November News

RBA ANNOUNCES 75 BASIS POINT INTEREST RATE CUT

The Reserve Bank of Australia met on Melbourne Cup Day and slashed the official interest rate by 75 basis points to 5.25%.  This is the third consecutive month that rates have fallen which contrasts greatly to the almost 7 years we had without one.

I am interested to see how this affects the property market.  If there is not a queue of buyers (particularly first home buyers with their beefed-up grants) outside the real estate office on Saturday then people must be either still: (a) wary of what is yet to come concerning the economy and/or their jobs; (b) believing that house prices are still a bit over-valued; or (c) hurting financially already.

Analysts are already speculating about another interest rate cut before Christmas.

Lender interest rates are still above the rate set by the RBA, but they have been coming down dramatically in recent weeks.  The lenders need the business and are offering deals with no establishment fees, no account keeping fees, even one bank is offering a $600 cash-back bonus.  The Commonwealth Bank was first to pass on this rate cut, reducing their variable loans by 0.58%.  We are waiting for the other lenders to follow the CBA’s lead.  If you would like a quick comparison of what is on offer, contact one of our loan consultants for a free, no obligation, home-loan check.

MORTGAGE STRESS

With interest rates coming down it would be natural to assume that the instances of mortgage stress in Australia would be letting up.  However, according to Genworth Financial, it is more than high interest rates and property prices that cause families to struggle with their repayments.  Genworth’s study found that in 38% of default cases, the main reason was attributed to illness or injury.  30% of cases attributed the reason for default to a job loss or pay cut.  Only 2% claimed rising interest rates and housing costs as the cause of their mortgage stress.

Insurance companies, such as Australian Life Insurance, offer affordable policies to Australians who want to be financially protected against an unforseen illness or accident.  From as little as $10 per month, you can have peace of mind that should you become terminally ill, or die, your family can survive financially without needing to sell the home.  We can offer you 3 months of free cover with Australian Life Insurance, which means you are covered while you consider whether the insurance is right for you.  Our loan consultants can give you a quote with any new loan.

If you have any questions, or would like us to undertake a comparison for you, please feel free to call 1300 307 771 any time, or use the Quick Application or Contact Us buttons above.  Of course there’s no obligation and our service to you is free.

Andrea Hookham

0412 753 166

Senior Loan Consultant

Leading Home Loans