https://www.rba.gov.au/media-releases/2019/mr-19-18.html
https://abc.net.au/news/11270464
Expect most loan and saving accounts to drop by another 0.25% (slightly less or more respectively depending on how uptight they're feeling).
RBA slashes rates again to 1%
non-core promise on 02/07/2019 - 16:49
Last edited 02/07/2019 - 16:49
Last edited 02/07/2019 - 16:49
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Banks have loosened the lending criteria already. Now you can borrow roughly 8% more than what you could borrow last month.
APRA recommended to loosen up the lending criteria, the rate that most bank assess is @7.5% which is unrealistic in the current rate market. I am not surprised that people can borrow more.
Scomo's FHB 5% deposit with LMI exempted.
Anyone can just walk away.
Then government will bailout the banks.
I don't think that's how LMI works. I just had a quick read and could be wrong, but it seems like if you don't pay your loan, the bank gets their money from the insurer.
But the insurer can still come after you, which means you are still on the hook.
Gov would need to bail out the insurers, so they can survive a big crash just long enough to keep chasing the housing market losers for the rest of their lives.
@crentist: If you can only afford a 5 percent deposit you would just walk away and declare bankruptcy.
@dcep: Ah right oops. Bit more reading, the gov scheme sounds moronic. There's no LMI exemption, just a gov guarantee to the bank for 15% of the loan (ie the gap between a 5% deposit and the usual 20%).
It seems banks already have some discretion to waive LMI for certain reliable professions etc. Which makes perfect sense if you make the interpretation that LMI is primarily an insurance against bad borrowers, and that the 20% deposit is used as an indicator of financial sensibility. But nothing to do with the bank's willingness to take on an 80% risk.
So for the gov scheme to have any effect, banks have to willingly take on an 80% financial risk for people whose ability to repay they are not fully convinced of through the usual indicators. This seems dangerous, I can see why you brought it up.
Best case, banks keep lending tight, and it makes almost no difference to anyone. Little loose, and a few mortgage defaults are balanced by more borrowers. Bit too much and defaults start hitting the market and the banks and things get shaky.
But, I wonder if there's an angle for the banks to hand out 5% loans like candy, knowing that they can stay ahead of defaults as long as housing doesn't drop 20%. Or if the scheme pays out before they recoup at sale, get guaranteed profits by churning through a few bad borrowers.
It’s bad news for savers with rate cuts. Now Ubank FD have dropped to 2.6%, with this new rate cut, it will drop further. There is no more incentive to save!
What else to do with cash savings.
buy foreign shares
Tab and Tavern ?? Maybe !!!
Stick it on your mortgage
Buy shares
ETF fund
Bet it on crypro if you like to gamble
so do u think they will reduce another 0.25%?
Kinda makes you have to spend your money as there is no sense in saving at these interest rates? I think this is what it means by the saying "stimulate the economy".(At the cost of Savers and Oldies)
There are options for saving that aren't savings accounts.
I believe that is the exact intention of the interest rate cuts. Further to spending all your savings, you are then meant to go out and borrow money to spend further.
It's insane
Ah the Lucky country, run by second rate incompetent politicians.
RBA is independent to the government - Though i agree the RBA and the govt are incompetent it is for different reasons
If you're dumb enough to get a massive loan when you're on minimum wage you deserve to be liquidated lmao
Have been slowly buying gold and silver over last 5 years, last thing you want is to have all ur savings in cash
Do you mean gold bars? Interesting, how and where do you buy it? Is it easy to turn it back into cash? Guess historically gold has been a fairly stable investment.
could invest in Gold without the need for physical storage requirements.
https://www.investsmart.com.au/shares/asx-gold/etfs-physical…
Paper gold is useless when the proverbial hits the fan. good luck taking possession.
Gold has barely beaten inflation over the last 5 years
https://www.macrotrends.net/1333/historical-gold-prices-100-…
Because you scared off all foreign investment because the whingers complained house prices were too expensive and can't afford them.
Now they are affordable and they still can't get the loan for them.
It is what happens when you let people who don't understand how to manage money dictate your decisions.
Or maybe by focusing on attracting investment into housing and ignoring the rest of the economy we have nothing left to spur on growth and people can't afford houses.
It would have been helpful if that foreign investment went into local businesses instead. Or if the money that went to housing had then spread out into other areas by the people who profited. Instead it all got reinvested into housing and inflated it even more.
It's not good money management to keep building a bigger basket for all your eggs.
Yes, letting foreigners own all out private residences and land is a fantastic idea, its great they can buy all our farming land as well, truly excellent long term planning.
If you can't get a loan for something, then it's not affordable
Now they are affordable and they still can't get the loan for them.
What are you smoking?
Even if interest rates fall to 0%, nobody is gonna spend big, coz job security is so bad nowadays (Too many casual and fixed term roles sadly)
People will most likely spend any tax cut windfalls or mortgage repayment savings on paying down other debts and Bills.
Plus I expect more people to invest in the ASX etc rather than putting their $$$ in term deposits that earn nothing.
This is true.
Time to take money out of your bank accounts and invest in crytocurrency!?
More like speculate.
It's like backing a startup, with no staff and no product. Simply gambling that requires more computational power.
Not too late to get on the rocketship. Next stop is 20k, then 50k.
What do you think the chances are of quantitative easing in Australia?
I’m also concerned about the security of bank deposits after learning about bank bail ins. See: https://digitalfinanceanalytics.com/blog/legal-opinion-depos…
Any suggestions for ‘real asset’ investment options (other than a high investment vehicle)?
Any suggestions for ‘real asset’ investment options (other than a high investment vehicle)?
I'm not an economist, and don't blindly follow advice off the internet. That being said, yes, almost anything is a better investment than AUD in the bank.
- Obtain, read and understand this book
- Sign up to a cheap chess-sponsored broker like self-wealth (5 free trades for you an a random ozbargainer).
- Transfer some of your savings into the account.
- Probably just buy ASX:VDHG. Or if you want unhedged international exposure; ASX:VGS and maybe a bit of ASX:VGE for some higher risk.
Economists speculate that QE should only kick in when the cash rate is around 0.5%. I put my money in Gold (ASX:GOLD) right now, it's both good when recession or QE happens :). I would go a bit defensive with assets.
I’m sitting back with popcorn waiting for some kind of real estate crash to happen which I’m not sure will actually happen. I would like to buy a 3 car garage 5 bedroom with a pool house at 2012 prices in north west Sydney. Anyone think it’s going to happen??
I hope it happens too… but I doubt it will. The rate cut will fuel the house price a bit, I think I will recover the last year loss (8%-10%). And then it will probably plateau or drop until there's a massive recession then you can expect 20 - 30% drop, though it won't go back to 2012 price level. It's probably around 2015 level
interesting prediction. Lots mention a “30 year cycle” but last recession was when interest rates were near 20%. Surely there’s something else brewing here
Cheap debt will encourage banks/individuals to invest in risky assets hence the potential of recession/financial crisis. For now I will just stick my money to Gold :D
the interest rate is far too low. i own property and also are hoping for price to crash, so i can upgrade without getting ripped off. i highly doubt this is like america's 2007. its probably reached bottom now. i checked stats some suburbs have rent higher than interest with loaner like athena home loan, this will fuel investor.
If you are talking about Sydney and Melbourne
You going to be sitting forever RE wont ever 'truly crash' the biggest drop we have seen is the 8-12% over the past 2 years which pales in comparison to the past 45 years of growth before that.
RE in our capital cities are cheap compared to other major cities in 1st world countries ie London, New York etc - however experience simply growth which makes them very attractive to investors ie China
Our population is growing (uncontrollably) and you cant create more land - with the desolation of manufacturing and rise of 'white collar' class means more then 50% of us work in or around the city.
Im not saying i like the fact that the average house costs 600k+ but these are the facts the only reason we had a pull back in house price growth was due to increased lending restrictions which are now being loosened and with stupidly low cash rates which will only throw fuel on the fire that will affect generations to come.
Just drive out of a city - there's enough land in Australia to fit many more people.
Lots of land no work
@Trying2SaveABuck: Yes it’s a bit of a challenge to develop a few more Sydneys, however there’s a trend that can change things. I’m talking remote working, for example my team is half remote at the moment with people working from Australia and Europe. My expectation the trend is going to continue and alleviate the need for huge cities.
@srr: Need big business to invest because the government wont do it because too much corruption and too few people that cant look past filling there own pockets.
The excrement running our country are doing everything they can to drive up the cost of imports, drive up housing costs, and to drive up share prices. Once again, the upper class benefits greatly, at the expense of the lower class. Instead of encouraging saving, they are creating an environment that rewards indebtedness.
Lets face it, the Reserve Bank does what the federal government tells it to do. It is in no way independent.
To savers, stick all your money in cryptocurrency instead of banks. Over the past year it went from $4,000 USD per coin to $12,000. There are sllumps, but the trend is upwards. You can double your money in one year; put it in a bank and you will lose out to inflation.
ent from $4,000 USD per coin to $12,000
Im not sure why you got neg. It is now nearly $17k as I type.
old people, closed mind, really hard to change… but young people will thrive instead, they will be leading the future anyway.
It's US$11k at the moment, not $17k. It was up near $20k not that long ago, then was down at $3k. It has nothing backing it.
My bad I was thinking in AUD. As you can see there are alot of people in many countries trading BTC. Im not gonna waste our time to convince you why it is the future. You are already make up your mind about it.
@frewer: Ive traded crypto, had eth, LTC and xrp. Made money on all of them, but I was never under the illusion it was anything more than a gamble and timing. Buying crypto you are simply hoping that more people will jump on board to increase prices, it has no inherent value.
Buy gold and silver, two of the most undervalued assets in the world.
Looking at buying some already out of interest, but what makes you say its undervalued so much? Also what method do you use to buy and store it?
Prices are heavily suppressed by central banks. China, Russia and banks accumulating so I'm just following what the smartest guys are doing. I buy from whoever's got the best deal at the time, I've just recently started but looking to store at a private vault (not a vault from a bank)
Great news
Great, yet another reason for house prices to massively increase again. This time from ridiculous to biblical.
i just hope rba doesnt drop rates again. house prices are already ridiculous at 2015 levels for 2019. compare sydney with other major cities around the world. last i checked sydney was #3 and no where near the density of tokyo and hong kong (#1 & 2). btw i own property so im not an armchair critic. its impossible for me to upgrade if it rises like crazy again. please gut foreign investors with 20% stamp duty thanks.
The rate drop is good for a lot of homeowners who still have mortgage.
Regardless of being in positive or negative equity situation.
For sydney price to come back to 2012 level or crash to 2000 level, these would trigger it:
- massive evacuation in the area
- massive epidemic in the area
- massive unemployment (remember mining towns?)Basically when no one would want to live or buy there, it will crash. Banks wont lend either. Which means prospective buyers without ability to pay cash outright, it will be impossible.
lol never going to happen
have u found any bargain houses on gumtree?
no but have got all my 21 tenants off there, easy to up the rent with them.
This is why I decided to take money from my interest account and invest. It just punishers savers
You're meant to go and spend it at Gerry's on a new tv.
What investments are we talking about here.
Houses of course
Not sure if serious…
A BankWest Qantas transition account is starting to make more sense.
0.4 QFF points/day per $100 of savings (e.g. $100K savings = 146,000 QFF points/year).
Hopefully Qantas doesn't devalue their rewards program. /s21 centeries , and we still relying on few people on top to made decision for us? No! The current economy situation is like a sinking boat, it will go no where, no matter how the captain trying. Let go of it. I said, break apart go with decentralization! cryptos are the future.
The bulk of cryptocurrencies are controlled by a handful of mining pools. Definitely not decentralized.
mining is only one part of the whole solution = it keeps crypto flow freely over internet (technical stuff)
the real issue here is central bank, one party, control everything.
crypto there is no one can control it!
It's like nothing was learn't from the mistakes of other countries over the last 2 decades.
As of 17 Jul 2019 Ubank’s interest rate is : 2.41 % P.A.
Real bad news for savers.
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Until it loosens again and the same thing happens.
Even now in the US, shitty loans are being handed out again left and right to anyone…