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Please feel free to contact our team with regard to reviewing your current home loan, purchasing a new home or other finance needs required for business, motor vehicle finance or personal loans.
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Here’s a question that has to be asked of both political parties before the election, and it goes like this: “Are you going to take seriously the recommendations of the International Monetary Fund that our family home’s tax break must go?”
And while you’re at it, you need to know whether any of the would-be governments would ever take the IMF’s advice to raise and broaden the GST, which would mean greater income tax cuts.
On current political stances, the first question should go to Labor’s Bill Shorten and his Treasurer-in-waiting, Chris Bowen, as this pair has had the rocks to promise to take away the tax ‘gift’ called negative gearing, to halve the capital gains tax discount for holding an asset for a year or more and saying to self-funded retirees, not receiving a pension: “No tax refund from stocks for you!”
These are the hard men of tax in the modern era and in many ways are gambling, like Dr. John Hewson did and John Howard did with their GST promise before an election. Hewson’s 15% GST was a loser, while Howard’s 10% version was a winner. The size of the tax and the calibre of the selling explain why one John lost and the other John won. But the stories do have relevance for the looming poll.
Sure, a GST on virtually everything from Dr. Hewson was easier to campaign against for then-PM Paul Keating, compared to the Bill and Chris’ crusade against negative gearing and property investors. However, if the Coalition plans to portray Labor as the anti-home owner party, whose policy promises can only send house prices down, then this could lead to other questions that could link Labor to what looks like scary IMF recommendations for many Aussie voters!
In its recent look at Australia and what it suggested was needed, the IMF wants to see the no capital gains tax on the family home phased out!
They like the negative gearing moves from Labor and imply that the capital gains tax-free status for a home should be restricted or limited. This could be based on the price of the home, which might be an option for a government that’s happy to favour the bigger group of Australians who aren’t property investors or self-funded retirees.
Fortunately, Chris Bowen told the AFR that “The Opposition has no plans to touch CGT on the family home”. However, if Josh Frydenberg doesn’t bring this topic up today and every day before the election, then he’s not a politician’s bootlace!
Treasury doesn’t agree with the IMF, arguing that we have a “comprehensive income tax system” and many of the deductions and concessions are linked to the fact that our income tax rates — personal and business — are high on an international comparison basis.
On the other hand, if any potential government could consider the IMF’s idea to increase and broaden the GST to deliver income tax cuts, it would be the Coalition. Malcolm Turnbull canvassed the idea before taking Tony Abbott’s job but as soon as he got the keys to The Lodge, he dumped it as unsellable to the Aussie voter. And Labor has long signed a ‘pledge’ not to increase or broaden the GST, despite most economists, accountants’ groups, government think tanks and independent smarty pants bodies all saying it’s the sensible way to go!
It would take a leader of unchallengeable, irresistible charisma to pull this GST trick off and we haven’t seen a politician of that calibre for a long time. And none seem to be in sight!
And if you want more IMF nightmares, the highly respected body makes the nice suggestion that State-inflicted stamp duty on real estate purchases be dumped but should be replaced with, wait for it, a land tax!
The pointy-head experts say this will increase the supply of houses and reduce prices, which is great for future homebuyers, but try telling a voter in May that as a political party we want to reduce the selling price of your home!
Other experts (not related to the IMF) argue that reducing the load of taxes on developers and killing off stamp duty would increase the supply of housing. But we’d need to get the lost tax money from somewhere else. That’s why a broader and bigger GST slug would help solve a lot of tax and economic problems.
In the absence of a sellable GST, we need to become a more productive country, which implies greater investment in machines, processes and human development.
It might mean changing pay structures and making them more responsive to working harder and smarter. But, once again, asking voters to consider a modern, internationally comparable pay world brings back the nemesis of John Howard — Work Choices!
And the history of Work Choices and the demise of the Howard government means no conservative political party would ever venture into that wage world!
PETER SWITZER Feb 25,2019
As financial markets digest the findings of the Banking Royal Commission, the Reserve Bank of Australia has made its first rate announcement for 2019. The RBA has decided to leave the official cash rate unchanged at 1.5% for the 27th consecutive time and I’d like to share some thoughts on why the Reserve Bank of Australia may have made this decision.
The RBA continues to balance the worrying parts of the economy – inflation dipping below its target range of 2-3%, falling house prices, a borrowing squeeze in response to the Royal Commission, slow wages growth and negative consumer and small business sentiment with the more positive aspects of strong infrastructure spending, increased export earnings and stable employment figures.
Approximately 29 complaints received by the Australian Financial Complaints Authority (AFCA) were directly aimed at mortgage brokers.
The new external dispute resolution scheme announced earlier this month it had received 6,522 complaints in its first month of operation.
Averaging about 310 complaints a day from consumers and small businesses about financial products or services, it received 47% more complaints than the three predecessors.
The banks received the greatest number of complaints with 2,367, followed by general insurers with 1,159 complaints and credit providers with 1,040 complaints.
Australian Broker reached out to AFCA to determine the number of complaints received regarding mortgage brokers.
A spokesperson from the group said, “In November 2018, AFCA’s first month of operations, we received 29 complaints against mortgage brokers, out of a total of 6,522 complaints received.
“Please note that complaints that have been more recently received in November might not have the industry or financial firm recorded, so these statistics might change.”
Commenting on the figures, MFAA CEO Mike Felton said, “It is pleasing to see complaints relating to mortgage brokers remain at remarkably low levels. At just 29 out of 6,522 grievances being logged by AFCA in its first month of operation, broker related complaints represented less than half of one percent of the overall figure.”
He added, “While this is a positive story for brokers, it is not a new story and brokers have for years had strong satisfaction ratings. Consumers’ Net Promoter Score of brokers is for example in excess of 70 as compared to an average score for the big four banks ranging from zero to minus 15.”
According to Felton, if conflicted remuneration was causing “systemic harm to consumers”, the new complaints figures from AFCA would be “high and rising”, along with relative arrears. In addition, he said that competition and consumer support would be shrinking and net interest margins “inevitably rising”.
“But this is not the case,” he said.
“The truth is brokers are focused on their customers’ needs, and on giving them choice, convenience and access to credit. That’s why broker share of the home lending market is now more than 55% and growing,” Felton continued.
Broker News 19 Dec 2018
I know Billy Slater, Bill Cosby, the demand to sack the ABC’s Emma Alberici and a radical recycling plan are ‘important’ news stories but I would’ve thought the fact that the country’s Budget Deficit is tumbling rates a decent headline.
The SMH’s website gave the story no prominence. The AFR gave it front page coverage but this was the headline: “Tax surge paves way for pre-election spend”, which has refused to say anything great about the achievement.
Now, don’t think I’m here rattling the can for Scott Morrison (yes, my old economics student). It’s not the case. I’m more rattling my own can, as I’ve been arguing that policies to create economic growth would create jobs, which in turn will boost tax collections while reducing government outlays on the unemployed.
When that happens, I’ve argued for a few years (here on Switzer Daily, on TV, on radio and in speeches I regularly do) that the deficit will fall. And the deficit and the way it feeds our public debt really worries a lot of people.
I saw Richo and Paul Murray stressing about it on Sky News only this week. They talked about how it blew out under Scott Morrison’s stewardship but they weren’t to know that in fact the deficit story was about to turn pretty positive for the new PM.
In case your favourite media outlet didn’t rate this Budget story, let me give it to you as interestingly as possible.
The headline should have been something like the one CommSec came up with: “Federal Budget: Smallest deficit in a decade.” However, the words “Federal Budget” could turn normal people off reading it.
I like “Australia’s debt disaster derailed! Put away the razor blades!” (Yeah, you have to fight mindless clickbait with mindful clickbait.)
Back to the actual story:
• The budget deficit for 2017/18 was guessed at in the May 2017 Budget at $29.4 billion.
• Only four months ago at the May 2018 Budget, the guess number was down to $18.2 billion.
• It is now $10.1 billion.
• The rolling annual deficit was the smallest in nine years – since the year to March 2009, at $6,563 million.
• Government debt stood at $342 billion at the end of June 2018 (or 18.6% of GDP), $13 billion lower than estimated at the time of the 2017/18 budget.
This is a huge story for those worrying about our public debt, which is fed by the Government’s deficits and is reduced by surpluses. And the quicker we get to surplus, the better it will be for our economy to ensure that if another GFC comes along, the Government of the day can do what Kevin Rudd’s Labor did in 2008 when it threw money at the problem.
The Costello/Howard (plus mining boom-created) surpluses gave Labor the ammunition to fight the forces of recession and helped us keep unemployment under 6%, when the USA saw the jobless rate hit 10%!
Just like personal finance, great budgeting gives you the firepower to borrow money, seize opportunities and weather financial storms. The fact that our budget bottom line is on the big improve is something worth celebrating and even headlining!
I have to say The Australian newspaper’s David Uren captured the right message to pass on to fellow Aussies with his “Surplus in sight ahead of election”. That’s why the PM will probably wait until May 18 so he possibly could crow that the Budget is balanced or even into a small surplus.
I used the word “possibly” because the Oz economy has to keep growing as fast or well as it has recently, which was predicted by the Reserve Bank and that, I’ve always argued, was on the money.
This means we have to watch Donald Trump and what his trade war might mean for world growth and our growth. Also, if Donald’s trade battles lead to a stock market crash, that could ruin Scott’s remote re-election plans and at the same time upset our increasingly rosy-looking apple cart!
Bill Shorten could inherit a damn good economy on the mend and if Donald doesn’t rain disaster on the world economy and global stock markets, it could be a great election to win.
Certainly, the one trump card Scott Morrison will have to play at election time will be the economic and Budget story, but given how media outlets rate these good news stories in their headlines, a lot of Aussie voters won’t either give or toss or worst still, might not even be told about it.
Of course, Government politicians will talk but who listens to pollies on the hustings?
EDITORIAL BY PETER SWITZER – SWITZER DAILY
|The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with it now being two years since the last cash rate move. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.|
With a combination of factors including very low wages growth, high underemployment, flattening property prices and home lending and modest inflation, many experts are predicting it may be some time before we see the next rate movement and it may actually be downwards.
Another emerging factor is lenders making ‘out of cycle’ rate increases. The term ‘out of cycle’ refers to lenders increasing rates independently of the Reserve Bank. Gone are the days when lenders relied almost entirely on customer deposits and domestic short-term borrowing, pegged against official RBA rates to fund loans. Most lenders now have much more complicated funding structures including accessing offshore wholesale and securitisation markets. Regulatory changes designed to strengthen the banking system have also seen the amount of capital lenders are required to hold increase, which means they have had to look to more expensive sources than their own balance sheets to fund loans.
We have seen around 20 lenders increase rates out of cycle recently so it is important to review your lending options regularly to ensure they remain the most suitable for your situation. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.
If you’d like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch.
PH: 1300 666 186
The media’s obsessive love affair with telling horrific housing stories continues this morning and this time I blame economists, who had the temerity to tell the truth about the fastest fall in house prices in six and a half years! Yep, a fact like that deserves an exclamation point but in the pursuit of honesty and providing my fellow Australians with the facts of the matter, you need to look at what that drop really means.
Until the story was nearly two-thirds completed, the newspaper story I read left out what I’m going to tell you now. Maybe if the writer did what I’m going to do now, that is, reveal the facts, then maybe he wouldn’t have created the scare factor and then got a top headline for his yarn.
Take these facts in to hose down your property worries:
- The actual fastest drop in house prices in six and a half years was, wait for it, 0.6%!
- This demonstrates how many endless months we’ve had house prices rises for!
- The predicted fall in house prices in Sydney and Melbourne is 10% over two years, which would be 5% per annum, which hardly looks like Nightmare on Elm Street.
- House prices in Sydney and Melbourne have risen by varying amounts over the past five years. The story today says 45% but others have said 75%. However, if I found a $1 million home too expensive at auction last year, if the price falls by 5% to $950,000, I reckon I’d still find this price pretty challenging.
I could go on, but I think I’ve put these housing horrors into perspective. What worries me is that headlines like this, on top of the plans Labor has to nuke the property market for investors next year if it wins the federal election, could actually turn this property correction into something more scary.
In the financial markets, if a market falls 10%, we call it a correction, meaning price rises might have been a little too silly and needed to be corrected like a badly behaving child. A 20% slump is a crash and that’s what a lot of media headlines have been predicting for about two to three years, so the better headline for newspapers should be: “We exaggerated the property fall out! Sorry.”
I’m not expecting such a headline, however, they might not have to apologise if they keep putting out horror housing headlines and spooking consumers, who are now starting to look much more confident. And if Bill Shorten, as PM, goes with his negative gearing and capital gains changes that could end up being like Kevin Rudd’s mining tax (which was unwisely delivered as the mining boom was ending), then it could really hurt the economy and turn a 10% price fall over two years into a 20% (or more) collapse.
I don’t mind the media telling an accurate story that could have negative economic implications, especially by hurting confidence. But it’s when they exaggerate negative developments and implications of a 0.6% price fall, that really gets me cranky.
And maybe I’d be less reactionary if my media mates occasionally took positive economic stories and looked at the promising future ahead because of these optimism-creating developments.
Only this week, there was a good news economic story and that old journalistic chestnut was pulled out of the oven by journalists who were quoting an economist who had got his forecast on the subject wrong — “but it’s not expected to last.”
This is why I do what I do. When I turn negative, that’s when it will be time for you to panic. I hope that will be some years off.
For those who want to see the annual house price changes, see below. What you’ll notice is that half of the nation’s capitals are still seeing house price rises and even Melbourne has only had a minus 0.5% movement in prices over the year. Also, real estate experts think Perth’s on the comeback trail and will probably see price rises this year, and so might Darwin.
By Peter Switzer – Switzer Daily 3/8/2018
More banks have increased interest rates as the pressure of increased funding costs continues to mount.
Both Bendigo Bank and Teachers Mutual Bank Limited (TMBL) announced new rates yesterday. TMBL includes three banks: Teachers Mutual Bank, UniBank and Firefighters Mutual Bank.
While Bendigo has increased its variable interest rates for home owners, TMBL announced changes to its fixed rates for new customers to the group’s brands.
Bendigo has confirmed the changes are to absorb increasing funding costs.
Managing Director Marnie Baker said the changes reflect the increased cost of funding.
She said, “When setting interest rates our bank needs to consider many factors and carefully take into account the needs of our stakeholders including customers, shareholders, staff, partners and the broader community.
“Funding costs have been steadily increasing this year, and we’ve absorbed this cost impact to date. Today’s adjustment to the variable interest rates will assist in balancing this funding cost increase.
“We carefully balance the interests of our mortgage customers, those who earn money through deposits and those who invest in our Bank. We must ensure our pricing remains market competitive, provides the appropriate platform for sustainable growth and supports the hundreds of communities in which we operate.”
TMBL rates have increased on selected fixed rate home loan products.
The rates have been increased by 8, 9, and 9 basis points for 1, 2, and 3 year fixed rates respectively.
TMBL chief executive officer, Steve James, said, “These rate changes are the first increase in 12 months for fixed rates, and follow a decrease to our fixed rates last November.
“Any new members who join after these rate changes will still have access to a competitive market rate and great products, such as our 100% mortgage offset facility.”
Other banks to increase rates recently include AusWide, IMB, AMP, ING and Bank of Queensland.
Rate changes – Bendigo
Variable interest rates across home loans and lines of credit will increase for owner occupiers and investors as follows:
– Owner occupier principal and interest loans will increase by 0.10% pa;
– Owner occupier interest only loans will increase by 0.16% pa;
– Investment loans will increase by 0.10% pa;
– Lines of credit will increase by 0.10% pa.
The interest rate changes announced are effective Monday 23 July.
Customers on a residential variable interest rate with a $250,000 loan will see their repayments increase by $15.71 a month (principal and interest home loan over 30 years).
Rate changes – TMBL
The changes will affect owner-occupier, principal & interest, 1, 2 and 3 year fixed rate home loans.
The new rates are as follows:
– 1 Year Fixed rate OO P&I – 3.87% p.a.
– 2 Year Fixed rate OO P&I – 3.78% p.a.
– 3 Year Fixed rate OO P&I – 3.88% p.a.
The new rates are effective from Monday, 16 July 2018.
17 Jul 2018 – AUSTRALIAN BROKER
CALL LYNNE OR ARON NOW ON 1300 666 186 TO ENSURE YOU GET THE RIGHT RATE!
A number of lenders have announced increases to their variable mortgage rates over the past month, citing funding cost pressure as the reason for the changes.
According to the latest Mozo Banking Roundup, Auswide, Citibank, ING, Bank of Queensland, AMP Bank, Beyond Bank, QBank, Heritage and IMB put up rates last month.
Auswide Bank increased its owner-occupier variable rates by five basis points and its investor variable rates by 13 basis points.
Citibank and ING have increased variable rates by 10 bps. Beyond Bank and QBank added six bps to their variable rates. Heritage Bank raised rates on all loan types by five bps.
Bank of Queensland put up the rate on owner-occupier principal and interest loans by nine bps and put up the rate on all other loans by 15 bps.
AMP Bank has increased owner-occupier interest-only rates for new customers by 40 bps.
IMB took the unusual step of withdrawing its package loans from the market. It also added eight bps to owner-occupier and investor variable rates.
These changes follow mortgage rate increases by Suncorp, ME and MyState since March.
Rates on fixed interest loans also rose, with Westpac and its subsidiaries increasing some rates by up to 15 bps.
The lowest variable rate loan in the market is 3.39 per cent, which BIDeloan is offering on its SMARTeloan product.
The rate leaders in the fixed rate segment are Greater Bank, which is offering 3.49 per cent for one year; IMB Bank, offering 3.65 per cent for two years; Community First and easy Street – 3.69 per cent for three years; Freedom Lend and ING, with 3.92 per cent for four years; and ING, offering 3.98 per cent for five years.
Among the big banks, ANZ’s best package variable rate is 4.3 per cent, while it is offering 3.99 per cent on a three-year fixed rate package.
Commonwealth Bank is offering 4.52 per cent for a package variable rate mortgage and 3.99 per cent for three years fixed.
National Australia bank is offering 4.34 per cent for a package variable rate and 3.94 per cent for three years.
Westpac is offering 4.34 per cent for a package variable rate and 3.99 per cent for three years.
Rate City has estimated that as many as 362,800 home loan customers will have to make higher repayments from this month.
It says most of the increases have been in the variable rate segment, raising the prospect of a switch to fixed rates.
NB: Please call Aron or Lynne now on 1300 666 186 and lock your Home Loan interest rate in to avoid the increases.
|The Reserve Bank of Australia decided to once again leave the official cash rate unchanged at 1.5% with the last rate move back in August 2016. I’d like to share today’s rate announcement and the thoughts on why the Reserve Bank of Australia has made this decision.|
The economy appears delicately poised with slow wages growth, low inflation, a slowing housing market, tighter lending policies and high levels of household debt now leading some economists to believe that the next rate change could be down. Contrasting this, we have seen some lenders increase rates out of cycle, citing an increased cost of funds as the reason. Until the RBA sees a strong economic lead one way or the other it is highly likely to continue to leave rates as they are.
Rates remain constant now but it is important that you are prepared if the next rate announcement is an increase. There may be different rates available from our wide panel of lenders and I’m always available to ensure you have the right financial solution for your current and future circumstances.
If you would like to have a chat about what today’s news means for you and your finances, please don’t hesitate to get in touch with Lynne or Aron now on 1300 666 186