Global Monetary Tightening

Australian banks’ “continued reliance” on wholesale funding from overseas institutions may see pressure on local interest rates.

One reason is “global monetary tightening”, especially given the European Central Bank (ECB) is starting to wind back the massive monetary stimulus which it pumped into the European economy since the global financial crisis.

In addition, Fitch expects the US Federal Reserve to lift interest rates four times this year.

America’s official rate is currently sitting in the 1.25-1.5 per cent range, so even one rate hike would mean US rates would be more competitive than Australia’s (currently at 1.5pc).

Stable customer deposits are the Banks preferred funding source.

Should the Banks be unable to raise sufficient deposits they will need to access the more expensive option of global wholesale funds.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

2018: The year to set up your financial future

Based on the expectations of most economists, mortgage holders have between nine and 18 months of the current record low-interest rates before the Reserve Bank will begin the process of moving them up towards more long-term historical norms.

Despite some projections from economists that the RBA will move rates up mid to late 2018, the central bank will be keeping a very close eye on the housing market and will be loathed to become accountable for any precipitous fall in house prices.

Low wages growth and inflation and very weak consumer spending will provide it with the conditions to retain interest rates at 1.5 per cent.

Interest rates are more likely to go nowhere this year.

Now is the perfect time to secure your financial future by securing the best possible borrowing solution.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Commercial property behaved mostly as expected in 2017

Yields continued to firm, tenants were back in the market and the office sector did particularly well, benefiting from business growth and, in the case of Sydney, withdrawal of stock.

Australia quietly moves towards its 27th year of positive economic growth. With high levels of transparency, a comparatively stable government, strict planning controls and strong performance of most commercial property types, why wouldn’t you want to buy?

If you are considering entering the commercial property market, or have already taken advantage of the sound conditions present, contact Strategic Investor Group to ensure you get the right advice regarding any potential loan structure.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group