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.
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.
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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.
http://stratgroup.com.au/wp-content/uploads/2017/03/SIG-WEB-LOGO.png00adminhttp://stratgroup.com.au/wp-content/uploads/2017/03/SIG-WEB-LOGO.pngadmin2018-01-02 09:00:542017-12-21 03:07:20Commercial property behaved mostly as expected in 2017
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What’s your bank loyalty worth? The better part of $5 billion a year. Well that, of course, is what it’s worth to the banks – what it’s theoretically costing existing customers who don’t shop around.
What it quantifies for the first time is how much more banks are prepared to discount interest rates for new customers, compared with what they charge their existing, loyal customers.
The RBA’s analysis of the securitisation numbers clearly shows how keen the banks are to attract new mortgages. The average outstanding loan is itself at a substantial discount to the advertised rates, but new loans – those taken out over the past three months – are more than 30 points cheaper again.
The bottom line is that, on average, we end up paying about as much as the RBA wants us to pay for money. To make up the average though, people on higher incomes with bigger loans who shop around pay substantially less than trusting, loyal customers
While investor loans are more expensive than those for owner-occupiers, the discount offered for new business remains attractive.
http://stratgroup.com.au/wp-content/uploads/2017/03/SIG-WEB-LOGO.png00adminhttp://stratgroup.com.au/wp-content/uploads/2017/03/SIG-WEB-LOGO.pngadmin2017-12-11 23:24:162017-12-11 23:25:13How much is it costing you for being loyal to your Bank?
Sydney and Melbourne regions have experienced the strongest value growth over the past decade while the other capital cities have generally seen comparatively moderate value increases.
When analysing the regions with the greatest value increases, the top 10 regions nationally are all located in either Sydney or Melbourne. This highlights how much stronger value growth has been in Sydney and Melbourne relative to other capital cities over the past decade.
The top 5 list for each state and territory shows a significant slant towards capital city regions rather than regional housing markets.
Overall the data highlights the strength of value growth in Sydney and Melbourne over recent years. Furthermore, it details just how moderate growth has generally been outside of these two cities.
Strategic Investor Group is unashamedly Sydney centric and dedicated to assisting you find value for money.
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