Finance News

It looks like we're all getting a pay-rise, but it's not going into our bank accounts

Posted on Thursday, April 22, 2021
I’ve got good news, and bad news.   The good news is we’re all about to get a superannuation increase!   The bad news is that despite it being only weeks since JobKeeper ended, Australian businesses are about to be slugged with the cost increase. This super increase was supposed to happen on 1 July 2020 but was pushed back due to COVID. However, with just a short time before 1 July you can assume it is going to happen this year, so get ready for it. The contribution rate to eligible employees is set to increase from 9.5%, to 10% this year, and then to 10.5% from 1 July next year. That may not seem like much, but for small businesses that have not recovered to pre-COVID levels (which is most), it is. Here's the X factor: industry super funds profit from more funds under management, so this 0.5% increase is enormous to them. As a result, their TV and radio advertising has shifted significantly in recent weeks, with a lady on an escalator ... Read the rest of entry »

House prices are up, the share market is up, so why isn't inflation?

Posted on Wednesday, April 7, 2021
In the post-COVID economy, the number one question is around what interest rates are going to do. More importantly, when will they increase?   As we know, the Reserve Bank is in charge of setting the official cash interest rate. The RBA met yesterday and unsurprisingly, has kept rates on hold. But they’ve gone further, stating:   “The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range.”   As a reference point, inflation in December was 0.9%, so we can expect interest rates to stay at 0.1% for a while yet, probably until 2024 at the earliest.   The interesting thing though is that the economy looks to be booming, and you’d be forgiven for thinking that everything is on the ups in a big way.   Housing prices have gone mad, petrol is through the roof, and iron ore is booming. So if none of those are driving inflation, what is?   I’ve been hosting Money News on Nine’s radi ... Read the rest of entry »

What does the future hold for interest rates?

Posted on Wednesday, March 24, 2021
“What’s going on with interest rates?”   It’s one of the most common questions I get, and the answer needs to take two factors into consideration: 1.     What’s the RBA planning to do? Answer: nothing, for a least a few years. 2.     What will the banks do? Answer: they’ll look to shift fixed rates sooner rather than later. Remember, a low cash rate (set by the RBA) means home loan rates will remain low, but right now the bond market is arguing with all central banks that they globally can’t keep interest rates around current low levels. The RBA says wages will need to take off before they’ll look to raise interest rates. And to keep interest rates in the bond market down, it has been buying three-year bonds, which simultaneously drives their price up and keeps interest rates down.   Fortunately, you don’t need to understand how the bond market engages with central banks, but the bottom li ... Read the rest of entry »

JobKeeper's about to end - buckle up for a bumpy ride!

Posted on Thursday, March 18, 2021
D-day is just 11 days away. That’s when JobKeeper ends and those relying on it to keep them afloat, will be left to sink or swim.   We’ve known for a long time it’s coming but it is going to be a huge shock to a lot of people who are not prepared, and a lot of businesses that are not financially able to keep people on the books without support.   The government has had plenty of time to implement more targeted support but for a lot of people it simply won’t be enough.   The mood isn’t so dire though. Most people feel buoyed by the increasing value of real estate. Only yesterday on Channel 9 we were told that Australia's property market has recorded its strongest rise in almost five years, with the average price of a residential home now more than $720,000. New figures released yesterday from the ABS found residential property prices rose in all capital cities in the December quarter of 2020.   This is simple outcome of increased demand and li ... Read the rest of entry »

Single? My top 5 tips for securing a home loan

Posted on Wednesday, March 10, 2021
It’s a common perception that in order to convince a bank to give you a mortgage, you must have access to two incomes in order to service the loan.   Interestingly though, new statistics from the ABS suggest that’s not the case, with 25% of houses sold in Australia, sold to single people.   In addition, for several years the stats have shown that single women buy houses at double the rate of single men. Young women find that in some cases buying is as affordable as renting, while older women may seek a home solo following a divorce or the death of a partner.   Little over 30 years ago, a single woman needed a male guarantor to secure a home loan. Fortunately that’s changed, but the process for any single person can still be a challenge.   Here are my top five tips for winning over the bank:   1. Have a savings history – Showing that you can manage your expenses and save money i ... Read the rest of entry »
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