Recent commentary from Bill Evans of Westpac forecasts the RBA decreasing rates by 1% over the next year. This is after (November 2010) he said rates would increase by the same amount over the 2011 year, which is not eventuating. Although a 1% decrease is unlikely (he is alone amongst economists in this view), his comments however at least mark a level of sensibility not heard in a while and reflect the challenge that faces the RBA.

It took a profit downgrade from DJ’s to make the top brass realise what everyone else has been feeling for months, that the economy in a main, is hurting. Lifting rates, even only an additional 0.25%, would send the vast majority of Australians into a deep depression.

In a telling sign about the concern of the RBA, for the first time since December 2010, they began their discussion of their last meeting with a review of financial markets. They are still following the IMF's optimistic forecast of world growth, but acknowledge the significant downside risk from Europe for the world economy.

As a result of the above, long term fixed rate loans have been steadily decreasing with 2 year fixed rate loans as low as 6.99%.

In days of 'responsible lending', lenders are rewarding borrowers who have higher debt levels with a greater discount off their standard variable rates and are rewarding home owners who's loan to value ratio's are below 75%.

A combination of a lowly geared facility and debt in excess of $1 million, can result in rates as low as 6.75% (That includes an offset account).

Please feel free to call us to advise where your lender has placed you on their risk curve and we’ll advise whether you should be getting more in your pocket.

There is growing appetite for construction debt with margins and debt cover requirements decreasing and gearing increasing.

Sydney is one market that is still demonstrating strength in an otherwise weak national property market. Property departments are therefore eager to grow their construction book in NSW where possible.

Please call Charter Finance to discuss further.

There has been a gap in the market for residual stock loans since the mortgage trusts were obliterated in the GFC, however appetite for these loans are now growing again. 65% LVR is generally achievable.

Please call Charter Finance on 02 9363 2747 to discuss further or email at reception@charterfinance.com.au or dean@charterfinance.com.au.

The material contained in this newsletter does not constitute financial advice. Any transmission or receipt of information via this newsletter does not intend to create a professional services relationship between Charter Finance Institute Pty Ltd and the reader. All products or rates detailed in this newsletter are valid as at the date of this newsletter and are subject to change by the Lender without notice.

Charter Finance Institute Pty Ltd is not responsible for any action taken in reliance on any information contained in this newsletter. Anyone reading the newsletter should not act upon material contained in this newsletter without appropriate consultation.