Reserve Bank of Australia meeting minutes suggest another rate drop in 2013

Australian interest rates predicted to fall lower.

Australia's Central Bank, the Reserve Bank of Australia has hinted that they are not done with lowering the official interest rates, and that has caused the Australian DOllar to fall lower.
The theory is that Australia's economy is in transition, as the China mining boom comes to an end, and other industries and sectors need to take up the slack, both in business investment and jobs growth. The easiest path for that to happen is a lower Australian dollar to help local manufacturing compete against cheap imports, and at the same time making Australian exports cheaper and therefore more competitive.
So even though the RBA signalled no immediate rate move down, the currencies markets took early positions and sold the Australian Dollar down.
So the RBA is suggesting it wants the $AU lower, without having to move rates itself.

Quote from the RBA minutes today.
“Members agreed that the bank should neither close off the possibility of reducing rates further, nor signal an imminent intention to reduce rates further,”Interest rates could be lower before the end of the year.

Some experts are predicting the Australian Dollar to be 88 cents by the end of the year, and that there will be another rate cut before Christmas, if the RBA deems that it is necessary to achieve Australian Government policy objectives.
Australia’s currency will weaken to 88 cents by the end of next year, according to the median estimate of analysts surveyed by Bloomberg News. They expect the kiwi to drop to 76 cents.

Mr Mortgage

RBA: Reserve bank keeps rate cuts in reserve

The Reserve Bank of Australia [RBA] in keeping rates on hold this week, with plenty in reserve to continue further easing of monetary policy if and when required.

Interest rate easing and effect lag 

The effects of interest rate reductions can take several months to filter through to a measurable response in the economy of Australia, and this in fact has shown to to true in this cycle of rate reductions.

Leaving Interest rates as is

The RBA Governor, Glenn Stevens, said "It was prudent to leave the cash rate unchanged, but, that there was scope to continue the easing cycle if it was necessary to support demand.

House Building approvals and retail spending are up

Building approvals, consumer confidence and retail spending are improving and retailers have told the RBA that yet to be released spending figures for February would be encouraging.

71,500 new jobs created in February

The RBA is taking the latest employment figures showing 71,500 new jobs were created in February into account.
Whilst its too early too early to tell whether the job market has lifted, that has to be a good number for Australia's Labor Government as well as. Among the triggers that could make the bank cut rates again are a rise in unemployment as the resources investment boom slows, and a further rise in the Australian dollar.

Housing market good news for Home Buyers and Homeowners

Current economic data is now showing improvements in consumer sentiment and retail spending, and buoyancy in the housing market with rising home values and improved sales. This has to give confidence for home buyers and homeowners thinking of selling or moving up.

RBA: Australian Mortgage rates on hold

The Reverse Bank of Australia has just decided in its monthly meeting to keep the official cash rate at 3%.

The RBA in its monthly meeting has decided, as predicted by most financial experts, to keep the interest rates steady for the time being.

The reasons have been muted as low unemployment, and stellar rise in new jobs of over 70,000 new jobs in February, and signs that property prices and home sales are on the rise.

Many were predicting that another .5% in interest rate reductions could be used in the latter half of the year, if needed. Many now say that this may not be required as the economy is great shape.
In fact some are now suggesting that the next rate move may be up!

RBA feels its moves on lower interest rates have started to take effect.

Interest rates will soon fall says Westpac

According to Westpac the Reserve Bank of Australia is getting ready to cut interest rates. That has to be good news for home buyers, homeowners and housing construction industry. But will it happen in October?

Westpac is Australia's second largest home loan lender, and the biggest winner in mortgage growth in recent years since the GFC. It believes the RBA will start cutting interest rates at its next meeting. Many other experts says lower interest rates are on the way, but after October.

The prophet of profits bank

Westpac, has a good track record in predicting the timing of RBA rate cuts. After all it has a big stake in the outcomes. Westpac believes that reigning in the value of the high Australian dollar would help Australian businesses, especially those that are not in the mining sector.

It would also be shot in the arm for the ailing house building industry, and that is a big employer

ANZ predicts a brace of interest rate cuts, in October next month and in November!

The RBA was close to cutting interest rates in its September meeting, but wanted more data on the economy due later in September . And things are suddenly unraveling for Australia with global economic conditions going south, the drop in commodity prices hurting Australia, and the low inflation all mean the bank could cut the base interest rate at its October 2 meeting.

All in all, a mortgage rate cut of 0.5% before Christmas is looming as a real possibility. Source: Mr Mortgage Mortgage information

Mortgage Interest Rates: Why the RBA is leaning toward a rate cut in Oct 2

Will the RBA Backflip to Lower Interest Rates?

In September the RBA saw no reason to change interest rates.
Now two weeks later the financial experts are saying that the Reserve Bank of Australia is preparing the markets for cuts to interest rates? It apparently won't need to see the inflation figures due in November to make the move. Obviously there are things that the RBA board members didn't see as important then, that have now emerged.

Suddenly the RBA signalled its new bias towards an easing on October 2 in a statement released by its governor, Glenn Stevens, after yesterday's board meeting in Sydney

How things have changed since August.

It was just in August that optimism ruled the RBA's statements on the World Economy. In particular that China's growth appeared to have stopped slowing. yesterday's updated assessments of international conditions is now more subdued. 

Australian Banks are lowering their mortgage rates independent of the Reserve Banks

Just weeks ago the Big Four banks were not passing on the RBA rate reductions.
Now the CBA has about faced and  lowered its fixed rates by up to .4%. What's that all about? First they say they can't afford it, then drop their pants weeks later?

When the big banks broke ranks with the RBA on interest rate reductions, they broke the pact with the RBA to support the Banks. That is a dangerous move and the banks seem to be thinking that through.

Europe's economy is still going backwards

Anyone that thinks that Europe has fixed its problems with Greece, Spain and Portugal isn't thinking straight. It will be 5 to 10 years before these problems have been ironed out.

Growth in the US was ordinary

The US economy is still in a hole. Its climbing out of a creator left by Bush's scatter brained bunch. What if the Party that caused that hole gets back into power again in November. Another disaster looms large in my view. 

Obama promised blue skies, and then discovered the economy was trashed by years of Republican actions. 

Clearly Obama should have been straight with the people once he discovered the Gravity of the mess he found. He should have told the US that they had an eight year hole to fill. Then the Republicans blocked his efforts at job creation. And now people belief that the Republicans can fix things? We have the same problem in Australia. A hostile opposition party trying to hold Australia back. 

The biggest problem I see for the  US is  property prices increasing and then mortgage rates increasing, and then the Republicans getting the population to work for less money. Either way, home prices in the US are down for years.

China had uncertainty about near-term growth

China has so many areas it can grow in, but right now they don't know which way to go, and even their Premier says the economy is disorganised. When it gets it's act together the growth will continue. 

The RBA is very concerned the big falls in "some coal and iron ore prices of importance to Australia, are not being reflected in the Price of the Australian Dollar

This is the dilemma that we face. The Australian Dollar is overpriced at its current value, given these in massive falls resources prices. But when those prices fell, the Australian dollar held up. That need to change.

It seems that the Australian Dollar is too attractive in an uncertain World, and paying good interest rates compare to other Countries. 

So if the RBA wants to shake this inertia, it might be thinking more than one reduction to get the momentum for a lower dollar in motion.  An Australian Dollar at 90 Cents US would make our economy so much better.

Food Security a hot topic, but not on the RBA radar?

One thing the RBA has not mentioned is Australia's bumper wheat crop in a hungry World.
Food security could be a factor just when Australian wheat growers are having a bumper crop, and major wheat producers like Russia, the US and Canada are having poor crop harvests.
So Australian Farmers are expecting a once in 20 year win on the grain prices, just at the very time that World Leaders are stating that Food Security is the future concern.
So Australia gets lucky again!

Miners pull back on projects

Lesser factors are the pull back of mining projects. Clearly, if all the projects talked about came on stream, there would be to many projects and no enough skilled people to handle them. And many Australians don't want to import workers for the purpose of bringing these projects forward.

Fortescue Metals Group became the first big resources company to scale back an investment program [funny about that] until prices recovered. Whilst the RBA has to consider the announcement as factual, you have to wonder at their real motive in this.

As the Prime Minister has said
"This is a boom with three distinct phases: a prices boom, which is now passing, an investment boom - still to reach its peak - and a production boom for the years and decades ahead."

Will Australia's inflation stay low with the carbon tax?

Economists have said that Australia's inflation rate is unlikely to climb above 3 per cent for the next one to two years, even with the Carbon tax effect added.
The RBA may well ignore the carbon tax inflationary effect, so that even a 3.5% inflation rate could be seen as within its comfort band.
The one thing that has not been looked at is the inflationary effect of a World wheat shortage on grocery prices. Wheat is just about everything that is in a packet these days.

Summary on Mortgage rates

The RBA seems to have gone from "no need" to reduce interest rates, to being concerned about the US, Chins, Europe, Asia and the sudden drop in commodity prices, whilst the dollar hangs too high. It clearly sees that the Dollar has to be forced to come down hard.
At the same time the CBA has reduced deeply its fixed rates interest on many home loans. A give away that it sees mortgage rates heading lower, and that competition in the mortgage market is heating up on thin home loan sales.

Home loan views sourced by Mr Mortgage

Mortage defaults: Why is Ipswich Australia's mortgage default capital?

Ipswich homeowners mortgage repayment defaults  the highest in Australia says ratings agency Fitch Ratings

And Queensland is the Worst performing State in Australia on mortgage repayments. So why is this?

In a word, Floods. Queensland has has two major Cyclones hit in two consecutive  years in 2010 and 2011, and recovery is only half done. Many people and businesses will never recover. So mortgage defaults are only one sad statistic in all this.

Mortgage defaults in Ipswich are very low by US and World standards.

First let's make the point that even in Ipswich, which is the worst performing area in mortgage repayment arrears. Its still pretty damn good compared to other real estate markets in the World.

The results don't mean mortgage holders are defaulting on loans, but do point to economic hardship by region, caused by a one off event that will take another year or two to fully resolve.

The Fitch ratings report, which looks at how many mortgage holders are more than 30 days in arrears, ranked Ipswich City first on a list of the worst-performing regions by number of home loan delinquencies.

More than one in 50 mortgages in the Ipswich region are over a month in arrears, with a 25% increase being recorded in the six-month period from September 2011 to March 2012. 

Overall, 2.14% of all mortgages in Ipswich City are now more than 30 days in arrears, up from just 1.28% in March 2010. 

Ipswich has a lot of low cost homes

The makeup of Ipswich home buyers is an important factor in mortgage defaults. Ipswich has many fine new estates. But it also has a lot of low lying flood prone and flood affected building areas, as well as a lot of older areas that were inundated.
So these homes were lower value and these homes attracted home buyers with lower incomes. They got hurt more than homeowners on higher incomes.

The Floods of 2011 has had a major impact on mortgage defaults in Ipswich

The floods that swept through Ipswich impacted homes directly, and home values going forward.

After the floods people thought twice about buying a home in Ipswich.
So house prices fell most there and people that were struggling yet not sell their homes.

Many homeowners did not have the right insurance

Many insurance companies never covered for flood damage and this has impacted on homeowners that were flood affected to recover form that damage.
And post floods, the insurance premiums for those properties so affected are simply out of reach for many in those areas.
This has to reflect in home values and future mortgage conditions on those properties.

Ipswich industries were greatly impacted by the Brisbane Floods

Many Ipswich businesses were inundated by the Floods. This has hurt homeowners in many ways.

• Many small businesses were not correctly insured and so many of these businesses never recovered.
• So both the business owners and their employees lost incomes.
• Many businesses that did get a payout decided to quit the area, as it would take the area years to recover fully, and they could see that they could take their money and reinvest elsewhere with less risk.
• Even where businesses stood down employees whilst the repairs were conducted. That can leave a hole in their budgets that takes years to make up.

Many of the mortgage lenders who operate in the Ipswich area cite a lot of cases of hardship and unemployment as contributing factors. Most of those relate directly to the Floods.

These factors affected many regions of Queensland, but Ipswich and Logan City were affected more because of the stronger concentration of borrowers with a lower average income, and those tended to be in low lying areas.

Summary of Other badly performing Mortgage repayment areas in Australia

Mortgage Delinquencies: Australia 10 worst-performing regions with more than 30 days in home loan arrears:

1. Ipswich City - 2.14%
2. Outer SW Sydney - 1.89%
3. Gold Coast West - 1.89%
4. Central Coast Sydney - 1.85%
5. Logan (& Beaudesert) - 1.84%
6. Caboolture Shire - 1.76%
7.  Fairfield-Liverpool - 1.73%
8. Gold Coast East - 1.69%
9.  Blacktown - 1.60%
10. Outer West Sydney - 1.60%

Source: Mr Mortgage

Student Loans: Five big mistakes that students make with credit cards.

Credit cards and students don't always mix well, mostly because easy money is too soon spent

But if students avoid these mistakes then they will have an enjoyable experience with money. This applies to any first time credit card user, but students are can also be away from home and that puts them at greater risk.
The Five biggest mistakes students make with credit cards are:

1. Getting a credit card without understanding the terms.

Credit cards are a financial contract. "I'll do this for this much, if you do pay me this much."
Contracts also carry consequences.
Do you know what those consequences are using your credit card, and who might be affected, besides yourself?
For instance, do you:

• Know the interest rate on your credit card
• How that interest rate is calculated
• What penalties apply if you breach the terms of the contract?
• What those breaches will cost you in money
• What those breaches will cost in your parents credit score if they are guarantor
• What those breaches will cost your future credit?

If your parents guarantee the loan what will happen to their credit and repayment costs if you default?Do you know all the ways you can default on a credit card loan?

2. Buying things you don't need because you have a credit card

Its so easy to buy with a credit card. The money isn't real and its painless. Everybody's doing it right.
Retailers love credit cards because they know people, especially students will spend more because they have a credit card.
Here's a few credit card tips:

• Always know your monthly budget
• Never buy what you know you can't afford to pay off in advance.
• Never go to sales, just because you might find a bargain. Target purchases in sales that you know you need.
• Never buy lunch with a credit card. Get cash out and then buy.

Remember the average student carries over $3,000 in credit card debt. Do you know how much that means in payments you have to make every month, just to cover the minimum repayments.

3. Make do with just one credit card

The average student carries 4 credit cards. That's four ways to get into debt. Four service and monthly fees.

Remember if you fail to meet the minimum requirements on your credit cards your credit score will tank and then all the interest rates could increase.

4. Keep track of credit card purchases

It easy to have $100 in your wallet and then wonder where it went by the next day.
Well a credit card is like having that $100 constantly replaced with fresh ones. You need to keep count and keep track. Otherwise you will soon max out your credit and card.

5. Pay less credit card interest

Choose the card with the least amount of interest payable. Know the terms of the contract and ensure you don't breach them.

• You will always have to pay back the credit card debt 
• Plus interest 
• Plus service fees and charges 
• Plus credit card baggage if you mess up. 

When you mess up your credit scores, every credit reporting agency gets to know about it. There is no where to hide. You need to know this before you use that credit card the first time, not when you have a mountain of debt and no way to repay it.

If you buy something for $500 and it ultimately costs over a $1,000 in interest repayments, added fees and charges and penalty fees and interest, and extra interest rates because you have destroyed your credit, was that $500 purchase the bargain you thought it was?

Credit cards make it easy to get what you need to complete your studies.
It also makes it easy to get whatever you want. Know the difference.
Source: Mr Mortgage

Mortgage Home Loan Rates May Fall In October

Some experts are now saying that the Reserve Bank might be edging toward a rate cut in October. But its too early to tell from here

The other thing you have to question these days is "who said interest rates will fall in October and why they said it." 

There are a lot of self interested groups out there spreading baseless rumours about everything these days, from job cuts, asylum seekers, interest rate cuts, the value of the Australian dollar, and about the Gillard Government Leadership. And for what purpose, other than sell gloom and negativity? 

Well, apparently gloom and doom sells papers.

Is Australia's Right Wing Media trying to bring down an Elected Government?

This is a valid question. Its pretty obvious that many that work for Rupert Murdcoh seem to hate the fact that the Gillard Government is doing so well, and actually trying to make out that its not as good as it the numbers say. But the caravan rolls on, and things just keep on getting better for Australia. Despite their unfair and essentially untrue attacks.

Its gotten so bad, that I have refused to buy Newscorp's Australian newspapers anymore. Fairfax is still balance it its editorials in my view.

And the free community papers go straight in the bin. 

So if you advertise with these right wing papers, you need to realise that people with non political views, or centre or left of centre views are being turned off your ads. 

Its interesting that Newscorp profits fell last year. 

Well I hope they keep on falling till they turn to losses that kill the papers that publish this spew, and pay these journos that produce it.

The RBA says enough is enough.

And its not just me that is seeing this bias and negativity by the Murdcoh papers.

The right wing media's relentless negativity is being drowned out in the Financial arena by a constant flow of comments by the RBA, who seems to be crushing a lot of the ring wing media's urban myths.

There used to be a time when you could read a paper, get the facts and make up your own minds. Now all you get is opinions and the facts are rarely given.

Gimme the facts, just the facts. Keep your opinions to yourself.

Today that idea of reporting the facts and letting people form their own opinions has all but gone.

Now the news giants peddle opinions. 

Opinions that are best for them and their self interest in my view, not in the interest of teh public. So now we have the media supporting opinions biased towards one political party. Sure they can pull out any fact and statistic and make it sound that the Government is doing a lousey job and things would be so much better if Mr Abbott and the Coalition were in power.

But the fly in the ointment is that when the Coalition were in power, they had better conditions, but they  performed worse by any standard, and lowered our services.

The RBA is telling people how it is, and it all good. Maybe too good.

Australians required confidence and composure from the crap that was coming from the right wing media.
This section is constantly talking down the economy and the achievements of the Labor Governments of Rudd and Gillard.
So the RBA Governor's hand was forced. He started to let people know how good things were travelling.
Did the right wing spruikers react? Boy did they? They started to slag the RBA Governor, started to say he should not be making public statements. Who says? They do. They were in charge of public opinion apparently.
Was the Government complaining? Of course not.

The comparisons are damning for the Liberals.

The liberals had the reins of the economy in the good times. The numbers are all sour for the Howard Government.
Employment, inflation, wages, productivity, and the value of the dollar were all worse under Howard. So why do the media think they are any good at running the Country? Believing their own spin? Wanting to believe?
Anyone can balance a budget by cutting spending in schools and hospitals and make companies more profitable in the short term by cutting wages. Anybody. There is no secret, No magic. But does that work long term? I believe not. design and innovation mean you get to the future first, and that is where the money is.
Industrial relations to the Liberals means lowering wages and conditions, and now sacking Public servants to balance to balance the books.
But if you want to build a competitive Nation that pays high wages, then that is a challenge.
Its means you have to get smarter, leaner and more innovative. All failures of the Liberals who's claim to fame is cost cutting and scaring the sh-t out of stupid people with regard to asylum seekers.
Australia is in a great position and we don't need lower wages and working conditions to make our way in the World.
We don't have to be mean and miserable to asylum seekers to protect our borders.
We need to take more Asylum seekers and have less failed States.
We need more of the Gillard Government.
For the second consecutive month we have seen declines in the jobless rate in August to just 5.14 per cent. That is during the barrage of gloom and doom spewing out of the Opposition and their media mates.
Can you imagine how good things will be if they media got behind the Government?
Where we need improvements.
The biggest room in the World is the room for improvement. We need improvements in the home construction industry, the building materials sectors and retailing needs a boost.
Both could be improved with an upswing in housing construction, as new homes means new needs to fit out and furnish those homes.
How we do that without causing land price inflation is the thing that the Gillard Government needs to work on next.
We have to learn to life with high wages and a high dollar value. That what success means to most.
Nobody in Australia wants Australians to have what the Greeks have.
The Australian Economy is far from Perfect. But in my view we have to give credit where credit is due. The gIllard Government continues to improve despite a hostile press.
If you advertise with News Ltd and you agree with this, Why not complain to the editor.

PS. I got a call from NewsPoll [I believe a NewsCorp Company 2 nights ago] The caller claimed he was "calling from NewsPoll, on behalf of the Government ". Since when does NewsPoll call and do surveys on behalf of the Government? Are they now telling outright  lies?
Mr Mortgage

Commbank: CBA slashes fixed rates to attract home buyers

CBA aims to torpedo competition with big drop in mortgage fixed interest rates

The Commonwealth Bank of Australia is feeling the heat from the NAB and pressure about their margins and have dropped their fixed interest rates on many of their home loans to the lowest in 9 years

The Commonwealth Bank of Australia overnight cut its 1 year fixed rate, 3 year fixed rates, 4 year fixed mortgage rate and five year home loan interest rates from .1% to .4 perent.

$ and 5 year fixed interest Mortgage rates the lowest in 9 years.
The CBA fixed interest home loan rates  for both 4 year rate was cut .3% and the 5 year fixed interest rate cut by .4% with both terms now at just 6.15 percent per annum.

New rates for new customers only or those switching from variable to fixed rates.
The new rates will be available for new customers, or those switching to fixed rate loans.

Source: Mr Mortgage

Credit Cards: No interest rate credit cards on the Rise. Where's the catch?

Credit card interest rates are rising relative to the RBA cash rate here in Australia, if you haven't noticed, but you can win with interest free credit cards in the US. So where's the catch you might ask?       

US consumers are using credit cards less.

Keeping their debt levels lower when it comes to credit cards is the current focus for Americans nationwide since the recession. Many credit card issuers have evidently noticed this trend, as they are offering no-interest cards at an increasing rate. But those deals have a catch, as you would expect.

No interest credit card offers

Nearly half of all major credit card issuers throughout the U.S. offering no-interest credit cards, the latter half of the year appears to be an opportune period for many consumers to jump on offers.

No fees on credit cards for the first year deals

In addition to the considerable number of credit card companies offering zero interest, Waters noted many are also offering no fees for the first year of having the cards, as well as extended teaser rates.

Your Credit score, and credit history are important to qualify for a no interest rate credit card. Going in and during the credit card use

Many banks and card companies are gearing a number of their credit card offers toward the high-credit-score demographic, who are the consumers who can mostly qualify for no-interest cards.

If you have recently improved their credit standings may find you qualify for the zero-interest cards on offer.

So. What's the catch with interest free credit cards?

Well, you would think that not defaulting will keep your credit scores high.
That can be a mistake, because no-interest rate credit cards, have clauses that say that if your credit score falls during the introductory period you get hit with interest charges of between 10 and 25 percent.

Keeping your credit score high is essential to keeping a no interest rate credit card active. And the credit card companies are betting on you falling off the wagon.
The catch in no interest rate credit card deals is in the fine print.

Source: Mr Mortgage