How low can mortgage rates go?

Commonwealth Bank explains investor changes
Australia’s largest mortgage lender, the Commonwealth Bank has explained changes to investor home loan rates and rules following media reports it is loosening lending criteria for investors. A CBA spokesperson said the bank has made changes to the interest rate and minimum balance on the CBA Extra Home Loan to bring it in line with similar home loan products in the market.
The changes have sparked claims from rivals that CBA is triggering a piece war between property investment lenders.

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How low can mortgage rates go?
Australian home loan borrowers have never had it this good. Lenders are now offering five-year fixed-rate deals at less than four per cent. But will rates come down even further?
AMP Capital chief economist Dr Shane Oliver expects another 0.25 per cent cut to official interest rates in August, 2016 and another rate cut in November.
Dr Oliver said: “I wouldn’t be surprised if we see someone come out there with a rate with a two in front of it.”

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What are Centrelink deeming rates?
Centrelink apply deeming rates to investments held, particularly by aged pensioners. That means Centrelink deems that you are earning a certain rate of return on your savings and investments to assess your income. Deeming rates apply to financial assets such as savings accounts and term deposits.
Currently the deeming rate for singles is 1.75 per cent a year for the first $48,600 invested and 3.25 per cent above that. For couples the 3.25 per cent rate kicks in at $80,600 of combined assets.

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Credit card fees are going up
Average credit card annual fees went up last year, along with many other fees levied by banks and other financial institutions.
The Reserve Bank survey of bank fees shows that, on average, fees grew by 3.5 percent during the 2015 financial year to around $12.5 billion in total, the highest rate of growth in fee income in three years.
Credit card fee increases averaged 6.6 per cent and annual fees on non-reward cards rose 4.7 per cent.

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Saving is the new spending
Richard Denniss, chief economist at The Australia Institute, co-authored the book: Affluenza: When Too Much is Never Enough. Mr Denniss said Australians have a love affair with overconsumption and spending for spending’s sake.
Now a growing number of people are trying to save as much of their income as possible and spend as little as possible. Rachel Botsman co-authored What’s Mine is Yours: How Collaborative Consumption is Changing the Way We Live and recommends savers look at social networks to swap, trade, rent and barter for goods.
Check out info choice’s savings account listings for a great product that suits you and your style of saving.

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How can I beat the deeming rates?
Pensioners and other Centrelink beneficiaries whose savings and investments are subject to Centrelink’s deeming rates need to shop around and find savings accounts and term deposits that deliver a better return that the deeming rate.
You can usually get better savings rates by looking beyond the Big Four banks. There are providers offering term deposits around and above the current deeming rate (3.25 per cent) and there are savings accounts now in the market with bonus rates above this mark as well. Shop around and compare products today.

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More borrowers hit trouble with their car loan
More borrowers are apparently getting into trouble repaying their car loan according to data released by Fitch Ratings’ latest Dinkum ABS Index. More than 0.5 per cent of the loans studied by Fitch are now delinquent.
A record high of 1.46 per cent of borrowers are more than 30 days behind in repayments on their car loan.

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Borrowers are increasingly looking past the big 4
Home loan growth among the mutual banks is more than double that of the big four Australian banks.
Customer Owned Banking Association CEO Mark Degotardi said borrowers are well aware of the benefits of mutual banks.
“We offer competition and choice, diversity and a genuine alternative.” said Mr Degotardi.

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Do rate cuts apply to credit cards?
Interest rates on credit cards are high compared with mortgage rates and the Reserve Bank’s official cash rate. Credit cards are unsecured loans so come with a higher risk to the lender.
However there are some very low rate credit cards in the market now. There is a good selection of credit cards with rates under 10 per cent. If you are paying interest on a credit card debt, look for a low rate card or a zero interest balance transfer deal.

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The new new thing: Extreme savers stash thousands
Jasmine and Aaron Boothey and their two kids are extreme savers. They save $60,000 per year, nearly two thirds of their after-tax income. The Bootheys are part of a growing tribe of extreme budgeters. Usually the goal is financial independence and early retirement. Canadian blogger Mr Money Mustache retired in his 30s by spending a small portion of his income and saving the rest.

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