Digital Finance Analytics (DFA) Blog
"Intelligent Insight"
My latest Friday afternoon chat with journalist Tarric Brooker, as we look at the RBA’s latest Statement On Monetary Policy, and the recent Bond Market dynamics.
And we look at the economic fall out on households if rates go higher for longer. Tarric’s charts can be found at: https://avidcom.substack.com/p/dfa-chart-pack-6th-october-2023
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Despite all the hopium from the property lobbyists, the truth is more households are running out of runway with regards to their finances.
It has shown up in my latest surveys, with more than half of mortgage holders now struggling with cash flow, and 70% percent of renters in the same boat.
Next Tuesday on my live show I will be walking through the detail behind these numbers. But the pressure is also showing up in other statistics. For example, the Australian Bureau of Statistics last week revealed that value of household deposit accounts decreased by $6 billion in the June quarter, with it being the first decline in 16 years.
“This was the first fall in deposit balances since the Global Financial Crisis and indicates that the household sector was tapping into cash reserves amid rising cost pressures”, the ABS said.
The decline indicates that households are ‘running’ down savings built up during the pandemic to pay for bills and loans as a result of the Reserve Bank of Australia’s (RBA) aggressive interest rate hikes to fight inflation and the overleverage into property driven by weak lending standards and high prices. Something has to give.
Meanwhile, figures released by the RBA on Friday indicate a growing number of people are using their credit cards to cover the cost of increased bills, with the stock of personal credit having risen by 1.6% in the five months to August.
It seems to me the real pressures are now painfully obvious, and some are truly running out of runway.
But note, the RBA’s forward guidance on monetary policy was unchanged, stating that “some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will continue to depend upon the data and the evolving assessment of risks.”
So, buckle up people, turbulence ahead.
A belated edition of our Monday evening rant with Edwin Almeida, our property insider. This week we explore the political shenanigans & follies, the latest numbers and some tips on beating the auction.
https://www.ribbonproperty.com.au/
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Today’s post is brought to you by Ribbon Property Consultants.
This is an edited version of a live discussion with Damien Klassen, Head of Investments at Walk The World Funds and Nucleus Wealth. Given the recent movements in bond yields, and the strong US$, markets are in the doldrums, and we will explore the current dynamics in play.
Original version here: https://youtube.com/live/VbBSqRZf3xo
Caveat Emptor! Note: this is NOT financial or property advice!!
I caught up with Steve again following the RBA no change announcement on Tuesday, and we discussed the implications, in the light of new research from Canstar about the state of play of household finances.
Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.
https://www.canstar.com.au/team-members/steve-mickenbecker/
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A belated edition of our property Rant this week, as I am joined by Edwin to look at the latest news and data on the market. Listings seem to be wilting, rental properties are becoming as rare as Edwin’s chickens…
[Note next weeks Rant will also be released on Wednesday due to the long weekend in some states].
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Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
This is an edit of a live discussion with mortgage broker Chris Bates. Chris started as a Financial Adviser back in 2007 and sold his Financial Advice business in 2020. Over the past 9 years, Chris has grown into one of Australia’s top Mortgage Brokers and is passionate about taking the product providing industry to a trusted advice based profession.
In 2022, Blusk won the Connective Broker of the year award. Connective is arguably Australia’s leading and largest Mortgage Aggregator. Chris has been finalist for the past three years. Chris was #1 with most loans settled in NSW and #2 nationally out of over 3,500 brokers.
Go to the Walk The World Universe at https://walktheworld.com.au/
I have discussed before the spate of announcables from the current Government – events and releases which give the impression of taking bold actions which grab headlines, but which in reality signifies very little at all. Housing was a standout example, but now we have another, the jobs plan.
Which in fact was a scene resembling The Hollowmen. It took 260-pages and six cabinet ministers to announce the jobs plan, and according to Jim Chalmers he wants to reduce the non-inflationary jobless rate so 2.8 million people who are not working, or wanting to work more hours, can bolster the labour market and improve their wellbeing.
So, the federal government will put “full employment” at the heart of Australia’s policy frameworks and institutions, to drive down structural unemployment over time and keep unemployment as low as possible. And they say the benefits of a strong labour market are not equally shared.
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In the UK, Annual growth in regular pay (excluding bonuses) is the highest we have seen since comparable records began in 2001. The Office for National statistics said In May to July 2023, annual growth in regular pay (excluding bonuses) was 7.8%, the same as the previous three-month period and the highest regular annual growth rate since comparable records began in 2001.
Annual growth in employees’ average total pay (including bonuses) was 8.5% in May to July 2023; this total growth rate is affected by the NHS and civil service one-off payments made in June and July 2023. But we can see workers are chasing real wages growth, as inflation eases, just a little with annual growth in real terms (adjusted for inflation using Consumer Prices Index including owner occupiers’ housing costs (CPIH)) for total pay up for the year by 1.2% and for regular pay a year on year rise of 0.6%.
In Australia, The Fair Work Commission released their latest data on Monday which revealed that average pay rises in new collective agreements in Australia have soared to a high of 4.7 per cent, closing in on inflation and putting pressure on wage forecasts. The increase is the highest average recorded since the commission’s data series began in mid-2022, surpassing previous highs of 4.4 per cent and is based on 174 deals lodged from August 12 to August 25, extended to 63,553 employees.
But with inflation at 6% on the quarter to June 2023, and the monthly series at 4.9%, on average workers are still going backwards in terms of real take home pay after inflation.
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An important debrief on the past weeks Senate Inquiry into Regional Branch closures, use of cash and other banking issues, with Robbie Barwick from the Australian Citizens Party.
Senate replay here: https://www.aph.gov.au/News_and_Events/Watch_Read_Listen/ParlView/video/1733879
The power of democracy at work!
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