Interest Rates in the Future – My Role and Yours – Plan for 4%

October 8, 2021

Bill Evans took up the Chief Economist role at Westpac in 1991 and has consistently been “getting the big calls right for 30 years”.

When he talks – I listen.

Bill Evans predicts (The Australian Sat 11th Sep 2021) “Interest rates will rise… starting in the first quarter 2023… and going up (in steps) by (only) 1.25%”.

What does that mean for you? Typical home loans are now 2.5% or under and, even allowing for sneaky bank behaviour, Bill Evans is telling us a reasonable worst case that we should plan for is namely a peak interest rate of 4%

So…

My Role is to guide you towards lenders who will agree to reprice your loan back to their new to bank offer (when I reprice your loan every 6 months) This is ABSOLUTELY why we stay variable – so that I can adjust your loan in your favour, every 6 months.

Your Role? This is VERY SIGNIFICANT – take the low rates I can get you BUT… you should be checking what your repayments would be for 4% and start making those payments now. “Fix your repayments, not your rate”.

Alan… will ensure YOUR loan starts the next cycle from the low 2%’s.

You… will ensure you are ALREADY paying your loan AS IF it was 4%.

This important step will build you a buffer. While rates are low – any surplus payment comes straight off your loan balance, and when rates do inevitably rise not only will you have surplus on your loan balance, but your budget will be unaffected. It’s a win win, and secure planning for your future.

How?  Go to my loan calculator, (or if you have my app ASK ALAN click to open directly)– fill in your loan balance and remaining loan term and your current rate. My calculator will confirm what you need to know – both your current payment and the one you should use to plan for now and your future.

On another note, my app, ASK ALAN, has had a refresh. If you don’t already have it Click Here to download now.

As always if you would like advice specific to your own personal circumstances, please call or email anytime, it’s what I’m here for.

Ask Alan

The game is up – The great bank RIP OFF is over.

September 22, 2021

Since the day ASIC reported back on a finding from the Royal Commission on charging older loyal clients more than new ones, I have refused to take a backward step on this issue… Because it represents the worst possible example of bank behaviour.

In a related article (The Australian) – it notes that CBA and Afterpay are locked in a battle for banking customers… but the MAIN prize is home loans.

Here in print is the damning statistic “big banks earn 62.4 per cent return on equity on existing home loans and 34.3 per cent on new loan”

34.3 per cent is MORE than adequate profit margin 62.4 per cent is a RIP OFF plain and simple. Old customers are treated as complete fools and RIPPED OFF by banks – blatantly.

Refinances were up 60% year on year at Jun 30, and ‘commentators’ say “shop around for a better deal”.

That is totally WRONG.

This Rip Off is not addressed by hopping from one bank to another – it is addressed by finding a bank who agrees, at point of sale, in writing, to give my existing clients the same rate as they publish for new clients.

UNLESS a bank agrees in writing to give my existing clients the same rate as they publish for new clients I black and white refuse to give them ANY new business.

When I started this move, I was told I would never get this agreement – well I now have FOUR brand name lenders who have agreed.

Such banks exist.

They and ONLY they deserve new business. I will NOT recommend a bank to my clients unless that bank can agree.

I know this is gaining traction both with my lenders and with my clients – who know that I review:

·       Every Loan

·       Every Client

·       Every 6 months

THIS SINGLE ISSUE is what I want to be known for – THIS is BRAND ALAN.

And it is working… I am getting calls from brand new people, referred by you – my clients, and those new people have heard about what I stand for.

This post is predominantly a thank you – to you – my clients, who see the value in what I stand for and what is a driving force in the service I offer.

As always if you would like advice specific to your own personal circumstances, please call or email anytime, it’s what I’m here for.

Ask Alan

On rates – an update on my February comments

June 18, 2021

Banks and Commentators alike are saying again; “The next move on rates is UP – You must lock in now!”

What complete twaddle! (Commentators are still feeling the need to say something to fill editorial space, and banks are still saying things out of complete self-interest).

I only listen to the person with the RED Rate Button on their desk.

That person is the Chair of The Reserve Bank.

In this current month’s Reserve Bank Minutes – where rates were left on hold, the Governor committed AGAIN to the following…

  • “I will not be moving rates until Inflation and Wages Growth are FIRMLY in the 2-3% band”
  • “That will NOT be until AT LEAST 2024” !!
  • (Unorthodox Policy Here to Stay : RBA : The Australian Wed Jun 16th)

Now to the money market facts behind this:

Since the start of the year the Australian 3-year Bond Rate HAS crept up from 0.12% to 0.37%, but the 1-year Bond Rate is STILL at 0.12%

This is why 3-year fixed rates have risen.

The Reserve Bank Governor stated that he will review the policy of purchasing Aust Govt Bonds in order to keep the bond rate at 0.1% in July – so I will watch that review carefully.

What does this mean – and what should you do?

3-year fixed rates have risen to 2.2% – 2.3% but the pressure created (by competition) on Variable rates is still DOWN.

We are however returning to a more “normal” environment where the 3-year Fixed Rate does indicate where variable rates are headed.

The best approach to your home loan rate is always to choose a variable rate from a bank who has a written agreement with me to reprice my clients’ existing loans back to their new client offer.  This is as certain as you need things to be.

I review every loan, every client, every 6 months and reduce their rate accordingly.

I refuse to use banks who will not agree to this.

It was ASIC who said “…any consumer who deals with a bank who price gouges their own clients is foolish.”

Banks behave terribly on rate towards their own customers – we know that – they favour profit and shareholders.

Your response is as it always has been, choose a bank that has a fair repricing agreement with me and reap all the benefits of variable.

With my suggested approach when variable rates do eventually move up, your own loan will be starting from a much lower base than otherwise.  

Ask Alan

How to choose the right lender – inside information from a mortgage broker

June 2, 2021

Amidst surging interest in property, there are record enquiries for loans.

The Reserve Bank reiterates again that it will not be raising the cash rate until unemployment has a 4.x% on it and inflation has a 2.x% on it. (The Australian Sat 8th May)

The Government initiative HomeBuilder is an incredible success but is driving up the cost of materials and labour by up to 30%. (The Australian 9th May)

Demand for existing houses – including in the regions (such as the Gold Coast) is pushing up house price by similar amounts. (The Australian 9th May)

How do you choose the right lender and not make an expensive mistake?

Read more

Investing in Property: What this property boom really teaches us…

March 8, 2021

Not long ago, regulators’ forced banks to cut back on investment loans. That period has passed, and this presents a new opportunity for investors.

If you are 30 and buying for the first time, if you are 40 and shifting house, if you are 50 and know you need to invest – there are two typical responses in these times that I shall call a “property boom”.

  • “I need to buy now, or I’ll miss out” – FOMO
  • “The market is crazy; I’ll wait until it crashes” – It never does.

Hidden in current headlines is “Feb 2021 – largest rise in house price in 20 years.”

In other words, this has happened before and will happen again.

Read more

Rates in 2021

February 3, 2021

Banks and Commentators alike are saying this week; “The next move on rates is UP – You must lock in now!”

What complete twaddle! (Commentators are back at work after the holidays and feel the need to say something to start the year, banks however, are saying things out of complete self-interest).

I only listen to the person with the RED Rate Button on their desk.

That person is the Chair of The Reserve Bank.

In Yesterday’s Minutes – where rates were left on hold, he SAID…

Read more

Property Bloodbath…Journalists do love a headline…

February 3, 2021

Last year when Covid hit there were predictions of gloom and doom for property – and they were well founded to an extent… BUT… Two things altered the course of events.

  • The Government intervened with Jobkeeper to cushion the blow of Covid Lockdowns.
  • The Reserve Bank intervened by dramatically cutting Interest Rates and stating that they will stay low until at least 2023.

I have heard so many predictions of property falling into the abyss over the years.

Just to name a few:

House price collapse: 25 Jan 2014

Read more

Best Interest Duty

December 10, 2020

On January 1st new legislation for brokers comes into play – it is called Best Interest Duty.

So, how do you actually find a broker who will act in your best interests?

It is a sad comment on an industry of which I have been a part for 23 years, with multiple awards in that time, that a Royal Commission highlighted the need for legislation to compel brokers to do what should be integral to their ethos.

In general, people act out of self-interest and there is nothing wrong with that.

If I did not get paid, I would not be a broker.

The problem is not self-interest, but that when conflict arises between a client’s best interests and the broker’s, that a broker may act by putting their own needs above the clients.

Read more

Rates – Where to?

November 5, 2020

As of Tuesday, the Reserve Bank Cash Rate is at 0.1%, The Reserve Bank also announced it will buy Australian Govt 3, 5 and 10 year bonds to keep them at their desired target of 0.1%.

So, if banks can be profitable with an interest rate margin of 1.8%-2.2% – then your home loan rate should be 1.9% to 2.3%.

However, with Covid loan losses that banks are having to provision for, it means that we aren’t at these low levels yet – but this is where they are going.

Read more

House Price Leads the Way to Recovery

November 4, 2020

Yes – you heard that correctly.

Since January this year only Melbourne and Perth house price trends are negative.

Sydney – up 1.8%

Brisbane – up 2.1%

Adelaide – up 3%

Melbourne and Perth have their own temporary Covid issues.

The interest rate on your home loan should now be well into the 2’s – and will head lower in coming months.

Read more