Trending Financial News 31 July
ASX sets new high, after 12 long years
The key Australian sharemarket index, the ASX 200, closed at 6845.1 points yesterday, a new record high. The ASX 200’s previous highest closing level was 6828.7 set on 1 November 2007.
Fund managers say shares are rising partly because of low interest rates, not a booming economy.
“There is an absence of value but that doesn’t stop share prices from going up,” fund manager Roger Montgomery told News Limited.
Low rates not producing a building boom
Building approvals for new houses and apartments is not responding to stimulus from the Reserve Bank. Building approvals fell 1.2 per cent in June 2019 according to the Australian Bureau of Statistics. Unit approvals fell 6.5 per cent while house approvals were up, slightly, by 0.4 per cent.
Unit approvals are down 39.3 per cent, and house approvals down 14.8 per cent over the last 12 months.
Robert Meller, managing director of BIS Oxford, told Mortgage Business:
“Building activity is anticipated to climb near its previous peak over the coming five years.”
Fewer Aussies getting into debt problems
Australians are doing a pretty good job of managing their finances. The number of bankruptcies fell 8.8 per cent last financial year, the lowest level since 1994/95. The number of new Part IX debt agreements fell 22.1 per cent.
The biggest fall was in the Australian Capital Territory, where total personal insolvencies fell 24 percent, followed by Tasmania (down 22.7 per cent), the Northern Territory (down 18.5 percent), Victoria (down 18.3 per cent), and South Australia (down 17.5 per cent).
New South Wales (down 14 per cent), Western Australia (down 13 per cent) and Queensland (down 12.7 per cent) lagged the national average.
What is Scott Morrison’s First Home Buyer scheme?
The Federal Government’s First Home Deposit Scheme will start on 1 January 2020. The new incentive for young people to get into the property market could effectively reduce the deposit that first home buyers need (to avoid Lenders Mortgage Insurance) from 20 per cent to 5 per cent.
The government will guarantee the other 15 per cent. This 15 per cent still must be repaid, but will save on LMI costs. The biggest benefit from the scheme is that first home buyers need only save 5 per cent, not 20 per cent, of the property’s price.
How does the First Home Super Saver Scheme work?
The First Home Super Saver Scheme started in 2017 and allows first home buyers to access voluntary contributions to their super for the purposes of paying for a home deposit.
The maximum you can accumulate under this system is $30,000 in total or $15,000 in one year. When you are ready to purchase your new home, you must apply to the Australian Tax Office to access your super savings. Allow 15 -2 5 days for the release of your super to go through and the money appear in your bank account.
Fairness test for insurance contracts
Treasurer Josh Frydenberg is proposing to extend unfair contract terms rules to include insurance contracts. Insurance contracts are currently exempted from the unfair contract terms regulations.
Insurance customers will be protected from contracts that would cause them detriment (financial or other) under the Treasury proposals.
Financial Rights Legal Centre director Alexandra Kelly told The New Daily that: “We continue to see terrible terms in insurance contracts. “From reliance on out-of-date medical definitions, requiring a cancellation to be in writing and agreed by the insurer, to consumers having to pay for the costs of their insurer’s investigation.”