It's here at last!

At some times this year, it seemed like it would go on for ever. But here we are at last. And thank goodness.....

Thanks for following us through the year and we look forward to bringing you more news you may not have heard elsewhere, or at least our spin on it, again in 2012.

Wishing you all an excellent Christmas and fabulous New Year. Stay safe and enjoy.

ANZ and the 2nd Friday of each month.

You may have recently heard that ANZ has made a change to when they will review their current home loan interest rates. Commencing on the 2^nd Friday of January 2012 and then on the 2^nd Friday of every month following ANZ will announce any changes in their interest rates.

While this is a change from the current practice announcing rate movements shortly after the Reserve Bank of Australia (RBA), at this stage we don’t believe it should be anything to worry about.

What does this mean for me if I have an ANZ Loan?

In the short term, not much. It adds some certainty, in that you will know exactly when ANZ will announce any changes to your interest rate. However, it will now allow them to move rates outside of RBA announcements. Whilst all lenders have always had this option available to them, until now not one of them has ever done it.

Is it good or bad for me?

It is too early to tell at this stage. Over the last 4 years we have seen quite a few changes with the four major banks now all having different standard variable interest rates which, of course, came about because, in some cases, the full RBA rate decreases were not passed on. ANZ have always been a competitive lender and we’re sure they will continue to be in the future.

Then why did they do this?

One of the main reasons was to uncouple the interest rate movements from the RBA announcements. No doubt they, like most lenders, found the pressure from politicians, the media and the public (especially via social media) “annoying”, for want of a better word. Now on the 2^nd Friday of each month they can quietly (or very, very quietly when rates go up) put their decision up on anz.com which will attract less attention.

OK, so that may be a little light hearted; the other major reason for the change is due to the varying funding costs. The overseas markets, where Australian lenders often borrow money long term to lend to you and I, are closed at the moment and everyone anticipates that when they open back up costs to borrow from these funds will have increased in a very similar fashion to what we saw at the start of the GFC. Until Europe and the Euro settle down these markets will continue to be volatile. By reviewing their rates monthly, ANZ will be able to move rates outside of the RBA announcements and with, perhaps, less scrutiny.

Hold on - the RBA meets on the 1^st Tuesday. ANZ doesn’t announce their rate changes until the 2^nd Friday;  that’s 1,2,3….10 days later!

That is sure to be a good part of the reason for the change. Yes, if rates go down then it is 10 days before you know what ANZ will do and then possibly another 7 days before any changes come into effect. But what about the reverse situation? When rates start going up, you should have all those extra days at the cheaper rate. This is, for us, the most important question. Only time will tell if the increases follow in the same time frame as the decreases. We will be watching this with great interest.

Will other lenders follow?

Not sure at this stage but our gut feeling is that other lenders will wait and see. The RBA doesn’t meet in January and ANZ will make an announcement on the 13^th so it will be interesting to see what happens especially if they move rates up!

We do believe that the general trend for interest rates right now is downwards, however it’s likely that many lenders will not pass on the full RBA rate decreases in the future so the major banks will continue to have differing standard variable interest rates. All this makes it harder for the general public to be able to compare loans between lenders all the more reason to ensure you have a Licensed Mortgage Broker working for you.

As always if you have any questions or concerns contact us, we are always here to help.

This will be our last update for 2011, unless something dramatic happens, so I would like to take this opportunity to wish you all a safe and happy holiday period. We all look forward to assisting you in 2012.

Robert Seton

Managing Director

PS: We have attached the ANZ press release for those of you who maybe interested. Click here.

Early Xmas present - Rates cut

http://www.abc.net.au/news

Illegal bank fees?

A class action brought by 34000 customers of ANZ has been given the green light to proceed to further hearings. It's only a partial win by these customers however gives comfort to customers of other banks. If the courts rule that ANZ's fees for late payments, amongst others, are indeed illegal, we can bet that the other banks will scramble to refund customers before a similar class action is brought against them.

Your bank giving YOU money: priceless!

We're not alone...

and we're not talking about ET.

We've thought for a while that interest rates in Oz had gone as high as they were likely to in this cycle. We figured there'd be a rate cut in November and would not be surprised to see another one or two by Easter. It seems some economists are coming around to the same way of thinking.

Westpac and JPMorgan have predicted more rate cuts than this. Of course, there will be PR departments for both intent on gaining exposure which relies on dramatic headlines. We're more pragmatic.

It's always nice to have others agree with you.

I'm now predicting a Sydney Swans premiership in 2012. Anyone care to join in?

Interest rates plummet

Someone can see the writing on the wall. Actually, it seems everyone can. Fixed rates continue to fall with the latest offering 5.99% fixed for 2 or 3 years. What does that say about variable rate expectations? As always, talk to your broker before fixing and remember you don't have to fix your whole loan.

And a new bank rides into town from 1st Dec - Heritage Bank. Until now a building society based in Toowoomba, Heritage is the latest entity to be given a banking licence. Now if they would only open some branches in Victoria......

Hellenic balancing acts and your mortgage

5 years ago, who would have thought that the outcome of a referendum in Greece could have a big impact on your home loan interest rate? It's quite likely that this will be the case. If Greece decides to go it alone and opt out of the euro, the ramifications could well be felt here.

Which way would rates go? Good question - money markets may tighten up again and funding costs increase, pushing up rates OR the global economy could take another hit and the Reserve Bank may decide that, as inflation seems to be under control in Australia, reducing interest rates will stimulate domestic spending. We're leaning towards the latter option as Christmas approaches and retailers are still doing it tough. Job losses aren't the ideal way to start a new year, and cutting interest rates is one sure way to keep shop assistants in their jobs.

What do you think?

Sell, sell, sell!

Have you been offered a home loan with your cheque deposit lately? No? Shouldn't be long now then.....Pre-Christmas sales push linked to staff bonuses

Great offer for property investors

From now until 9th October 2011, a complete property depreciation report from Deppro, the depreciation specialists, can be purchased for $330 (incl GST). That's $270 off!

We've used Deppro ourselves so are happy to be able to provide this great offer to our clients, friends and followers - and anyone else you'd care to share it with.

Getting a depreciation schedule prepared on your investment property can make a big difference to the cost of your investment. Have a chat to your accountant. I bet he or she would recommend a report.

If you would like to know more about the offer, or about Deppro, get in touch with us now and we'll get the information to you straight away.

To take advantage of this offer right now click here.

The "Blacklist" makes it's public debut.

Today in Melbourne's The Age newspaper the lender's blacklist made it's official media debut! The list is compiled by all major lenders and has apartment projects that the lenders have concerns about. What does this mean for you; it confirms that in ALL circumstances you should have a "Subject to Finance" clause inserted into any Contract of Sale that you may sign. You can read all the details by clicking here.

Also spotted (well, it would have been hard to miss) was a full page ad by CBA advertising that it would match or beat any other MAJOR lenders' interest rate. In a spring marketing gimmick, Commonwealth Bank said that it "guaranteed" it would beat any "currently advertised rate from ANZ, NAB or Westpac".

The pledge excludes "subsidiaries", which rules out a lot of Westpac's offerings through St George, BankSA, Bank of Melbourne, RAMS (and many other lenders) offering more competitive packages than the big 4. It also speaks down to consumers thinking they are unable to grasp the reality that is "not all about rate" - service, extras and convenience play a much bigger role now than ever before.

I can't help but wonder how the CBA can do this. Last year on Melbourne Cup Day they went above the RBA increase stating that "cost of funds" was the reason and, again only last month at the AGM, Mr Norris CEO stated that the "cost of funds" would keep rates up and that a rise outside of an RBA increase could be on the cards. I wonder what's happened? Could it be that the decreasing size of their mortgage portfolio has them scouting for business at any cost?

If you believed that banks didn't want your business, think again. They are at war with each other in mortgage land right now and of course, when at war, the truth is usually the first casualty.

And away we go......

Variable rate discounts have started. Leading building society releasing a home loan rate of just 6.85%! Want to know more? Get in touch with us.

Market "volatility" has RBA rethinking rates.

At a function in Sydney yesterday RBA deputy governor Ric Battellino said even though inflation in Australia had started to rise the RBA remained wary of raising interest rates while markets experienced the most volatility since the global financial crisis. Here is a little more of what he said:
"Inflation forecasts for the longer term have risen to be a little above the top end of the target range."
"As you know since then market volatility has become more extreme."
"An important issue ahead of us will be to assess what impact this is likely to have on global and domestic economic activity."
"As yet there is little information on which to base such judgements."

Dr Battellino also took aim at the major Australian banks for raising interest rates above and beyond the RBA's last increase of 25 basis points in November last year.

"Banks responded to the November increase in the cash rate with substantially larger increases -- around 40 basis points -- in interest rates on housing loans," he said. "The size of the increase and the controversy it created seemed to have a noticeable impact on household behaviour."

So what does this mean for you as a mortgage holder? Well, the situation facing the RBA is unique; they have no previous data to refer to so they have no real idea of the impact of the above situations moving forward. The RBA still seems to be carrying some lender "baggage" from November 2010 when the banks raised interest rates higher than the 0.25% the RBA moved and this has changed how you and I behave, with our consumer confidence plummeting and a real shift to saving. Again these are all firsts - something financial markets find unsettling.

Fixed rates are still moving down with some now at 6.34% and they are tipped to move down again later this week.

The most interesting figures we read this week were that the interbank futures market predicts there could be 151 basis points of rate reductions by this time next year. So they are saying that rates in Australia will fall by 1.5% in the next year...WOW. Have to remember that this is a "future prediction" and therefore very volatile however everything is pointing to lower rates with over 60% of economists now predicting that the RBA will lower rates by 0.25% next month. Only time will tell, but for now it's definitely time to sit and wait for at least the RBA meeting next month.

How low can they go?

And the fixed rate "limbo" is under way, which is great news for anyone who wants to fix their mortgage interest rate but not so good for those looking to put money into a fixed term deposit. ING announced 1, 2 and 3 years fixed at 6.39% late yesterday making the other 3 lenders who announced their cuts seem pretty...well, pedestrian. So the big question is how low can they go? Time will tell but it certainly appears that there will be some further rate discounting in the near future. Stay tuned and start stretching- the limbo may prove to be just too tempting!

Wow, what an interesting week it has been (as in ‘may you live in interesting times’).

We have seen huge falls and then huge gains on the stock market, sometimes in the same day, figures released indicating that 1 in 4 households are feeling the mortgage strain, the Reserve Bank of Australia (RBA) revising Australia’s growth predictions down by a massive 1% and for the first time in history the US had its credit rating downgraded. Not to mention Spain, Italy, Portugal – well, the whole EU except for Germany and France. Whew, what a week! However the big question remains “What does this mean for me?”

From a mortgage perspective, we have seen fixed rates steadily coming down over the last 3 months, until late last week when the rush started. There are now fixed rates for 1 year loans starting at 6.59%, 2 and 3 years rates at 6.69% and most if not all lenders have reduced their fixed rates by at least .20%. Westpac’s economist, Bill Evans, has been touting over the last 2 weeks that the RBA would decrease the cash rate by 1% over the next 12 months, only to be howled down by any economist who could get some air time. As it turns out, he looks as though he is closer to being on the money than not.

Uncertainty is the enemy; it leads to rash decisions and wildly fluctuating markets and unnecessary fears which do not help anyone, especially if you have a mortgage.

We want to help you try and put together the best strategy for you and your family moving forward when it comes to dealing with your mortgage. If you are feeling the strain and you are currently paying over 7% then perhaps one of the above mentioned fixed rates could help. As an example, for every $100 000 you have at 7.19% if you took a 1 year fixed rate of 6.59% you would save $40 per month (paying P&I) or $50 per month (paying Interest Only). So if you have a loan of $300 000 you would save at least $120 per month and up to $150 per month. If you want to check out your own situation please visit our website and under “Tools” you will find various calculators that will show exactly what you could save or you can contact us directly and we can provide you with some advice for your own personal situation.

Of course, these rates could continue to fall, as could the variable rate. If in doubt, it would be best to discuss it with us.

Over the next few weeks, if not months, we anticipate that there will be a lot of movement around interest rates; if you wish to keep up to date then may we suggest that you follow our blog.

A week can be a long time....

....especially in economics at present.


Last Tuesday the RBA seriously considered increasing interest rates. Thankfully for those of us not in the only game in town (i.e. mining) they held off. These are the top business headlines one week on:

• Anger Over Credit Rating Resurfaces in Washington
• Markets brace for more economic pain 
• A World of Worries: Markets Fall, New Recession Feared 
• Debt crisis: Silvio Berlusconi unveils reforms to avert Italian crisis
• Painfully won super gains wiped away

Where are all those economists predicting 3 more rate rises this year? Presumably not spending their trading profits on a beach somewhere. Crying into their beers perhaps?

Or are they happy to sit back and count the number of press cuttings they've had recently? (It doesn't matter what you say as long as it makes the media. And scary stories sell more papers.) Oh, no, wait, here they are:

• http://www.theage.com.au/business/double-rate-cut-tipped-for-september-20110808-1ii9g.html

I just wish I'd switched my super into cash a week earlier.

Who cares how the US economy is doing?

The answer is EVERYONE. And this is why - the graph tells the story.

Yes, the economies of China and India are booming. But how much do the consumers in those countries spend? Given their relatively low incomes, not as much as you might think. India's consumer spending in 2009 was about US$738billion; China's US$1835billion (for their total population, not per capita!) Australia's total household consumption was US$565billion.

And the Americans? US$10026 billion. Say no more. If they're not spending, we might as well all go home!

Found on Facebook!

Here's a tip - if you're hiding from creditors, check your privacy settings on Facebook.

A couple here in Aus couldn't be found by the usual methods when they defaulted on a large loan so the lender found them and delivered the default notice to them via Facebook. The court found this fair enough as they were frequent FB users and it was fair to assume they would receive the notice this way.

Their privacy settings meant they could be identified by matching up their names and birthdates for starters.

Haven't we all been told not to disclose personal info to all often enough? Let alone when you're on the lam. Dumb and dumber.

How much is $11 billion really?

Quite a lot you might think. It's the amount Queensland will spend on health in 2011/12. It's the estimated cost of rebuilding Christchurch. The same amount will be paid to Telstra by the NBN for the existing copper telephone network.

It's also the amount that Australian banks charged in fees last year. It works out at $500 for every man, woman and child in Australia.

Yes, fees to consumers are down - by 16%. However, fees to business went up 21%.

This is the first year in 13 years that overall fee collection didn't rise. They didn't drop either. Give with one hand...........

Do you know how much you paid in bank fees last year? Including credit cards, ATM fees, account and loan fees? If you don't, you should work it out. If it's too high, give us a call.

We made the press!

From time to time, we are asked our opinion. It's nice to see it accurately quoted and actually used....Thanks Domain! http://theage.domain.com.au/home-buying-tips/the-loan-20110610-1fvv0.html

CBA customer satisfaction drops

Who remembers the last Melbourne Cup day rate rise from the Commonwealth? Way above the RBA increase? Well, the latest survey shows that they're the only lender to suffer a drop in customer satisfaction. Quite a price to pay! There are lots of offers to switch banks at the moment. Did you know your mortgage broker can also access these offers and others that aren't advertised? If you are a current "unhappy" CBA customer then you might want to talk to us!

Selling property? Top 6 tips.

1. Most people rely on first impressions more than they'd admit. Ever heard of 'street appeal'? That's the aim.
2. Make sure you target your advertising to get the best bang for your buck. Do you need a colour brochure? Ads where your buyers will see them are better.
3. Get a good agent. They'll be working for you so interview them. Pick one that can negotiate you the best deal. Get a referral from a gun salesperson!
4. Know your market. Don't waste everyone's time (and your money) advertising a property for a lot more, or less, than it's worth. Do your research without emotion, if you can.
5. Once they're in the door, keep the street appeal going. Clean and clear to make rooms look bigger. Let in light (and dust!)
6. Small repairs are OK. Several small jobs to be done might put off a buyer or two so take the tidying up a level and fix broken roof tiles, fence palings, etc. Buyers probably want to pick their own new bathroom, but not want to replace the tap washers.

Investors on the comeback trail!

The average weekly rent in Australian capital cities increased by 2.7% on average last year and is predicted to jump in the next twelve months due to low vacancy rates. Which strengthens the argument for buying - whether to live in or to rent out.

Investors are coming back into the market: a recent NAB survey says 33% of purchases will be by investors in the next year. Lower returns on the stock market make property look attractive and many people feel pretty comfortable doing their own research, unlike shares. (If you aren't one of them, consider talking to a property advocate.)

Also notable is the alleged raid on Melbourne property by cashed up sandgropers. (If you know any, refer them to us!) The property market there has gone backward of late, unlike the Vic capital which crept up 2.5% last year..

How big can it get?

Victoria gains nearly 80000 new residents a year. That's a lot of new homes needed, on top of existing demand. You would have to think that it puts a floor under property prices and pushes up demand for rental properties and, in turn, rent.

We're certainly seeing more enquiry from first time investors than ever before. They're looking to buy anything from a two bedroom flat 5-10 kms from the city to a four bedroom house 20+ kms out.

Infrastructure continues to restrict growth in certain parts of Melbourne, at least, concentrating it in others. Horses for courses - you need to know what you want to achieve from a property before you even start looking. And, needless to say, get your finances in order before you start so you don't waste time looking in the wrong place.

More on population growth and what it might mean for we Vics here.

They've done it now!

Wayne Swan has been very keen to ban all exit fees on home loans and now he has his wish. It sounds like a good idea however it could pose a serious risk to competition in home loans. The smaller and non-bank lenders can't absorb high upfront costs the way the big boys can, so it's likely they will have to charge higher upfront fees to remain viable.
Whereas before only borrowers who left their lender early incurred fees, now everyone will have to share the pain.
Watch this space.......
(Want to know more? Take this link.)

Broker clients are happier!

We always thought our clients were happy souls (in the main). Now here's proof!

According to the eighth MFAA/Bankwest Home Finance Index survey, 67 per cent of respondents felt they got a better home loan deal from a broker than a bank.

MFAA chief executive Phil Naylor said the research had revealed that borrowers liked using brokers because they are knowledgeable and have access to a wide range of lenders.Experience was also a strong indicator, with 30 per cent of respondents saying brokers are more experienced than lenders, up from 24 per cent last year.

Since many of us left banks to become brokers, that's well known to us. Great to see the perception catching up to the reality!

Back to the future?

Some of you may remember the Bank of Melbourne from the ‘90’s. It was a great bank and dear to many Melburnians’ hearts. Westpac bought the business, kept the status quo for a while then got rid of the brand, switching all existing branches to Westpac.
Guess what? They’re bringing it back. Apparently their research says that the Bank of Melbourne brand is fondly remembered in Victoria so the St George brand is going and we’ll have Bank of Melbourne – and Westpac of course! Read more here.


I wonder if they are bringing back the service that made us all so fond of BOM? We’ll be watching!

Who says banking competition is dead?

Well, what a difference a month makes.

In January, the talk was all about the lack of competition for, and amongst, the big banks. In the past couple of weeks there has been a plethora of new lending offers introduced by banks and non-bank lenders, large and small.

It all started on Valentine's Day with NAB's interesting marketing tactic of 'breaking up with the other banks'. If you were in a cave (or maybe just away on holidays) and you missed it, you can view some of the highlights here: http://breakup.nab.com.au/ . Apparently this strategy took 18 months to put into place, so they've clearly been working on the “breakup” for some time.

A particularly interesting concept within the strategy were the actors breaking up in restaurants, cafes, trains and trams all around Australia, wonder how many people thought it was real at the time? Have they worked it out yet? (Did you see one? What was the reaction like from people around you? We would love to hear some firsthand reports.)

The immediate reaction from the other major banks was varied. ANZ took the high road ('we didn't know we were together to start with'), Westpac kept silent; CBA took the bait though. The very next day they began offering discounts on application fees, then discounts on their discounts and finally a brand new home loan with NO HIDDEN FEES....does that mean their other loans do have hidden fees?

Since then, lenders big and small have rolled out a plethora of discounts and rebates, some offering up to 1.25% off their standard variable rate - but is that as good as another lender who offers only 1.00% off their rate? Of course it all depends on the base rate, the fees and the length of time you will have the loan.

So, if you have a home loan of $250000 or more, not in a fixed rate and haven't reviewed it for a while, now is a great time to do so. Not only are the chances that you will get a far better deal than you are on now you will probably be able to change lenders with little, if any, out of pocket costs. The best bet is, of course, to speak to us, your friendly broker. We can provide you with detailed comparisons of each lender and how their offer relates to your situation. If you want to move to a better deal, we'll make simple!

Is this the best kept secret in Australia?

OK, hands up - how many of you are aware that on 1st January 2011 a whole new regime was introduced to consumer credit?

Yep, you're the consumer and you probably have credit so how come you didn't know about these new laws? Because they've mainly been publicised to people who have to comply with them, who (of course) already know about them!

Since I don't run a newspaper or TV station and am not in government (thankfully) the best I can do is to let you know what changes have been introduced via this blog.

The most important change is that we now have national consumer credit protection laws. Until this year, each state had its own (different) laws around what could and couldn't be done, what was and wasn't covered, by the term 'consumer credit'.

Consumer credit generally meant home loans, credit cards and personal loans. The interpretation has been broadened to also include residential investment property loans, so that property investors, who are not necessarily experienced business people, are also covered by the new laws.

The biggest change for our industry has been the introduction of credit licensing (governed by ASIC). Previously, in most of Australia, anyone could advertise themselves as a mortgage or finance broker and there were no barriers to entry.

Now, in order to arrange the loans above, a broker, lender or intermediary must hold a credit license. (We got ours recently so, yes, we're still in business.)

This is a much better situation for those who want to get some advice but are not sure who to ask. The first thing to check now is whether the adviser you talk to has a credit license. (Financial planners and accountants are covered by a different set of regulations; the ones I'm referring to here apply only to those involved in arranging credit.)

If they have a credit license, they must belong to an external dispute resolution scheme (aka Ombudsman) so you have some recourse if things go wrong. That's good to know!

If you've taken out a loan before and do so again from now on, you will receive a lot of different information to that supplied previously. That's because credit advisers now have to provide certain information to all clients that reach a minimum standard.

Best of all, the law is now the same all around Australia. So, if you buy an investment property in another state, you know that the rules will be the same as they are at home. (It's also pretty handy for businesses in this field who do business in more than one state.) 

Mind you, we are still waiting for ASIC to tell us exactly what a 'Credit Guide' is and what it must contain. We were supposed to start handing them out on the 1st January 2011 however the implementation was delayed until 1st April as, by the middle of December, ASIC still hadn't worked out what they wanted us to do.

The funniest thing is that we still don't have the guidelines and we're nearly at the second deadline.

At least you can be certain that we'll introduce a credit guide as soon as someone tells us what it is!

So, you're really interested in this and want to know what the new laws are all about? I'll give you some links to start with:

ASIC's National Consumer Credit regulation page

Treasury's NCCP page

That should do - don't want to bore anyone to death.

If there's anything you have a burning desire to know about these laws, please have a look first (!) and if you can't find it, let us know. We'll see what we can do to help. No, really, we will!

By the way our ASIC Credit Licence Number is: 391439, just in case you were wondering.

Until next time.......M