RBA Holds Interest Rates

The RBA today held interest rates at 1.75%. The announcement at today’s board meeting was the expected result in light of the current status of the economy and especially with an impending federal election result to be announced in the coming days.

Click the below link to go to the RBA’s official announcement.

http://www.rba.gov.au/media-releases/2016/mr-16-17.html

 

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What should I do about the latest RBA rate drop?

Salt FinanceFor almost everyone, the RBA’s latest decision is definitely a positive one, which will create more options and opportunities for home owners and investors.

Before this last rate decrease, there were some wonderful opportunities to purchase or refinance at more than 1% below all the major banks’ standard variable rates. We would like to see that continue, but will need to wait to see how all other lenders on the market adjust as well. My instincts tell me that the bridge will be somewhat narrowed between the very best rates and the major banks’ rates, at least for the short term.

That being said, here is my simple advice on what your next move should be depending on your specific situation:

  1. Act now: If you already know you are paying more than you should, are sick and tired of it and determined to do something about it, click here to start a conversation with Salt Finance to assess what options are available and put yourself in a better place. After all, it’s your money and there is no reason to pay the bank any more interest than you need to.
  2. Assess your position: If you aren’t quite sure what you are currently paying or  what you should do at this stage or if you have any upcoming finance requrements, I would recommend the following steps:
  • Get in touch with us now. Let us know that you are following the below steps. We’ll keep you accountable and guide you in the future.
  • Find out what you will be paying after this latest rate reduction with your current lender or contact us and we’ll advise you.
  • Consider other monthly personal loan or credit card commitments that you may be able to consolidate into one easy manageable repayment – get your statements out and add them up! You’d be surprised just how much they could be costing you!
  •  Let us know what your current position is. Please remember to let us know of any future or upcoming finance needs as it is highly relevant to the assessment of your options.
  • At that point, provided your needs aren’t urgent, we’ll wait until the dust settles on this latest reduction and all lenders have announced their new rates. If your needs are urgent, we’ll act immediately.
  • Lastly, we will assess and present your best options based on your individual situation.

3. Do nothing – If you’re already receiving more than 1% below the major banks standard variable rates and have no impending finance requirements to consolidate, renovate, upgrade, invest or release equity for any reason and you don’t wish to fix any part of your loan, then rightly you can do nothing and just enjoy the latest rate reduction.

As per point 2 though, should you have any upcoming needs, I would encourage you to click here and start a conversation with Salt Finance to best prepare yourself and find out what your future options may be.

I hope you have found this helpful. Please leave your comments or questions below. Alternatively, feel free to email me directly at marco@saltfinance.com.au

Marco Cipri

 

 

 

 

Reserve Bank slashes official interest rates by 50 basis points!

There was some great news for all home owners and buyers last week when the Reserve Bank  cut official interest rates by 50 basis points to 3.75%.  With most economists’ predicting a cut, the larger than expected move to 3.75% will be a pleasant surprise to all households and businesses.

The move comes after weak economic data, including inflation, housing and manufacturing figures, influenced economists to predict a slash in the official cash rate.

For most mortgage holders and prospective buyers, this is great news! It will potentially cut repayments on a $300,000 mortgage by $125 per month, which will be a big help to all first home buyers and homeowners.

That being said, all of the major banks have once again played their usual game of cat and mouse and in the end failed to pass on the full rate cut. Don’t despair though, as there are some things you can do about it, which I’ll touch on later.

In terms of interest rates, CBA will drop it’s standard variable rate by 40 basis points to 7.01% from Friday, May 11.

The move by the CBA betters the deal offered by NAB, which only passed on 32 basis points from its borrowing rates. What will particularly sting NAB depositors is that they will be hit with the full Reserve Bank cut of 0.50 points, suffering a slide in their earnings from 4.15% to 3.65%.

Westpac has dropped its home loan rate by 37 basis points from 7.46% to 7.09% and at present remains the least competitive of all the major banks.

ANZ, who currently sits at 7.42%, will announce it’s intentions on May 11 in line with it’s new policy on distancing itself from RBA regulation by announcing it’s decision on interest rates on the 2nd Friday of every month.

The Treasurer, Wayne Swan, has labelled the move “an insult to hard-working Australians”.

“Customers with a mortgage or small-business loan will rightly feel short-changed,” he said.

Both the NAB and Westpac have posted bumper first-half profits last week with Westpac’s cash profit coming in at $3.195 billion.  ANZ also lifted its first half profit by 1% to $2.92 billion but said margins in its Australian business are declining.

Mr Swan also had this to say, “NAB and all the major banks are booking huge profits. Customers shouldn’t hesitate to ditch any bank that takes them for a ride with decisions like this.”

What should you do next?

In terms of what you should do right now, there are only 3 options:

  1. Act now: Click here to start a conversation with Salt Finance to assess what options are available to put yourself in a better place.
  2. Assess your position: If you are unsure, click here for a more general overview and get my advice on what your approach should be depending on your specific situation.
  3. Do nothing: If you’re already receiving more than 1% below the major banks standard variable rates and have no impending finance requirements or intentions to fix. Otherwise, click here

For more information these 3 options, please read my following article What should I do about the latest RBA rate drop?

I hope you have found this helpful. Please feel free to leave your comments or questions or alternatively, email me directly at marco@saltfinance.com.au

Marco Cipri