WA First Home Owners Targeted by State Budget

In today's state budget, Troy Buswell has announced that the WA government will drop the first home owner grant for existing homes from $7000 to $3000 which will take effect in September. At the same time, as an incentive to build rather than buy a house, the first home buyer grant will be increased by $3000 to $10,000.

Many commentators including the Barefoot Investor Scott Pape have been calling for the scrapping of the first home owner grant for quite a while now because it artificially inflates the value of homes. It seems to come in the right time as the RBA continues to talk about further rate cuts, following the rate cut on Tuesday that brought the Australian cash rate to it's lowest ever point.

Also in the budget was an increase in land tax by 12.5%.

NAB's Online Subsidiary UBank Offering 4.62% Variable

If you are looking for a good variable rate for refinancing, NAB's UBank has continued to be the market leader with their variable rate now down to 4.62% following the 0.25% cut on Tuesday and a loyalty rate of 0.20% for the life of the loan. They are also offering a $500 gift card on top of that, so if you haven't refinanced, there's some serious numbers to think about.

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Interest Rates Fall Again

The RBA has cut interest rates yet again to prepare the Australian economy for an inevitable slow down. Following the decision from the RBA, the NAB is the first to committing to a 0.25% rate cut on their variable rates, with Bank of Queensland also matching the rate cut. Commonwealth Bank, ANZ, Bankwest and UBank has also matched the 0.25% rate cut whilst Westpac has added a little extra, cutting rates by 0.28%. Here is what the RBA had to say: 

At its meeting today, the Board decided to lower the cash rate by 25 basis points to 2.5 per cent, effective 7 August 2013.

Recent information is consistent with global growth running a bit below average this year, with reasonable prospects of a pick-up next year. Commodity prices have declined but, overall, remain at high levels by historical standards. Inflation has moderated over recent months in a number of countries.

Globally, financial conditions remain very accommodative, though the recent reassessment by markets of the outlook for US monetary policy has seen a noticeable rise in sovereign bond yields, from exceptionally low levels. Volatility in financial markets has increased and has affected a number of emerging market economies in particular.

In Australia, the economy has been growing a bit below trend over the past year. This is expected to continue in the near term as the economy adjusts to lower levels of mining investment. The unemployment rate has edged higher. Recent data confirm that inflation has been consistent with the medium-term target. With growth in labour costs moderating, this is expected to remain the case over the next one to two years, even with the effects of the recent depreciation of the exchange rate.

The easing in monetary policy over the past 18 months has supported interest-sensitive spending and asset values, and further effects can be expected over time. The pace of borrowing has remained relatively subdued, though recently there are signs of increased demand for finance by households.

The Australian dollar has depreciated by around 15 per cent since early April, although it remains at a high level. It is possible that the exchange rate will depreciate further over time, which would help to foster a rebalancing of growth in the economy.

The Board has previously noted that the inflation outlook could provide some scope to ease policy further, should that be required to support demand. At today's meeting, and taking account of recent information on prices and activity, the Board judged that a further decline in the cash rate was appropriate. The Board will continue to assess the outlook and adjust policy as needed to foster sustainable growth in demand and inflation outcomes consistent with the inflation target over time.