Ask Alan News

On January 1^st 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.

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.

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.

• Consolidate your finances. We often keep lots of accounts, with small amounts of money in them – if you have repayments for loans, and are concerned that you may be short of funds, round up those small accounts and put them all into the account that repayments are debited from.

Over the last week I have had several clients ask me what I both think and suggest in the current circumstances.

I have been quiet since my email of 6^th Feb when I highlighted what the Corona Virus outbreak might mean for the year ahead.

There are too many opinions being espoused on social media – and while that is understandable it is not helpful.

In these times when we need whatever certainty we can, there is only one set of “facts” in my opinion.

Our Prime Minister and the Chief Health Officer are meeting twice weekly with every State Premier and their Health Officers. This National Cabinet makes decisions for the country and the Prime Minister speaks as a result.

 Dear Santa,

I’ve been good all year,

Most of the time,

Once in a while,

Never mind,

I’ll buy my own stuff…

All banks offer spectacular deals to new people.

Then under the cloak of darkness (called “out of cycle” rate rises) – they claw margin back.