6th March 2012

RBA Leaves Official Rate Unchanged

The RBA yesterday confirmed economists’ expectations by keeping rates on hold at 4.25%.

The Reserve Bank chose to leave the cash rate untouched after last month indicating it would only move given a “material softening” in economic conditions. The result has confirmed a Bloomberg poll of 24 economists, who unanimously agreed the Central Bank would leave rates untouched.

The decision comes after the TD Securities – Melbourne Institute Monthly Inflation Gauge put inflation at the lower end of the Bank’s 2-3% target band. However, TD Securities head of Asia Pacific Research Annette Beacher said employment, housing finance and exports had provided “upside surprises” for the bank.

Bank of Queensland has subsequently increased rates, a month after vowing to stay on hold until at least the next RBA meeting.

Following the February meeting in which the Reserve Bank shocked economists by leaving the cash rate steady, BoQ resolved that it would leave its rates untouched until at least the Bank’s March meeting. With the Reserve again leaving rates on hold yesterday, Bank of Queensland has belatedly followed other lenders in hiking its standard variable rate by 10bps.

BoQ chief executive Stuart Grimshaw claimed the bank “held rates for as long as it could”, but was now forced to move.

“Competition is fierce for local deposits and to remain competitive BoQ needs to provide strong rate returns on our term deposits. BoQ has covered the higher cost of funding for a number of months to provide our lending customers with certainty, and it is disappointing that we’re unable to continue on that course,” Grimshaw said.

The increase will be effective from 16 March, and will bring the bank’s standard variable rate to 7.46%.

If you’re trying to save for a home deposit in these tough times, tell us how you’re doing it and go in the draw to win $1,500 from the MFAA. Go to: https://www.facebook.com/mfaaessentials

3rd November 2011

What Does The RBA Interest Rate Cut Mean For You?

On Tuesday, Melbourne Cup Day, the RBA cut interest rates by 0.25% to 4.5%, the first cut in official rates since April 2009 and the 6th year in a row it has moved rates on Cup Day, traditionally a meeting when rates are left alone.  I’m not going to bore you with the reasons for this cut, you can go straight to the Glenn Stevens RBA media release for this.

As lenders cut their rates in line with the official rates, those on variable rates should start to see some savings in the order of $250/year or $20/month per $100,000 borrowed.  As was widely reported in the media, CBA and Westpac moved to cut 0.25% from their rates effective a few days after the official rate cut and NAB was criticised for only cutting 0.20% (effective Nov 7).  Despite this, NAB still has the lowest SVR of the big four.  Are you concerned you’re not getting the best rate at your bank?  Are you thinking of buying a property, but have been previously told you can’t borrow enough?  The drop in rates and the prospect of further cuts may increase your borrowing capacity.  Contact me and I’ll ask one of my mortgage professionals to assess your situation for you.

20th October 2011

ATO Changes to SMSF Rules a Positive Step for Property Investing

Over a third of Australian superannuation funds are held within Self Managed Superannuation Funds (SMSF), with the average size of each fund about $960,000.  Legislative changes in 2007 have allowed SMSF owners much more flexibility in how they invest their money, including buying residential property.

Buying a property within your SMSF has just become more attractive with the ATO releasing a draft ruling allowing funds from your SMSF to be used to improve a property and conduct repairs to recently acquired property.  This will ultimately have the effect of broadening the the available properties that you can purchase within SMSF as the previous restriction essentially limited purchases to new properties that didn’t require any modification to offer a good rental return.  Find more information on the ATO ruling here>>. Download ruling SMSFR 2011/D1  from the ATO.

One commentator suggests these changes will have a major positive effect on the rental availability and affordability as investors  increasingly enter the property market as part of their SMSF investment strategy.

If you’d like more information on these changes and how to use a SMSF to improve your post retirement financial position, drop me a line!

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