ANZ and NAB announce rate cuts
More lenders have announced that they are cutting their mortgage rates following the RBA’s interest rate reduction last week. ANZ will drop its standard variable rate by 0.25 per cent and doing so 8 days earlier than most of its competitors with the new rate effective from 12th
February. NAB has also announced that it is passing on the full 0.25 per cent to its standard variable rate home loan customers but will do so on the 20th
of this month in line with most of its competitors.
Source: ANZ, NAB
Strong start for new home sales
Sales of new homes were 14.4 per cent higher last year than in 2013 and this year is set to see continued strength. That’s according to the Housing Industry Association’s New Home Sales Report and economist Diwa Hopkins commented: “The two key leading indicators of new home building activity, new home sales and residential building approvals, both saw increases during the December quarter of 2014.This is a clear indication that actual residential construction activity will rise in the current early months of 2015, which is good news for the broader domestic economy in addition to the housing sector.”
REIA says government must retain negative gearing
The Real Estate Institute of Australia has called on the government to retain the benefits of negative gearing to encourage property investment and drive down the cost of rents. It is among a raft of measures being proposed by the association that represents real estate agents, including a uniform approach to assistance to first-home buyers across Australia and that conveyance stamp duty should be scrapped and replaced by an efficient source of revenue for states and territories.
Source: Real Estate Institute of Australia
Australia’s household debt causes concern
There is new concern over the level of household debt in Australia. A new report from The McKinsey Global Institute says that all of the major economies it researched have higher ratios of debt to GDP than they did in 2007, before the financial crisis. However, whereas the ratio has improved in countries such as the US and UK, it has worsened in others including Australia, and to levels in excess of those at the peak of the financial crisis. The institute recommends a number of mechanisms to avoid a property-related debt crisis including flexible mortgage contracts, clearer personal-bankruptcy rules, and tighter lending standards and macroprudential rules. The report acknowledges that debt is necessary for economies to grow but advises that there needs to be improvement in how it is handled.
Source: The McKinsey Institute
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