Rate Club – 22 July 2016

The Question You All Want Answered About Rates

I've just finished meeting you all at our workshops in each of the capital cities and this would be the most popular question - "should I fix?"  Personally I say NO! Firstly as above, the banks are sitting on fatter margins and can afford a better rate for you.  The second thing is that the no- majors are starting to make inroads into mortgages at the expense of the majors.  Their share has gone from 20% to 29% this year.  This competition will force the majors to fight for their huge share and loosen their purse strings.  I believe the RBA will be closer to 1% by the November meeting.  I think we then will be approaching the time to look seriously at fixing.  History shows that people fix at the wrong time - just before rates come down.  I think we are in for a sustained period of lower rates that can only get lower!

Another Popular Question?

"How will the new government go? How will the economy travel?"  I don't have a crystal ball but I think the new Senate will surprise people by having learnt from the previous one and become far more pro-Australia and pro-economy.

The economy needs a lift as we've had falling wage growth over the last four years.  The RBA has breached its number one charter of facilitating falling employment by twiddling its thumbs for the last six years while presiding over a 6% unemployment rate.  They will take action to lower rates which will be a positive.

The government went to the election without any practical plans to create jobs and increase your wealth.  Now they will have to get practical and present practical solutions to the Senate.  I think the soon to be released Gross Domestic Product (GDP - our wealth indicator) will surprise the media with a drop.  This will spur on the political minds to help you.  A suggestion would be for the government to raise billions of dollars on new debt at just 1.85% fixed for 12 years.  Far from being afraid of debt, this debt can be channelled into creating wealth for Australians.

The Queensland Government is in neutral for the lack of funds.  Projects are on hold for the lack of funds.  Research and development grants are minuscule because of lack of funds.  The cost of getting goods to ports and airports to earn export income could be reduced but for the lack of funds.  Tony Abbott planned to become the "Infrastructure Minister".  I looked at all the plans and worked out that unemployment would be zero if these plans were implemented.  So if the government and politicians roll their sleeves up and get cracking we are in for a great economy with rising incomes. Watch Episode #67 of Ask Kevin Young in the side column to hear more of my thoughts.

I love property!

Kevin Young Club Founder