How to Earn 4.02% While Shopping for a House

Statistics in Australia suggest that there is an increasing number of first home buyers who refuse to be drawn into the Australian real estate market because they are convinced that the house prices are not going up in a hurry. Consequently, many are sitting on savings of around $150,000 as they take their time finding a home. So what should one do with the savings?

Most good online saving accounts give you just under 3% interest. Bankwest Telenet Saver account is offering 2.50% at the time of this publication and UBank's Usaver account recently dropped their intereest rate to 2.96%. Most people looking for a home won't want to lock their money in a term saver account and even if you do, banks offer around 3.50%.

I found out recently that UBank offers 4.02% if you open a UBank Saver Ultra Account. This account gives you an everyday transaction account which is a first for UBank. It comes with a debit card with a sweep facility which moves money OUT of that transaction account when your balance goes over (minimum $1000) and moves money IN to the transaction account when your balance falls under a certain amount (eg $100).

This means that you can earn more interest on your savings without having to log in and move money every month/year. So why bother? Doing this could increase your interest earnings by 36% (comparing UBank USaver's 2.96% with USaver Ultra's 4.02%). The only condition is that you deposit $200 or more into the USaver account each month. Anyway, over to you. If you have a better offer you know of, please leave a comment.

Interest Rates Held Steady, May drop in 2015

Statement by Glenn Stevens, Governor: Monetary Policy Decision

At its meeting today, the Board decided to leave the cash rate unchanged at 2.5 per cent.

Growth in the global economy is continuing at a moderate pace. China's growth has generally been in line with policymakers' objectives. While weakening property markets present a challenge in the near term, economic policies have been responding in a way that should support growth. The US economy continues to strengthen, but the euro area and Japan have both seen weakness recently. Some key commodity prices have declined significantly in recent months, reflecting somewhat softer demand and, more importantly, increased supply.

Global financial conditions remain very accommodative and long-term interest rates and risk spreads remain very low. Differences in monetary policies across the large jurisdictions are affecting markets, particularly exchange rates.

In Australia, most data are consistent with moderate growth in the economy. Resources sector investment spending is starting to decline significantly, while some other areas of private demand are seeing expansion, at varying rates. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend for the next several quarters.

Inflation is running between 2 and 3 per cent, as expected, with recent data confirming subdued rises in labour costs. Although some forward indicators of employment have been firming this year, the unemployment rate has edged higher. The labour market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently. Hence, growth in wages is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over the past year or so as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets. Dwelling prices have continued to rise.

The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar. But the Australian dollar remains above most estimates of its fundamental value, particularly given the significant declines in key commodity prices in recent months. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.

Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2–3 per cent target over the next two years.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.

WA Second Most Expensive, Slowing House Prices

Over the last three months, Perth has gone slightly backwards in the price of homes with a -0.1% growth. This has contributed to a year on year price increase of 3.7%. The national average increase in the last year was 9.1% with Sydney steaming ahead in the last quarter with 2.7% growth and a whopping 14.7% over the last year.

Perth's average house price still sits at second in the nation with an average house price of $588,700, second only to Sydney's $681,900.

Region	Quarterly	Year-on-year	Avg. price $ (whole of state)
Sydney	2.7%	14.8%	$              $681,900
Melbourne	1.0%	6.9%	$              $564,800
Brisbane	1.0%	6.7%	$              $457,600
Adelaide	1.0%	5.6%	$              $404,600
Perth	-0.1%	3.7%	$              $588,700
Hobart	1.0%	4.3%	$              $312,000
Darwin	0.3%	3.4%	$              $521,700
Canberra	0.3%	2.4%	$              $571,000
National avg.	1.5%	9.1%	$              $563,100