The battle for customer deposits is heating up, meaning good news for savers.

An industry-wide shift has caused lenders to price deposits well above the Reserve Bank’s cash rate in a bid to secure retail funding instead of costly wholesale capital.

Australia’s $1.3 trillion deposit market became a relatively cheap funding source for the banks as the cost of wholesale funding spiked during the credit crisis.

Analysis of the regulator’s monthly banking statistics shows NAB controls $77.8 billion in household deposits, ANZ $55.7 billion, CBA $50.3 billion and Westpac $44.7 billion at the end of October 2009.

With $25,000 in a term-deposit (TD) account for 12 months, some banks are offering a rate of 6.8 per cent. The frequency of the interest payments becomes more and more significant with longer term deposits.

If you’re after a good rate on a term-deposit The Biking Broker can access TD rates with NAB better than what you’ll get if you go into a branch.

For the 60 per cent of Australians who don’t have a mortgage, there’s never been a better time to be a saver.  For the first time, online savings accounts are offering interest rates above the standard variable mortgage rate.

In a report today (11/2/10) The Sunrise tv show on Seven, rated bank’s online saving accounts, with Bankwest offering the highest at call rate of 5.62%. Higher rates are available with conditions on minimum monthly deposits or balances.

In conjunction with a current special from Bankwest with no application fees on its Mortgage Shredder Loan (usually $700), this makes it a good time to pair your lending needs with your saving needs at Bankwest. Call or email the Biking Broker today for more details.

Old mate has walked into a local bank branch and the home lending officer has put them into a very large line of credit (LOC) for the purchase of the property. A LOC, depending on the lender has an interest rate between 0.1% and 0.15% above the standard variable rate (SVR).  The loans officer has structured the loan with the LOC covering about 83% of the purchase price. The balance of funds were to come from the client’s savings.

If the client had come to me first I would have recommended:

• a smaller line of credit secured against his existing property for deposit and fees, to bring the purchase loan down to 80% of the purchase price
• and the purchase loan as a discounted SVR at a lower rate than the LOC

This would have saved the client at least $8000 in mortgage insurance and about $600 a year in repayments and still maintained a bit of flexibility he was requiring by setting up a smaller LOC.

What would you do with $8,600 this year if you didn’t have to pay it to a bank?

Remember – if you walk in off the street every bank will tell you they can get you into a loan, but no bank will tell you that you might get a better deal elsewhere and no bank employee will ever admit that they may not be the best person to help you get the best that the lender has to offer (rather than the best deal for the bank).

This additional allowance applies to small businesses, with a turnover of less than $2m, any eligible asset¹ purchased between the 13^th December 2008 and the 31^st of December 2009.  Please note that the equipment must be delivered/installed and in use before the 31^st of December 2010. The asset must be brand new, not second hand and cannot include trading stock, land or buildings.

I’d recommend anyone who is considering the purchase of equipment to take advantage of this limited opportunity before it ends².

Should you wish to take advantage of this opportunity please call me to arrange finance for a new business vehicle, earthmoving equipment, office equipment including computers and printers (minimum spend required of $5000)³ for eligible business customers⁴.

I can arrange repayment terms and amounts to suit your budget and cash-flow situation.

Don’t have enough time to shop for your new car or van?

Ask me about the JIVVE vehicle purchasing program-the dealer comes to you!

Thank you for your continued support of my business and I look forward to assisting you.

1. Assets must be >$1000 in value, purchased before 31 Dec 2009 and installed prior to 31 Dec 2010.
2. Please seek professional accounting advice as to the suitability of an asset purchase to your needs under the incentive scheme.
3. Small ticket assets $5,000-$35,000 must be purchased through a recognized dealer. Finance for near new vehicles can be arranged (second hand assets not eligible for incentive)
4. Minimum 2 years financials, good credit history/references, other terms and condition may apply.

A statement by Glenn Stevens, Governor of the Reserve Bank, cites the following reasons:

• the prospects for Australia’s Asian trading partners appear to be noticeably better
• sentiment in global financial markets is much better than earlier in the year
• housing credit growth has been solid and dwelling prices have risen appreciably this year
• the exchange rate is likely to constrain output in the tradeables sector and dampen price pressures

To Summarise, he said,”..the Board’s view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker. The adjustments at the October and November meetings will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead”.

A full transcript of Glenn Steven’s statements is available here>>

A statement by Glenn Stevens, Governor of the Reserve Bank, cites the following reasons:

• a resumption in growth of the global economy
• improving sentiment in global financial markets
• stronger than expected measures of confidence in the Australian market
• lower than anticipated unemployment
• housing credit growth and housing price growth

These and factors that formed the basis for the low interest rate setting have, in the RBA’s view passed.

A full transcript of Glenn Steven’s statements is available here>>

This will be huge! Ticket price includes Oompah Band, German dinner and a 500ml stein to keep!

Details on the flyer.

Tickets can be bought from The Biking Broker or at Shoenique, 51 Mary St. Why not get a group together? Groups booked together will be seated together at at one of six long tables.

Getting a broker to arrange your loan can save a lot of time and hassle, but it is important to ensure the service you expect is the one that’s delivered. Asking these 12 questions can help you ensure you have a great experience with your finance broker.
1. Does your broker have a wide range of home loans from a wide variety of lenders, e.g. banks, and non-banks? The wider the choice, the better the chance of finding the loan that suits you.
A: Jaimie Cook, The Biking Broker, has access to over 25 residential lenders, their commercial arms and 8 equipment finance lenders.
2. What are the qualifications and experience of your broker, even ask for references from previous borrowers? Are they a Mortgage and Finance Association of Australia (MFAA) member? Have they completed training courses?
A: Jaimie is a full member of the MFAA and holds a Cert IV in Financial Services. Check out the testimonials on this web site!

3. Ensure your broker is not an agent for one lender in disguise? Some lenders now operate as brokers too so establish with any broker representative exactly what their role is.
A: The Biking Broker is a fully independent broker. A full list of available lenders is listed in The Client Services Guide.
4. Will your broker disclose all commission and payments received so you can judge whether a particular loan recommendation is being influenced by how much the broker will be paid?
A: A schedule of commissions will be provided by The Biking Broker when loan products are discussed. A full list of residential commission levels is listed in The Client Services Guide. When a loan and the amount of the loan is determined, you’ll be supplied with a dollar value of the commission The Biking Broker receives.

5. Does the broker charge a fee? Many brokers will not charge borrowers for using their service, others will, so enquire about fees at the outset.
A: The Biking Broker’s services are free for residential mortgage loans above $50,000 and for equipment finance.
6. How are the loans The Biking Broker offer researched and rated? Good brokers should be able to clearly outline their criteria.

A: Please refer to the Choosing the Best Loan Option page on The Biking Broker’s website.

7. Ask your broker to provide a formal comparison of any loans recommended including the upfront and ongoing fees and the AAPR (average annual percentage rates).
A: Provision of comparison rate information is compulsory under legislation. Clients will be supplied with these when individual loan products are discussed.
8. Have I been given unbiased and correct information? Always do some double-checking yourself to satisfy yourself.
A: The Biking Broker will supply detailed loan information on the loan offered, this information can usually be confirmed on the lender’s web page, just ask for the URL.
9. Check what service is offered by the broker after the loan is negotiated. Will the broker be available for subsequent loan enquiries? What happens if there is a dispute between you and the lender?
A: The Biking Broker is always available to assist with loan offer documents, settlement issues and post-settlement issues such as ensuring the lender has got everything right and is prepared to take any issue you have to the lender on your behalf. As a last resort, The Financial Ombudsman Service can be contacted to resolve issues with lenders and general insurance companies.
10. Will your broker comply with the Privacy Act to ensure the security of your personal and financial details?
A: All personal details are treated in absolute confidence. Personal documents are secured in locked cabinets or by password and securely destroyed when no longer required to be held by The Biking Broker.
11. Does your broker have professional indemnity (PI) insurance? This safeguard will help you in the event of legal action.
A: The Biking Broker has PI Insurance covering claims  within industry standards.
12. What if I have a dispute with my broker?
A: Please, always contact The Biking Broker first. My main goals are to get the most suitable loan for you that I can and to deliver exceptional customer service. If I can’t satisfy your complaint you can contact my aggregating firm, Astute Financial Management for conflict resolution. As a last resort, the independent Credit Ombudsman Service Limited (COSL) is available if there is a dispute you can’t resolve with The Biking Broker directly.
You can be sure that when using The Biking Broker that all of the above steps will be covered and that you should always feel comfortable raising concerns and asking questions throughout the loan process. Should you wish to discuss your options for obtaining finance please contact me at any time.

In an interview with Peter Switzer, Rob Mellor from BIS Shrapnel denies the popularly held belief that once the boost drops, prices will follow. He tips that the modest growth of the last four months was not simply a passing trend, citing positive signs that it will continue even once the incentives expire.

‘Compared to six months or nine months ago, people are probably taking a big sigh, saying, “gee, it wasn’t as bad as we expected”. Property prices haven’t fallen through the floor, they’ve stabilised. We’ve even seen some modest prices growth in the last three to four months, and I think there are positive signs that that’s going to continue beyond even the end of this calendar year when this first homebuyers scheme ends. We’ll just see modest price growth across the board probably through to the middle of next year and possibly beyond that.’

Mellor predicts a rise in growth of above five per cent for 2010-2011, and up to a 10 per cent rate in the next two or three years time, particularly in the Sydney market.

While Mellor acknowledges some odd markets in Queensland and Western Australia where mining investments might have been cut back could suffer price declines thanks to dwindling populations, ‘with the exception of those, really in the major capital cities, the likelihood of prices declining now are really fairly minimal.’

He continues: ‘We are through the worst. The next disaster that we’ll be worried about is really high interest rates somewhere down the track.’

Federal government incentives have been heeded by hoards of first timers – with a 90 per cent spike in first homebuyers. But what will happen when the First Home Owners Grant returns to its established point in October?

Mellor denies the popularly held belief that once the boost drops, prices will follow. He tips that the modest growth of the last four months was not simply a passing trend, citing positive signs it will continue even once the incentives expire.

‘It’s not just additional funding,’ says Mellor. ‘It’s also low interest rates, the lowest interest rates in 40 years. Interest rates are not going to go up tomorrow.’

Mellor says they may rise in the second half of next year, at the earliest.

‘There’s still going to be significant numbers of first homebuyers in the market this time next year Compared to what we’ve had in the last five years or so, these are very strong numbers.’

Meantime, domestic lenders have been progressively raising fixed rates since April. With the latest rises effective today,by Westpac, in the market you can now expect to pay on average 5.36% for 1 year fixed rates, 6.52% for 3 year rates and 7.21% for 5 year rates. This compares to 4.68%, 5.59% and 6.23% respectively at the beginning of June this year, a rise of almost 1% in longer term rates!

If you’d like to talk to me about whether fixing may be of benefit to you, call or email me.

More information on the rally download the flyer. tingoora-rally-2009