2009 Financial Forecast
|  | Cost Of Bank Funding Dropping
The cost of Bank Funding has dropped with the 90 day bank bill at 3.9% which is the lowest since June 1969. “There’s plenty of liquidity and the interbank market may be finally starting to thaw,” said Adam Carr, a senior economist at ICAP Australia Ltd in Sydney.
Liquity injections were the result of the bankruptcy of Lehman Brothers Holdings Inc. back in September 2008. Governments and central banks were pressured to come to the aid of financial institutions and inject cash into the money markets. The cost of wholesale funding in Australia has come down due to the federal government’s guarantee which would allow banks to lend at a cheaper rate. | | | |  | Future Rate Cuts?
In the current state, Economists predict an interest rate cut to be unlikely before RBA’s next meeting on Tuesday, 3rd February 2009. During the peak of the Credit Crisis the cash rate reached 7.25% in March 2008. The RBA has reduced rates since September 2008 by 3% to minimise the impact of the Credit Crunch on the economy. The current cash rate sits at 4.25% which is the lowest since 5 December 2001. This can be gauged in comparison to a high of 17.50% back in January 1990. See cash rates from RBA | | | | 
| Cheaper New Homes
A noticeable decline in property value since the peak of 2007 has made property purchases more affordable for many first home buyers. Australia’s top 100 developers have reported a 1.1% drop in new home sales, compared to a 3.1% rise in October. In November sales of new detached houses were down by 0.4% and October was down by 5.2%. QLD sales fell by 10.1%, WA was up 7.9% and NSW up by 3.8%. Multiunit sales fell 5.3% in November while October showed a 8.6% decline.
| | The increase in NSW new homes could be due to the combination of the increased first home owner grant, interest rate cuts and significant drop in property values. Monarch Investments chief executive Peter Icklow comments, “New house and land packages are selling for far less than replacement costs, people have all those grants and no stamp duty under $500,000, and provided they can put together a deposit it can work out cheaper than renting.” | | |  | Debt Workout
In these uncertain times one of the core strengths of Palladium Finance is to provide advice and options to borrowers who are experiencing problems with new or existing finance. As our range of expertise covers all areas of property finance from residential, commercial and development we would welcome the opportunity to speak to any friends, clients or family that may need our help. Call 02 9380 7222 now. |
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Last Updated ( Friday, 09 January 2009 )
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