Trending Financial News 4 September 2019

Sydney and Melbourne lead home price turnaround

Average home prices in Australian capital cities rose
during August, for the first time since August 2017, according to CoreLogic’s
home value index. Sydney and Melbourne home prices led the way, both up by
about 1.5 per cent, as average national prices edged up 0. العب طاولة 31 8 per cent. Prices
trended lower in Adelaide, Perth, Darwin and regional areas.

“With housing credit restrictions easing and mortgage
rates likely to reduce further, this rebound could potentially turn into a
‘v-shaped’ recovery,” said CoreLogic research director Tim Lawless.

RBA
leaves rates unchanged for September

The Reserve Bank of Australia board
has left the official overnight cash rate (OCR) unchanged at 1.00 per cent. The
RBA board said “an extended period of
low interest rates will be required” to reduce unemployment.

The RBA Board said it would “ease monetary policy further if needed to
support sustainable growth in the economy.”

Retail variable home loan rates are now as low as 2.89 per cent p.a. (comparison rate 2.91 per cent p.a.) from Reduce Home Loan’s Low Rider Variable loan. Fixed rates now start from 2.79 per cent p.a. (comparison rate 3.95 per cent p.a.) from Greater Bank’s 12 month Fixed home loan.

Behaviour
more important than rates for savers

Banks will
not necessarily be a part of our lives within ten years with many people,
especially young people, expected to use phone ‘wallets’ to manage their money
according to author and fintech expert Brett King.

Mr King
suggested the big Chinese wallets like Alipay or WeChat Pay may become
ubiquitous in Australia because of their pioneering trust in biometrics.

“It’s the
face versus the 16 digit PAN, which is why by 2030 we’re probably all going to
be using Chinese digital wallets,” said Mr King.

Savers need
to manage their behaviour

Savers don’t
need their banks to provide them with the best rate or best account features in
the market, they need assistance with managing their behaviour, according to
author and fintech expert Brett King.

Mr King told
the FINSIA Summit in Melbourne that: “It’s not about product features. It’s
about helping people save behaviourally.”

“Savings
behaviour is far more effective, around six times more, than the best interest
rates to help people to save money,” King said.

Borrowers are
still opting for variable rates

InfoChoice
CEO Vadim Taube most borrowers are sticking with variable rate home loans,
despite some very long and very low fixed rate deals, according to search
trends on InfoChoice.

However, most
borrowers are resisting the allure of fixing their mortgage at today’s current
low rates because they believe lenders will slash rates even further.

Vadim Taube said Reserve Bank governor Philip Lowe has repeatedly stressed he will take the official cash rate below 1 per cent if the economy fails to pick up.

The majority of economists expect the RBA will cut rates by 0.25 percentage points in both November and February 2020, bringing the official cash rate to 0.5 per cent.