Bank lending rates dropping faster than a front rower's shoulder in a scrum
Dr Lowe has spoken: we're likely to see the Reserve Bank deliver another rate cut very soon, possibly as early as next Tuesday. The fall in international borrowing costs, the reluctance of Australians to spend money at the moment, still-stalled wage growth and rising unemployment make the move to a .75 per cent cash rate almost a fait accompli.
Speaking at a business event in Armidale yesterday, RBA governor Philip Lowe said that when the board meets next Tuesday, they're prepared to act "if necessary."
According to Dr Lowe, some bright spots in Australia's immediate economic outlook include our resources sector and infrastructure spending. Risks include household consumption (which is tied to wages and employment) and international trade tensions, which have a flow-on effect to our local fortunes. The RBA will be intending further cuts to address these factors.
If recent action by the big banks to increase their competitiveness in the home lending space is any gauge, we can expect to see any upcoming official cash rate cuts translate into more attractive mortgage conditions. We heard yesterday that Westpac has dropped its serviceability floor; today, the news is that CommBank has slashed up to 90 basis points off its fixed rates across its mortgage range.
With a 1 October RBA rate cut currently sitting at a 75 per cent probability, the big banks are racing against gathering second-tier lenders - and each other - to rebuild their home mortgage books.
Remember though, this is only good for people who can overcome the significant barriers placed in the way of aspiring borrowers following the Hayne royal commission. PM Scott Morrison, speaking from New York, has appealed to Australian banks to "not shy away from lending" and to pull back from "onerous" responsible lending standards.
That's perhaps a bit rich coming from a bloke whose government called the Hayne royal commission in the first place, and barracked the findings that led to those very same onerous standards. It's an understandable comment however, when you consder the Morrison government is working hard to shift responsibility for economic stimulus as far away from itself as possible at the moment.
New projects on the hop
We've seen a bit of action today from the developer community on major projects.
Landream has lodged a first-stage residential DA to redevelop the former council depot in Sydney's Pyrmont,
Built is about to tackle its biggest project yet as part of the transformation of Liverpool in Sydney's south west. It's taking on a $400 million-plus mixed-use development of a 9300 sqm site in partnership with Liverpool City Council.
Lastly, B1 Group is working to get its hands on collapsed developer Ralan's four-tower, 1600-unit Ruby Collection residential project on the Gold Coast. B1 Group is being backed by Hong Kong's Shimao Property.