Yes, it’s RBA Board meeting day again and as widely expected, they cut the official cash rate – but by 0.50% which was much more than most of expected.  The official cash rate is now 3.75%.

 We now wait to see whether the Banks and other lenders will pass this on in full.

 So give us a call on 1800 LOANS1 if you need to further discuss.

is a post from: South Coast Business & Financial Solutions Pty Ltd

Related posts:

1. 2011 – The Year in Review
2. RBA Cuts Interest Rates – November 1, 2011

Would you rather have your money in a balanced super fund or in property.  Below is an interesting opinion from Angus Raine.

 Whilst you could possibly argue that Mr Raine would naturally support property investment (to see his group sell more real estate), I would have to agree with his sentiments and the numbers provided.  And, given that most of us already have a significant exposure to “shares” through our superannuation, then a good “balanced” approach to investment should include investment property as well.

 Contact our office on 1800 LOANS 1 if you would like to discuss further.

Superannuation VS Property is a post from: South Coast Business & Financial Solutions Pty Ltd

No related posts.

1. Support the Christmas Hamper Drive

Hi again everyone.  I am writing this prior to the actual interest rate announcement today, so the points made may not necessarily reflect the action taken by the RBA.  We can only hope that “common sense” prevails and the Central Bank does cut the official cash rate.

 Woeful building numbers have the housing industry pleading for a rate cut when the RBA meets today.

 ABS figures have revealed a 3.1% decline for detached house approvals for February, along with a 16.6% drop for other dwellings.  The decline was spurred by a massive 41.2% plummet in NSW building approvals.  HIA chief economist Harley Dale said approvals had fallen to their lowest level in nearly three years.

 “Today’s building approvals outcome is, quite frankly, woeful, even allowing for NSW virtually driving the entire fall.  It is difficult to be positive about the short term prospects for new housing when a 7.8% decline in building approvals in February 2012 takes them to their lowest level since March 2009.  Furthermore, the level of approvals over the three months to February implies annual housing starts hitting a level lower than the GFC trough of 2008/09,” Dale said.

 Master Builders chief economist Peter Jones claimed the drop would further exacerbate Australia’s housing shortage.  “The current level of dwelling approvals is running at 130,000 annualised, way below what’s needed to even provide for population growth let alone to begin to eat into the housing shortage estimated by the Government’s own Housing Supply Council at more than 200,000 dwellings,” Jones said.

 Both Jones and Dale have called on the Reserve Bank to cut rates when it meets today to provide stimulus to the flagging industry.

 (from: The Adviser)

 I also read today a report from Westpac chief economist, Bill Evans, where he clearly articulates several reasons why the RBA should cut the official cash rate “sooner rather than later”.  In particular, he notes that the Australian labour market showed zero jobs growth in 2011 – the weakest year for jobs since 1992, and with a loss of 15,400 jobs in February 2012 as well.  Despite this, the rise in the unemployment rate was contained to just 0.3ppts (from 4.9% to 5.2%) due to a marked fall in the participation rate.  Had the participation rate held steady since September, the unemployment rate would have increased to 5.8%.

 He also noted that there was a sharp fall of 5% in the Consumer Sentiment Index for March, largely in response to consumers’ concerns around the economy, employment and interest rates.  The Index has now fallen to 96.1 which is below the level in October which preceded the two rate cuts in November and December 2011.  Furthermore, inflation (as measured by the CPI) is comfortably within the RBA’s preferred “range” of 2% to 3% whilst GDP growth was only 2.3% in 2011, the fourth consecutive year when GDP had printed well below the accepted trend growth rate of 3 ¼ %.

 It was also interesting to note that the Reserve Bank Governor, Glenn Stevens, said in a March 19 speech in Hong Kong that “Overall recent economic performance in Australia is not too bad… but neither is it so good that it cannot be improved”.   Let’s hope he errs on the right side, and cuts interest rates later today.  You will be receiving a further email “shortly” to confirm what actually happened.

Home Loan Interest Rates 3rd April is a post from: South Coast Business & Financial Solutions Pty Ltd

Related posts:

1. RBA Cuts Interest Rates – November 1, 2011
2. Interest Rate Hikes Cost CBA CEO

Hi again everyone. With 2011 almost over, it is now probably a good time to look at what has happened throughout the year, run a “snap-shop” of where we are now and, most importantly, look forward to what might happen in the markets in 2012. I will try to keep it brief.

So, What Has Happened in 2011 and What is Projected for 2012

Variable interest rates remained flat for the first 10 months, then we saw two consecutive 0.25% cuts to the official cash rate by the RBA in November and December. Most economists are now predicting a further 2 or 3 rate cuts in 2012 which should bring the average “discounted” variable rate for new borrowings below 6.0% (assuming the Banks pass on the full rate cuts).

Fixed interest rates, which are driven by the Money Market, dropped below 6.0% for the first time in many years. We currently have “an inverse yield curve” where longer term fixed rates are lower than shorter term and variable rates (which is very rare) and this is basically because the Money Markets are predicting further rate cuts in the future. At year end we saw many 2nd tier Banks and other lenders with fixed rates below 6.0%. One lender, Citibank, were offering 3 year fixed rate loans at 5.75% in December. We are now waiting for the “majors” to drop their 3 year fixed rates below 6.0% as well.

Australia’s housing shortfall (i.e. the gap between demand and supply as per the National Housing Supply Council’s report) increased by 28,200 to 186,800 dwellings nationally. NSW and Queensland had the largest shortfalls of 73,700 and 61,900 respectively. Based on building trends and household growth, the report also predicts that the gap could grow to more than 640,000 dwellings in the next 20 years.

The above housing shortfall has continued to translate into increasing rents (particularly in NSW) whilst vacancy rates have remained at almost historically low levels. Some areas, like the NSW South Coast, have seen 10% compound rental growth rates over the past few years, and rents are expected to continue to grow in 2012.

The NSW State Government removed the stamp duty exemption for first home buyers of established properties below $600,000 in NSW from 1 January 2012. The exemptions will now only apply to “new” homes or vacant land and this will effectively add tens of thousands of additional dollars to the cost of established homes for first home buyers in NSW.

….and within the above framework, Australia’s big four Banks reported half year profits of almost $12 billion – smashing all previous profit records. And this was after being forced to reduce their fee based income, yet they continue to complain about their higher funding costs.

So now the big question is - “Will the Banks pass on all of the expected rate cuts in 2012?” Only time will tell. Please contact me at your leisure should you wish to discuss this or any of the above points.

I hope that you have all had an extremely enjoyable Christmas (and not eaten and drank too much like me) and I wish you happiness and success in 2012

Cheers for now from “your trusted finance professional”,

Tony Cottam JP; SA Fin; Dip FS
Managing Director
South Coast Business & Financial Solutions Pty Ltd
“Your Everylender Solution”
Phone : 1800 422657 (Fax 02 4454 3322) Mobile 0411 144502
www.everylender.com.au

Tony Cottam is a Credit Representative (Number : 398916) of BLSSA Pty Ltd
(Australian Credit Licence Number : 391237)

2011 – The Year in Review is a post from: South Coast Business & Financial Solutions Pty Ltd

Related posts:

1. RBA Cuts Interest Rates – November 1, 2011
2. Interest Rate Hikes Cost CBA CEO

TONY Cottam from South Coast Business and Financial Solutions is encouraging local residents to swing by the South Pacific Open Tennis Tournament when it is held in Ulladulla next month. South Coast Business and Financial Solutions has been a sponsor of the three-day event since it started three years ago.

Mr Cottam is looking forward to its return on November 4, 5 and 6 and would like to see as many tennis fans as possible soak up some of the action. The event is set to attract some of the nation’s top tennis players, all of them chasing national ranking points.

Mr Cottam is well known for his love of sport but said he was a “fan of the local community more than anything”. He said the South Pacific Open Tennis Tournament was a great event and one that he was extremely happy to be involved with.

This year South Coast Business and Financial Solutions will be sponsoring the singles events and the ‘Dash for Cash’ novelty event while the BIG4 Bungalow Park at Burrill Lake will be sponsoring the doubles and mixed events.

The team from South Coast Business and Financial Solutions will be enjoying all the action from a corporate box and are inviting their clients to join them for a drink.

Mr Cottam said he was particularly looking forward to the ‘Dash for Cash’ at 7pm on the Saturday night of the tournament. It is a fast-paced and fun event with $1000 up for grabs and is sure to generate plenty of laughs. As part of the event, players will compete for 500 special $2 notes that will be exchanged for cash. Competitors must win a point as a receiver then dash to the sideline to collect their $2 prizemoney before racing back into position in preparation for the next serve from their opponent. If they lose the point they go to the end of the queue waiting to serve and the server moves to receiver.

Mr Cottam said Ulladulla was a great venue for the tournament and boasted facilities that people would be lucky to find in some of the larger metropolitan areas.

story courtesy of Milton Ulladulla Times

South Pacific Tennis Open is on Again is a post from: South Coast Business & Financial Solutions Pty Ltd

No related posts.

The staff of South Coast Business & Financial Solutions are proud to be again holding a Christmas Hamper Drive.

Last year was our first ever drive and we were thrilled at how successful it was.
Seven lucky families in need received a hamper that included food items and at least one gift to every member of their family.

Please support us again this year.

Donations can be left at our office located at:
9/15 Boree St, Ulladulla

Support the Christmas Hamper Drive is a post from: South Coast Business & Financial Solutions Pty Ltd

No related posts.

Hi again everyone.
Well, as widely predicted (and expected) the RBA cut the official cash rate by 0.25% following their board meeting earlier today.

For the second consecutive year, the Reserve Bank of Australia has managed to upstage the race that stops a nation – The Melbourne Cup.

At its November Board meeting this afternoon, the Reserve Bank decided to cut 25 basis points (0.25%) from the official cash rate, taking the new rate to just 4.5 per cent. The announcement failed to shock industry pundits, with many economists predicting a November rate cut.

Last week’s benign inflationary growth provided the RBA with the right impetus to cut rates, according to RP Data’s national research director Tim Lawless. “The rate cut should not come as a surprise from a housing market perspective, considering the soft market conditions that have been evident since June last year have created no inflationary pressures,” he said.

“The improved debt servicing position will be a welcome improvement to anyone with a mortgage, however, the primary benefit from the rate cut is likely to be seen in an improvement in consumer sentiment which should lead to an uplift in housing transaction volumes which are currently tracking about 13 per cent below the five year average nationally.”

(from: The Adviser)

It is interesting to note that this is the first movement in the official cash rate since Melbourne Cup day last year, and the first cut in rates for more than two and a half years. Amazingly, the Reserve Bank has actually “moved” interest rates every Melbourne Cup day for many years now (I think, about six years in a row) so its sounds like interest rate movements would be a safer bet than the horses – well it would be for me, anyway.

So, not only is this rate cut good news for home buyers (it represents around a $50 per month saving on a $250,000 mortgage), it should translate into a significant boost in “confidence” and this, married with increased rental returns, can only lead to improved buyer demand in housing markets – both from investors and owner/occupiers. I know that we have been “busier” over the last month or so than we have been at any time for the last 4 or 5 years, so it seems that the “more astute” buyers are already entering the market.

My advice to you is – don’t be left behind, so call for a chat tomorrow.

Cheers for now from “your trusted finance professional”,

Tony Cottam JP; SA Fin; Dip FS

RBA Cuts Interest Rates – November 1, 2011 is a post from: South Coast Business & Financial Solutions Pty Ltd

Related posts:

1. Interest Rate Hikes Cost CBA CEO

Hi again everyone.  I read a very interesting article recently that suggested there was a strong correlation between the number of property and DIY programs on TV and the state of the property market in Australia.  Have a read yourself (a summarised version) and make your own conclusions.  Let me know what you think.

Several economists have the belief that televised Property shows played a large role in the 2001 to 2003 Australian property boom.  Every channel had some sort of “be a Property Owner Show” back then.  As the property market declined the number of these shows on television also dropped.

However, lately we have seen a resurgence of the lifestyle and DIY reality programs flooding television in Australia.  Some of the notable entrants are “The Block” (nine network), “The Renovators” (ten network) and “Top Design” (nine network) adding to the genre stables of “Better homes and gardens” and “Hot Property”.  Even the ABC is not being left out with continuous reruns of “Grand Designs” and the long running “Gardening Australia”.  The consistent theme to these shows are similar: “If you don’t own property you’re not a normal Australian”.  If you channel surf you can find a property show at any time, especially if you have Fox/Austar.

While the shows are primarily produced for entertainment value and many would argue that the renovation/design profits purported by such shows are widely exaggerated, the impact of these programs can be hugely beneficial to consumer confidence.  Lack of consumer confidence has been the main factor in the weak Australian property market as Australia does not have the same fundamental problems that some overseas markets experienced.  The American and UK “crashes” were primarily caused by under regulated banking policies, and in the US a huge oversupply of new properties.

It will be interesting if history remembers a property boom of 2011 long after all these shows are forgotten.

(from: Accredited Broker)

I definitely agree that consumer confidence is the main factor.  It only takes a small increase in “confident” buyers to change the market fundamentals – and a swing from “buyers’ market” to “seller’ market” may not be that far away.  I also read with interest that Westpac’s chief economist, Bill Evans is now forecasting a series of interest rate cuts. He said that low consumer sentiment could force the RBA to slash the official cash rate by up to 1.0% in 2012.   Let’s hope he has got it right!

Cheers for now from “your trusted finance professional”,

Tony Cottam  JP; SA Fin; Dip FS

TV Could Promote Property Boom is a post from: South Coast Business & Financial Solutions Pty Ltd

No related posts.

Hi again everyone. I have deliberately kept my head low over the past few weeks – what with the incredible volatility in the stock markets, falling Consumer Sentiment, reports of rising unemployment, the “bouncing” Aussie dollar, continually increasing residential rents and the Carbon Tax debate (if you can call it that), it was probably a good time to let the markets “speak” for themselves.

Well, amongst all this “doom and gloom”, occasionally a story filters through that, although not earth-shattering, it does (if you “love” the banks like I do) “tickle your fancy”. It may lead to some interesting Barbeque conversation.

According to The Herald Sun, Ralph Norris, the outgoing CEO of the Commonwealth Bank lost out on more than $7.0 million in pay due to the company’s slide in the Roy Morgan customer satisfaction rankings. The Bank slipped to the bottom of customer satisfaction rankings (late last year) after it moved first to raise interest rates above the RBA’s official cash rate hike. As a result, Norris’ $16.1 million pay packet was cut to $8.6 million.

Other senior executives also lost out, The Herald Sun reports. Eleven senior CBA executives saw nearly $15 million in performance pay taken away due to poor satisfaction rankings.

(from: Australian Broker News)

On a more serious note though, I did see a report today from Bill Evans, Chief Economist at Westpac, wherein he confidently predicts that “Westpac has changed its interest rate forecast to incorporate 100 bps (1.0%) of rate cuts by the Reserve Bank beginning with a 25 bp (0.25%) reduction in December.” He also suggests that “a continuation of the global market uncertainty might force the RBA’s hand to cut rates a little earlier than our original December target.” Please let me know if you want a full copy of the report and I will email it to you individually.

If he is right (and I do support his view), then rising rents, falling interest rates and our National dwelling shortage could finally translate into good news for our property markets, despite all the doom and gloom in Europe and the United States. All of the Australian “fundamentals” still point to buying property now (besides, who would want to be in equities now?).

Cheers for now from “your trusted finance professional”,

Tony Cottam JP; SA Fin; Dip FS
Managing Director
South Coast Business & Financial Solutions Pty Ltd
“Your Everylender Solution”
Phone : 1800 LOANS1 (Fax 02 4454 3322)
www.everylender.com.au

Interest Rate Hikes Cost CBA CEO is a post from: South Coast Business & Financial Solutions Pty Ltd

No related posts.