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Saturday, 22 January 2022
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What is APRA worried about? Most mortgagees can easily absorb increases in interest rates without posing a systemic threat to the banking system. Housing lending is a relatively risk-free activity for banks.
We tend to forget that house prices often fall. Direct lending controls are more effective than rate rises because macroprudential limits affect the volume of money for housing leaving business rates untouched.
The record run in house prices looks unsustainable but the outlook for Australian banks is for improving credit growth and earnings. For house prices to rise, the supply of credit must match demand from borrowers.
Among the share success stories is a poor personal experience as Telstra's service needs improving. Plus why the new budget announcements on downsizing and buying a home don't deserve the super hype.
This increased focus on affordable housing is welcome but the challenge is that investors typically require ‘market’ rate financial returns. By definition, social housing tenants cannot pay market rent.
Three key indicators are useful for predicting the short-term outlook for house prices, although tighter lockdowns make the outlook gloomier. There is enough doubt to create cause for concern.
There is good reason to believe the negatives will continue to outweigh the positives over the next 12 to 18 months. There is more concern about house prices than the short-term indicators suggest.
House prices have recovered quickly, driven by low interest rates, a relaxation of lending standards and the reelection of the Coalition. Will APRA be tempted to impose new prudential standards?
Australian banks appear cheap and their shares trade below broker targets. But three analysts offer deeper explanations that suggest stronger credit standards will affect house prices and credit growth.
Economic growth and interest rates affect housing prices, but political decisions around zoning, migration, and taxes are also strong influences. Overall, the current climate suggests a much slower growth in house prices.
Budget 2017 outlined two changes to superannuation rules, both in an attempt to improve home affordability. One makes a small reduction in the tax burden for savers, while the other allows more money into super.
Household borrowing, mainly for property, now far exceeds business borrowing, but it is businesses that create jobs and wealth. The crackdown on housing debt is overdue.
Most people entering retirement do not see a financial adviser, mainly due to cost. It's a major problem because there are small mistakes a retiree can make which are expensive and avoidable if a few tips were known.
Eligibility for the Commonwealth Seniors Health Card has no asset test and a relatively high income test. It's worth checking eligibility and the benefits of qualifying to save on the cost of medications.
The focus is on Magellan for its investment performance and departure of the CEO, but Douglass says the pandemic, inflation, rising rates and Middle East tensions have not played out. Vindication is always long term.
This is our annual checklist of what retirees need to be aware of in 2022. It is a long list of 25 items and not everything will apply to your situation. Run your eye over the benefits and entitlements.
The Warren Buffett/Charlie Munger partnership is the stuff of legends, but even Charlie admits it is coming to an end ("I'm nearly dead"). He is one of the few people in investing prepared to say what he thinks.
Depending on personal circumstances, it may be time to rethink the bias to paying down housing debt over wealth accumulation in super. Do the sums and ask these four questions to plan for your future.