Reserve Bank of Australia Update

The March Board meeting of the Reserve Bank of Australia (RBA) concluded with a decision to maintain the official cash rate at 4.35%, following a thorough review of recent economic indicators. The official statement for this decision is available on the RBA's website.

This decision is in line with what was anticipated by the market, providing stability for borrowers in Australia who have variable interest rate loans, especially in light of recent rapid rate increases.

Although inflation has exceeded the target range of 2% to 3%, registering a 3.4% rise in the twelve months leading to January, the RBA's decision to maintain the rate allows for a continued assessment of the effects of previous rate adjustments.

The RBA board remains committed to bringing inflation back within the target range. Recent data indicates a moderation in inflation, with the headline monthly CPI holding steady at 3.4% over the year to January, showing a gradual decline in momentum driven by a decrease in goods inflation. Despite this, services inflation remains high but is slowing at a more gradual pace. These trends reflect ongoing excess demand in the economy and robust domestic cost pressures, both in labour and non-labour inputs.

The board emphasised the importance of ensuring that inflation is on a sustainable path towards the target range, noting that medium-term inflation expectations have thus far been consistent with the target, and it is crucial to maintain this alignment.

Property Market Snapshot

When was the last time you looked at your SMSF loan interest rate?

In today's rapidly changing financial landscape, it's essential to stay ahead of the curve when it comes to maximising your financial opportunities. That's why we're excited to bring you valuable insights into Self-Managed Super Fund (SMSF) borrowing and refinancing, two strategies that could significantly impact your financial future.

SMSF loans are often an untapped resource, offering unique advantages for property investment within the framework of your superannuation. With competitive rates and a growing number of lenders entering the market, now is the perfect time to reassess your SMSF borrowing arrangements.

Refinancing your SMSF loan or conducting a health check on your current setup can potentially unlock large savings and ensure your borrowing strategy remains aligned with your goals. We’re here to guide you through this process, leveraging our expertise to help secure the favourable terms and rates tailored to your needs.

Here are some key tips to consider when exploring SMSF lending:

Evaluate Your Current Loan: Take the time to review the terms, interest rates, and fees associated with your existing SMSF loan. Refinancing could potentially lead to significant cost savings or improved features.

Understand Lender Requirements: Different lenders may have varying criteria for SMSF loans. Make sure you understand their requirements regarding property types, loan-to-value ratios, and repayment structures.

Seek Expert Advice: SMSF borrowing involves complex legal and financial considerations. Consult with professionals who specialise in SMSF lending, such as mortgage brokers, accountants, and financial advisors, to ensure compliance and optimal outcomes.

Assess Investment Opportunities: Conduct thorough due diligence on potential property investments within your SMSF. Consider factors like location, rental yield, and potential capital growth to make informed decisions.

Regularly Review Your Strategy: Market conditions and personal circumstances can change over time. Regularly review your SMSF borrowing strategy to ensure it continues to meet your objectives.

By partnering with the right mortgage broker, you can potentially gain access to a wealth of industry knowledge and a diverse range of lending options.

If you're considering SMSF borrowing or refinancing, we're here to help. Reach out to schedule a free consultation, and let's take proactive steps towards optimising your financial future.

How does the decision affect you?

The cash rate significantly shapes interest rates throughout the economy, impacting lending and deposit rates. Consequently, these interest rates play a crucial role in influencing economic activity, employment levels, and inflation rates.

This broad influence has widespread implications for many individuals in Australia.

If you would like to discuss what today’s news means for you and your finances, please feel free to contact us to arrange a discussion in more detail.

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By Lipins Partners • May 30, 2024

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Why life's big milestones are a reason to check your life insurances

By Curo Financial Services • March 21, 2024

Traditionally, life’s big milestones were often summed up as getting married, buying a house, having a baby and later settling into retirement. And while all of these are still momentous and memorable life moments, today there are several other modern milestones to add to that list. These could be launching your own side hustle, investing in a property with a friend, choosing to have a child on your own, or deciding to travel in a campervan. Aside from all these moments being a cause for celebration, these milestones also mark an important point in your life to reconsider the security you have in place to not only protect yourself and everything you’ve worked towards but also the ones you love. Considering Life Insurances Big changes in your life are a time to take stock of the things you’ve achieved, your future goals and what’s important to you. And more often than not, life’s big milestones come with added financial responsibility. For this reason, it’s important to consider how you would continue to meet these responsibilities if something were to happen to you. Pooling money with family or friends to buy property can be a great way to break into the property market, however, it comes with its own unique considerations. In particular, having a plan for how you will manage and share the financial responsibility which extends to how you would cover both your shares of the mortgage if something were to happen to either of you. Life Insurance, Critical Illness Insurance and Total and Permanent Disability Insurance (TPD), are all ways to help protect yourself and people that are important to you, helping ensure that if you passed away or could never return to gainful employment, neither your friends or your family would be left to cover the cost of your financial commitment. Similarly, if you were diagnosed with a Critical Illness or experience a traumatic event that left you totally and permanently disabled, you would have lump sum payment to help offer you financial security and assist with ongoing expenses, or debts. Considering Income Protection While big life achievements are generally a result of considerable planning and preparation, you can’t always predict what will happen in life. This means that if you’re considering launching your own venture as your next big milestone, it can be helpful to have protections in place that can help prevent your goals from being railroaded in the event of an illness or accident. Often, increasing earning power is a motivator to launch a business, so it may be worthwhile considering how you would maintain this financial security if something were to happen to you. Income Protection can give you an alternative source of income if you’re temporarily unable to work due to an illness or injury that's left you totally or partially disabled. Whether you’ve launched a solo side hustle or are working with a small team, it can help you stay on top of personal living expenses, medical costs and business expenses, leaving you to focus on recovering. Every Australian is different and has their own unique ambitions, goals and milestones. If you’d like help reviewing your personal financial situation, please reach out. Any advice is general in nature only and has been prepared without considering your needs, objectives or financial situation. Before acting on it you should consider its appropriateness for you, having regard to those factors.