Pete Wargent blogspot

Co-founder & CEO of AllenWargent property buyer's agents, offices in Brisbane (Riverside) & Sydney (Martin Place), & CEO of WargentAdvisory (providing subscription analysis, reports & services to institutional clients).

5 x finance/investment author - 'Get a Financial Grip: a simple plan for financial freedom’ (2012) rated Top 10 finance books by Money Magazine & Dymocks.

"Unfortunately so much commentary is self-serving or sensationalist. Pete Wargent shines through with his clear, sober & dispassionate analysis of the housing market, which is so valuable. Pete drills into the facts & unlocks the details that others gloss over in their rush to get a headline. On housing Pete is a must read, must follow - he's one of the finest property analysts in Australia" - Stephen Koukoulas, MD of Market Economics, former Senior Economics Adviser to Prime Minister Gillard.

"Pete is one of Australia's brightest financial minds - a must-follow for articulate, accurate & in-depth analysis." - David Scutt, Business Insider, leading Australian market analyst.

"I've been investing for over 40 years & read nearly every investment book ever written, yet I still learned new concepts in his books. Pete Wargent is one of Australia's finest young financial commentators." - Michael Yardney, Australia's leading property expert, Amazon #1 best-selling author.

"The most knowledgeable person on Aussie real estate markets - Pete's work is great, loads of good data & charts, the most comprehensive analyst I follow in Australia. If you follow Australia, follow Pete Wargent" - Jonathan Tepper, Variant Perception, Global Macroeconomic Research, author of the New York Times bestsellers 'End Game' & 'Code Red'.

"The level of detail in Pete's work is superlative across all of Australia's housing markets" - Grant Williams, co-founder RealVision - where world class experts share their thoughts on economics & finance - author of Things That Make You Go Hmmm, one of the world's most popular & widely-read financial publications.

"Wargent is a bald-faced realty foghorn" - David Llewellyn-Smith, 'MacroBusiness'.

Tuesday, 3 May 2016

The long slow march to zero? (part 11)

Okay.

Well, the Reserve Bank of Australia (RBA) went ahead and did it anyway, with no telegraphing needed!

With global interest rates and inflation remaining stubbornly low, the Official Cash Rate was cut by 25 basis points at 2.30pm to its lowest level in history, on the back of much softer than expected inflation figures.

The cash rate is now at a historic low of 1.75 per cent.

Obviously this is unbelievably happy news for homeowners who can probably barely believe the affordability dividend that has been slung their way since the financial crisis.


This will pull forward demand for homebuyer loans, although restrictions on investor credit will mean that this interest rate cut may be somewhat less stimulatory than some of those delivered previously.

It will be interesting to see who passes on what from the three major lenders that haven't yet announced, but it wouldn't be a surprise to see some of the major banks holding back a few basis points of the 25bps cut.

That said with the guillotine threat of a Royal Commission hovering above their respective heads, perhaps the majors will need to pass on a minimum 22bps...lol.

Interestingly National Australia Bank (NAB) immediately announced that it would pass on the full 25 basis points to variable rate homeowners.

It is interesting to remember that an interest rate cut is rarely a "lone wolf", and this potentially makes it much more likely that we'll see a "double tap" (i.e. interest rates only tend to be cut if significant action is deemed necessary).

Counting against this, however, the wording of the statement's final paragraph which noted that "at this meeting" growth prospects would be improved by monetary easing. Does this mean that no further cuts are expected? Perhaps so, though that's open to interpretation.

The RBA's policy decision is here.

Federal Budget tonight. It's all happening!