What is a “Tracker Mortgage”?

April 11, 2024

A report from a government committee has suggested that Australian Banks be forced to issue “Tracker Mortgages” (Aust Financial Review 27 March 2024).

Australian banks have unsurprisingly pushed back.

A “tracker mortgage” supposedly “tracks” the Reserve Bank cash rate so that your home loan rate remains at a fixed margin relative to the Reserve Bank cash rate.

The benefit is that a borrower will not be left (as currently happens) with a rate stranded high and dry well adrift of where it should be.

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2024 The Year Ahead

January 30, 2024

There are things that can be taken as almost certain this year – so let’s plan for them.

On the money supply side:

  1. At some stage this year the Reserve Bank will start to reduce rates.
  2. When rates fall by 0.25% it is almost certain that banks will act with their usual pattern and cut by 0.25% for new clients and only 0.15% for existing clients.

No need for you to worry here – I will be able to deal with that for you in my scheduled 6 monthly reviews – it’s what I do for you.

So, let’s turn to getting ahead in life this year.

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The Melbourne Cup Rate Rise – Why Did it Happen, What Does it Mean for YOU?

November 14, 2023

This time WHY matters.

The 3-year bond rate in the US is 5.30%, the 10-year bond rate 4.65%.

The 3-year bond rate in Aust is 4.35%, the 10-year bond rate is 4.75%.

Banks BORROW to lend to you at the 3-year bond rate (among many other sources) – so money is COSTING the banks 4.35%

They can also borrow (overnight) from the Reserve Bank at the cash rate 4.10% – but the Reserve Bank also needs to borrow that to lend to the banks – so the Reserve Bank is making LOSSES at 4.10%.

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Interest Rates Have Peaked

August 2, 2023

“The balance of risks now favour the prospect that the RBA is now on hold” – Bill Evans (The Australian Wed 2nd Aug 2023)

I predicted quite some time ago that the “peak” of this interest rate cycle would be 6% (to you) and that you should plan around that – and that appears to be correct.

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Well, that was a surprise…

May 3, 2023

Should it surprise us that 100% of economists on Monday became only 70% of economists by Wednesday?

I will carefully analyse what the Reserve Bank board says as well as Bill Evans.

I think it is possible that with this Reserve Bank board undergoing significant change by September that they wanted to fire one last shot – I will write in detail next week.

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The end of this interest rate cycle..

May 3, 2023

It is with a reasonable degree of confidence that I can say that interest rates have peaked (Bill Evans: The Weekend Australian: Sat 29th Apr: page 30).

At the start of this cycle, I suggested that you plan for a peak of 5.5% (and more recently 6% just to cover a worst case).

Interest rates, to you, have now peaked (if I am correct) at just under that 5.5%.

You should now budget for rates at this higher level for a reasonable period ahead.

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An open letter to Banks on behalf of my clients.

May 2, 2023

I am always open to opportunities with new lenders for my new to bank clients.

Under BID (Best Interest Duty) my obligations are clear – and they are obligations on me personally.

Banks have absolutely no obligations under BID.

This means that in the main – our interests do not align.

There is one place they do – new business.

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How best to Plan Ahead…

March 7, 2023

With the Reserve Bank likely lifting rates later today – how best to plan ahead.

I asked two clients recently if they were interested in hearing why rates are being lifted – and their answer could not have been clearer … “no – we read your emails because you tell us how to plan”

The so-called experts (and even Bill Evans from Westpac has changed his view a few times recently) seem divided but also in agreement on between 1 and 3 rates rises – including today’s.

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The “Why” about Rates

March 7, 2023

Covid came along and no government in the world quite knew how to respond… they planned for the worst.

  • We were all locked up.
  • While they developed a vaccine.
  • Which meant businesses and people lives were about to be financially destroyed.
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Waiting For The Crash…

March 7, 2023

I cannot count the number of times in my 25 years of mortgage broking I have heard the “I’m waiting for the crash” reason for delaying a buying decision.

First – EVERY buyer (me included) hopes for property to be “down” 5 minutes before they buy and then “up” 5 minutes after they have bought.

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