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Interest Rates Series Part 1: When are rates real and when are they not?

There’s been a lot of recent media attention on interest rates, with some commentators saying they will remain as is while others are suggesting they’ll fall even lower.

The latter opinion seems to match what we’re hearing from the Reserve Bank, with Governor Philip Lowe recently announcing the official cash rate might even go down by another half a per cent to 0.50%.

While this may seem like good news for consumers, the problem we are seeing for our clients is that the banks aren’t readily lending enough money to them. They are also reluctant to lend to property developers and builders, which are generally the mainstay of the economy.

This is totally against what the government is trying to achieve; their intent is to increase lending and encourage more spending, thereby boosting business activity and improving economic conditions. It also doesn’t make sense because the Reserve Bank doesn’t want consumers getting into more debt – it wants businesses to invest and borrow more money.

However, if consumers are in the position to borrow to buy a house or complete a renovation, or are able to purchase new goods, they are assisting businesses to grow, employ more people and boost the economy.

For home loan clients, the current talk in the media and by the government is that all homeowners should check their interest rate and if it sits at over 4 percent, it’s time to shop around. But how easy is it to do this?

With onerous lending criteria by the banks, it’s difficult for consumers to take advantage of the attractive interest rates the banks are offering. It’s challenging for homeowners just to get through the credit process and when – or if! – they do obtain an approval, it’s not easy to predict what amount, terms and interest rate they will be eligible to receive.

In our view, it’s a bit like winning a golden ticket to a Ball – but you don’t have money to afford the new dress or suit! Or for those clients who may remember TV ads from the 80s, it is a Clayton’s Interest Rate – the interest rate you get when you can’t get the interest rate!

(If you want to take a trip down memory lane, or for those that want to know more about old Australian culture, check this link.)

If you have any questions or concerns regarding this matter, please call the Client Services team on (08) 9227 6300 or email

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Important information and disclaimer

This publication has been prepared by AustAsia Group, including AustAsia Finance Brokers Pty Ltd (Australian Credit Licence No 385068), and AustAsia Real Estate Pty Ltd (REBA Licence No. RA1736).

Any advice in this publication is general only and has not been tailored to your circumstances. Accordingly, reliance should not be placed on the information contained in this document as the basis for making any financial investment, insurance, or other decision. Please seek personal advice before acting on this information.

Information in this publication is accurate as at the date of writing, 22 August 2019. Some of the information may have been provided to us by third parties. While it is believed the information is accurate and reliable, the accuracy of that information is not guaranteed in any way.

Opinions constitute our judgement at the time of issue and are subject to change. Neither the Licensee nor any member of AustAsia Group, nor their employees or directors give any warranty of accuracy, nor accept any responsibility, for any errors or omissions in this document.

Any general tax information provided in this publication is intended as a guide only and is based on our general understanding of taxation laws. It is not intended to be a substitute for specialised taxation advice or an assessment of your liabilities, obligations or claim entitlements that arise, or could arise, under taxation law, and we recommend you consult with a registered tax agent.

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