Debt Consolidation, Debt Solution, Debt Relief

Economists from leading financial services companies agree that the RBA will push interest rates back to near pre-GFC levels by the end of 2011.The Australian Financial Review’s quarterly economic survey, published today, revealed that most economists believed the central bank would keep rates on hold in April, but start nudging them steadily upwards in May until the cash rate reached around 6% in 2011.RBC Capital Markets warned that the current average home loan rate of 6.25% was well below the 10-year average of 7.25%. “We think the market continues to underestimate the magnitude of this tightening cycle,” said senior economist Su-Lin Ong.

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PROPERTY investors have been warned by Reserve Bank Governor that they cannot expect interest rates to remain at the present historic low rates which have fuelled the latest property boom.

Glenn Stevens cautioned against property investment as a “riskless” path to riches.

“I think it is a mistake to assume that a riskless, easy, guaranteed way to prosperity is to be leveraged up into property,” he said.

“It isn’t going to be that easy.”

And he sent a clear message that home owners may have to expect more mortgage pain when the Reserve Bank meets to review rates, presently set at four per cent, in April.

Rates could not remain at the low levels set during the emergency of the Global Financial Crisis and investors should not plan their futures on continuing bock bottom rates, the RBA chief said in his first televised interview, on the Seven Network’s breakfast Sunrise program today.

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Cash payments of up to $900 appear to have succeeded where years of pleading and threats have not. They have persuaded Australians to do their tax.

The latest tax statistics show a record 12.6 million individuals filled in returns for the 2007-08 financial year, up 7 per cent or 840,000 on the year before. In no previous year has growth approached 300,000.

Worth between $250 and $900, the tax bonus stimulus payment was available only to Australians who completed their tax returns by February 2009 and earned up to $100,000.

But Australians in the very richest of families do not seem to have been shy about claiming it.

Australia’s highest-earning postcode is 2027, taking in Edgecliff, Rushcutters Bay and Point Piper, with an average taxable income of $186,000. Yet about 3000 of its 5000 taxpayers claimed the rebate, according to the Tax Office. They were matched by the second-highest earners in the state, in Mosman and Spit Junction, who took home an average of $156,000 each yet claimed two rebates for every three taxpayers.

Net incomes fell in all but two of the top 10 earning NSW postcodes, largely reflecting a massive 29.5 per cent slide in capital gains.

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CUSTOMERS are grabbing cash from store checkouts in a backlash against ATM fees.

Woolworths, Coles, Big W and Kmart are among outlets that act as de facto banks – even for customers who don’t buy anything.

Woolworths spokesman Luke Schepen confirmed customers could withdraw cash without making a purchase at staffed and self-serve checkouts.

He said the system helped shoppers dodge potential “foreign” ATM fees.

The Woolworths group, including supermarkets and other stores, handles 80 million “cash outs” through the Eftpos system annually.

This is 220,000 a day – up 12 per cent in a year.

Coles spokesman Jim Cooper said its supermarket customers withdrew about $3.5 billion a year at checkouts. The number of “cash out” transactions had risen 15 per cent since 2007.

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Banks’ fear of taking on excessive risk following the financial crisis may hinder Australian’s recovery, according to analysis from St George Bank.

St. George chief economist Justin Smirk said the major banks have changed lending behaviour, limiting the volume of loans going to the business sector in the wake of the global financial turmoil.

Private investment may shrink 0.4 per cent this year, according to forecasts released this week by BIS Shrapnel. That’s down from 9.9 per cent growth in 2008 – before the global slowdown took full toll – and last year’s 3.1 per cent.

Small- and medium-sized businesses may be among the last to benefit from the Australian economy’s rebound. Government stimulus outlays have buoyed retailers and the construction industry, while rising commodity prices are re-igniting the mining boom. Housing prices have also jumped, drawing in more funds from banks.

”Because housing had a very modest downturn compared to what went on with business…the recovery will be much greater in business – as long as there aren’t funding constraints,” said Mr Smirk, who delivered his report in conjunction with Access Economics in Melbourne this morning.

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The International Monetary Fund (IMF) has warned the world’s wealthiest nations to watch their surging levels of government debt, saying it could drag down the growth needed to ensure continued economic recovery.

The economic crisis is leaving “deep scars in fiscal balances, particularly in the advanced economies,” John Lipsky, the IMF’s No 2. official, told the China Development Forum in Beijing. He said that countries that have been going into debt to stimulate their economies should now prepare for belt-tightening steps next year.

“Policymakers should be making it clear to their citizens why a return to prudent policies is a necessary condition for sustained economic health,” said Lipsky, who is the fund’s deputy managing director, according to remarks prepared for the conference.

The IMF projects that gross general government debt in the G-7 advanced economies, except Germany and Canada, will rise from an average of about 75 per cent of GDP at the end of 2007 to about 110 per cent of GDP at end of 2014, Lipsky.

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DIVORCE has a major financial impact, and it doesn’t matter who paid for what when you separate assets.

Everything is considered part of the matrimonial pool: superannuation, your prized golf clubs, even cutlery inherited from your grandmother are up for grabs.

Latest data from the Australian Bureau of Statistics shows there are about 47,000 divorces granted each year in Australia, and that doesn’t include break-ups among defacto couples. Between a third and a half of all marriages end in divorce.

Getting the divorce itself costs very little. There are divorce kits available free at the courts. They are relatively easy to complete so you may not even need a lawyer.

What is expensive is going to court to resolve parenting and property settlement disputes.

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AMP has opted for some price discounting in an effort to generate demand for loans from its banking subsidiary.  Unlike other lenders who have been putting interest rates above the rates set by the RBA, AMP have decided to go the other way,

AMP has just announced a cut of 22 basis points in its basic variable home loan to 6.27 per cent. AMP cut its introductory variable rate loan by 45 basis points to 5.94 per cent.

This latter loan rate is only 20 basis points more than the 5.75 per cent paid by AMP on its highest yielding savings account.

The home loan book of AMP Bank declined in January 2010 over December 2009, by 0.2 per cent, and highlights a disappointing year for the lender’s home loan business.

AMP reported very strong growth rates in 2008 (around double that of the wider market) but let the momentum slip over the following year, when it recorded growth in home loans of only two per cent (on APRA data) and compared with a growth rate for all banks of more than 12 per cent.

AMP has little access to retail funding, with household deposits of only $1.3 billion compared with a mortgage book at January 2010 of $8.3 billion.

AMP is one of several small funders to enjoy repeat levels of support from the Australian Office of Financial Management in marketing mortgage-backed securities, including a $1 billion transaction two months ago.

If any of the following are applicable to you, please be careful.  These are the early signs that you are carrying excessive levels of debt.:

• You are charging  food or petrol expenses on you credit card because  you have no cash available;
• You are close to the limit or over the limit on your credit cards;
• You only pay the minimum balance on your credit cards each month;
• It seems that the only way you can afford to pay your living expenses  is by increasing the limit on your credit card;
• You do not know the amount you owe to your creditors;
• It seems like you have too many credit cards to handle and too many payments;
• You have considered bankruptcy as a way out of your situation

If more than 1 of the above points describe your life, please stop and seek financial assistance.  Excessive debt left unchecked can have dire consequences for your credit history and ability to borrow in the future.

In the aftermath of the financial crisis that rocked the globe, Australians have taken spending to a new height, plunging the nation into record levels of debt.

New Reserve Bank figures show Australian debt, at $1.2 trillion, has surpassed American levels for the first time.

The figures show household debt – the combination of personal and mortgage debt – is equivalent to Australia’s GDP, which drops every adult in an average of $74,000 debt.

The executive director of the Australian Financial Counselling and Credit Reform Association, Fiona Guthrie, says thousands of people are in serious financial difficulty.

“Some are losing their homes, having cars and households goods repossessed or facing bankruptcy,” she said.

“The numbers are here to prove this: record bankruptcies, record mortgage stress and record waiting lists in financial counselling agencies.”

Debt adviser Dominique Grubisa says most people go into the red because the sheer availability of credit, especially in the lead-up to the financial crisis, allows people to spend well beyond their means.

“Most people get into debt when it’s easy and everyone’s throwing money at you, when credit is on tap,” she said.

Ms Grubisa says people tend not to worry about debt levels until their lives hit a snag, such as a job loss.

“When times are good, nobody worries about it … you can always just get another credit card to pay off the existing one,” she said.

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