tobacco excise. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices. The Bank expects that inflation over the year ahead will continue to be consistent with the 2–3 per cent target.
The flooding in Queensland and Victoria is having a temporary adverse effect on economic activity and prices. Some production of crops and resources has been lost and some other forms of economic output have also been lower in the affected areas.
Prices for the relevant commodities have risen and are likely to remain elevated in the near term. Resumption of production is occurring at differing speeds by region and industry. In setting monetary policy the Bank will, as on past occasions where natural disasters have occurred, look through the estimated effects of these short-term events on activity and prices. The focus of monetary policy will remain on medium-term prospects for economic activity and inflation.
The floods also resulted in damage or destruction to physical capital in the affected regions. Over the next year or two, the efforts to repair or replace infrastructure and housing will add modestly to aggregate demand, compared with what would otherwise likely have occurred. The extent of this net additional effect will depend on the full extent of the damage, the speed of the rebuilding, and the extent to which other public and private spending is deferred. The Bank's preliminary assessment is that the net additional demand from rebuilding is unlikely to have a major impact on the medium-term outlook for inflation.
The Bank will of course continue to assess the effects of the floods and the subsequent recovery, along with all the other factors having a bearing on economic conditions. At today's meeting, the Board judged that the current stance of monetary policy remained appropriate in view of the general macroeconomic outlook.
The Reserve Bank Statement –
Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 4.75 per cent.Global output grew strongly in 2010, notwithstanding the relatively subdued performance of several of the major economies. The Chinese and Indian economies in particular have recorded very strong expansions, and price pressures, particularly for food and raw materials, have picked up. Concerns about sovereign creditworthiness in Europe have remained prominent and uncertainty from this source seems likely to persist for some time. Overall, however, the global economy continues to look strong going into 2011. Commodity prices have remained high and in many instances have risen further over recent months.
Australia's terms of trade are at their highest level since the early 1950s and national income is growing strongly. There have been further indications that private investment is beginning to pick up in response to high levels of commodity prices. In the household sector thus far, in contrast, there continues to be caution in spending and borrowing, and an increase in the saving rate. Asset values have generally been little changed over recent months and overall credit growth remains quite subdued, notwithstanding evidence of some greater willingness to lend.
Employment growth was unusually strong in 2010. Most leading indicators suggest further growth, though most likely at a slower pace. After the significant decline in 2009, growth in wages picked up somewhat last year. Some further increase is likely over the coming year.
Inflation is consistent with the medium-term objective of monetary policy, having declined significantly from its peak in 2008. Recent data show underlying inflation at around 2¼ per cent in 2010. The CPI rose by about 2¾ per cent, reflecting the once-off effect of the increase in tobacco excise. These moderate outcomes are being assisted by the high level of the exchange rate, the earlier decline in wages growth and strong competition in some key markets, which have worked to offset large rises in utilities prices. The Bank expects that inflation over the year ahead will continue to be consistent with the 2–3 per cent target.
The flooding in Queensland and Victoria is having a temporary adverse effect on economic activity and prices. Some production of crops and resources has been lost and some other forms of economic output have also been lower in the affected areas.
Prices for the relevant commodities have risen and are likely to remain elevated in the near term. Resumption of production is occurring at differing speeds by region and industry. In setting monetary policy the Bank will, as on past occasions where natural disasters have occurred, look through the estimated effects of these short-term events on activity and prices. The focus of monetary policy will remain on medium-term prospects for economic activity and inflation.
The floods also resulted in damage or destruction to physical capital in the affected regions. Over the next year or two, the efforts to repair or replace infrastructure and housing will add modestly to aggregate demand, compared with what would otherwise likely have occurred. The extent of this net additional effect will depend on the full extent of the damage, the speed of the rebuilding, and the extent to which other public and private spending is deferred. The Bank's preliminary assessment is that the net additional demand from rebuilding is unlikely to have a major impact on the medium-term outlook for inflation.
The Bank will of course continue to assess the effects of the floods and the subsequent recovery, along with all the other factors having a bearing on economic conditions. At today's meeting, the Board judged that the current stance of monetary policy remained appropriate in view of the general macroeconomic outlook.
You can visit the Reserve Bank Of Australia website here. If you have any comments please leave below. If you have any questions, or would like to use my services as a mortgage broker, please contact me anytime.
Thursday, January 20, 2011
What Is A Professional Packaged Mortgage?
This is an email question from Liz in Tuart Hill, What is a Professional Package (sometimes referred to as a pro pack) mortgage? This is quite a common question, and the title ‘Professional Package Mortgage’ can be a little confusing.
Quite a few bank and lenders offer professional packaged mortgages. Don’t be deceived by the name of it, ‘professional package’, as this type of home loan package that is generally available to anyone who has a mortgage (You don’t have to be a doctor or lawyer for example). Most banks or lenders offer ‘Pro Packs’ and they are generally a fully featured banking product.
A ‘Pro Pack’ from a bank or lender, is generally not a type of home loan, but a package that you may pay an annual fee for, and it may offer interest discounts on home loan products, offset or savings accounts, credit card annual fee waivers, insurances, it may offer discounts on a complete range of bank or insurance products.
Lets look at some of the possible advantages of a ‘Pro Pack’ Mortgage –
No application fees on multiple home loans
Interest rate discounts on variable home loans and lines of credit.
Some lenders offer discounts on fixed rate home loans.
No Monthly fee on home loan.
No monthly fees on an offset or savings account.
Annual fee waiver on some credit cards.
Discounts on different types of insurance products (like home, contents, life insurance, etc)
There could be some real savings with a ‘Pro Pack’ mortgage, depending on your personal financial needs. The Annual fee can vary between the banks and lenders, but generally a Professional Package mortgage will cost between $340 and $500 per year.
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