Fortnightly …. To Be or Not to Be ….
I can tell from the questions I am being asked that rates are starting to have an effect and people are being not only more careful with their money but also trying to create additional value.
Tell me who “hasn’t” heard that paying a loan fortnightly shortens the loan term?
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Inflation was slightly higher in December than expected. Inflation kicked off with oil price shocks caused by the Russia/Ukraine conflict, so rate rises did feel a “bit unfair” to many.
However, in December one of the single biggest contributors was travel and holidays. After two years of disappointment, we all spent whatever it took to have a holiday (and so we should). But that is 100% discretionary spending, on us. Too much money chasing too few goods. That always has a bad end – with the price of everything going up. Inflation kills wealth and inflation has to be controlled.
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Amidst all the bad news of 2022 comes some good news at last.
It is just possible that the rate of inflation in Australia has peaked (in October) earlier than predicted by economists (The Australian 1 Dec 2022: Robert Gottliebsen).
(By the way – what do you call 100 economists in a room?… a vacuum!)
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What caused the Reserve Bank to move away from its previously stated plans?
Namely… they were not going to move until:
The reasons that threw the Reserve Bank off course were simple:
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.
To repeat from an earlier email, this is how I see the rate scenario playing out this year…
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House price rose by 25% in 2021 driven exclusively by
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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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.”
Read moreThe 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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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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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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