💸 Everything You Need To Know About The Interest Rate Cuts

Christian Baylis, founder of Fort Lake Asset Management, joins Jonesy & Amanda to simplify what it all means.

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Episode Transcript

Speaker 1 (00:00):
Je Jersey and Amanda gam.

Speaker 2 (00:02):
Nation homeowners are breathing aside relief. The Reserve Bank has
cut interest rates by ero point two five percentage points.
It's now three point six percent. We're joined now by
the founder of fort Lake Asset Management. He also happens
to be one of Australia's leading economists, doctor Christian Balis,
Christian high.

Speaker 1 (00:20):
Hi Jonesie Himander. How are you going you well?

Speaker 3 (00:22):
Is it jet skis for everyone? No?

Speaker 1 (00:26):
I don't think so, but it's it's a modest saving,
but could be a big saving for the average homeowner
because the average mortgage is about six hundred and sixty
odd thousand years one hundred and thirty bucks a month.
It's pretty good. But the big thing that we need
to focus on is there could be another two or
three more to come, and that's what I think people
could get a little bit more excited about, and then

(00:47):
maybe the jet skis can come out after that.

Speaker 2 (00:48):
So it's all good news.

Speaker 1 (00:51):
No, it's not all good news. That's the ironic thing
about these things. It's a bit of a paradox because
when they're cutting interest rates implicitly, what it means or
explicitly I should say, is that means other things in
the economy are starting to stall a little bit, particularly
consumption and these sorts of things. They're economic geeky terms,
but what that basically means is people are starting to
squirtle away money and save again. They're real incomes aren't

(01:14):
at a sufficiently high level for them to feel like
they can go out and splash out on the jet
skis and these sorts of things, And so the RBA
is getting a little bit worried and they just want
to provide a little bit more accommodation, put a few
more foundations under the bricks there and make sure that
everyone feels a little bit more comfortable. But the promise
is I think that they're going to be doing more,
so there is good news to come. Yeah.

Speaker 3 (01:36):
So is this the right time to buy a house
right now?

Speaker 1 (01:39):
Well, look, it depends where you are, obviously. I Mean.
The thing that always amazes me about Australia when I
sit on a plane and I frive from Perth to Sydney,
I look out the window and it's only for about
five minutes that I see incumbered land with buildings and
these sorts of things. Australia has a huge block of
land with not a lot built on it. And obviously
the biggest issue is supply. The government's trying to do

(02:01):
things to basically prop up supply and do those sorts
of things to bring home prices down, but really what
it will help with definitely, houses are an interest rate
sensitive thing. The one thing we have to remember in
Australia when you go and buy a house, people don't
pull out a calculator and start doing valuation models and
these sorts of things. They basically say, what is it
that I can afford? How much am I earning? What

(02:23):
are my expenses per week, per month? And to that extent,
interest rate's coming down actually does help people a lot,
so it will support the property market. It probably does
mean that property is becoming more attractive as interest rates
go lower. So that's the long answer to your question.

Speaker 2 (02:37):
And is it a good time to refinance?

Speaker 1 (02:40):
Absolutely. I always say get out there, push hard, make
sure you're going on to some of these compare the
market type internet sites that are allowing you to check
what else is out there. There is a hell of
a lot of options out there. Don't feel like you're trapped.
That is the best way to get more bang for
your buck. You can end up getting much more than

(03:01):
the zero point two to five, So certainly shop around.
It's a much more competitive market and a free flowing market.
It used to be much harder to change your mortgage,
going back a decade or so ago, they've made it
a lot easier. Definitely get out shop around because you
will be surprised.

Speaker 3 (03:14):
And it's funny that I was in the bank, just
doing unrelated bank business with a new card and the
dude's just out the little concierge. Then he says, anything
else going to help you with us? Said where you
can lower the interest rate as a joke, Yeah, radio,
and he just did it. So yeah, I thought, okay,
so you can just ask that.

Speaker 1 (03:32):
Yeah you can. You just ask, and you know not.
The worst thing to do is, once you've shopped around,
go back to your bank and say, hey, look, a
lot of these banks are offering me this. You know,
can you match it or can you better? And you'll
be pleasantly surprised. All of the time. Banks don't like
to lose business. It's a competitive world out there, and
it costs a lot more to acquire a customer than
it does to keep one. So definitely utilize that to

(03:53):
your advantage.

Speaker 2 (03:53):
Good advice. Thanks good Christian, Christian, thank you very much,
doctor Christian Batis, thank you for joining us.

Speaker 1 (03:59):
Thanks guys much, press out a chance

Speaker 3 (04:00):
Always room on our jet ski for you Christians.