Statement by Glenn Stevens, Governor: Monetary Policy DecisionAt its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

The global economy is expanding at a moderate pace, with some further softening in conditions in China and east Asia of late, but stronger US growth. Key commodity prices are much lower than a year ago, in part reflecting increased supply, including from Australia. Australia's terms of trade are falling.

The Federal Reserve is expected to start increasing its policy rate over the period ahead, but some other major central banks are continuing to ease policy. Equity markets have been considerably more volatile of late, associated with developments in China, though other financial markets have been relatively stable. Long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low. Overall, global financial conditions remain very accommodative.

In Australia, most of the available information suggests that moderate expansion in the economy continues. While growth has been somewhat below longer-term averages for some time, it has been accompanied with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet, with domestic inflationary pressures contained. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.

In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for commercial property have been supported by lower long-term interest rates, while equity prices have moved lower and been more volatile recently, in parallel with developments in global markets. The Australian dollar is adjusting to the significant declines in key commodity prices.

The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.

Australians rank moving house second only to divorce and bereavement on the scale of life crises.

Broken and misplaced possessions, incompetent removalists, chaos and exhaustion are a few of the negative images we have come to associate with moving house.

Fortunately most of these nightmares can be avoided by anticipating problems and becoming organised well before moving day.

The first step is deciding how you prefer to approach the job of packing and moving your possessions. If you decide to economise and do the move yourself, check what your home contents insurance covers you for.

For bulky or fragile items your safest option is usually to hire a removalist but make sure the organisation you choose is a member of the Australian Furniture Removalists Association (AFRA).

The AFRA Code of Conduct ensures members provide paperwork for quotations, insurance, contracts and inventories. The contract should clearly state if fees are charged by the hour or by cubic volume, for example, or if a charge is incurred for the time the removalist spends travelling to and from the job.

Whether or not you decide to do your own packing, it might be a good idea to leave the mirrors, valuables and breakables for the removalists to professionally pack.

Remember to pack a survival box containing all your essential items such as toothbrush, toilet paper and kettle – they’re bound to come in handy at the end of what will undoubtedly be a long day.

Top 10 survival tips

1. Get rid of clutter so you don’t end up packing items you don’t need
2. Check in advance that furniture can fit through the doorway or up the stairs
3. Label boxes clearly and fill them logically according to grouped items
4. Prepare a floor plan to help decide where you need things placed
5. Carry valuable documents, jewellery and passports yourself
6. Check the manufacturer’s instructions for moving appliances
7. Keep cleaning equipment separate so you can find it on arrival
8. Notify gas, electricity, internet and other suppliers
9. Change your address and redirect mail
10. Update the address on your insurance policy 

It’s not as easy as it once was to apply for an interest-only loan. Over the last couple of months lending for this type of investment loan has been tightened in an effort to slow the pace of record growth in investment home loans.

Lenders are under pressure by government regulatory bodies to make it less attractive to take out interest-only loans, a strategy which is hoped will protect investors and achieve sustainable growth in the home loan market.

Lenders have responded to the crack-down in different ways. Some now ask for larger deposits for investor loans or have scrapped discounts they previously offered. Others have begun to price loans with principal and interest repayments cheaper than interest only loans. Still others now offer better discounts on owner occupied loans or allow investors to borrow less than owner occupiers.

Which way to turn?

As these changes are not uniform across the industry, but vary from lender to lender, it has been difficult for investors to know which way to turn. We have had many clients come to us worried about whether the changes affect their existing loans or what they should do when they make a change or try to restructure their loan.

As your mortgage broker, we are in touch with latest changes occurring in the industry and can seek out the best options to suit your particular needs.

Should you take out an interest-only loan?

Interest-only loans can be a tax-effective way to invest in property, but they are most effective when accompanied by advice and tax planning.

Because the monthly repayments are minimal for a specified amount of time (usually between 1-5 years), it offers great way to save money and free up funds in the short term for other investments, renovations or to pay off non-tax deductible debt like credit cards and car finance.

However problems start when the interest only period ends and borrowers who haven’t planned their finances carefully are unable to pay off the principal amount, along with the interest. If property prices fall and you are forced to sell, you may end up selling for a loss.

The other drawback is that because you are only paying off interest, your original loan amount doesn’t reduce because you are not paying any of it back, which equates to a considerably higher cost over the full term of the loan.

Mortgage brokers are now responsible for writing over half of Australia’s home loans and are valued for their choice, expertise and convenience, according to a new survey commissioned by the Mortgage and Finance Association of Australia (MFAA).

From a 49.9 per cent share of the market in the March 2014 quarter, total new home lending to mortgage brokers increased to 51.9 per cent in the March 2015 quarter.

Over this time there was a $44.2 billion increase in mortgage lending across Australia and brokers were responsible for 71 per cent of this increase, Australian Bureau of Statistics data reveals.

Brokers were also found to be proficient at matching the product to the customer’s needs. In fact 30.2 per cent of broker initiated home loans went to smaller lenders, demonstrating that brokers offer consumers real choice and have access to a wider range of mortgage products than banks or other financial organisations.

Investors in particular are convinced of the value of using a mortgage broker, with research showing that 40.5 per cent of broker originated loans are from investors. Owner-occupiers follow closely behind at 37 per cent of broker-originated loans, then first home buyers at 14 per cent and commercial borrowers at 6.0 per cent.

Lenders are also complimentary of the role of mortgage brokers. Those interviewed for the MFAA study said lenders were moving to a partnership model with brokers, whereby both work together to provide customers with the most appropriate proposition. Great news for customers! 

Statement by Glenn Stevens, Governor: Monetary Policy DecisionAt its meeting today, the Board decided to leave the cash rate unchanged at 2.0 per cent.

The global economy is expanding at a moderate pace, but some key commodity prices are much lower than a year ago. Much of this trend appears to reflect increased supply, including from Australia. Australia's terms of trade are falling nonetheless.

The Federal Reserve is expected to start increasing its policy rate later this year, but some other major central banks are continuing to ease policy. Hence, global financial conditions remain very accommodative. Despite fluctuations in markets associated with the respective developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain remarkably low.

In Australia, the available information suggests that the economy has continued to grow. While the rate of growth has been somewhat below longer-term averages, it has been associated with somewhat stronger growth of employment and a steady rate of unemployment over the past year. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. Recent information confirms that domestic inflationary pressures have been contained. That should remain the case for some time, given the very slow growth in labour costs. Inflation is thus forecast to remain consistent with the target over the next one to two years, even with a lower exchange rate.

In such circumstances, monetary policy needs to be accommodative. Low interest rates are acting to support borrowing and spending. Credit is recording moderate growth overall, with growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The Bank is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates. The Australian dollar is adjusting to the significant declines in key commodity prices.

The Board today judged that leaving the cash rate unchanged was appropriate at this meeting. Further information on economic and financial conditions to be received over the period ahead will inform the Board's ongoing assessment of the outlook and hence whether the current stance of policy will most effectively foster sustainable growth and inflation consistent with the target.