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.
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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).
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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)
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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”.
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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.
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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.
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.
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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.
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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.
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As I suggested back in June, rate reductions are starting to flow through to new borrower deals.
This is good news for my own existing clients because I review;
You will start to see these reductions flowing through to your loan in your next review.
As you know, I seek written agreements with any bank that wants my new business. Namely that they agree to price my existing business in keeping with new offers whenever I make a request.
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