Growth of the Housing Stock

Reserve Bank Board Members observed that residential construction appeared to have plateaued, with dwelling investment largely unchanged in the June quarter. The pipeline of work already approved or underway was expected to continue supporting dwelling investment around current levels over the subsequent year or so; the peak of apartment completions was expected to occur during this period. At the current level of dwelling investment, the growth of the housing stock was expected to outstrip that of the population, as it had done in the preceding few years.

Financial market pricing continued to indicate that the cash rate was expected to remain unchanged during the remainder of 2017, although expectations of a rate rise in 2018 had increased and a 25 basis point rise was fully priced in for the second half of 2018.

Don’t delay reviewing your own financial circumstances, ensuring you take full advantage of current favourable economic conditions.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Coffee with Kiril – Episode 15: The real risk to Sydney Property

The real risk to Sydney Property

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube channel

Freshen Up Your Money Habits

We’re deep in the midst of spring, a season known for welcome warmer temperatures, new life and new beginnings, so it makes sense that now is a good time to freshen up your money habits.

By paying closer attention to your finances you might tighten your budget and make your money work harder for you.

Don’t put off reviewing your financial position. Your actions today will help influence your financial tomorrow.

When it comes to your money there is no ‘set and forget’.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Why are interest rates rising despite what the RBA does?

The global economy is looking better than it did a year ago. The turning point was around the end of last year. While it doesn’t seem to have picked up further recently, neither is this expansion a flash in the pan. That is positive news for the Australian economy.

When banks overseas raise their rates, lenders here suddenly face higher wholesale costs which are then passed on to customers.

This is one reason why Australian lenders have this year increased rates independently of the RBA’s strategy of keeping rates on hold.

As a nation, we are borrowing far more than we are saving so banks need to get funds to make up for the shortfall.

About a third of the major banks’ funding comes from the wholesale markets, almost all of it from overseas from countries like the US.

Although it is unlikely interest rates will rise in the short term, it is prudent to review your personal situation, to ensure you are protected should circumstances change.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Coffee with Kiril – Episode 14: Interest rates going up? No chance

Interest rates going up? No chance

To view other Coffee with Kiril episodes and other Strategic Investor Group videos – please visit our YouTube channel

Monetary Policy Consistent with Sustainable Growth

The Reserve Bank Board noted that conditions in established housing markets had continued to vary considerably. There had been clearer signs of an easing in conditions in the Sydney market but less so in Melbourne, where prices had continued to grow strongly. Borrowing for housing had continued to outpace growth in incomes, although the composition had shifted towards owner-occupiers, with higher interest rates for investors in housing reflecting the ongoing effects of APRA’s recent measures to strengthen lending standards in this area.

Taking into account all of the available information, and the need to balance the risks associated with high household debt in a low-inflation environment, the Board judged that holding the stance of monetary policy unchanged would be consistent with sustainable growth in the economy and achieving the inflation target over time.

There is no better time to take stock of your financial position and structure your current debt to take advantage of the low-interest-rate environment.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

How are you placed should interest rates rise?

Can you remember back to November 2010?

It was the last time the Reserve Bank of Australia raised the cash rate, to 4.75 per cent.

A lot has happened since then, including plenty of interest rate cuts: the cash rate now stands at 1.5 per cent – a historical low.

We are now at a point in time where the economy is improving and the official cash rate is tipped to rise sometime in 2018, which will put an end to the easing cycle.

The banks are facing increased regulatory pressure from the Australian Prudential Regulation Authority (APRA). Australian banks face some of the toughest guidelines in the financial world.

How are you placed should interest rates rise? It’s time to act now and position your financial circumstances to cushion the effects should interest rates increase.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group