I call it the real estate economy, because if you are like me, my house is my most important asset and my life revolves around making it comfortable, maintaining, improving and keeping it. My jobs and money making enterprises are generally a means to this end.

Why are we on the brink of disaster? Banks are ripping off small business and the public alike by not passing on the rate cuts. They are being wasted on bank profits and extremely obscene salaries for bank executives.

Thousands of jobs are disappearing daily as small business is forced to cut back on expenditure. People will be forced to sell their homes because the banks have not passed on the RBA interest rate cuts. Major Bank’s continue to overcharge mortgage holders for their finance, official interest rates are at an all time low of 3%, yet small business pay in excess of 6%. The majority of small business use residential real estate as their surety for their business loans. So as small business’s start to go under as predicted, the Australian banks will have plenty of residential property to sell as they foreclose on mortgages and we know they will flood the market like they did in the late eighties as it seems all the Bank CEO’s have memories similar to fish, they can be caught time and time again on the same hook and maggot. All this on the back of a Government deposit guarantee, that effectively bailed out the banks. The guarantee is indirectly from the very taxpayers they are ripping off.

The remedy?

The Government needs to put a cap on first mortgage loans. A figure of 2% should be plenty. That is, if official cash interest rate cashs are 3%, then the standard variable first mortgage rate would be 5%. If the RBA lower rates by .25% then the maximum rate for this mortgage would come down by a similar rate. The bank’s however, would be given a period of 15 to 20 days to adjust the rate.

Cheaper money for small business will stimulate the Australian economy in general, but the important boost will be to the real estate economy as the cost of keeping and obtaining a home will be more sustainable.

Write to your local MP if you agree with my sentiments. We can as a group achieve change.

It seems all the original criteria remain the same, with just the date for expiry extended to 30th September 2009, in its current form and to 31st december 2009 with slightly reduced benefits. So get your skates on, free up your cash. Sell that expensive car and take the bus, cut out excessive spending on entertainment and clothes, give up smoking and take a part-time job. Above all save, save, save.

Unfortunately property prices have gone up because of the boost, but there are still some reasonably priced properties available and interest rates are at historical lows.

Do you have a granny who is ready for the nursing home? Why not buy her house? You could even let her stay as boarder after you take over. You will save on agents fees at least. She may be happy that her home is staying in the family.

There are heaps of things you can do to find a reasonably priced home. Please be innovative, think outside the square. However, make sure you abide by the rules of the boost. I hear the government will be checking up on people.

If you dont have a contact with a Bank or Mortgage Broker, I am now using Easy-Loans for my customers. All the work is done either by email, instant messenger or telephone, hassel free.