Will the RBA cut the cash rate this month?

We don’t like to dust off the old crystal ball and speculate very often, but there’s been so much noise about whether the RBA will cut the official cash rate this Tuesday that we feel compelled to address it.

30 meetings in a row.

That’s how long the RBA has kept the record low official cash rate at 1.5%. All the way back to August 2016.

So with an uninterrupted streak like that, why are we putting this article out now?

Well, it’s fair to say that speculation has hit overdrive that the RBA will make a cut when it meets on Tuesday. But it’s certainly far from a given.

So today, let’s look at some of the main reasons for a cut to the official cash rate, some of the main reasons against, as well as what a rate cut might mean for your home loan.

For: Inflation (or lack thereof)

Australian Bureau of Statistics data showed inflation was totally static in the March quarter, with the consumer price index at 0.0 per cent, bringing the annualised rate down to 1.3 per cent.

The unexpected reading has financial markets and pundits predicting an increased likelihood that the RBA will cut the cash rate this Tuesday.

Basically, the thinking is that by cutting the cash rate, the RBA could give the economy a good ol’ hit with the defibrillators.

ANZ Bank chief executive Shayne Elliott backed the case for cutting official interest rates to a new record low, saying it would boost economic activity and give “breathing space” to people struggling to make their home loan repayments.

“Maybe it will just give a bit of juice into the economy, and get a bit more employment, and put a bit of money back into people’s pockets,” Elliott says.

That said, some people doubt that an official rate cut would be passed on to mortgage holders, as we’ll touch upon later.

For: Falling house prices

Nationally, we’re amidst the worst annual housing price fall since the GFC.

Over the year, median prices nationally fell by 7.2% in average weighted terms.

The declines in the combined capital cities over this period was even larger at 8.4%.

CoreLogic’s research director Tim Lawless says a rate cut could help give the property market a bit of a boost.

“The prospect for lower interest rates is another factor that could support an improvement in housing market activity later this year,” says Lawless, who also adds that “the worst of the housing market conditions are now behind us.”

Against: The federal election

Perhaps the biggest reason why we may not see the RBA announce a rate cut this month is because we’re in the middle of a federal election campaign.

“Changing monetary policy during an election risks the central bank being caught up in a political fight,” says the AFR’s senior economics writers in an analysis piece.

“The RBA last raised interest rates during an election in 2007 and John Howard and Peter Costello never forgave then-governor Glenn Stevens. Howard had campaigned on keeping rates low.”

As we all know, Howard lost that election to Kevin Rudd, and the only other time there was an official cash rate change during a federal election was in 2013 – when Rudd lost to Tony Abbott.

So the track record for rate changes during election campaigns is not good for incumbents.

Against: Would lenders pass on the cuts?

So what would a cut mean for your home loan?

According to an analysis commissioned by the AFR, lenders would keep rates the same, or pass on only half the rate cut. That’s what they did after the last cash rate cut in July 2016, and it’s another reason the RBA might not end up making the cut this month.

If they did, however, and half the cut was passed on, the typical monthly repayment on a $1 million standard variable loan would reduce by just $65, the analysis finds. On the average $400,000 loan, the reduction would be just $26 a month.

Final word

So those are the main reasons for and against a cut to the official cash rate.

What’s a little more clear cut, however, is that most economists are predicting that if it doesn’t happen this month, it will most likely happen in the months to follow – and perhaps twice before the year’s end.

If you’d like to know more about what these potential upcoming cash rate cuts could mean for you and your family, please get in touch – we’d love to run you through it.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

With home loan interest rates dropping, is it time to pull the cord?

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Fixing your home loan while rates are dropping is a bit like pulling the ripcord on a parachute. If you do it early you’ll get a steady ride but may miss out on a bit of action. But if you leave it too late things might get a little messy.

To fix the rate or not?

That seems to be the question on a lot of people’s lips at the moment.

We’re just a few months into 2019 and already 44 lenders have dropped rates on more than 500 fixed-rate home loan products.

These discounts aren’t just being offered by smaller lenders trying to attract new customers, either.

Commonwealth Bank, Westpac and NAB have all announced significant fixed rate cuts, while ANZ recently offered a discount to the headline rate on its flagship variable rate product.

To fix or not to fix?

When there are so many lenders scrambling over each other to cut rates, a question we often hear from clients goes something along the lines of: “Is now a good time to lock in a rate?”

While we’d love to be able to give you a definitive answer on this, the fact of the matter is that it depends on your individual circumstances, preferences and home loan.

Let’s quickly run you through a few important considerations below.

What will the RBA do?

The first factor to consider is that these cuts are being made out-of-step with the RBA.

That’s because the RBA hasn’t changed the cash rate since it was moved to 1.50% in August 2016.

However, speculation of a near-future cut to the cash rate has ramped up, with the RBA’s April meeting minutes revealing there was an explicit discussion of what it would take to make a cut.

Some economists, including AMP’s Shane Oliver and NAB’s Ivan Colhoun, predict the RBA will cut the official cash rate twice to 1% before the year’s end.

Furthermore, the RBA will likely come under more pressure to cut interest rates at their next meeting after inflation fell further below its target band, the ABC reported this week.

With all that said, nothing is certain. It wasn’t too long ago that most pundits were predicting that the RBA was going to move the cash rate upwards rather than downwards.

The pros and cons

Locking in a fixed home loan means that it doesn’t matter whether or not the official rate goes up or down, you won’t be affected.

It can give you a sense of clarity and certainty, and as such, can help you budget and plan ahead for up to the next five years.

You might prefer a fixed home loan rate if you:

– are comfortable with the interest rate offers being currently spruiked by lenders and won’t suffer from FOMO (fear of missing out) if rates drop further

– prefer to accurately plan your finances in the short and mid-term

– are concerned that you would be unable to make your repayments if rates were to rise.

However, you might prefer not to lock in a rate if you:

– are confident interest rates will continue to fall over time

– don’t mind having some unpredictability in your financial planning

– prefer to go with market rates.

Give us a call

If you’re still unsure on what’s the best option for you, or you’d like us to run you through some of the home loan rates currently on the market, then give us a call.

As we touched upon earlier, lenders have dropped rates on more than 500 fixed rate home loan products so far this year, so the market is constantly shifting.

We’d be happy to look at your current home loan and run you through how it compares to some of the other products on the market.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

What the 2019 federal budget means for your family’s finances

With a federal election due in May, the 2019 federal budget is more a series of election promises than it is a set-in-stone budget. That aside, here are some of the more interesting talking points and what they’ll mean for your family’s monthly budget.

The winners from the 2019 federal budget are middle-income workers, small and medium businesses, and older Australians wanting to ramp up their super contributions.

The losers? Well, there was no direct announcement aimed at homebuyers struggling with housing affordability.

However, there were a number of indirect ways the budget may assist your mortgage repayment or deposit saving capacity.

Let’s take a look at a few.

Middle-income tax relief

Middle-income workers earning between $48,001 and $90,000 could receive immediate tax savings of up to $1080 for a single or $2160 for a dual-income family as early as July 1.

Workers who earn $90,001 to $126,000 don’t miss out on the action, either. However the more you earn over $90,000 the less you’ll receive until tax savings taper off completely at $126,001.

Tax brackets flattened

High-income earners could also benefit under the Coalition’s plan to flatten the tax brackets, albeit by 2024-25.

Essentially, all taxpayers earning between $45,000 and $200,000 would have their tax rate reduced to 30%.

This would see a couple earning $200,000 per person receiving total household tax relief of $23,280.

However, as the changes are not scheduled to come into effect until 2024-25, and Labor does not support the plan, the Coalition would need to win the next two elections to implement it.

SME business benefits

Tax rates for small and medium businesses will drop from 27.5% to 26% next year, before falling to 25% in 2021.

The government is also increasing the instant asset write-off threshold from $25,000 to $30,000 per asset and will make it available to businesses with an annual turnover as high as $50 million (up from the current $10 million cut-off).

Meanwhile, apprentice incentive payments are being increased for businesses that employ carpenters, plumbers, hairdressers, bricklayers, plasterers, bakers, vehicle painters, tilers and arborists, to name a few.

Employers will have their apprentice incentive payments doubled to $8000 per placement, while apprentices will receive a $2000 incentive payment.

Superannuation changes

Australians aged 65 and 66 will be able to make voluntary superannuation contributions without having to work at least 40 hours over a 30 day period.

They’ll also be allowed to make up to three years worth of voluntary contributions ($300,000 in total) in just one year if they wish.

The government is also increasing the age limit for spouse contributions from 69 to 74 years.

Energy assistance payment

A one-off Energy Assistance Payment, worth $75 for singles and $125 for couples, will help age pensioners, people on the Disability Support Pension, veterans, carers, single parents and Newstart recipients cover the cost of rising power prices.

Want to know more?

Today we’ve covered the federal budget measures that may have a direct impact on your finances, but there were plenty more announcements that we haven’t touched upon, including infrastructure and transport projects, national security, pre-school education, healthcare, welfare, mental health initiatives, and regulator and compliance funding.

If you have any questions about any of the potential changes arising from this year’s federal budget and how it may affect your family budget, please get in touch. We’d be more than happy to discuss it with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Top 5 tips for standing out on Airbnb

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The short term rental market is booming. Each year, tens of thousands of Australians list their properties on Airbnb to make a tidy buck on the side. Here are our top five tips on how to stand head and shoulders above your competition.

Most people who own an investment property prefer to rent it out long term. It’s more of a set and forget approach, if you like.

But for some, such as those who own one home and/or those who travel for long periods, renting out their property on platforms such as Airbnb and Stayz is becoming an increasingly appealing option.

In fact, in 2017 more than 30,000 people listed their homes on Airbnb across Sydney and Melbourne alone.

These numbers have made the Australian Taxation Office (ATO) sit up and take notice. So much so that the ATO recently declared they’ll be ramping up their enforcement activities and will undertake 4,500 audits of taxpayers they suspect may not be declaring Airbnb income.

Suffice to say, when the ATO starts paying attention to a marketplace, you know money is being made.

Here are our top 5 tips on how to make more money than the next person.

1. Professional photos

First impressions last, and these days the first impression is the webpage impression on your Airbnb listing.

You don’t see real estate agents walking around with outdated camera phones taking dank snaps of the living room. And neither should you!

A good photographer has the skills and equipment to highlight the beautiful little details that makes your property sing, and crop out the less than desirable qualities that may turn a potential guest away.

Obtaining high quality images from a professional real estate photographer costs between $150-$300 via websites such as Snappr or Airtasker.

If they get you just one extra two to three night booking they’ll have already paid themselves off.

2. The devil is in the details

There’s no point in having a photographer take wonderful photos of your property only for the guest to show up and feel like they’ve been conned by the old bait and switch!

You need to put in that extra bit of effort to make their stay memorable. After all, they’ve chosen your place ahead of a hotel, not to mention all the other Airbnb competition out there.

There’s a good chance your guest is visiting your local area to check it out. So try and include as much (classy) local artwork, local guidebooks, decorations and information as possible.

The bathroom should also always be spotless, make sure good quality tea and coffee is available for free, and ensure all the basic kitchenware is easy to find.

Other tips include providing menus for local takeaway, tips for local sightseeing, entertainment such as books and boardgames, all necessary electrical appliances such an iron and hairdryer, and some basic cleaning equipment and products in case something gets spilled.

3. Play host, but don’t smother your guest

It’s important that you’re available to your guest should they need to check anything.

That might range from “where is the frying pan?” all the way to “where’s the local hospital?”.

It’s critical that you never show irritation, no matter how trivial or inconsiderate a guest’s inquiry might appear.

That’s because one scathing review can undo a lot of the money, time and effort you’ve invested.

It’s equally important to give your guest the privacy they require. Be on hand to offer any simple tips or suggestions, but don’t pin them down for hours on end chatting to them about your own travels.

This is their holiday after all!

4. Consider using a property management service

If you’re going to be away from your property for a while it’s worth considering taking the hassle and stress out of trying to manage your property from afar by outsourcing to a professional service.

There are plenty of options out there to choose from, including (but not limited to) Hey Tom, Hometime, HomeHost and Airsorted.

Expect to pay about a 15% to 20% (+ GST) commission to them, however most boast that they can help increase your Airbnb income.

5. Thank guests for their reviews

Taking the time out to thank every single guest for their review shows you’re a super attentive host who’s always aiming to please.

The best thing is it also gives you the opportunity to further highlight the positive aspects of your property.

For example, if a guest writes in their review that they had great ocean reviews, reply: “Thanks for the review Craig! Stoked that you enjoyed the ocean views from your bedroom!”

The best thing about this trick is that it even works for negative reviews.

That’s because most negative reviews will also mention something positive about the property. So make sure you thank them for that, acknowledge their complaint and thank them for bringing it to your attention, and advise that you’ve taken steps to rectify the issue for future guests (and actually do so!).

This shows other guests that you’re a very reasonable person who takes all concerns seriously – and will be approachable if they need you during their stay.

Guess who else is approachable?

We are!

If you have any queries or questions about your property and think we might be able to help out, don’t hesitate to get in touch – we’d love to help out.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

12 reasons you should see a broker for car finance

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We’ve all heard the horror stories about a mechanically-challenged friend buying a car and it turning out to be an absolute lemon.

Well, the truth is that sourcing finance for the car isn’t all too dissimilar. But here are 12 reasons why you won’t end up with a lemon of a loan with us!

1. Using a finance broker doesn’t cost you a penny

Using a car finance broker is free. We won’t charge you for any of the work we do on your behalf. Also, all enquiries are free and there’s absolutely no obligation to go ahead with any of the options we present to you.

While it’s true we work on a commission basis from the lender, we work for you. Not the car dealership. Not the bank. You.

If we don’t find you a loan product that you’re completely happy with, then you’ll go elsewhere and we don’t get paid. And fair enough!

2. Access to possible discounts

We don’t want to brag, but negotiating with lenders is our thing. We deal with lenders on a daily basis and know just how hard to push when sourcing you a loan. This can result in discounted interest rates for you.

3. Time is money

Using a finance broker saves you time. And as we all know time = money.

By having us go out and negotiate on your behalf it can save you countless hours researching interest rates and repayments, and then getting in touch and negotiating with various banks and lenders.

4. We’ve got your best interests at heart

It’s our number one priority to make you happy by helping you source a loan that suits your needs.

It’s really important for our business and reputation that we nail our job. The big banks don’t have this same incentive to ensure you’re completely satisfied with the quality of their service. Neither do the car dealerships!

5. Pay less for the vehicle

There’s this little trick car dealerships like to use – the old ‘Drive away, 0% finance to pay’.

But all too often the dealerships sell these vehicles at inflated prices.

For example, a car that has a price tag of $24,990 with a 0% finance deal might sound great, but the automaker would most likely be willing to sell it to you upfront for $19,990. Therefore, you can actually end up paying $1000-$2000 less if you take out a competitive loan through us.

6. Avoid hidden nasties

Did you know that 80% of people don’t read Product Disclosure Statements?

You can’t exactly blame them. If you read every PDS, T&Cs and Privacy Policy you came across it would literally take you weeks to complete each year.

Instead, by using us we can give you the low down on the important points in the PDS to help you avoid getting stung by hidden nasties.

7. Access to dozens of lenders

We’ve got access to dozens of lenders on the market to help you score a competitive rate. Not only that, we’ve got our fingers on the pulse when it comes to the deals that lenders are offering.

You won’t have access to this many lenders if you deal directly with a bank or car dealership.

8. Get a loan suited to your needs

After finding out a little more about your situation, we’ll be able to get in touch with our panel of lenders to find a loan that’s suited to your personal needs.

This can even include finding a vehicle that’s suited to your family’s needs, if you need us to do so!

9. Got less than perfect credit rating?

If you’ve run into a bit of credit trouble in the past, we can still help you source a line of credit for your vehicle. We’ve got good experience in this department and know which lenders to approach to help you get a loan.

10. Convenience is king

We take all of the legwork out of sourcing car finance. We’ll liaise with lenders on your behalf, compare what they can offer, and come back to you with the options that we believe will suit you.

That will take a big weight off your shoulders as well as a lot of potential stress!

11. Minimise the impact on your credit file

If you apply for finance with more than one lender it can have a detrimental impact on your credit file. However working with a finance broker can allow you to apply with a number of lenders through just the one application.

12. The personal touch

While online (and big bank) options exist, we pride ourselves on our personal touch. If you’ve ever got any queries or concerns about your loan you can pick up the phone and we’ll sort it out for you.

That’s much better than calling up a call centre and being bumped around from anonymous customer service person to anonymous customer service person.

Get the ball rolling now

All too often the process of sourcing car finance is put in the too-hard-basket. But by simply picking up the phone and calling us now we can help you get the ball rolling.

It’s quick and easy, too. We’ll get some initials details from you and get cracking asap.

That way you can get stuck into the other tasks on your to-do-list, or simply kick back and watch Netflix!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.