The Reasons Behind and Lessons from the Past.

May 9, 2022

What caused the Reserve Bank to move away from its previously stated plans?

Namely… they were not going to move until:

  • Inflation was comfortably in the 2%-3% range.
  • Wages growth was above 3%.

The reasons that threw the Reserve Bank off course were simple:

  • Russia invaded Ukraine and has caused a global disruption to Oil, Coal, Gas markets (you felt this when Petrol hit $2.20 per litre and became an election issue). Prices go up because this feeds into the price of everything.
  • China decided to prolong its pursuit of Covid zero and has recently shut down Shanghai and then Beijing. Supply chains are in disarray (try getting anything delivered in a reasonable time – eg a car). Prices go up in a scramble for product.
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Interest Rates in 2022, an Important Message

March 25, 2022

I am writing again – to let you know how I think the interest rate scenario will unfold in 2022 and how to prepare together. We each have roles.

The pieces are falling into place for the Reserve Bank to start to lift the cash rate.

  • Inflation between 2% and 3% – is already in place.
  • Unemployment under 4% – this is imminent.
  • Wages growth above 3% – is the missing piece.

To repeat from an earlier email, this is how I see the rate scenario playing out this year…

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Rates and House Price – What Lies Ahead

January 31, 2022

House price rose by 25% in 2021 driven exclusively by

  • Low interest rates,
  • The need for more space to accommodate working from home.

There was a segment of the property market that missed this – inner city units – which rose by only 8%.

Unit blocks close to the city were the opposite of what the market wanted.

As Covid shifts gears I am already seeing demand for inner city units return because,

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Customer Service is Taking Action to Create Value for Someone Else

December 13, 2021

How many times could you say that you went to a business seminar, and it changed your life – and that it is still your daily focus 20 years later

Ron Kaufman, Singapore: 2001 – Ron Kaufman is who Singapore Airlines sought out in 1990 help them achieve their goal – “Service Even Other Airlines Talk About.”

“Singapore Airlines trains for service at an unbelievable level. Their quality is simply unmatched – but if you fly with them, you know this already.”

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APRA, The Reserve Bank and Interest Rates

October 29, 2021

The Reserve Bank has cut rates to low levels to encourage borrowing.

This is a good thing.

The strategy has worked.

Housing and construction are the backbone of our economy – because they generate so much employment and activity.

House price has increased – and that in itself is not a bad thing.

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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%”.

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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.

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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.

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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.

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So Where Are Rates Headed?

June 9, 2020

This morning as I was sitting down to write on the (immediate and medium) future of interest rates, knowing that they are poised to head down again – two clients of long standing emailed me.

One wrote to me – tongue in cheek;

I know (how much) you “adore” fixed interest rates, not, but now, locking part or all of a home loan in at these ever so low interest rates needs to be considered?

I still remember the painful 14% home loan interest rates.

Looking forward to your opinion in regard to this matter.”

Surely with rates now under 3%, surely with banks offering fixed rates in the mid 2%’s – SURELY it must now be time to fix … Surely!!

The best time to fix is still never.

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