What I found makes interesting reading in light of the massive cuts to local jobs and outsourcing to foreign countries the banks and other financial institutions have proudly touted as the reason we “Australians enjoy the best value for money banking in the world.”

From the Reserve Bank Of Australia, Statistical Tables:

Average home loan fee income per Australian Household.

1997 $302 per household

2008 $1045 per household

That is a 246% increase in 11 years. 22.5% per year!

I guess loans are bigger now, but this is fees, not interest.
If you are getting gouged by high home loan fees consider refinance.

Transaction account fees per Australian Household.

1997 $431 per household

2008 $1792 per household

That is a 315% increase in 11 years. 28.5% per year!

Increase must be for all the convenient services they offer? We are being gouged.

Credit Card Fees per Australian Household.

1997 $135 per household

2008 $332 per household

That is a 146% increase in 11 years. 13% per year!

Competition is keeping these fees under relative control.

Total bank Fees for all Accounts and Loans per Australian Household.

1997 $1160 per household

2008 $4845 per household

That is a 317% increase in 11 years. 29% per year!

So the big four major banks cry poor, do not pass on RBA interest rate cuts, increase home loan rates above RBA increases, continue to send jobs off shore and use 1950′s like lending practices. So much for CPI and the reasons we need high home loan rates. Bank fees are a catalyst, just like fuel costs, for bringing inflationary pressure to bear on home buying Aussie battlers. I say we need more competition in the banking sector.

Please check your loan statements for errors, I recommend you do it every month. If you get your statement six monthly, get access to transactions on-line and check them monthly. Fee income as you can see is a bounty for banks, don’t let them pirate more of your hard earned income than they are entitled too.

The RBA controls interest rates to an extent, and historically rates are not that volatile compared to other developed countries.

Here’s the letter:

“I am sending you this email to advise you of some SIGNIFICANT changes that have occurred in the Low Doc market over the last few months.

4/ If you want to buy another Investment property”

I personally think we are returning to the nasty old days like in the 70′s, this means less people able to get loans and a stagnant property sector. I hope I am wrong. Take a look at interest rates in the 70′s, they are high, but not that bad. People just could not get a loan and banks were stupidly tough with lending. However the bankers of that day did not enjoy the extreme bonuses of their counterparts today, so I am guessing the rouges of Martin Place and Collins Street will find a way to gain from others misery.

Now, may just be the time to fix some of your loans for a year or two.

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.

Minutes of the Reserve Bank of Australia’s February board meeting, released 18th March 2009, show the Banks governor Mr Glen Stevens taking a seat on the fence rather than make a recommendation regarding interest rates.

The Governor decided to offer a choice between a rate cut or a wait and see approach to see the results of previous cuts. Thank goodness the board decided on the wait and see!
Home Loan rates are already at historical lows.

My opinion is documented in a previous post. Australia must maintain relatively high interest rates in comparison to our trading partners to encourage investment and the flow of foreign capital to Australia.

This wait and see period is the ideal time to consider your property investment strategy. If all the international economic bodies are correct, Australian property values are overdue for a correction. Many predict a drop of upwards of 30%. Now! may be a time to take profit. Especially in the lower or first home buyer areas.

Get an up to date valuation on your properties. Check which properties are paying their way. Get rid of the dead wood and prepare to take advantage of a new wave of property bargains as the recession starts to hit home.

I for one, for the sake of the country, hope they leave them alone this month. Our Banks have just suffered a credit rating markdown, making it more expensive for them to borrow overseas. Australia needs to attract overseas money and what better way to do it than an attractive interest rate?

Our housing loan lending rates are already at historical lows, please leave well enough alone RBA.

The International Monetary Fund has for some time voiced a considered opinion that: “Australian property is among the most overvalued in the developed world.“ International investors have heeded the IMF’s warning and are quitting their Australian holdings in the droves. New enquiries have all but dried up.

February 2009 is the perfect time to ready yourself for the turbulent time ahead. Consolidate your debts, sign your tenants to a longer lease, crack down on tardy payers. Repair and maintain your properties to keep them in top condition. Check your mortgage interest rate, get the lowest rate mortgage available or convert to interest only if you can and get some quality mortgage checking software.

Could Australian property prices collapse and go bust as part of a domino effect from the US Sub Prime crisis and credit default swap dilemma?

Last week many popular media outlets reported that the US credit markets may be headed for the drain. Maybe it could happen, and maybe Australian property owners and mortgage holders would be hit with more mortgage stress. Well that was until the US government stepped in with a so called “conservatorship” of the two giant us domestic mortgage providers Fannie Mae and Freddie Mac in a bid to avert what many doomsayer’s prophecy as a global financial system meltdown. The US government as I understand it have taken over the running and financial backing of these two companies.

What a great move. In the past all I have ever seen is governments selling off public assets in a time of crisis. Literally, throwing billions of potential income to the private sector. Buying private assets when they are cheap? This surely is a move in the right direction. This purchase may give the government of the US the largest public ownership of housing outside the China and Russia. You see in the US, mortgage holders are not as personally liable for the mortgage debt as they are in Australia, they can simply just hand back the keys to the house and walk away, leaving the bank to worry about the mortgage and the house. People are dying to get to the USA to improve their lives, and they will want the American dream. Watch out China, this could be the catalyst for the USA economy and its people to resurrect the great boom nation and move it to a new higher plain of economic strength.

If sanity prevails and greed is good as the fictitious Gordon Gecko from the movie Wall Street extols, the worlds debt security markets should be back on track in no time. The US government and therefore tax payers may even make some profit from the recovery. Please be assured, someone will profit big.

Historical Australian Mortgage Interest Rates may indicate more than you think? Cast your mind back to when our Australian Mortgage Interest Rates were 18%. I am sure some people got rich in property, by making a few sacrifices? Recent financial media speculation centres around our Australian Mortgage Interest Rates moving down. I hope they are right. With the downward move I expect an improvement in the liquidity of Australian Property, but maybe not a price increase. The US credit situation will continue to dampen enthusiasm.

My advice? Start scouting for your next property. Some folks will get scared with all this media doom and gloom and sell up, in that case you could find some bargains in the Australian Property market very soon. Make an appointment with your mortgage broker or mortgage home loan coach and be prepared to move quickly before everybody gets on the property boom band wagon again.