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Logic Wealth Group September E-newsletter
  www.logicfinance.com.au
   contact@logicfinance.com.au
Welcome to the LWG September Edition
The Logic Wealth Group Experience.
Good afternoon,

With the launch of Logic Wealth Group and new website (www.logicwealthgroup.com.au) we have received a great response from our clients, particularly regarding the Logic Wealth - Initial Review and Comprehensive Review. These reviews provide a detailed overview of your current position, along with a plan to achieve your future wealth goals.

Once your needs and requirements are established we create the Logic Wealth Plan that is tailored specifically for you. With the help of your Logic Wealth Consultant you can achieve your future goals and targets.

"Most people are seeking help with their current and on-going financial commitments, this is where the Logic Wealth Plan can help you set out a road map for the next 5, 10, 30 years." David Lipschitz

Even when you think all your finance's are completely under control it is a good opportunity to review this every 6-12 months.
At the Logic Wealth Group we look forward to assisting you with your financial future, so give us a call at the office on (08) 8232 7272 or contact your current consultant to discuss your opportunities.

Now to the newsletter,

Well it seems that the RBA have left the official cash rate unchanged at it's latest meeting giving great possibility for a decrease next month. Do we think that this will happen? If so, will the banks follow suit and reduce their rates accordingly?
in the next article we read how housing affordability has increased. With the median household income increasing and the current median mortgage repayment reducing, families are noticing some freedom with the cash flow.

Lastly, we delve into the current banks reducing their fixed rates and how fixed rates are hitting their lowest in 3 years!!

As mentioned, Logic Wealth would love to assist you with your financial needs. Give us a call and experience the Logic Wealth difference.

Aaron Stock – Finance Consultant
aaron@logicfinance.com.au

with

David Lipschitz – Finance Manager
david@logicfinance.com.au
Statement by Glenn Stevens, Governor: Monetary Policy Decision
At its meeting today, the Board decided to leave the cash rate unchanged at 3.50 per cent.

Having picked up in the early months of 2012, growth in the world economy has since softened. Current assessments are that global GDP will grow at no more than average pace in 2012, with risks to the outlook still on the downside. Economic activity in Europe is contracting, while growth in the United States is only modest. Growth in China remained reasonably robust in the first half of this year, albeit well below the exceptional pace seen in recent years. Some recent indicators have been weaker, which has added to uncertainty about near-term growth. Around Asia generally, growth is being dampened by the more moderate Chinese expansion and the weakness in Europe.

Markets for key natural resources are adjusting accordingly. Some commodity prices of importance to Australia have fallen sharply in recent weeks. The terms of trade peaked a year ago and have declined significantly since then, though they remain historically high.

Financial markets have responded positively over the past couple of months to signs of progress in addressing Europe's financial problems, but expectations for further progress are high. Low appetite for risk has seen long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Nonetheless, capital markets remain open to corporations and well-rated banks, and Australian banks have had no difficulty accessing funding, including on an unsecured basis. Share markets have generally risen over the past couple of months, on very light volumes.

In Australia, most indicators available for this meeting suggest growth has been running close to trend, led by very large increases in capital spending in the resources sector. Consumption growth was also quite firm in the first half of the year, though some of that strength was temporary. Labour market data have shown moderate employment growth, even with job shedding in some industries, and the rate of unemployment has thus far remained low.

Inflation remains low, with underlying measures near 2 per cent over the year to June, and headline CPI inflation lower than that. The introduction of the carbon price is starting to affect consumer prices in the current quarter, and this will continue over the next couple of quarters. The Bank's assessment is that inflation will be consistent with the target over the next one to two years. Maintaining low inflation will, however, require growth in domestic costs to remain contained as the effects of the earlier exchange rate appreciation wane.

As a result of the sequence of earlier decisions, interest rates for borrowers are a little below their medium-term averages. The impact of those changes is still working its way through the economy, but dwelling prices have firmed a little and business credit has picked up this year. The exchange rate has declined over the past month or two, though it has remained higher than might have been expected, given the observed decline in export prices and the weaker global outlook.

At today's meeting, the Board judged that, with inflation expected to be consistent with the target and growth close to trend, but with a more subdued international outlook than was the case a few months ago, the stance of monetary policy remained appropriate.
Housing affordability improves
Cash rate cuts earlier this year have helped improve housing affordability, according to a new report.

As per the Adelaide Bank/REIA Housing Affordability Report, the average monthly loan repayment is now $2,155 compared to $2,290 in the June Quarter 2011.

In addition, median weekly family income is now $1,560, compared to $1,493 in the June Quarter 2011.

Speaking about the results of the report, Adelaide Bank’s general manager Damien Percy said the figures indicate that many people are now deciding to get on with their lives and are again making decisions about their housing choices.

“I think simple timing is a factor. Age waits for no-one. Older people in bigger houses make lifestyle choices to ‘downsize’, younger people have growing families and need to upsize. The imperative to ‘right-size’ your dwelling at a particular life stage can drive decision-making to an extent,” he said.

“Many people have been delaying these important choices and housing decisions for nearly five years.

“In June 2011, 35.4 per cent of family income was required to meet home loan repayments. In the June Quarter 2012, the figure had come down to 31.9 per cent – a 3.5 percentage point drop.

“This is still a significant chunk of family income, but moving nonetheless to relieve some of the pressure on household budgets. Appropriate and affordable housing underpins stable and successful communities and we forget this at our peril.”
Fixed rates hit three year low
A wave of rate reductions has forced fixed rate home loans to their lowest level in over three years.

According to new research by RateCity, 46 lenders have dropped their three-year fixed home loan rates since July, including all four major banks: ANZ, Commonwealth Bank, NAB and Westpac.

Westpac was the latest to drop its three-year fixed rate, cutting 10 basis points from its interest rate.

Of the 46 lenders, the average rate cut was 9 basis points, however eight lenders have cut their rates between 30 and 40 basis points.

RateCity spokesperson Michelle Hutchison said she expects more borrowers to take up fixed home loans this year.

“Three-year fixed home loans – the most popular fixed term among borrowers – are currently averaging 5.95 percent and borrowers can find deals starting from 5.53 percent by LJ Hooker Finance. We haven’t seen three-year fixed rates this low in more than three years when we were hit by the GFC,” she said.

“Variable home loans are still the most popular choice among Australian borrowers, especially with interest rate drops this year making them more attractive. However, with fixed rates at a three-year low and uncertainty about which direction rates will move, we expect to see more borrowers taking up fixed home loans this mortgage season.”

Australian Bureau of Statistics (ABS) data analysed by RateCity, shows the percentage share of fixed home loans financed in June was 10.16 per cent – up from 6.93 per cent in June last year.