The Reserve Bank of Australia has cut its cash rate to a low 2.5% – lower than during the GFC. The Sydney Morning Herald says several banks wasted no time in passing on the rates cut to their home loan customers. National Australia Bank and Bank of Queensland said they would both pass on today’s 0.25 percentage point cut in interest rates to the home loan customers in full. This is good news for home buyers with a good deposit and a good clean credit file – but maybe not such great news in the long term for the Australian economy.
By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repair and www.fixmybadcredit.com.au.
As Australian Broker reported today, the speech made late last week by RBA governor, Glenn Stevens, also indicated another rate reduction was on the cards, with Stevens admitting the RBA was becoming increasingly concerned about major areas of the Australian economy, particularly the passing of mining and credit growth ‘booms’.
Many brokers will be taking this information straight to clients, as 1st Street Home Loans founding director, Jeremy Fisher, outlined in an interview with Australian Broker earlier today.
“First and foremost, we’ll get in touch with any clients that are due to settle and looking at making any necessary changes to their loans. And then we’ll go back and review any clients that are, I guess, a ‘watchlist’. So it’s pretty much just keeping our clients informed of the change.”
Fisher said 1st Street sends out a bulletin to all their clients immediately following RBA cash rate announcements in order to keep them updated.
“Then we just go back to our watchlist and touch base with everyone that’s kind of doing things as we speak – because that may or may not influence what they’re doing.”
Mr Stevens told the Sydney Morning Herald he expected the Australian economy to continue to grow below trend in the near term as mining investment falls, and for inflation to remain consistent with the medium-term target as labour costs moderated.
He added that the Australian dollar remained “at a high level” despite losing about 15 per cent of its value since early April, and welcomed a further depreciation of the exchange rate to help foster a rebalancing of growth in the economy.
Several analysts said the RBA could ease rates again later this year as the country continues to grapple with a slowing economy amid an uneven transition away from mining-led growth.
Taking advantage of interest rate cuts.
With this interest rate cut, we feel it is worthwhile to ramp up our education efforts around credit history. Many people do not know what a credit file is – many more don’t know the process for being listed with bad credit, and more again assume that if there was something amiss with their credit file, that they would somehow be informed. They don’t realise that the onus is on them to check their credit history on a regular basis (at least once per year) just to make sure that errors have not been made on the credit file. Errors can happen to anyone – from all walks of life.
People may believe their credit history is clean, but creditors can and do make mistakes with credit reports, and often it is not until people apply for finance that they have any idea they have bad credit. At this time the process of investigation and complaint can be stressful and can sometimes mean the prospective borrower misses out on the home loan while the discrepancy is addressed.
The process of clearing an unfair credit listing can sometimes be very time consuming – especially if the creditor has not cooperated with requests to supply documentation in a timely fashion, or the matter has to be referred to a third party for investigation.
So the message is, if people are thinking about buying a home in the near future – they should check their credit report first, and make sure it has the “all clear” before they apply for finance, and before they get their hearts set on any particular home. This is free for all credit active Australians once every year and we encourage any home buyer to request a copy of their credit report. It takes 10 working days or for a fee to the credit reporting agency, it can be sent urgently. But what it does is give peace of mind – not only to the Purchaser, but to the Broker or Bank Manager, and in some cases a clear credit file can help get the deal over the line with the Agent and Seller.
If there are any inconsistencies or out and out errors on the credit file, the advantage to getting those removed is generally thousands and thousands of dollars in interest saved by being able to take advantage of those interest rate cuts with the mainstream lender of the buyer’s choice.
To find out more about the benefits of using a credit rating repairer to dispute credit listings, contact a Credit Repair Advisor at MyCRA Credit Rating Repairs on 1300 667 218 or visit the main site for more information www.mycra.com.au.
Image: renjith krishnan/ www.FreeDigitalPhotos.net