"12 tips to getting a great property valuation"

Hi Followers

I came across this and thought I'd post it:

Investors periodically have their properties revalued in order to finance additional investments. For example, just say your property’s value has gone up by $50,000. Most lenders will let you borrow around 80 per cent of that value ($40,000) which you can use as a deposit for another property purchase. In order to work out exactly how much they’ll lend you, lenders will often send a property valuer around.So we’ve asked a couple of industry experts for the insider’s word on property valuations. How can investors get the highest figure possible?
Phillip Grahame from Herron Todd White says, “The main things in a valuation are the size and functionality of the dwelling and the size and location of the land.”So obviously the chances of a favourable valuation mainly come down to your choice of property in the first place. And of course, it also depends on what the property market in general is doing at the time. However, according to our experts, there are a number of things you can do to make sure you pull off the best valuation possible on the day.

1. Presentation

Grahame says presentation is the most important thing to take care of when you have an upcoming valuation.
“(Make sure) the gardens are looking nice and the clutter throughout the house is cleaned up and all that sort of thing. Because first impressions, even with property valuers, do count,” he says.“If it’s freshly painted and really neat and tidy and presents well, as it would to a buyer, then we’re going to be more positive on that particular property.”
Mark Ruttner from First Valuation Group agrees, “The owner should provide a property in a state of repair similar to an open for inspection.“There’s nothing worse than rolling up to value a house and all the clothes for the last two weeks are on the bedroom floor; the toilet seat is up; dishes for the last week are still sitting in the sink.”Ruttner suggests mowing the lawn and trimming the edges. He also says any external painting should be fully completed, as first impressions can be significantly dampened by incomplete paintwork.

2. Recent sales evidence

If you know the sale prices achieved at any recent property sales in your area, have that information available for the property valuer.
Ruttner says, “One of the best times to get a current valuation is when you have, say, two or three recent sales that are very similar to that of the property getting valued. Obviously such sales have a direct effect on the arrived value.”The easiest way to keep tabs on sales in your area is to attend auctions nearby. Whether it’s an auction or a private sale, hold on to the sales brochure when you attend the open home so that your valuer will be able to track down the agent to confirm the selling price.
If you want to be really helpful, Ruttner says it’s great when a property owner puts together a written report detailing three or so comparable sales within about 500 m of the property over the past six months. Grahame agrees that recent sales information is very useful. He explains, “In most cases we’ll probably be aware of (the sales data) but in some cases we won’t. So if the applicant knows of it, it pays to make the valuer aware of it.”

3. A rates notice

According to Ruttner, some valuers like to see a copy of your municipal/council rates. They vary from one place to the next, but there will generally be a “site value” or “unimproved land value” figure reflecting the value of the land only. And sometimes there will also be an “improved value”, based on the land and building.“Those (values) are done on a statistical analysis. So it’s not accurate but it gives us a ball park,” Ruttner says. “It gives the valuer a pretty good idea of where it’s sitting in the marketplace.”

4. Be honest

Grahame says, “We’ve heard every story and trick in the book and we can see through that pretty quickly. I’ve always found in my experience the more honest the people are, the more we look favourably on the property and the application. If someone’s telling fibs, immediately we see through that and get in a defensive mindset.”
For example, Grahame says clients might claim that a neighbouring property recently sold for $500,000 but the valuer might have evidence that it only sold for $450,000.

5. Make your improvements prior

If you have improvements to make, make them before the valuer comes around. Grahame says there are plenty of people who fall into the category of “the gonnas”.“Next week we’re gonna fix up the bathroom; or next week we’re gonna put on that carport… What people don’t understand is that we have to value it as we find it on that day. We can’t take into account any future improvements they may – or in a lot of cases they may not – do.”

6. Clear instructions

Grahame says, “If you’ve got plans for future improvements and got quotes and costings, make sure if you’re going through a lender that the lender requests an ‘as if complete’ valuation. A lot of times (the valuer) goes there and it hasn’t been communicated that’s what’s required and we just value as is on the day.”

7. List of recent improvements

Ruttner says, “If improvements have been made to the property over recent times, provide a detailed and written list of works conducted and the cost of these. Even better would be project specs and a building contract, giving the valuer an idea of exactly what has been spent.” While this will often add weight to your application, “also bear in mind that cost does not equal value in all instances,” he cautions.

8. Don’t overcapitalise

Grahame says, “Obviously improvements and renovations add value. But you’ve got to be careful about overcapitalising. So not spending more on a particular improvement than that particular area can cope with.” For example: “Putting on a large extension will obviously increase the value of the property but it may not increase the value more than what it actually cost. That’s generally dependant on the quality of the area. “So if people renovate and improve to put the property in a bracket higher than what most properties in that area sell for, then there’s a chance that they’re overcapitalising. If they’re in a really strong, well regarded area where people are looking to buy in high price brackets then it’s harder to overcapitalise.”

9. Outdoor living areas

“Outdoor living areas are one thing which tends to add more value than cost. So if there’s a well presented and functional living area, that always reflects well on a valuation,” Grahame says.

10. Kitchen and bathroom

“Kitchen and bathroom facilities are an obvious one,” Grahame says. “If they’re well presented and don’t have a dated look about them, then that will obviously have a positive impact on the valuation.”

11. Etiquette

“The inspection in a typical three-bedroom home would take a prudent valuer not much more than 10 minutes to inspect inside and out, so don’t feel that you have to speak to the valuer to make sure that they haven’t missed any part of the property,” Ruttner says.
Some owners feel a need to follow the valuer around pointing out every feature of the dwelling, but Ruttner suggests “don’t try and sell the property to the valuer.” While you may be pointing out features you feel add value to the property, it’s best to leave it up to the expert to decide which are the salient features. If you waste the valuer’s time with lots of chatter you may get in the way of them doing their job as thoroughly as possible. If you want to make sure the valuer has all the information they need, Ruttner suggests that at the end of the visit you can always ask whether there are any matters the valuer isn’t sure of.

12. Be patient

“Lastly, don’t ask the valuer what they think it’s worth just as they’re leaving,” Ruttner says. After visiting the property, the valuer needs to go away and undertake at least two separate methods for determining the property’s value.
Two of the most common methods for residential property are “direct comparison” and “summation”.Direct comparison involves analysis of recent sales of similar properties in the area. It may be a straight comparison, or a comparison of the rate per square metre (which is the sales price of each property divided by the land size). In this method the valuer takes into account factors which differentiate your property from those in the comparison sample, such as location, size, quality of the dwelling and views. Using the summation approach, the valuer assesses the land value (sometimes based on a comparison of vacant land sales), and then includes the “added value” of the improvements on the land (i.e. buildings). The added value is based on market evidence and is sometimes analysed on a rate per square metre basis. The valuer probably won’t be comfortable giving you an answer until this analysis is complete.

In short...

So for optimal results, keep the place neat and tidy, provide any information to the valuer which might support your case, and then leave them in peace to get on with their job.

This informationn was gathered from:
http://apimagazine.com.au/api-online/property-investment-articles/12-tips-to-getting-a-great-property-valuation

DEB BRADY
0405 570 903

UNDER OFFER!!!!

Hi Followers

UNDER OFFER THIS WEEK

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DEB BRADY

0405 570 903





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Hi Followers

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DEB BRADY

0405 570 903





COMING UP!

Hi Followers

Coming this week...Brand new development in the heart of Cottesloe. Stunning fit out and designs and a location that is hard to beat!

Call me today on 0405 570 903 to register your interest!

DEB BRADY
0405 570 903

"Don’t forget to claim depreciation"

Hi Followers

As tax time is just around the corner I thought this was a good read:

There's nothing more exciting than buying your first investment property and getting that first slip from your property manager to show your rent coming in. However, rental income is just the start. Around tax time, there are even more ways to help you pay off your investment – and one of those is by getting a property depreciation schedule that you can claim on tax.

What is property depreciation?
Just like you claim wear and tear on a car purchased for income producing purposes, you can also claim the depreciation of your investment property against your taxable income.
There are two types of allowances available: depreciation on plant and equipment (such as blinds, carpets and air conditioners) and depreciation on building allowance, which refers to construction costs of the building itself, such as concrete and brickwork.

So how does a depreciation schedule help me?
A depreciation schedule will help you pay less tax. The amount the depreciation schedule says you can claim effectively reduces your taxable income and the savings can be substantial.

Is my property too old to claim property depreciation?
The most common misconception is that only new property can be depreciated and this is simply not true. If your residential property was built after July 1985 you’ll be able to claim both building allowance and plant and equipment. If construction on your property commenced prior to this date, you can only claim depreciation on plant and equipment but it will still be worthwhile.

I bought my property three years ago. Can I still make a claim?
Yes you can. Your accountant can amend your previous tax returns up to two years back.

My property is renovated. Can I still claim?
Yes. The Australian Tax Office (ATO) will need to know how much you spent on renovations. If the previous owner completed the renovations you're still entitled to claim depreciation. Where the cost of renovation is unknown, a quantity surveyor has been identified by the ATO as appropriately qualified to make that estimation.

Shouldn’t my accountant prepare this report?
If your residential property was built after 1985 your accountant isn't allowed to estimate the construction costs. The ATO has identified quantity surveyors as properly qualified to make the appropriate estimate of the construction costs, where those costs are unknown. Real estate agents, property managers and valuers aren't allowed to make this estimate.

Should my depreciation provider be a registered tax agent?
From March 1, 2010, all companies that prepare tax depreciation schedules must be registered tax agents. The Australian Institute of Quantity Surveyors (AIQS) is a "recognised tax agent association", enabling full members of the AIQS who have sufficient experience to gain registration as tax agents.

Will you need to inspect my property?
A site inspection of your property is necessary to satisfy ATO requirements and also ensures that all depreciable items are noted and photographed. This guarantees you won't miss out on any deductions and the documentation can then be used as evidence in the event of an audit.
The best time to get a quantity surveyor to inspect your property is immediately after settlement and hopefully just before the tenant has moved in. But if that's just not possible, quantity surveyors can liaise directly with the tenant or property manager in order to cause minimal disruption.

How much will my property depreciation schedule cost?
The cost of preparing a tax depreciation schedule varies according to the type of property you’ve purchased, location, size and numerous other factors. Quantity surveyors fees are 100 per cent tax deductible.

This information was gathered from:
http://202.174.100.149/api-online/property-investor-tips/dont-forget-to-claim-depreciation

DEB BRADY
0405 570 903

"Australian commercial property ‘safe haven’"

Hi Followers

As many of my clients have interest in commercial property I thought I'd share this article:

Investors from Hong Kong, Singapore, Malaysia and China are turning to the Australian commercial property market in search of higher rental returns, according to CommercialAsia.com.

National sales manager for Australia and New Zealand Corey Weekes says Australia’s steady economy and commercial property sector, particularly in the areas connected with the resources boom, offers Asian investors attractive yields to preserve and grow their wealth.

“Region-wide cooling measures for property investment by Asian governments are also driving many Asian investors to explore offshore options like Australia,” Weekes say.

Offshore-based institutions and private investors accounted for 37 per cent of Australia’s commercial sale transactions in 2011.

City sales director with Knight Frank, John Bowie Wilson, adds the number of offshore investors interested in the Australian commercial market is increasing on a daily basis, as prices rise in Singapore and as Hong Kong awaits a currency correction against the US dollar.

“Asian investors are typically capital-rich and have a good understanding of the requirements when investing in Australian property,” Wilson says.

“The recent drop in interest rates is helping local private and institutional investors to return to commercial property investments, however it’s still a challenge for many domestic investors to raise capital.”

This information was gathered from:
http://www.apimagazine.com.au/api-online/news/2012/05/australian-commercial-property-safe-haven

DEB BRADY
0405 570 903

"RBA sets scene for lower rates"

Hi Followers

I came across this article today that I want to share:

THE minutes of the latest monetary policy meeting did not explicitly flag the possibility of another round of interest rate cuts but still left the way open.   

The meeting was held by the board of the Reserve Bank of Australia (RBA) on May 1 and ended with a cut in the cash rate to 3.75 per cent from 4.25 per cent.

The minutes spelled out the reasoning behind the move - economic growth and inflation that fell short of the central bank's expectations, the lowered forecasts for both published in the RBA's quarterly report on May 4, and the ongoing risks from Europe.

The minutes show no real sign that the RBA expects those factors to go away all of a sudden.
The forecasts prepared by the RBA, like those in the federal budget last week, are based on the assumption that market expectations for the cash rate are vindicated.

As the minutes noted, those expectations were - when the meeting was held - that cash would fall to 3.25 per cent by the end of 2012.

And the forecasts are consistent with plenty of scope to cut the cash rate.

"The staff assessment was that inflation was likely to remain in the lower half of the (two to three per cent) target range over the foreseeable future, with cost pressures to be contained given the forecast for moderate growth in the economy,'' the RBA said in the minutes.

The risks from abroad are skewed downward.

The RBA said the risks from Europe continued to cloud the world economic outlook and were weighing on market sentiment, which had deteriorated.

"Members noted that the deterioration had not been triggered by any particular event but, rather, it reflected renewed concerns about the inter-related state of public finances and weakness in economic activity in the euro area,'' the RBA said.

In other words, the darker mood was soundly based on fears that fiscal consolidation would retard growth, making it harder for the affected countries to balance their budgets.

In the minutes, the RBA described this as a "negative feedback loop''.

Against this backdrop, it's clear that the RBA has not closed the door on further cuts to the cash rate.
However the minutes did not canvass the possibility explicitly.

Accordingly, the RBA will be inclined to adopt a wait-and-see approach, which has more appeal since there was an unexpected fall in the unemployment rate in April, reported by the Australian Bureau of Statistics on Thursday.

The futures market has currently factored in a cash rate of about 2.75 per cent by the end of 2012.
It's possible, but the minutes suggest that's only likely to happen if the worst fears surrounding Europe are realised.

Barring that, it will be a matter of watching the flow of data to see if the RBA's forecasts again prove to be on the sunny side of reality.
This information was gathered from:
http://www.news.com.au/money/interest-rates/rba-sets-scene-for-lower-rates/story-e6frfmn0-1226356152887

DEB BRADY
0405 570 903

"Understanding negative gearing and positive cash flow"

Hi Followers

Thought I'd share this article , a must read for investors!

Negative gearing is running a property at a loss so that the overall effect of the property on your tax return is a deduction. The tax saving that results can help support the property. If the tax saving is good enough it may even result in the property having a positive cash flow.

For example:

Notice how the property is only cash flow positive if the owner is in the 46.5 per cent tax bracket which, from July 1 2009, means he or she would have to earn more than $180,000 a year.

The more likely tax bracket would be 31.5 per cent. To be in this bracket from July 1, 2009 you would have to earn less than $80,000 a year and more than $34,000. Note, this lower threshold increases over the next few years but the upper threshold is expected to stay the same until 2014.

Buying a property and having $45 a year extra as a result sounds good, doesn't it? Even if you're only in the 31.5 per cent bracket and only have to top the property up to the tune of $1905 per year it's not bad.

So now all you need to do is rush out, buy this property, sit back and wait for it to pay itself off. But let's look at what sort of property would fit the above example.

The special building write-off is quite high. This could be because it was built between July 18, 1985 and September 16, 1987 so it qualifies for a depreciation rate of 4 per cent. But even at this rate it would have to have cost $150,000 to build way back then. Also, if this is the case the property is only entitled to depreciation over 25 years so this claim is about to expire. It's more likely that the 2.5 per cent rate applied, which means the building write-off will last for 40 years after it was constructed (100/2.5).

To qualify for $6000 in building depreciation a year at the 2.5 per cent rate the building must have cost $240,000 to build. Yet the interest of $22,000 in the example could only cover borrowings of $258,823, assuming an 8.5 per cent interest rate.

A substantial deposit would have been necessary to have such a low interest expense and still receive such a high rate of rental return. You see, at a standard rent return on investment of 5 per cent the property would have to be worth $400,000 to receive $20,000 in rent.

Maybe this could have been achieved by buying well and some clever renovations, but if it was achieved because of a large deposit then the $45 per year return is a poor yield on those funds unless there's capital growth.

The key factors to look for in a positive cash flow property are a strong rental return compared with purchase price and a low land value, as land isn't included in the special building depreciation amount. Generally these qualities are found in remote areas where capital growth isn't as good.

A more likely profile is a $300,000 property where $310,000 is borrowed to cover the purchase and associated costs.

{BREAK}
For example:


If the above is typical of properties that are available then it's going to take some real bargain hunting to find a positive cash flow property.

Higher cash flow costs won't improve your cash flow. In fact, if they're not deductible, such as initial repairs, they work against your cash flow.

The two factors that increase your cash flow are higher depreciation (including special building write-off) and a high tax bracket. Higher depreciation as a percentage of the purchase price is achieved by buying a newish property with a low land value, such as a unit or in a remote area, because the special building write-off is based on the original cost to build the property.

Even if you find a property that has a positive cash flow you still want to achieve some capital gains to offset the CGT. CGT will be payable even if you sell for only enough to cover the original purchase price plus buying and selling costs. This is because you're required to reduce your cost base by the amount of building write-off you have claimed.

If you can't find a positive cash flow property you need to make sufficient capital gains to cover the tax on the reduction in your cost base, the cash shortfall each year you own it and the CGT.

(The mystery of how this is calculated was detailed in a two-part report in the January and February 2007 editions of API.)

The first example in this article would require capital growth of 1 per cent per annum (assuming a $400,000 purchase price and large deposit) to break even, but that doesn't take into account the loss of opportunity with the money used for the deposit.

In the second example you'd need capital growth of 4.4 per cent per annum just to break even. This is based on holding the property for five years and assuming you're in the maximum tax bracket both during the time you owned it and when you sell it.

If all else remains the same but you're only in the 31.5 per cent tax bracket during the period of ownership and when you sell then the first example requires capital growth of 1.4 per cent per annum to break even. The second example requires 5.2 per cent per annum.



As discussed, properties that lend themselves to positive cash flow tend to be in areas of low capital growth. Assume nothing and always crunch the numbers so you know exactly what you're asking the property to achieve.

This information was gathered from:
http://apimagazine.com.au/api-online/property-investment-articles/understanding-negative-gearing-and-positive-cash-flow

DEB BRADY
0405 570 903

"Actons April sales signal rebound in WA market"

Hi Followers

I thought I'd share an article published on rebonline.com.au

ACTON, a WA-based real estate group, has posted a 49 per cent on-year surge in sales in April, beating the usual Easter slowdown and signalling an improved year ahead.

“Historically our figures fall in April, usually due to Easter and school holidays,” said ACTON managing director Graeme Baxter. “This wasn’t the case this year and it will be very interesting to see the May figures.”

“At this stage I’m feeling very confident about the direction of the market for 2012. There appears to be a good balance between buyers’ and sellers’ attitudes.

“Sellers are now pricing for the market and will consider all genuine offers. Buyers are no longer expecting to get huge price discounts, however they still expect good value for money.”

ACTON’s sales figures were 15.34 per cent higher than the March result, and 49.32 per cent higher than April 2011. ACTON's April result comes shortly after figures released by the Real Estate Institute of WA (REIWA) revealed a jump in activity in the state's property market.

Mr Baxter said last week’s rate cut would support a market that is continuing to show signs of recovery.

“The ACTON Group has had yet another strong month, and that followed small rate rises from the banks in the first few months of the year,” he said.

“The rate cut from the RBA was significant and allowed the banks to pass on a reasonable cut to mortgage holders. We should see the effect of this over the next few months.”

ACTON said that one area that continued to perform well was Mandurah, located 60km south of Perth. “Sales in that region have always been strong, but have been outstanding this year,” the company said. “April was a record month for ACTON Mandurah.”

Other areas also performing strongly include ACTON’s regions in the western suburbs, and prime riverside locations. Trade up buyers were also more active.

While the strong sales turnover is good news and suggests ongoing confidence in the market,

ACTON said sellers needed to remain realistic when it came to pricing.

“More sales do not necessarily mean a jump in prices,” said Mr Baxter.

“There are close to 13,500 properties on the market and buyers still have a lot of choice. Price is the key to selling in a reasonable time frame. If buyers don’t like the price they can, and do, go elsewhere.

“However, if the good sales results continue over the next few months I would definitely expect to see a gradual rise in prices in the second half of the year.”

This information was gathered from:
http://rebonline.com.au/breaking-news/5031-actons-april-sales-signal-rebound-in-wa-market

DEB BRADY
0405 570 903

St. Bartholomew's House

Hi Followers

I have recently joined the St Bartholomew's foundation Inc which  provides community based support, accommodation and assistance to homeless individuals, and establishes collaborative partnerships with individuals and other organisations to eliminate or reduce homelessness.

I've posted the link below so you can see what this great organisation is doing for our community.

http://stbarts.org.au/

For further information or if you are interested in getting involved please call me on 0405 570 903

DEB BRADY

0405 570 903

"NAB breaks rank in rates cut stand-off "

Hi Followers

Thought I'd share this:

NATIONAL Australia Bank (NAB) has cut its variable home loan rates by 0.32 per cent, less than the central bank's rate cut.   

NAB said it would reduce its standard variable rate on mortgages and business loans, effective from May 4.
The interest rate on NAB's online savings account iSaver will also drop by 0.5 per cent to 5.0 per cent.

NAB's consumer credit card interest rates will drop by 0.25 per cent.

The Reserve Bank of Australia (RBA) cut the cash rate by 0.5 per cent yesterday.

NAB said the cuts would save its standard variable home loan customers $80 per month in interest on the average $300,000 mortgage.

Its new standard variable mortgage rate will be 6.99 per cent, the lowest offered by the big four banks.

"We will continue to offer a fair exchange of value, balancing rising funding costs, the needs of our existing customers and our ability to continue lending to home owners and businesses," NAB group executive of personal banking Lisa Gray said in a statement.

ANZ said today it would make its decision on rates at its regular pricing meeting on the second Friday of the month.

Westpac and Commonwealth are yet to announce any rate movements.

Bank of Queensland cut its standard variable rate by 0.35 per cent yesterday.

Ratecity.com.au CEO Damian Smith says he's surprised NAB announced their rate cut before ANZ's review meeting on May 11.

"NAB has set the benchmark for the other major banks to hold onto some of the Reserve Bank's 50 basis point rate cut," he said.

"For a typical $300,000 mortgage, this will be a saving of about $65 per month."

This information was gathered from:
http://www.news.com.au/money/interest-rates/nab-cuts-rates-by-less-than-rba/story-e6frfmn0-1226344985868

DEB BRADY
0405 570 903

SOLD SOLD SOLD SOLD

Hi followers

A recent record number of sales have early left me SOLD OUT!

SOLD SOLD SOLD



I need more homes to sell!! If your thinking of making  move please call me on 0405 570 903 and let me show you how your home will be added to my list sales!

DEB BRADY

0405 570 903



"RBA slashes interest rates by 50 basis points"

Hi Followers

RATES SLASHED!!

THE Reserve Bank of Australia (RBA) has provided huge relief for struggling homeowners and retailers, slashing interest rates by 50 basis points.   

The cut is the first since December 2011 and takes the official cash rate to 3.75 per cent, from 4.25 per cent.

The rate cut, widely predicted by economists, is likely to ease financial pressure on thousands of households across Australia, with average mortgage holders likely to benefit by about $1000 annually if the banks pass it on.

However economists believe it unlikely that all lenders will pass on all the savings.
Treasurer Wayne Swan once again warned the banks to pass on the rate cut.

“Let’s be very clear, this is a cut of 50 basis points and will be a significant benefit not just to homeowners but also to small business,” he said.

“Everybody has been hanging out for this rate cut and now it is here and people want to feel it in their pocket.”

If the banks do not pass on the rate cut Mr Swan encouraged customers to walk down the road and get a better deal.

“This is a very big move from the Reserve Bank – they haven’t moved rates this far since the depths of the Global Financial Crisis," said RateCity.com.au CEO Damian Smith.

“The signals from the big four banks suggest that they will try to hold on to part of this rate cut. Of the 50 basis point cash rate reduction from the RBA since November (2011), the big four banks have only passed on around 40 basis points to variable rate home loan customers.”

RBA governor Glenn Stevens said that a lower inflation outlook provided the scope to cut the cash rate and to help stimulate the economy.

"This decision is based on information received over the past few months that suggests that economic conditions have been somewhat weaker than expected, while inflation has moderated," Mr Stevens said.

"In Australia, output growth was somewhat below trend over the past year, notwithstanding that growth in domestic demand ran at its fastest pace for four years."

Unions, business groups and retailers have been pushing for a hefty rate cut of as much as 50 basis points, saying economic conditions supported it and would help to revive the retail sector by boosting consumer spending.

Last week, speculation of a reduction in the 4.25 per cent RBA cash rate intensified after the much lower than expected consumer price index (CPI) showing inflation was under control.

The Housing Industry Association had also called on the Reserve to deliver a 50 basis point cut after a survey showed new home sales had fallen to their lowest level in more than a decade.

Most economists expect further rate cuts to follow today’s decision, with 10 out of 16 economists surveyed by AAP saying the RBA would cut again in June. Two even said the RBA would cut three times in 2012.

All eyes will now turn to the big four banks to see if they will pass on the savings.
Commonwealth Bank chief economist Michael Blythe said the 50 basis point cut would lift consumer confidence.

"I think it has provided a circuit breaker for the negative feedback loop of consumer confidence that has been coming through," he said.

He said the decision to cut by more than the standard 25 basis points would ensure lower borrowing rates for consumers, even if commercial banks didn't pass on the full rate cut.

"It looks like a little bit like they are getting it all over in one hit and guaranteeing that, whatever banks may do, you still get a net easing in conditions."

He said the RBA still had plenty of room to cut rates further in the coming months if necessary.

This information was gathered from:
http://www.news.com.au/money/interest-rates/rba-slashes-interest-rates-50-basis-points/story-e6frfmn0-1226343674156

DEB BRADY
0405 570 903