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21 Nov 2008 - Rates set to fall sharply again by Christmas
As growing signs of a weakening Australian economy continue to emerge, the Reserve Bank has clearly flagged that more aggressive rate cuts are in store. Deteriorating jobs growth, falling retail sales and rising employment were identified in the RBA’s board minutes as key factors behind the board’s decision to cut rates by a higher than expected 75 basis points this month.
“Members agreed that a further sizeable reduction in official interest rates was appropriate. This would enable a further meaningful reduction in rates paid by borrowers and could assist confidence among consumers and businesses. In addition, given the changing balance of risks, there was an advantage in moving the setting of monetary policy quickly to a neutral position,” the RBA said.
The minutes from the bank’s November 4 board meeting, which were released this week, revealed that the board has become increasingly bearish about the outlook for the Australian economy. They showed that the board did not believe that the federal government’s $10.4 billion fiscal stimulus package, easier credit conditions and a softer Australian dollar were enough to prevent the economy from grinding to a sudden halt.
The official cash rate is now sitting at 5.25 per cent which is its lowest level in five years. Many market commentators are predicting that the RBA will slash rates by another 100 basis points by Christmas. This would bring official rates down to 4.25 per cent.
More economic data is due out over the next two weeks which will show just how close the Australian economy is from tipping into recession. The RBA will be particularly interested in the September quarter private sector capital expenditure figures. These are due out next week and are important to Glenn Stevens and his team because business investment is one of the key drivers behind jobs growth and economic activity. October retail sales figures are also due out the following week. These will show the extent to which consumers are reining in household spending and battening down the hatches for the expected downturn in 2009. The Reserve Bank will next meet on December 2.
Source: InfoChoice top
20 Nov 2008 - Credit card rates going up
InfoChoice
GE Money and Wizard Home Loans have increased their credit card rates by 2 per cent *or* more since September. The Reserve bank has dropped official interest rates by two per cent since September. Bank of Queensland, Citigroup and Suncorp have also increased rates on some of their cards by up to 0.84 per cent according to research by Infochoice for the Daily Telegraph. No credit card issuer has passed on the full rate cuts to consumers. Analysts said card issuers were limiting the effectiveness of the rate cuts by holding them back. Average card rates are around 20 per cent.
The Daily Telegraph
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20 Nov 2008 - Traders betting on 1% rate cut
InfoChoice
The chances of a one per cent cut in official interest rates firmed yesterday from 92 per cent to 94 per cent based on overnight swaps trading according to Credit Suisse. The governor of the Reserve Bank Glenn Stevens said yesterday that there was plenty of scope for the government and the central bank to act to avoid Australia falling into recession. Stevens said Australians risked talking themselves into a recession. Westpac''''s leading economic index fell 1% in September to 258.4 points and the annualized growth rate of the gauge slowed to 1.1% from 2.5% in August, the bank said today. Business confidence plunged last month to a record low, and this month consumers were pessimistic for a 10th straight month, reports showed last week.
The Age
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20 Nov 2008 - Lenders bid for loan business
InfoChoice
Lenders bid for the right to loan money to potential borrowers on a new website launched this week by Ian Thorpe called ziggybid.com.au. Users can register on the site created by Glenn Spratt, one of the founders of Wizard home Loans, where 15 major lenders and 3000 mortgage brokers can compete to offer the lowest price deal on home loans for each registered borrower. Swim champion Ian Thorpe, who is an investor in the project, said "It takes away all of the daunting elements about applying for a mortgage and introduces healthy competition into the market as the banks vie for your business." Other similar websites include bidmyloan.com.au.
Herald Sun
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20 Nov 2008 - Visa card for solar hot water
InfoChoice
ANZ and renewable energy company Jackgreen have launched the ANZ Easy Being Green Visa card, which will offer consumers a six month interest-free period for the cost of installing an Easy Being Green environmentally friendly solar hot water system. Customers who purchase and install an Easy Being Green solar hot water system from Jackgreen and pay for it on their ANZ First Easy Being Green Visa card will pay no interest for six months on balances up to $6000 *or* to their credit limit. All other purchases will attract the normal interest rate. Applicants are subject to ANZ's normal credit criteria.
Jackgreen Ltd
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20 Nov 2008 - Banks to launch Guarantee accounts
InfoChoice
Banks are expected to announce details of how they will pass on the government's deposit guarantee fees for retail deposits over one million dollars in the next few days. The fees will come into force from next Friday, 28 November. Commonwealth Bank is rumoured to be preparing a new savings account product but a Commbank spokesman yesterday said he knew nothing about it. It was reported in the Herald Sun on Saturday that Westpac and NAB have been advising high net worth investors that they can avoid the fee and retain all their money at the one institution by splitting their funds into separate deposits under different names.
The Sheet
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20 Nov 2008 - Credit unions object to guarantee fees
InfoChoice
The credit union umbrella organisation Abacus says the proposed three tiered fee system for the federal government's deposit guarantee is unfair on them. Most credit unions are not rated by Standard & Poor's and other ratings agencies. Abacus says it has concerns over using the opinions of international ratings agencies to establish the tiers for the fees. "All regulated banking institutions - Australian banks, building societies and credit unions - meet the same regulatory requirements under APRA," said Louise Petschler, CEO of Abacus, in a statement. "In our view, regulation by APRA offers far better protection than the now frequently criticised international debt rating agencies. "Those ratings are not relevant for most mutual banking institutions as we do not need to raise debt funding in wholesale markets," said Petschler. "It''s ironic that the safe, mutual part of the banking system, which is not exposed to wholesale market turmoil, looks likely to be charged more than those who are in these markets."
The Sheet
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3 Nov 2008 - Account switching made easier
Switching bank accounts to get a better deal is now easier following the introduction on Friday of a new account switching service. Australian Securities and Investments Commission (ASIC) Chairman, Mr Tony D’Aloisio, said Authorised Deposit-taking Institutions (ADIs), which include banks, credit unions and building societies, would now provide account-switching services to consumers that are switching their personal transaction accounts.
‘The services will make it easier for consumers to switch accounts by reducing the hassle involved in updating direct debit, direct credit and other automatic payments’, Mr D’Aloisio said.
The new services, available from 1 November 2008, have been developed by banks, building societies, credit unions and other groups in a project coordinated by the Australian Payments Clearing Association (APCA). Under the account-switching package, a customer’s existing ADI will provide the customer with a list of their direct debit, direct credit and other automatic payments going back 13 months. The customer’s new ADI, in return, will assist the customer with re-establishing these direct debits and credits.
‘The switching services are expected to promote competition by encouraging consumers to shop around for the transaction account that offers the best value for money’, Mr D’Aloisio said.
‘Depending on your needs and circumstances, you could switch to a transaction account that offers lower fees or even no fees. Even small monthly savings add up over time.’
The general obligations for ADIs under the account-switching package are contained in the new Part D of the Electronic Funds Transfer Code of Conduct (EFT Code). The EFT Code is a voluntary industry code of practice, adopted by virtually all ADIs, covering all forms of consumer electronic payment transactions such as ATM and EFTPOS transactions, and telephone and Internet banking transactions. It provides consumer protection in areas such as product disclosure, dispute resolution and liability allocation for unauthorised transactions. ASIC administers the EFT Code.
Source: Australian Securities and Investment Commission
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3 Nov 2008 - Buyers market at top end of town
Buyers are enjoying price falls in the affluent suburbs of the capital cities of ten to almost forty per cent. In Melbourne the median residential property prices in top suburbs such as Albert Park have fallen by as much as 39 per cent. Toorak has lost 14 per cent according to the Real Estate Institute of Victoria. In Sydney’s affluent eastern suburbs, only 90 properties have sold for over $2 million in the last three months, compared to 449 in the same period last year. In Perth’s western suburbs, prices have fallen 10 – 20 per cent this year say agents. Queensland beachfront properties are selling for significantly less than in 2007, with many vendors wearing big losses.
Source: Financial Review top
3 Nov 2008 - Debts to take Centrelink bonuses
Half of all Australians who are eligible for bonus payments from Centrelink in the second week of December are planning to save the money or pay down bills according to a survey from the Australian Retailers Association. Parents who receive family tax benefit part A will get $1000 per child. Carers will also get $1000 for each person they care for. Age pensioners will get $1400 for singles and $2100 for a couple. Experts say the best use of the bonus payment is to pay down credit card debts, with average interest rates still around 20 per cent on most cards. If your lender does not penalise extra mortgage repayments, putting one thousand dollars on a $300,000 mortgage in the first year would save more than $6500 in interest over the life of the loan. Analysts said people wanting good term deposit rates should act as soon as they can as rates are falling rapidly.
Source: Herald Sun top
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