The next 48 hours will likely bring mixed results on the economy for the federal government, already under fire in opinion polls over its botched home insulation program.

There is a growing expectation on financial markets that the Reserve Bank of Australia (RBA) will decide to lift the official cash rate at Tuesday’s board meeting that would further increase the average home loan monthly repayment by just under $50.

However, Wednesday’s national accounts are likely to show a solid acceleration in economic growth in the three months to December, possibly growing at its fastest pace since mid-2007.

RBS Australia chief economist Kieran Davies said markets were now pricing in a 60 per cent likelihood that the central bank will lift the cash by 25 basis points, to 4.0 per cent, after its surprise decision to leave the rate unchanged in February.
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National Australia Bank Ltd (NAB) chief executive Cameron Clyne is watching the changes taking place in the UK financial sector before deciding whether his bank will expand in or exit that market.

The European Commission is forcing UK banking giants Lloyds Banking Group and Royal Bank of Scotland to divest significant parts of their businesses in exchange for government aid, to ensure that they don’t distort the market.

“There is now some talk about the UK market changing,” Mr Clyne said at an Australia-Israel Chamber of Commerce lunch on Monday.

“At the moment it remains speculative but we’re watching it very closely and are very keen to see how it develops.

“We’ve got one of two routes (in the UK) which is to expand or get out.”
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Senior Australian are taking up reverse mortgages to pay down debt, fund home improvements and supplement their income in retirement, a study by Royal Bank of Scotland (RBS) and Deloitte finds.

The study of 425 retirees found 32 per cent of funds from reverse mortgages were used to fund home repairs and renovations, 18.7 per cent was used to boost income and 6.6 per cent was used to help family members.

Another 6 per cent was used to consolidate existing debts.

Reverse mortgages, when outright home owners borrow against the equity in their homes, were launched in Australia earlier this decade and are sold primarily through financial planners and brokers.
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