Wednesday, November 30, 2011

House Prices in Perth Continue Fall

The blood letting in the Perth real estate market doesn't seem to have ended, with the house prices falling anohter 0.8% in October 2011, bringing the year to date drop to 4.4% which equates to a drop of around $20,000 on an average Perth home according to RP Data. With a drop in interest rates, and possibly another one around the corner next week, it will be interesting to see how Perth prices hold up.

Friday, November 4, 2011

These Banks Dropped their Interest Rates on Tuesday

Now that the Reserve Bank has dropped the official cash rate for Australia, the question that most homeowners want to know is, "Did my bank follow?"

  • Ubank has made no announcement. Currently their rate is at 6.79%. 
  • Westpac has dropped their standard variable rate by 0.25% to 7.61%
  • Commonwealth Bank has also dropped 0.25% to 7.66% (or 6.86% depending on the product)
  • Bank of Queensland & Members Equity Bank have dropped 0.25%
UPDATE 3/11/11
  • ANZ has dropped their standard variable rate by 0.25% to 7.55%
  • NAB has dropped their standard variable rate by 0.20% to 7.47%
  • UBank still haven't moved on their home loan rates but cut their savings accounts by 0.40% much to everyone's outrage on Twitter and Facebook.
UPDATE 4/11/11
  • Ubank has dropped their UHomeLoan standard variable rate by 0.20% to 6.59% in line with the parent bank NAB. They are also offering new sign ups a loyalty bonus of 0.20% off their rate taking the rate to 6.39%!
UPDATE 8/12/11

RBA Announced another rate cut in December. Check out who dropped their interest rates in the most recent post here.

Tuesday, November 1, 2011

After 11 straight months RBA cuts cash rate to 4.50%

It has been exactly one year since the Reserve Bank of Australia dropped interest rates to 4.75%. Today, breaking eleven straight months of no interest rate movement, the RBA brought down the cash rate to 4.50%. Here is what the RBA released earlier:

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 4.5 per cent, effective 2 November 2011.
Recent information is consistent with a moderation in the pace of global growth, though fears of a major downturn have not been borne out so far. The pace of US economic expansion picked up in the September quarter, but is still only moderate and leaves considerable spare capacity. China's growth has slowed, as policymakers there had intended. Output in Asia has now recovered from the effects of the Japanese earthquake, and domestic demand in the region is generally expanding. Trade performance, however, is starting to see some effects of a significant slowing in economic activity in Europe, where the prospects are for economic weakness to continue. Commodity prices, while still at high levels, have generally declined over recent months.
Financial markets have recovered somewhat from the turmoil of recent months, helped by stronger economic data in the United States and by signs that European governments are making progress in their efforts to deal with the sovereign debt and banking problems. Equity markets have gained ground and the Australian dollar has risen significantly as risk aversion has lessened. But it is likely to be some time yet before concerns about the European situation can definitively be laid to rest and the effects of the recent turmoil on confidence may result in a period of precautionary behaviour by firms and households.
Information about the Australian economy suggests moderate growth overall. The terms of trade have now peaked and will decline somewhat in the near term, but they remain very high. In response, investment in the resources sector is picking up very strongly, with much more to come. Some related service sectors are enjoying better-than-average conditions. In other sectors, cautious behaviour by households and the high exchange rate have had a noticeable dampening effect. The unemployment rate has increased a little over recent months, though it remains close to 5 per cent.
After underlying inflation started to pick up in the first half of the year, recent information suggests the subdued demand conditions and the high exchange rate have contained inflation more recently, notwithstanding continuing sizeable increases in utilities charges. CPI inflation on a year-ended basis remains above the target, due to the effects of weather events last summer, but is now starting to decline as production of key crops recovers. Moreover, with labour market conditions now softer, the likelihood of a significant acceleration in labour costs outside the resources and related sectors in the near term has lessened. Accordingly, the Bank's current judgement is that inflation is likely to be consistent with the 2–3 per cent target in 2012 and 2013, abstracting from the impact of the carbon pricing scheme.
Financial conditions have been easing somewhat recently, with market interest rates declining a little and competition to lend increasing.  But overall conditions have remained tighter than normal, with borrowing rates still a little higher than average, credit growth subdued and asset prices lower than earlier in the year. The exchange rate has been very variable over the past few months, but on the whole has remained at historically high levels.
Over the past year, the Board has maintained a mildly restrictive stance of monetary policy, in view of its concerns about inflation. With overall growth moderate, inflation now likely to be close to target and confidence subdued outside the resources sector, the Board concluded that a more neutral stance of monetary policy would now be consistent with achieving sustainable growth and 2–3 per cent inflation over time.

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