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It has been a tough year for mortgage holders but the good news is there are signs of better times ahead.

Predictions that interest rates will rise again before the end of the year have fallen, with the Reserve Bank’s increasing confidence that the economy is slowing. At each Reserve Bank meeting the Board undertakes a health check of the economy using key indicators like job figures, wage activity, household spending, retail sales and commodity prices. Recent health checks have shown a cooling of economic activity and domestic demand, indicating that the earlier rate hikes have begun to work their way through the Australian economy.

Some experts like leading CommSec economist, Craig James, go one step further in claiming that Australians are better off than it appears. He found that while rate rises, higher petrol prices and a falling stock market have been hurting our hip pocket, some of these costs have been covered by years of wage increases and tax cuts.

A recent CommSec analysis of wage, tax and cost of living data has revealed that a person who took out an average home loan six years ago and was earning the average wage, would today be ahead by more than $425 a month. Even those who took out mortgages more than three years ago are likely to be in front despite numerous rate hikes and the increased cost of living.

The outlook in the US is not so rosy. Last year’s subprime mortgage crisis has led the way to a depressed housing market, with mortgage firms, Fannie Mae and Freddie Mac, almost becoming the latest victims.

The collapse of these giant firms would present a serious threat to the US economy, which would have a flow-on effect in the Australian economy via lower commodity prices, lower demand for our exports and higher prices for funds. Given the severity of the situation, a Bush Administration rescue is in place, which it is thought will put a lid on the problem, preventing further destabilising of the economy.

In these times of economic uncertainty, it is all the more important to make a thorough and considered decision when a funding need arises. I am well experienced in arranging loans and will use this expertise to seek out a range of suitable financing options for you within the current economic climate.

I read an article in the paper recently, commenting on the Australian reserve bank’s policy to lift interest rates in an attempt to control inflation.

A prominent American economist has criticised the Reserve Bank of Australia’s reliance on inflation targeting, saying it is absurd to think it could dampen global food and energy prices.

Joseph Stiglitz, a Nobel-prize winning former World Bank economist from Columbia University, told on ABC Radio’s AM program this week inflation targeting by central banks might lead to a ?disaster? and that it was a ‘fad’ which would be discarded.

‘To think that there is anything Australia can do to dampen global food inflation or global energy inflation is absolutely absurd,’ Stiglitz said. ‘I think we are about to see a number of instances of countries that follow inflation targeting in an inappropriate situation and they will be a disaster.’

Soaring petrol, food and housing costs pushed Australia’s core annual inflation up 4.4% in the first quarter to a seven-year high while the RBA’s aim is to keep yearly price increases between a 2% and 3% average.

‘The countries that follow inflation targeting are likely to get themselves into trouble,’ Stiglitz said. ‘I would predict that in five years, inflation targeting will be seen as just another fad, fashionable among central banks like monetarism, it will be pushed aside and central bankers will be looking for a new fad to follow.

‘Today, central bankers are following a new religion ‘ that is inflation targeting. It works sometimes, but it doesn’t work at others.’

I think there is a lot of sense in what this American economist says.

If he is correct, maybe we’ll see some relief coming to mortgage payers in the coming months, just to get some respite would be a blessing for many homeowners.

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FREE OFFER if you read on!

Interest rate rise, is this the end of the boom market?

As you know the reserve bank of Australia has lifted interest rates by a 0.25%, and there have been hints at another rate rise coming shortly, probably another 0.25% by June.

Now, these rises along with the gloomy outlook presented in the media for the coming year could make some people depressed.

I see this time as a real opportunity not to simply batten down the hatches and wait till the storm passes, but simply take a step back, reassess your position, and prepare yourself for the opportunities that might come your way.

Here are the things I think you can do right now:
• Review your current home loan and check to see that you are not paying too much, paying too many fees, or not having the right combination of features to suit your individual needs.
• Do a budget, do it properly, do it completely and commit yourself to it.
• Do a budget.
• Do a budget.
I guess I’ve made myself clear here. Budgeting is the cornerstone of survival and prosperity. No one who has ever made money in the property market or in investing generally has ever done so without having a budget as the basis of their strategy.

To help you in this, I have a special offer for you.

I have research the market for a long time looking for the best budgeting software. I have downloaded free software from various websites, purchased a few specialty products and basically I’ve come to believe that there is only one product on the market worthwhile having.

Keep2Budget is quite simply the best product I have found. It sells for a ridiculously low price of around $30 or $40. It has a very easy-to-use interface, and is based on an old fashion model of putting your money into coffee tins for each category of your spending. Of course the coffee tins are not real; they are used simply as a metaphor and provide the blueprint for the way the software works.

In my next newsletter, I will be offering free copies of this program to the first 10 people to register with me.

But, if you wish, you can contact me now and get your free copy before the newsletter goes out.

Call me on 1300 133 193

My final point is this: this is not the end of a boom market, I think it’s just a blip along the way. The world economy is in a bit of turmoil due to the crisis in the US which will have a domino effect here in Australia. But the population growth in southeast Queensland is such that demand for housing will continue to increase with prices still steadily rising.

It might just be the time to set up your line of credit for future bargains right now. This will give you the flexibility to move on opportunities as soon as they arise, with the benefit of not having to pay for the money until you actually use it.

Call me and I’ll talk you through the details.

1300 133 193

At last I have finished the first draft of the Home Loan Ebook I have been promising. To obtain it you just need to leave a comment requesting it and I’ll email it to you.

Feel free to make any comments as to how you think it might be improved, I am always keen to hear new ideas and to hear what things you need to know.

I will be updating it as the market changes so the information remains relevant.

Give it to your friends if you like but please note the copyright conditions and do not attempt to alter it in any way. (It’s password protected anyway!)

Naturally the information is not to be construed as advice in any way, and I do not hold the information to be definitive or complete. The information is a guide, hopefully a good one, that will assist you in determining which loan is the best for you, and not everyone else!

Email me or leave a comment below.

Cheers

Michael