The federal government has decided Australia’s banks can survive on their own without taxpayer-funded guarantees.
Deposits of more than $1 million will no longer be guaranteed from the end of March, although bank accounts with less than $1 million will continue to be underwritten until late 2011.
The government is also phasing out its wholesale guarantee of bank borrowing on global money markets from the end of next month.
Canberra’s underwriting of state and territory government borrowing will be turned off from the end of December.
In October 2008, $600 billion to $700 billion of measures were unveiled as global turmoil jeopardised the stability of Australia’s financial system and the ability of banks to lend.
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Wealth Today’s cut-through strategy to assist everyday Australians in terminating their mortgages while building wealth under appropriate protection, is simple, logical and proving a winning approach to business as the company makes its fifth state wide launch this month, into South Australia.
The company attracted another seven franchisees in January, exceeding projections and taking their total to twenty four since launching mid November 2009. Another 40 business owners are currently evaluating the model.
“The Wealth Today model makes excellent sense for brokers,” said Managing Director, Dr Tony Pennells. “We’ve designed it to seamlessly slot into a broker’s existing business and the beauty of it is that brokers don’t actually have to source all new clients to make it work and to grow their business.”
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The Reserve Bank of Australia (RBA) has again warned that interest rates will likely rise further this year, lifting its forecasts for both economic growth and inflation.
But financial markets are not overly confident that another increase in the official cash rate will happen anytime soon, suggesting homeowners may be able to breath more easily for at least a couple of months.
The central bank released its quarterly monetary policy report on Friday, expanding on this week’s post-board meeting statement by governor Glenn Stevens when the cash rate was unexpectedly left at 3.75 per cent.
“Looking forward, if economic conditions gradually strengthen as expected, it is likely that monetary policy will need to be adjusted further over time to ensure that inflation remains consistent with the target over the medium term,” the RBA said on Friday.
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One of Australia’s most respected economists has joined a call for more affordable housing in the nation’s fastest-growing regions.
Former ANZ chief economist Saul Eslake has told an affordable housing forum at Bond University on the Gold Coast the task of finding a home they can afford is about to get even tougher for many Aussies.
“Australia does have an ongoing housing affordability problem, which on present indications is likely to get worse as house prices and rents rise and as interest rates continue to rise, albeit perhaps more gradually than financial markets were thinking before this week,” Mr Eslake told reporters on Friday.
The forum, held by the Gold Coast Housing Company and the Urban Development Institute of Australia, has called for smaller house and land sizes, and an increase in funding for community and not-for-profit housing programs to help combat the problem.
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First home buyers will find it harder to get a foothold in the residential property market this year as supply dwindles and interest rates begin to bite, analysts say.
Interest rates are still expected to increase by at least one percent point this year, despite this week’s pause by the central bank, economists say.
Established house prices are expected to continue strengthening and the generous government first home buyers grant has been wound back.
The Reserve Bank of Australia (RBA) on Tuesday surprised financial markets by leaving its key cash interest rate unchanged at 3.75 per cent.
Economists say the respite for borrowers is likely to be shortlived, with many predicting four separate 25-basis point increases in the coming months.
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Demand for home loans dived in January after three official interest rate increases and the removal of the federal government’s generous first homeowners’ grant, a mortgage broker says.
Loan Market Group says its home loan approvals have dropped by 40 per cent from a peak in 2009 after the company recorded its quietest month since 2006 in January.
“The three successive rate rises in the final three months of 2009 definitely had an impact on homebuyers and we didn’t see the need for the RBA to put rates up this month,” the group’s chief operating officer Dean Rushton said in statement.
“There is no doubt that the removal of government stimulus is having an impact on the market.”
The government’s increased first homebuyers’ grant ended on December 31, returning to $7,000.
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Federal Treasurer Wayne Swan has accused the opposition of voodoo economics, saying its credibility on the subject is a “smoking ruin”.
His comments came after the Reserve Bank predicted on Friday that the Australian economy would grow by 3.25 per cent in 2010, and by 3.5 per cent next year.
“I welcome these stronger forecasts, but we certainly can’t take these stronger forecasts for granted,” Mr Swan told reporters in Sydney on Friday.
“I think we can be optimistic about the future, but there is certainly no room for complacency.”
The government was at one with the forecast views of the central bank, but Opposition Leader Tony Abbott was practising voodoo economics, Mr Swan said.
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The central bank will have to raise the cash rate above 4.5 per cent this year, but there is no indication when the first increase will occur, economists say.
The Reserve Bank of Australia (RBA) this week surprised financial markets by leaving its key cash interest rate unchanged at 3.75 per cent.
It said in a statement on Friday it was waiting to see the economic impact of three official rate hikes in the final quarter of 2009 and accompanying rate increases by commercial lenders before deciding whether to move again.
The RBA continues to expect an improvement in economic growth over the next two years as domestic demand increases.
In its statement, the RBA outlined its central forecast for the economy to grow at around 3.25 per cent and 3.50 per cent in 2010 and 2011, which would be much stronger than 2009.
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The Reserve Bank of Australia (RBA) has confirmed an on-target inflation outlook allowed it to postpone an interest rate rise on Tuesday, but a postponement is not the same as a cancellation.
Borrowers should be aware of the basis for the benign inflation outlook forecast in the RBA’s quarterly Statement on Monetary Policy released on Friday.
“The forecasts are based on the technical assumption of a rise in the cash rate over the forecast period , with the assumed path broadly consistent with market expectations as the statement was finalised,” the RBA said.
The statement was finalised on Thursday, when the futures market had factored in a rise in the cash rate from the current 3.75 per cent to around 4.5 per cent by the end of the year and not much below five per cent by early in the second half of 2011.
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Activity in the construction sector expanded in January, with housing construction hitting a two year high on government stimulus, a survey shows.
The Australian Industry Group Performance of Construction Index rose 8.4 points to 57.7 in January, above the 50 level separating expansion from contraction.
In the industry’s strongest performance in two years, the house building sub-index grew 10.3 points to 63.7.
AI Group director public policy, Peter Burn, said the improved conditions coincided with the reporting of increased tendering opportunities, new contract wins and a further uptake of work stemming from the Federal Government’s infrastructure stimulus programs.
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Source: Press Release
The Reserve Bank’s interest rate decision simply means there has never been a better time to take out a mortgage with a non-bank lender.
SCMC director Heidi Armstrong says today’s Reserve Bank board decision to leave the official cash rate at 3.75% highlights the fact that home loans from the big banks “represent very poor value for money”.
“The big banks have standard variable home loan rates up to 1.12% higher than our standard variable rate and the gap between our rate and their rates has never been wider,” says Armstrong.
“The media keeps quoting bankers’ claims that the non-bank lending sector is ‘fragmented’ when companies like the State Custodians are in excellent shape,” she says.
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Australia’s big four banks say they will hold standard variable home loan rates steady after the central bank shone the spotlight on bank mortgage rates as a major reason for leaving the cash rate unchanged.
The Reserve Bank of Australia (RBA) left the official interest rate unchanged at 3.75 per cent on Tuesday, surprising most economists, who had predicted a 25 basis point hike to four per cent.
RBA governor Glenn Stevens noted in his first statement for 2010 that last year’s out of cycle interest rate rises by some banks was a reason for leaving the cash rate steady in February.
“Lenders have generally raised rates a little more than the cash rate over recent months and most loan rates have risen by close to a percentage point,” governor Glenn Stevens said.
“Since information about the early impact of those changes is still limited, the Board judged it appropriate to hold a steady setting of monetary policy for the time being.”
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The Reserve Bank of Australia (RBA) has given borrowers some short-term relief after surprising financial markets by hitting the pause button on interest rates this month.
On Tuesday, the central bank left the overnight cash rate at 3.75 per cent following its board meeting, even though most market economists expected the RBA to lift by a quarter of a percentage point.
It is the first time since its September board meeting the central bank has not lifted the cash interest rate. The RBA board did not meet in January.
But economists still expect more rate hikes during 2010.
RBA governor Glenn Stevens said the bank was waiting to evaluate the impact of past rate rises by itself and commercial lenders on the domestic economy.
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Mortgage broker Loan Market Group has welcomed the central bank’s decision to leave the official interest rate unchanged but says mortgage holders can still expect rises in the months ahead.
The Reserve Bank of Australia (RBA) left the cash rate unchanged at 3.75 per cent after its first board meeting of the year on Tuesday.
Most financial market economists had expected a rise of 25 basis points to four per cent.
Loan Market Group executive chairman Sam White said the decision would allow the RBA to examine the impact of the three rate rises made late last year.
“What they’re trying to do is assess the impact of the previous rises,” he said.
“Australians are also coming back from holidays.
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