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Rates at 1960 levels by Easter: tip
Sunday, 23 November 2008
Predictions of an aggressive interest rate cut by the RBA could see rates drop as low as they were in 1960’s. In early 1960 the cash rate was at 2.9 per cent and debt futures markets are predicting a drop to 2.75 per cent by Easter next year. At the moment the current cash rate is 5.25 per cent. ABN Amro chief economist Kieran Davies said a shrinking Australian economy, falling asset prices and recession-like levels of business confidence will make the RBA more inclined to cut rates aggressively. This will be the biggest rate cut since April 1990 when the Australian economy was about to enter into recession. The rest of the world is set to experience very low rates as well, including the Chinese economy which is slowing sharply.
Abbey launches First Home Saver account
Friday, 21 November 2008
One of the UK's biggest lenders, Abbey, is launching its own First Home saver account following the recently launched First Home Saver account scheme that the Rudd government introduced in October this year. Abbey's new first home saver account is aimed at those aged between 16 and 35 who are trying to save up for the deposit on their first house. Abbey is offering an eight per cent variable rate with no withdrawals and the account holder must attend a mortgage interview at the completion of the account, though they’re not locked into taking a mortgage with Abbey. Abbey’s focus is on rewarding those who save for a deposit to help re-establish the link between savings and a mortgage, however unlike the Australian accounts, UK savers do not get bonus money from the Government.
End of easy credit over as banks tighten lending standards
Tuesday, 18 November 2008
It seems the financial crisis has put an end to the days of easy credit. Banks are pulling in the reins, tightening lending criteria and making it harder for home buyers to get a loan. In the wake of the global crisis, the Commonwealth Bank has gone as far as banning no deposit loans. According to Aussie Home Loans boss John Symond it signals a return to sensible lending practices and it appears banks are taking this seriously in the wake of the American sub prime disaster. Banks in America were left billions of dollars out of pocket due to loan defaults, and in Australia, banks are making sure only those who meet the eligibility requirements are getting a loan. It’s a return to more prudent lending for Australia and a tougher ride for those wanting a loan for a home.
First home buyers forward dating contract to get extra grant money
Friday, 14 November 2008
Since the government boost to first home owner grants in October, some first home buyers seem to think it’s worth the risk to try ‘forward dating’ contracts so they can be eligible to receive the extra bonus. Furthermore there are reports of real estate agents and mortgage brokers suggesting this tactic. This would provide unscrupulous first home buyers an extra $7,000 towards their first home and also make them fraudulent, not to mention their 'dodgy' real estate agent and mortgage broker counterparts. There has been a reported 25 per cent surge in Victorian mortgage sales since the doubled government grant and although an incentive for struggling first home buyers, rorters of the system will be heavily fined if found. Rorters have been fined $411,000 in the past year alone and this may increase with the boosted government grants if first home buyers continue to forward date contracts.
Fear of unemployment keeps many buyers waiting on sideline
Thursday, 13 November 2008
While the government's first home owner grants are a great incentive, fear of unemployment may be holding first home buyers back from purchasing, according to Housing Industry of Australia chief economist Harley Dale. Mr Dale expects that there will be a further stimulus package from the government to help motivate first home buyers into action. Although first home buyers are lacking confidence in job security, in an address to 400 housing industry representatives, Mr Dale said that with rising unemployment the housing industry should still grow, if it peaked at about 6 percent. Overall, the housing industry needs to see first home buyers purchasing first homes rather than holding back out of fear and lack of confidence, according to Mr Dale, the fate of the economy over the next 12 months is riding on it.
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