A Message from Our Management
February 2010 Finance Newsletter
Well here we are again into the last month of the first quarter of the year! Isn't it extraordinary how fast the year flies! :)
We're all set to have another rate rise when the Reserve Bank meets again this week; the economy has been running so well.
How are you set to manage this in your cash flows?
Many Aussie's are 'financially unfit'
In spite of improvements in the economy, a survey by Finance News: 16 Feb. 2010 shows almost a third of Australian women and a quarter of men are classed as financially unfit...
BankWest spokesperson, Adrian Bradley said, their research revealed even more Australians are doing it tough and struggling to manage their finances with nearly 28 per cent of those surveyed had an over-reliance on debt, little or no regular savings, no insurance coverage and high housing costs relative to income.
In fact there are 6% more people classified in the most serious category of financially unfit.
A majority of Australians, 69 per cent, said 2009 had been a difficult year for them financially, the online survey of 833 Australians across all states, territories and age groups found.
About half of those surveyed reported borderline financial fitness, which included moderate savings, some insurance, average housing costs and moderate debt levels.
Just 22 per cent were classed as financially fit, with regular savings, a range of insurance, low housing costs and high asset levels relative to debt and income.
Rising rates drive loan delinquencies
Mortgage delinquencies are set to rise in 2010 as borrowers battle rising interest rates and Christmas-induced credit card bills, says global ratings agency Fitch...
Going on to say, borrowers who took out their loans before the global financial crisis hit may find it easier to meet interest payments because they’d already survived the massive hikes in interest rates in March 2008.
Further interest rate hikes, combined with continued global instability and the risk of rising unemployment in Australia were expected to push arrears higher in 2010, Fitch said.
Credit underwriting rules set to tighten
Big and regional bank loan officers expect credit underwriting standards for home loans and small businesses to be tightened over the next six months, with home borrowers, consumers and small to medium sized enterprises the hardest hit.
While lending standards for personal credit card applications and loans to large companies and the corporate sector have been tightened "somewhat".
The top reason for tightening lending standards has been attributed to the rising funding costs followed by the general economic environment.
However it's been reported that bank margins will fatten by up to 10 basis points ... go figure!
The Silver Lining in all of this
The Global Financial Crisis has made a big impact on couples thinking about divorce ... in fact, it’s been credited with saving a few marriages - for the time being.
Melbourne lawyer Sally Nicholes, of Nicholes Family Lawyers, says: "We certainly have some clients who have put settlements on hold and an increased number who are exploring mediation."
Melbourne financial adviser Kerry Mitchell says no one plans for divorce and getting the right advice is important. Sometimes, people find it hard to accept a reduced lifestyle and many do not realise that settlements can take two years.
Meanwhile, property and share values can change dramatically, so now valuations are taking place as close to the date of settlement as possible rather than at the start of the process.
Lawyers and judges have become more reliant on financial advisers as they negotiate tricky property settlements as part of the divorce process because they want to look at
What’s appropriate?
As a company what we're finding is that those people on our Debt Reduction Program who are actively using their tools are sailing through this time because they know how much money they have coming in, what expenses are not negotiable and they have a handle on their discretionary spending under control.
If you're one of our debt reduction clients and you need a bit of a refresher or you've had changes in your budget then give us a call ... if on the other hand you have no idea what I'm talking about and you'd like one of our fabulous Relationship Managers to come and visit with you then let us know.