New record lows ahead: Your mortgage rate could be slashed further

Thu, 07 Nov 2019  |  

This article was written on 20 August 2019: It was on the Yahoo Finance website at this link: 


New record lows ahead: Your mortgage rate could be slashed further

Fancy a mortgage rate of 3 per cent? Maybe a little less?

Within the next few months, mortgage interest rates are on track to fall to fresh record lows, probably below 3 per cent.

That is the overwhelming message to come from the Reserve Bank as it struggles to deal with the soft economy where inflation is tracking at record lows, a long way from returning to the 2 to 3 per cent target range.
While the totality of these interest rate cuts are unlikely to be fully passed on to mortgage holders, strong competition within the mortgage market will see mortgage rates fall from current levels around 3.5 per cent down below 3 per cent. This is a stunningly low borrowing cost for those buying a house.

It also means that housing affordability in much of Australia will be at its best level in many decades.

How much could you save on your mortgage?

Over the past two years, house prices have dropped 10 per cent, a time when mortgage rates have fallen markedly and household incomes have risen by over 6 per cent, even though wages growth has been weak.

A 3 per cent mortgage interest rate will mean that monthly repayments on a $400,000 mortgage, repaid over 30 years will be under $1,700. This is down from almost $2,300 a month when interest rates were 5.5 per cent. Looked at another way, for that $2,300 monthly repayment on a $400,000 loan when rates were 5.5 per cent, the same monthly repayment is required for a mortgage just under $550,000 when interest rates are 3 per cent. That is an extra $150,000 of borrowing capacity.

Either through a higher borrowing capacity or a lower monthly repayment, housing affordability is extremely favourable.

It’s time to negotiate on your mortgage rate

It is a good time to negotiate a lower interest rate given strong competitive pressures because no one should be paying more than 4 per cent even before the next few interest rate cuts are delivered. It should be reasonably clear what this means for house prices. Already house prices are starting to edge up as the impact of lower interest rates and favourable affordability attracts new buyers.

Easier credit conditions are also feeding into stronger housing demand. If interest rates do fall as the market is pricing and there is further strong ongoing demand from first home buyers and strong population growth, house prices are set to register solid gains for the next year or two. It would be reasonable to expect nation-wide house prices to rise 5 to 10 per cent between now and the end of 2020, with the strongest gains likely in Perth, Sydney and Melbourne.

Rising house prices will help to support household wealth levels, an issue that has a strong influence on consumer spending.

All of which points to a better year for the economy into 2020 driven, in large part, by the RBA coming to its senses and delivering aggressive interest rate cuts in a simple yet effective measure to boost economic growth.

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How Labor lost the federal election SO badly

Thu, 07 Nov 2019

This article first appeared on the Yahoo Finance website on 20 May 2019 at this link: 

How Labor lost the federal election SO badly

The Coalition did not win the election, Labor lost it.

The tally since 1993 for Labor is a devastating seven losses out of nine Federal elections. By the time of the next election in 2022, Labor will have been in Opposition for 23 of the last 29 years. Miserable.

The reasons for Labor’s 2019 election loss are much more than the common analysis that Labor’s policy agenda on tax reform was a big target that voters were not willing to embrace.

Where the Labor Party also capitulated and have for some time was in a broader discussion of the economy where it failed dismally to counter the Coalition’s claims about “a strong economy”.

In what should have been political manna from heaven for Labor, the latest economic data confirmed Australia to be in a per capita recession. This devastating economic scorecard for the Coalition government was rarely if ever mentioned by Labor leader Bill Shorten and his team during the election campaign.

This was an error.

If Labor spoke of the “per capita recession” as much as the Coalition mentioned a “strong economy”, voters would have had their economic and financial uncertainties and concerns confirmed by an elevated debate on the economy based on facts.

This parlous economic position could have been cited by Labor for its reform agenda.

Why animals are a crucial part of the Australian economy

Thu, 07 Nov 2019

This article was written on 31 October 2019: It was on the Yahoo Finance website at this link: 


Why animals are a crucial part of the Australian economy

Animals are a critical part of the Australian economy, either for food, companionship or entertainment.

But every month, millions of sheep, cattle, pigs, chickens, fish and other animals are bred and then killed. Most of them are killed in what we define as ‘humane’, but no doubt tens of thousands are horribly mistreated, as are a proportion of the animals we keep as pets.

Animals are slaughtered to provide food for human food consumption, to feed other animals (your cats and dogs are carnivorous) and for fertiliser.

The Australian Bureau of Statistics collects a range of data on animal slaughterings and the most recent release of the Livestock and Meat data release included the following facts.