Westpac has set a cat amongst the pigeons so to speak since they raised their mortgage rate 45 basis points and their 1 year rate momentarily to 6.80%. Since then their deposit rates have been aggressive. It appears that they have been writing loans quicker than they could fund them as they have tried to reduce the flow through various means. They raised mortgages by 45 pts, have now reduced the LVR loans can be written at and have stopped marketing RAMS Home loans through mortgage brokers. If this does slow the lending rate one would think their aggression in the term deposit space will abate.
January 20, 2010
January 19, 2010
Inflation
The TD Securities-Melbourne Institute inflation gauge rose by 2.6% as an annual rate. In December it rose by 0.3% as it did in November.
The gauge indicates some emerging upward pressure according to TD Securities senior strategist Annette Beacher.
There is a very good chance the RBA will now lift rates to 4.00% or 4.25% before pausing.
The gauge indicates some emerging upward pressure according to TD Securities senior strategist Annette Beacher.
There is a very good chance the RBA will now lift rates to 4.00% or 4.25% before pausing.
January 15, 2010
Employment Figures
Very interesting employment number yesterday which I believe gives the RBA little choice but to press the rate hike button in February. It certainly vindicates the rate hikes to date.
Total numbers employed grew by a solid 35,200 (all but 7,300 were part-time) while average expectations were for 10,000 (ANZ had 30,000). The headline rate dropped to a bullish 5.5% after a downward revision to 5.6% in November.
The trend is clearly displayed in this graph.
Total numbers employed grew by a solid 35,200 (all but 7,300 were part-time) while average expectations were for 10,000 (ANZ had 30,000). The headline rate dropped to a bullish 5.5% after a downward revision to 5.6% in November.
The trend is clearly displayed in this graph.
January 14, 2010
Personal Lending
Total personal finance commitments rose 1.1 per cent in November, seasonally adjusted, to $7.053 billion, from $6.959 billion in October. This is the sort of borrowing that the RBA is not going to want to let get out of control seeing as we, as a nation, already have a very high household debt ratio. This is an extra point in the rate rise argument list.
Employment figures are out today with expectations for 10,000 more people to be employed and the unemployment rate to remain unchanged.
January 12, 2010
Job Ads
Job Ads seem to be surging at the moment. ANZ Job Ad survey figures from December indicate that advertisements in December rose to their highest level in 31 months with a 6% lift after a rise of 5.2% in November giving a good indication that the recovery is likely to be sustained.
Expectations for labour figures on Thursday are for an increase in numbers employed by 10,000 although ANZ have expectations for a 30,000 increase.
A big increase will put serious pressure on the RBA to continue hiking rates.
Expectations for labour figures on Thursday are for an increase in numbers employed by 10,000 although ANZ have expectations for a 30,000 increase.
A big increase will put serious pressure on the RBA to continue hiking rates.
January 11, 2010
Construction Activity
Housing prices and finance are up and house building activity is up. Overall construction is however contracting. Figures from Friday show that the (Ai)/Housing Industry Association Performance of Construction Index (PCI) grew by 1.7 points in December to 49.3, just below the 50.0 mark separating expansion from contraction.
Construction activity contracted in December at a slower rate that in the previous month at least.
The result suggests on-going weakness in overall construction activity, the Australian Industry Group (Ai Group) says.
Construction activity contracted in December at a slower rate that in the previous month at least.
The result suggests on-going weakness in overall construction activity, the Australian Industry Group (Ai Group) says.
January 08, 2010
Spending
Solid retail spending towards the end of last year will keep the RBA trigger finger close to the rate hike button. A lift of 1.4% nationally and 2% in NSW indicates that confidence is strong.
Building Approvals
There's a lot of talk about strong housing numbers (prices and approvals) putting pressure on interest rates. Given much of the action at the end of last year was from first home buyers, and given the federal assistance has now ended, I think such conclusions are a little premature.
Australian building approvals rose 5.9 per cent to 13,724 units in November, seasonally adjusted, from an upwardly-revised 12,962 units in October. Expectations were for a 3% rise.
Australian building approvals rose 5.9 per cent to 13,724 units in November, seasonally adjusted, from an upwardly-revised 12,962 units in October. Expectations were for a 3% rise.
Job Ads
The Olivier Job ad index has shown growth in December of 0.5%. NSW had a particularly strong showing of 2.5% after growing 7.3% in November.
Housing Prices
In economic news, research has shown that capital city housing prices in the first 11 months of 2009 increased by 11.3%. The increase in November was 1.1% - the 11th consecutive monthly gain.
The implications are that with need for housing unlikely to be met by supply that this strength will continue. With higher rates and the unwinding of the first home buyer scheme I can't see it being to the same degree. Some economists suggest the RBA may tighten in Feb in response to strong housing prices buy there are still a lot of figures to come to be able to make such a conclusion.
The implications are that with need for housing unlikely to be met by supply that this strength will continue. With higher rates and the unwinding of the first home buyer scheme I can't see it being to the same degree. Some economists suggest the RBA may tighten in Feb in response to strong housing prices buy there are still a lot of figures to come to be able to make such a conclusion.
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