For the last few years, news about our economy has been a “mixed bag.” Some of the indicators go up and some go down. The Reserve Bank of Australia (RBA) began lowering cash interest rates two years ago and they are now at an unprecedented record low. Some are pessimistic about the economy and some are optimistic. While we do see some naysayers in the media, the mortgage brokers at Smartline Rockingham are optimistic about the economy.
So, why are we so optimistic about the economy?
As of this writing, numbers for July weren’t in yet, but there were some encouraging numbers across a wide range of metrics and markets in June. One important metric: retail sales in June were much higher than expected. In addition, the lower Australian Dollar is encouraging global spending in Australia. ASX stalwarts Suncorp and CSL produced solid gains.
In the past twelve months, the housing market has risen 11.1% in the capital cities, led by Sydney (18.4%) and Melbourne (11.5%). The manufacturing sector is in the expansion mode, as evidenced by a Performance of Manufacturing Index (PMI) number of 50.4. Retail was up 0.7%, which was nearly twice the projected 0.4%.
The consumer confidence rating, as compiled by ANZ/Roy Morgan, rose three consecutive weeks in June to +12, which is the best performance in seven years. As of mid-July, the stock market was up 5.2% for 2015. More recently, in August, the DHL Export Barometer, which compiled information from 597 Australian exporters, showed the highest level of confidence since the Global Financial Crisis (GFC).
Over the last 12 months, the median superannuation fund has produced slightly more than 9%.
What it Means to You
What this means to you is that, despite a lot of whining and complaining in the media, our economy is getting better. It may not be improving fast enough for some people, but it is improving.
If you are looking for a new home loan or to refinance your current home loan, now is the time to take advantage of record low interest rates. Remember: as the economy improves, housing prices rise. There may never be a better time to buy your first home.
To learn more, call us today: (08) 9527 1800.
