CDS Financial Blog

Market Update

This month we have received some interesting reports in relation to interest rates, the general state of the economy, the recent budget and the property market. Please click on relevant links below for full details:-

Westpac Residential Property Monitor (May 2008)

House price indices released by the ABS suggest that house prices continued to rise in the first quarter of 2008, despite the slow down in demand.

Commonwealth Bank – Economic Update (May 2008)

The RBA has revised 2008 and 2009 GDP forecasts whilst lifting inflation forecasts for the period. “We still see another rise to 7.50% as the most likely outcome.”

MLC Federal Budget Summary (2008)

The 2008 Budget contained no major surprises, with many measures re-iterating previous announcements including personal tax cuts.

Reserve Bank Decision

The Board of the Reserve Bank of Australia decided to leave the cash rate unchanged at 7.25 per cent at its May 6^th meeting.

Governor Glenn Stevens commented that indicators relating to household spending showed subdued outcomes. Further, that the demand for credit by both households and businesses had weakened. He also suggested the Board decision was made with the expectation inflation would remain high short term but should decline over time. Let’s hope this is the case.

Australian lenders have perhaps also contributed to this decision having taken matters into their own hands over recent months, adjusting rates independently of any RBA decision. The current Standard Variable Rate across the top five banks is as such:

Please do take into consideration each of these lenders had a Standard Variable Rate of 8.57% per annum as early as December 2007. Further more, we have only seen the RBA increase rates 0.50% since this time. As such, the major banks have almost matched the Reserve Bank by independently adding up to 0.40% to their rates since the start of the year. Other bank and non-bank financial intermediaries were quick to follow suit.

In conclusion, we can only really hope that inflation does decline over time and that the major banks have already passed on any additional costs of borrowing associated with the global credit squeeze. Unfortunately the only words of wisdom I can possibly provide in times of rising interest rates is to make sure you are currently getting the best possible deal, from your home loan to your credit card, every little bit helps.

As a benchmark, if you are paying in excess of the following interest rates in any of the following lending areas, it is time for review:-

I am more than happy to personally assist anyone wishing to undertake a financial health check. I may be contacted directly on +612 9153 0333.

Shaun M. Smith

Managing Director

The RBA has today increased the cash rate by 25 basis points, to 5.5 per cent

The Reserve Bank of Australia (RBA) has this morning announced the outcome of their board meeting of yesterday, March 1st. As expected, the board decided in favor of increasing the cash rate by 25 basis points.

This increase will soon be reflected in a mirrored increase by lenders on all variable products. For those with variable rate products wishing to determine what their new repayments shall be please click here to be taken to the CDS Calculator where you can quickly identify your new minimum repayment level.

It is difficult to determine at this stage whether there shall be any further increase moving forward. The RBA had previously suggested that a rise of up to 50 basis points could be warranted. Whether this will occur will lies solely on the Reserve Banks future outlook towards sustainable growth.

Below is a link to this mornings Media Release by the RBA Governor, Ian McFarlane:

http://www.rba.gov.au/MediaReleases/2005/mr_05_04.html

Christmas Wishes

The team at CDS would like to take the opportunity to thank you for another great year and wish you and your families the best for the coming holiday season.

For your record please note our office shall be operating in a reduced capacity from 21^st December 2007 through 6^th January 2008.

We look forward to speaking with you in the New Year and to assisting you meet your financial goals for 2008.

Market Update

The Reserve Bank left rates unchanged at 6.75% in December however continues to warn of the upside risks of inflation. The Board will not meet again now until early February giving home owners and investors at least some short term stability.

We have further seen in recent times, the sub-prime conditions in the United States having impact on funding costs globally. This has resulted in Australian bank and non-bank lenders having to review and adjust their prices in line with their increased price of funds. Many lenders have already passed their increased costs onto the consumer with others soon to follow suit.

CDS shall continue to monitor both international and domestic forces driving upward pressure on rates. We endeavour to keep you informed as relevant information is released

LENDING & INVESTMENT REPORT

CDS is pleased to announce the increased level of service that we are now able to offer our present and future clients. To reflect such change, please be advised that CDS is now trading as CDS Financial Services.

CDS Financial Services represents the future of lending in Australia and offers a full range of financial products across a host of lenders. Our product platform includes:

Market Update

ANZ economists predict cash rate to increase 50 basis points by end of 2008!

The following update on Monetary Policy has just been released by ANZ Bank. Their Economic and Market Research division believes the Cash Rate will increase another 50 basis points to 7.75% by the end of 2008:-
ANZ has identified a number of key reasons behind their forecast for higher rates:

Inflation has continued to surprise on the high side;

Inflation expectations have increased with a risk of higher wage outcomes and price setting;

Short term growth forecasts remain solid;

Credit pressures in Australia have eased; an easing of financial conditions;

Recent signs that central banks across the world are becoming increasingly concerned about the threat of higher inflation as credit concerns ease; and

Pent-up demand for labour should keep the labour market tight and unemployment rate lower for longer;

Emerging economies are seeing strong growth which should continue to benefit Australia

Please click on the link below to view the complete report:-

ANZ Bank – Monetary Policy Update (27^th May 2008)

Regards

Shaun M. Smith
Managing Director

 

Low Doc Loans at Full Doc Rates

HomeSide has today released a ground breaking Low Doc product. They shall now offer Low Doc Loans at Full Doc rates across their entire product range.

Self-employed and PAYG borrowers are now able to apply for residential loans without providing traditional financial information and without incurring any increase in interest rate. Each borrower is simply required to declare their level of income and that they can afford the loan in question.

This product offering is certain to create much interest amongst existing and potential Low Doc borrowers with applicable rates well below what has been seen to date from this segment of the market.

Please find Homeside Lendings current rate offering is as such:

Should you wish to take advantage of this new product or obtain further information on it, please don’t hesitate to call any of the CDS Team members listed below. Each of which is familiar with this new product offering. d

HomeSide launches Low Doc Loans at Full Doc Rates

HomeSide is to release a ground breaking Low Doc product this Monday 15th November 2004. They shall now offer Low Doc Loans at Full Doc rates across their entire product range.

This is seen as an extremely aggressive move from a lender that has been impartial to Low Doc lending over recent years. The Low Doc market is set to become quite interesting in the months ahead.

In the mean time, we are in a unique position to offer our clients an early Christmas present in the form of a rate reduction. Current rates are as follows:

Product Overview

For more information please don’t hesitate to call me. I see this as a fantastic opportunity to promote more business prior to Christmas and to fill the marketing kitty over coming months.

Regards

Shaun M. Smith

Managing Director