Latest / TFS WealthCast / RBA Held The Rate – Here’s Our Raw Take

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RBA Held The Rate – Here’s Our Raw Take · TFS WealthCast

• 0:17
  SPEAKER_02: Alright, hot off the press.
• 0:20
  SPEAKER_02: Today, the 16th of June 2026, the Reserve Bank of Australia just announced its decision, and for the first time all year, they held the cash rate at 4.35%.
• 0:32
  SPEAKER_02: But here's the thing: they didn't say it's over, they didn't say relief is coming.
• 0:37
  SPEAKER_02: They said, and I'll quote this directly, they will do whatever is necessary to bring inflation down, including increasing the cash rate target further if required.
• 0:49
  SPEAKER_02: So, pause or pivot.
• 0:51
  SPEAKER_02: Relief for false hope.
• 0:53
  SPEAKER_02: We are giving you our raw take today.
• 0:56
  SPEAKER_02: No spins, no jargon, just the honest truth about what this means for you, your mortgage, and your property.
• 1:04
  SPEAKER_02: And as always, joining us today on this episode is our senior finance broker, property investor, our founder, and someone who has been watching this rate cycle very closely.
• 1:14
  SPEAKER_02: Mr.
• 1:14
  SPEAKER_02: Pramu Rodrigo.
• 1:16
  SPEAKER_02: Welcome back to the show, Pramu.
• 1:17
  SPEAKER_02: No worries, my pleasure.
• 1:19
  SPEAKER_02: So, Prabhu, what's your gut reaction to today's RBA decision?
• 1:24
  SPEAKER_01: Oh, um, look, I I think it it was expected to keep it on hold at 4.35 because they are still looking into uh certain um data, the stats, as you mentioned, the inflation rate.
• 1:42
  SPEAKER_01: I think they're their main decision making, even though they say it's it is inflation rate, there are other drivers that they are looking into.
• 1:51
  SPEAKER_02: Yeah.
• 1:51
  SPEAKER_01: Um the world economy is also uh a part, which they don't talk too much about it.
• 2:00
  SPEAKER_01: Yeah.
• 2:00
  SPEAKER_01: If there's any you know too too many bombs and uh going down, depending on the Trump's uh mood, you know, then they they will always uh go down the path of okay, we need to increase the cash rate.
• 2:13
  SPEAKER_02: Speaking of facts and data, I see you come prepared today, you've done your yeah, I've actually looked into the his historical trends.
• 2:21
  SPEAKER_01: Yeah.
• 2:21
  SPEAKER_01: Um, because it it's always fascinating me when I looked into the his historical trends.
• 2:28
  SPEAKER_01: Um yes, obviously the times are different, and but but when we look at the the issues that uh economists and uh other uh professionals are talking about, it's pretty similar.
• 2:45
  SPEAKER_01: Um so yeah.
• 2:48
  SPEAKER_01: So I'll I'll I'll I'll I'll give you a bit of information what I've what I've gathered.
• 2:53
  SPEAKER_02: Alright, this episode's about to get interesting, ladies and gentlemen.
• 2:57
  SPEAKER_02: So do stay tuned.
• 2:58
  SPEAKER_02: Alright, promo.
• 3:00
  SPEAKER_02: Let's set the scene properly.
• 3:02
  SPEAKER_02: Yeah.
• 3:02
  SPEAKER_02: Because context is everything here.
• 3:04
  SPEAKER_02: Can you walk us through what the RBA actually decided today and what led us to this point?
• 3:12
  SPEAKER_01: So so they they left the cash rate as 4.35%, as we all know.
• 3:20
  SPEAKER_01: The the the reason that they didn't move further up could be a reason that they won't they're a little bit worried about the the the affordability of certain things for a lot of people, such as the housing market.
• 3:38
  SPEAKER_02: Yeah, right.
• 3:39
  SPEAKER_01: So the government is talking about the affordability and uh yeah, and their whole focus with the new budget was to help first home buyers buyers get into the market.
• 3:49
  SPEAKER_01: Give them a fair go.
• 3:50
  SPEAKER_01: Yeah.
• 3:50
  SPEAKER_01: Right.
• 3:51
  SPEAKER_01: And then, you know, uh uh opposition leaders to, I mean, these days, Pauling Hansen also talking about affordability, yeah, right?
• 4:02
  SPEAKER_01: Make it affordable.
• 4:04
  SPEAKER_01: So I think it is a good move not to move the cash rate because the moment you move the cash rate by, I don't know, 25, 50 basis point, banks will follow.
• 4:16
  SPEAKER_01: Cost of funds goes up.
• 4:18
  SPEAKER_01: They can't just not increase their retail rates, yeah.
• 4:22
  SPEAKER_01: They will.
• 4:23
  SPEAKER_01: So, how many of people right now in Australia having half a million dollars sitting in a savings account?
• 4:29
  SPEAKER_01: Not a lot.
• 4:31
  SPEAKER_01: They would have already borrowed against property or other assets.
• 4:37
  SPEAKER_01: So I think it's a good move not to move it up at this stage.
• 4:42
  SPEAKER_01: At this stage.
• 4:43
  SPEAKER_01: Um I think a lot of people are thinking maybe there could be a uh another rate hike coming.
• 4:52
  SPEAKER_01: I have a feeling that if certain things go to the plan of what these guys are expecting, I reckon we might see some rate reductions coming in.
• 5:08
  SPEAKER_01: All right.
• 5:09
  SPEAKER_01: What does that mean to the market?
• 5:12
  SPEAKER_01: Um I I think it's uh uh a different uh totally different podcast itself, because there will be a lot of people thinking it might be thinking we shouldn't reduce the cash rate because there's gonna be a lot more people coming into the market, but then you have to align with the government's uh what the government wants to do as well, uh, and also giving a fair go uh to suit to certain types of uh individuals to get into the property market to have their first home.
• 5:42
  SPEAKER_01: So I I I I personally think the reduction of cash rate is a is a must.
• 5:49
  SPEAKER_01: It should happen, but not to the extent what a lot of people are thinking it should happen, right?
• 5:56
  SPEAKER_01: So uh if you're if you're planning on thinking that you're gonna get three percent retail rates, forget it, you're not gonna get it.
• 6:05
  SPEAKER_01: Right?
• 6:05
  SPEAKER_01: That that won't happen right now.
• 6:08
  SPEAKER_01: Um so so where we are heading is towards rate reductions, how quickly, how aggressively the RBA would do.
• 6:19
  SPEAKER_01: Uh we have to wait and see.
• 6:21
  SPEAKER_02: So let's look at the data, right?
• 6:24
  SPEAKER_02: So inflation and unemployment right now, Pramhu.
• 6:27
  SPEAKER_02: Right?
• 6:28
  SPEAKER_02: What is your take on inflation and unemployment right now?
• 6:31
  SPEAKER_02: Let's start with inflation.
• 6:33
  SPEAKER_02: Look, what are what are we on?
• 6:35
  SPEAKER_01: Um I think it's about inflation is should be about 4.2.
• 6:40
  SPEAKER_01: 4.2 as of as of now.
• 6:43
  SPEAKER_01: Yeah, 4%.
• 6:44
  SPEAKER_01: What's the target we gotta be about 2.3 or something like that?
• 6:48
  SPEAKER_01: Yeah.
• 6:48
  SPEAKER_01: Is that a realistic target?
• 6:50
  SPEAKER_01: I don't think so.
• 6:51
  SPEAKER_01: I don't believe it.
• 6:52
  SPEAKER_01: I think realistic target should be 3.5%.
• 6:56
  SPEAKER_02: Yeah, they they they gave they actually give a range.
• 6:58
  SPEAKER_02: So they want to be they want to target 2 to 3%, between 2 and 3%.
• 7:04
  SPEAKER_01: Yeah, I think they should target between 3 and 3.5%.
• 7:07
  SPEAKER_00: Yeah.
• 7:07
  SPEAKER_01: That is a realistic target right now.
• 7:10
  SPEAKER_01: Right.
• 7:10
  SPEAKER_01: So when you go and think we're gonna get between 2 to 3%, can you get 2% from 4.2?
• 7:21
  SPEAKER_01: How long will it take for you to go to 2% inflation rate?
• 7:27
  SPEAKER_01: These are not realistic targets.
• 7:28
  SPEAKER_01: They've just thrown numbers.
• 7:30
  SPEAKER_01: They've just thrown numbers.
• 7:30
  SPEAKER_01: They haven't looked into the actual reality of it, right?
• 7:33
  SPEAKER_01: Whoever done those rate uh figures, uh yeah.
• 7:38
  SPEAKER_02: Maybe they utilized AI to maybe must have helped them.
• 7:43
  SPEAKER_01: But but but but um I mean getting into a realistic uh target where the three, three and a half percent, I think that's where a lot of us make our decision based on uh especially on investments.
• 7:56
  SPEAKER_02: Um and inflation has been tricky, right?
• 8:01
  SPEAKER_02: I mean, energy prices, services, inflation, rents, and the government's been spending all kinds of contributions on projects that it's that the public sees is not really gonna benefit them.
• 8:15
  SPEAKER_01: Yeah.
• 8:16
  SPEAKER_02: Right?
• 8:16
  SPEAKER_02: They see it as a waste of money.
• 8:18
  SPEAKER_01: Yeah.
• 8:19
  SPEAKER_01: So some are for long-term benefits.
• 8:22
  SPEAKER_01: Not everything is for short-term benefits, some are for long-term benefits.
• 8:27
  SPEAKER_01: I think the main drivers, main things where a lot of everyday people want to be helped out, needs to be addressed as well to bring down the inflation rate.
• 8:39
  SPEAKER_01: But then how's our spending patterns?
• 8:43
  SPEAKER_01: Current market or current people, what is the spending pattern?
• 8:49
  SPEAKER_01: Look at it as an example.
• 8:52
  SPEAKER_01: Um, decade ago, people were spending in shopping centers, right?
• 8:57
  SPEAKER_01: Boxing day, or I don't know, the those sales days, right?
• 9:02
  SPEAKER_01: Or end of financial year.
• 9:04
  SPEAKER_01: Those are the days that people start spending quite a lot of money off their of their of their savings.
• 9:10
  SPEAKER_01: But look at it now.
• 9:13
  SPEAKER_01: They're spending it every day thanks to Uber, uh, you know, online purchases.
• 9:20
  SPEAKER_01: They're at a very much of a uh high rate of consumption.
• 9:27
  SPEAKER_01: Okay?
• 9:28
  SPEAKER_01: So so putting a 2% inflation rate, this is my point, it's not realistic.
• 9:37
  SPEAKER_01: You can't do it.
• 9:39
  SPEAKER_01: Right.
• 9:40
  SPEAKER_01: How many times which he, as an example, if I pick you as an example, you know you're what 29, 30, 29, 28, 29?
• 9:48
  SPEAKER_01: 28, not 29.
• 9:49
  SPEAKER_01: 28, okay, sorry.
• 9:50
  SPEAKER_01: Okay, he called himself that okay.
• 9:52
  SPEAKER_01: Um on a Friday night, how many times you cooked a meal?
• 9:58
  SPEAKER_01: On a Friday night?
• 9:59
  SPEAKER_01: Friday night and a Saturday night.
• 10:01
  SPEAKER_01: Those two, those two nights, how many times have you cooked a meal?
• 10:05
  SPEAKER_02: Uh some sometimes, yeah.
• 10:07
  SPEAKER_01: Okay, sometimes.
• 10:07
  SPEAKER_01: So if you if you go for a year, your percentages aspect of it by buying your food out or going out for dinner or takeaway, yeah.
• 10:17
  SPEAKER_01: What is the highest percentage you have on a Friday and a Saturday night ratio?
• 10:22
  SPEAKER_01: It's like 50-50.
• 10:23
  SPEAKER_01: Is it?
• 10:24
  SPEAKER_01: Yeah, I like to cook, you know, a nice glass of wine.
• 10:26
  SPEAKER_01: Yeah, so there you go.
• 10:28
  SPEAKER_01: 50% you spend outside.
• 10:29
  SPEAKER_01: Yeah.
• 10:30
  SPEAKER_01: You're trying to be moderate here and saying that it's 50-50.
• 10:33
  SPEAKER_01: But majority of people on a Friday night and a Saturday night, they spend out.
• 10:37
  SPEAKER_01: Yeah.
• 10:37
  SPEAKER_01: They they they they take out.
• 10:40
  SPEAKER_01: Oh, they go out for dinner.
• 10:41
  SPEAKER_01: On a Friday night and a Saturday night.
• 10:43
  SPEAKER_01: A lot of people do spend that money because they can't be bothered of making the food.
• 10:48
  SPEAKER_01: They want to relax.
• 10:49
  SPEAKER_01: But when you look at the Uber bill on a Friday night on a Saturday night, what is it?
• 10:53
  SPEAKER_01: There are premium figures that they charge on those two days.
• 10:58
  SPEAKER_01: Right?
• 10:59
  SPEAKER_02: Yeah.
• 11:00
  SPEAKER_02: So you are spending more.
• 11:02
  SPEAKER_02: Usually, and then the food would usually take longer because there are more people utilizing Uber to get food.
• 11:08
  SPEAKER_01: So that's one factor.
• 11:10
  SPEAKER_01: When you go out for a pub, for a beer, or you know, a night out, what's the rough amount that you would spend versus five years ago now?
• 11:20
  SPEAKER_01: Because your your your alcohol to the food that you eat, the prices have gone up.
• 11:27
  SPEAKER_01: So do you expect the businesses to have their prices down?
• 11:33
  SPEAKER_01: That means their cost of running business also has to come down.
• 11:37
  SPEAKER_02: Yeah.
• 11:38
  SPEAKER_01: This is why I always say the 2% inflation rate, it's it's it it's stupid to even put it as a benchmark.
• 11:48
  SPEAKER_01: That would that will never happen.
• 11:51
  SPEAKER_01: I the best place, three to three and a half percent.
• 11:54
  SPEAKER_01: Right now, let's talk about unemployment.
• 11:56
  SPEAKER_02: Yeah, right.
• 11:58
  SPEAKER_02: So unemployment hit 4.5% in April.
• 12:00
  SPEAKER_02: That that's a four-year high.
• 12:02
  SPEAKER_02: Yeah.
• 12:03
  SPEAKER_01: Okay.
• 12:04
  SPEAKER_01: So what's the what's the rate of uh migrants in Australia?
• 12:10
  SPEAKER_01: And that is where you enlighten us.
• 12:12
  SPEAKER_01: Yeah, see, now you gotta understand the rate of my migrants coming in and permanent residency.
• 12:17
  SPEAKER_01: Yeah, right.
• 12:18
  SPEAKER_01: It's not students I'm talking about, not that I'm not about them.
• 12:21
  SPEAKER_01: Permanent residence.
• 12:23
  SPEAKER_01: So couple comes in with four, you know, two children, four people, permanent residency.
• 12:29
  SPEAKER_01: One person works, the other person doesn't.
• 12:31
  SPEAKER_01: That person pretty much takes care of their children, depending on where you come from.
• 12:37
  SPEAKER_01: Depending on the aspirations you have.
• 12:40
  SPEAKER_01: Unemployment.
• 12:42
  SPEAKER_01: Now that because that they don't want to work.
• 12:48
  SPEAKER_01: Right?
• 12:49
  SPEAKER_01: So their unemployment rate going up.
• 12:52
  SPEAKER_02: Is that a real number?
• 12:54
  SPEAKER_02: No, because see that person's not working, but they have to stay at home to take care of the kids.
• 13:00
  SPEAKER_02: Exactly.
• 13:01
  SPEAKER_02: Right?
• 13:01
  SPEAKER_01: That's a lifestyle decision.
• 13:03
  SPEAKER_01: Yeah, exactly.
• 13:05
  SPEAKER_01: Right.
• 13:05
  SPEAKER_01: So we have we have given the opportunities to a lot of people to come to this country and settle them in.
• 13:15
  SPEAKER_01: Who has that kind of mindset?
• 13:17
  SPEAKER_01: So we can't complain about the unemployment.
• 13:20
  SPEAKER_01: So how did they do the consensus?
• 13:22
  SPEAKER_01: Maybe go back to the previous uh ways of you giving permanent residencies.
• 13:28
  unknown: Right.
• 13:28
  SPEAKER_02: Again, please enlighten us.
• 13:30
  SPEAKER_01: How did it be?
• 13:30
  SPEAKER_01: I mean, it wasn't easy to come here as a student.
• 13:37
  SPEAKER_01: So much of uh requirements to be ticked off.
• 13:41
  SPEAKER_01: But even now they're making it stricter, right?
• 13:44
  SPEAKER_01: They are saying it's stricter.
• 13:45
  SPEAKER_01: Why are they doing it now?
• 13:47
  SPEAKER_01: It's too many people coming in.
• 13:48
  SPEAKER_01: Because they didn't make it, they didn't continue that.
• 13:51
  SPEAKER_01: Yeah.
• 13:52
  SPEAKER_01: Now they're chopping engines.
• 13:54
  SPEAKER_01: It's like a floodgate, they opened it later, right?
• 13:57
  SPEAKER_01: Yeah.
• 13:57
  SPEAKER_01: So so then you go down the path of looking at their aspirations, what they study, what exactly they are doing, right?
• 14:06
  SPEAKER_01: How much of contribution they are doing to the country.
• 14:10
  SPEAKER_01: The economy.
• 14:11
  SPEAKER_01: Right?
• 14:11
  SPEAKER_01: Yeah, exactly.
• 14:12
  SPEAKER_01: Right.
• 14:12
  SPEAKER_01: So how how you know this?
• 14:15
  SPEAKER_01: Yeah.
• 14:17
  SPEAKER_01: It's not happening to the country anymore.
• 14:19
  SPEAKER_01: So then I'm not pointing the finger saying, you know, the migration policies need to be changed.
• 14:26
  SPEAKER_01: What I'm saying is we gotta understand where we are.
• 14:30
  SPEAKER_01: Yes, whatever, they are here.
• 14:33
  SPEAKER_01: Yeah, what can we do?
• 14:37
  SPEAKER_01: So then adding more taxes to small businesses does it help?
• 14:42
  SPEAKER_01: No.
• 14:42
  SPEAKER_01: Yeah.
• 14:44
  SPEAKER_01: That person could get inspired to do a small business at home.
• 14:49
  SPEAKER_01: If you're gonna start charge about 47% out of that person, that person won't work.
• 14:55
  SPEAKER_01: Yeah.
• 14:56
  SPEAKER_01: Go categorize an unemployment.
• 14:58
  SPEAKER_01: So these these are just minor things I'm talking, right?
• 15:02
  SPEAKER_01: So you gotta you gotta understand it's not always the when we are discussing things like that, it's not always the stats and facts what we have.
• 15:12
  SPEAKER_01: Yeah.
• 15:12
  SPEAKER_01: Because there are so many things the they haven't taken into statistics which are facts.
• 15:22
  SPEAKER_02: So, Prabhupada, where are the rates headed now?
• 15:26
  SPEAKER_02: Okay, RBA held the rate, right?
• 15:30
  SPEAKER_02: Yeah.
• 15:31
  SPEAKER_02: But in another couple of weeks or a few months, when they have another rate announcement, what do you think is gonna happen?
• 15:40
  SPEAKER_01: See, at some point they gotta they gotta address one of the main problems that the country has, which is the housing shortage.
• 15:48
  SPEAKER_01: What are you gonna do?
• 15:50
  SPEAKER_01: So much of people are living here.
• 15:53
  SPEAKER_01: Um some of them are doing rooming houses, yeah.
• 15:57
  SPEAKER_01: Some of them, you know, sharing a room.
• 16:02
  SPEAKER_01: How long are you gonna do this?
• 16:05
  SPEAKER_01: You're not gonna do this for long.
• 16:07
  SPEAKER_01: So so you have to start letting investors coming into the market in a confident manner and start investing in property as it always been a confidence way of in investing, they have to let that happen.
• 16:24
  SPEAKER_01: Yeah.
• 16:25
  SPEAKER_01: So, which means the cash rate must come down.
• 16:28
  SPEAKER_01: You can't have the investor keeping all the equity, keeping all the savings in the savings account and not doing anything about it.
• 16:39
  SPEAKER_01: Because if you start giving them about, you know, if the fixed deposits start giving them five and a half percent interest to six percent interest, uh, a lot of people will keep their money in their uh fixed deposits.
• 16:54
  SPEAKER_01: Why do we have to take risk?
• 16:56
  SPEAKER_02: Yeah, so uh this is interesting.
• 17:00
  SPEAKER_02: So I managed to gather some information on what um the top four banks think or have predicted for the future rates, whether the rates are gonna go up, down, or whether it's gonna be on hold, right?
• 17:12
  SPEAKER_02: Tier one banks.
• 17:13
  SPEAKER_02: Tier one banks, four the big four.
• 17:15
  SPEAKER_02: All right.
• 17:16
  SPEAKER_02: So let's go with Westpac first, right?
• 17:18
  SPEAKER_02: So chief economist Lucy Ellis from RBA Insider, she forecasted two more rate hikes in August and September of this year, right?
• 17:29
  SPEAKER_02: Now that would take the cash rate according to her to 4.85%.
• 17:33
  SPEAKER_02: It predicts that the cash rate would peak at 4.85% in late 2026.
• 17:40
  SPEAKER_02: What are your thoughts on this?
• 17:43
  SPEAKER_01: Why don't you tell me all three?
• 17:46
  SPEAKER_02: Okay.
• 17:46
  SPEAKER_02: So that's WestPec, right?
• 17:48
  SPEAKER_02: Yeah.
• 17:48
  SPEAKER_02: Their prediction, it'll there'll be two more rate types.
• 17:51
  SPEAKER_02: Yeah.
• 17:51
  SPEAKER_02: Now we're going with CBA.
• 17:53
  SPEAKER_02: Now they expect the rates to be on hold for the rest of the year.
• 17:58
  SPEAKER_02: Okay.
• 17:58
  SPEAKER_02: Right?
• 17:59
  SPEAKER_02: And what what do they predict afterwards?
• 18:01
  SPEAKER_02: So base case.
• 18:02
  SPEAKER_02: First cut in May 20 2027, followed by another in August 2027.
• 18:09
  SPEAKER_02: Rate cuts.
• 18:10
  SPEAKER_02: There'll be cuts.
• 18:11
  SPEAKER_02: Okay.
• 18:11
  SPEAKER_02: So two cuts in May uh 2027, one in May, one in August.
• 18:16
  SPEAKER_02: Okay, right.
• 18:17
  SPEAKER_02: C C B A.
• 18:18
  SPEAKER_02: Yeah.
• 18:19
  SPEAKER_02: Okay.
• 18:20
  SPEAKER_02: So, because they view the three hikes that were already delivered as sufficient to do the job.
• 18:25
  SPEAKER_02: Now it's about letting them flow through in the events.
• 18:28
  SPEAKER_02: Okay.
• 18:29
  SPEAKER_02: Right.
• 18:29
  SPEAKER_02: So now we now we move on to A and Z.
• 18:31
  SPEAKER_02: ANZ, yeah.
• 18:33
  SPEAKER_02: Now they're forecasting 2.25% cuts in 2027.
• 18:39
  SPEAKER_02: Again, around they've just said 2027.
• 18:44
  SPEAKER_02: 2.25 basis point reduction.
• 18:47
  SPEAKER_02: So basically 50 basis point reduction.
• 18:49
  SPEAKER_02: 20 basis point reduction in 2027.
• 18:51
  SPEAKER_02: Okay.
• 18:52
  SPEAKER_02: So they acknowledge that August is a live risk, but not their base case.
• 18:58
  SPEAKER_02: Right?
• 18:59
  SPEAKER_02: And um one of our favorite banks.
• 19:02
  SPEAKER_01: Yeah, NAB.
• 19:04
  SPEAKER_02: Right?
• 19:04
  SPEAKER_02: So I mean, we all four, all four now.
• 19:06
  SPEAKER_02: I think.
• 19:07
  SPEAKER_00: I mean, we we love them.
• 19:08
  SPEAKER_00: We love them all.
• 19:10
  SPEAKER_02: I mean, some of our brokers, I think they love uh the lovely BDM at ANZ because we always get the best food from them, you know.
• 19:17
  SPEAKER_02: Yeah, just give a shout-out to Michael.
• 19:19
  SPEAKER_02: Michael, yeah.
• 19:20
  SPEAKER_02: Next podcast, we'll bring him in.
• 19:21
  SPEAKER_02: Definitely.
• 19:23
  SPEAKER_02: So so NAB, their chief economist, Sally Hall.
• 19:27
  SPEAKER_02: I hope I pronounced the name correctly.
• 19:29
  SPEAKER_02: She forecasted three cuts in 2027.
• 19:33
  SPEAKER_02: Three cuts.
• 19:34
  SPEAKER_02: Three cuts.
• 19:34
  SPEAKER_02: Oh wow, okay.
• 19:35
  SPEAKER_02: I mean, that would bring the rate back towards 3.6% where it was at the start of this year.
• 19:41
  SPEAKER_02: Yeah.
• 19:43
  SPEAKER_02: She suggests the first cut would come before July 2027.
• 19:49
  SPEAKER_02: So most likely May.
• 19:51
  SPEAKER_01: May.
• 19:51
  SPEAKER_01: Alright.
• 19:52
  SPEAKER_01: Okay.
• 19:52
  SPEAKER_01: So the reason I asked you to give me all four banks is very important when you ask me a question like this, what my thoughts are.
• 19:57
  SPEAKER_01: Yeah, it's good to have it.
• 19:58
  SPEAKER_01: Yeah.
• 19:59
  SPEAKER_01: So as you can see, three out of four.
• 20:06
  SPEAKER_01: Ah, okay.
• 20:07
  SPEAKER_01: Uh, what are they predicting?
• 20:09
  SPEAKER_01: Cuts.
• 20:10
  SPEAKER_01: Cuts.
• 20:12
  SPEAKER_01: Right.
• 20:13
  SPEAKER_01: Now, let's go to Westpac.
• 20:16
  SPEAKER_01: Yeah.
• 20:17
  SPEAKER_01: You know, incre increasing uh increasing the cash rate by 50 basis points.
• 20:23
  SPEAKER_02: So that brings to um but then to be fair to Westpac, I have to mention that even though she they predicted two rate hikes in 2026, right?
• 20:34
  SPEAKER_02: Uh they have did state that the cuts would begin in 2027.
• 20:37
  SPEAKER_01: In 2027.
• 20:38
  SPEAKER_01: So so the reason I want to go to the uh increments of rates.
• 20:43
  SPEAKER_01: 4.85.
• 20:46
  SPEAKER_01: What does that mean for everyday mom and dad, everyday investor?
• 20:50
  SPEAKER_01: 50 basis points increment.
• 20:52
  SPEAKER_01: You're already paying about 6%, 6.5% for your investment.
• 20:58
  SPEAKER_01: You'll be pushing close to 7 or more.
• 21:00
  SPEAKER_01: So your investment rate is seven.
• 21:03
  SPEAKER_01: If you're paying interest only, your in your investment rate is about 7.3.
• 21:07
  SPEAKER_01: Yeah.
• 21:08
  SPEAKER_01: On occupyers paying about five and a half.
• 21:11
  SPEAKER_01: Uh sorry, six and a half.
• 21:13
  SPEAKER_01: Right.
• 21:14
  SPEAKER_01: Six and a half, six point three five.
• 21:16
  SPEAKER_01: So those sort of rates after 50 basis point.
• 21:18
  SPEAKER_01: Some could be paying close to seven, too.
• 21:22
  SPEAKER_01: What does that mean to the market?
• 21:25
  SPEAKER_01: The new market.
• 21:27
  SPEAKER_01: The people who want to get into the market.
• 21:30
  SPEAKER_01: It reduces the borrowing capacity significantly.
• 21:36
  SPEAKER_01: Right?
• 21:36
  SPEAKER_01: Yeah.
• 21:37
  SPEAKER_01: Now, with the new budget from this government, it reduces even more.
• 21:45
  SPEAKER_01: For some certain individuals.
• 21:47
  SPEAKER_01: Yeah.
• 21:47
  SPEAKER_01: Not to individuals that you know, I I I don't want to uh uh say this, but uh it's not for everyone what this govern this budget is.
• 22:00
  SPEAKER_01: But then go down the path of the developers, go down the path of the vendors.
• 22:07
  SPEAKER_01: Who wants to sell their property to make a profit?
• 22:11
  SPEAKER_01: Who wants to sell their development to make a profit?
• 22:14
  SPEAKER_01: Do you really think just because your borrowing capacity comes down from 700 to 600,000, the developer is willing to reduce their prices by 100,000 a lot?
• 22:26
  SPEAKER_01: No, they need to profit.
• 22:27
  SPEAKER_01: That's what it's a 20, it's a 20 plot.
• 22:31
  SPEAKER_01: Developer as an example, right?
• 22:35
  SPEAKER_01: You are asking a developer to reduce 2 million dollars of his profit.
• 22:43
  SPEAKER_01: Developer can hold it by just spending about a half a million dollars.
• 22:48
  SPEAKER_01: Won't come down.
• 22:51
  SPEAKER_01: What's the ripple effect?
• 22:53
  SPEAKER_01: That first home buyer, failure, give them a failure.
• 22:59
  SPEAKER_01: What are they gonna be doing?
• 23:00
  SPEAKER_01: Renting.
• 23:02
  SPEAKER_01: When they are renting, you get a rent from an investor.
• 23:06
  SPEAKER_01: Unless you're willing to go from to the government and ask the government to give you a government housing project.
• 23:13
  SPEAKER_01: Yeah.
• 23:14
  SPEAKER_01: Okay.
• 23:15
  SPEAKER_01: When you go and rent a property in an invest from an investor, investor at 50 basis point high is paying about 7% to 7.35% interest rate.
• 23:30
  SPEAKER_01: What do you think the investor is doing off the rent?
• 23:34
  SPEAKER_01: He's gonna increase the rent.
• 23:35
  SPEAKER_01: He's gonna increase the rent.
• 23:37
  SPEAKER_01: Unless he's a good same, you know.
• 23:40
  SPEAKER_01: You hardly find these people anymore.
• 23:42
  SPEAKER_01: Probably on the biblical terms, there are people like that, but not anymore.
• 23:46
  SPEAKER_02: Yeah.
• 23:47
  SPEAKER_01: Right?
• 23:48
  SPEAKER_01: So do you really see the rates are gonna stay at a level of 4.85 cash rate, where the rates are retail rates, borrowing rates are at seven, seven, six and a half, seven?
• 24:05
  SPEAKER_01: No.
• 24:05
  SPEAKER_01: It's not sustainable because our our migration or population has grown.
• 24:12
  SPEAKER_01: We the biggest problem we have is the housing supply.
• 24:17
  SPEAKER_01: So we need to address that.
• 24:19
  SPEAKER_01: To address that, we gotta bring the rate down.
• 24:21
  SPEAKER_01: We gotta bring not the first home buyer first, we gotta bring the investor into the market first.
• 24:28
  SPEAKER_01: Address the rental problem first.
• 24:30
  unknown: Yeah.
• 24:31
  SPEAKER_01: And then the first home buyer.
• 24:34
  SPEAKER_01: Eventually it's gonna happen.
• 24:35
  SPEAKER_02: Yeah.
• 24:36
  SPEAKER_02: I mean, this is why whether we like it or not, because first home buyers are not.
• 24:39
  unknown: Yeah.
• 24:40
  SPEAKER_01: It's why out of four banks, three are predicting rate cuts.
• 24:44
  SPEAKER_01: Rate cuts.
• 24:45
  SPEAKER_01: Now, guys, I always told when the rate went up from whatever, you know, 1.99% to 6%.
• 24:52
  SPEAKER_01: Right?
• 24:52
  SPEAKER_01: That's a massive, massive increment.
• 24:55
  SPEAKER_01: If you can hold it, you hold it.
• 24:59
  SPEAKER_01: What happens after that?
• 25:02
  SPEAKER_01: We we we started rate increments in in in uh early this year.
• 25:08
  SPEAKER_01: Has the property prices really come down?
• 25:13
  SPEAKER_01: From February to now?
• 25:14
  SPEAKER_01: No, we do we don't say that.
• 25:16
  SPEAKER_01: If I sell one of my properties, I'm making a good profit.
• 25:20
  SPEAKER_01: I'll probably squeeze another$20,000 more if I have to pay if the market is willing to pay for me.
• 25:28
  SPEAKER_01: But if I want to get more borrowing to go and invest, whoever gives me the lower rate give we will give me more borrowing.
• 25:38
  SPEAKER_01: So that means I'm squeezing the market more.
• 25:42
  SPEAKER_01: To do what?
• 25:42
  SPEAKER_01: To invest more.
• 25:44
  SPEAKER_01: So rate to answer to your question, what's my thoughts are rates are going to come down.
• 25:54
  SPEAKER_01: This is the moment you invest.
• 25:57
  SPEAKER_01: This is the moment if you are a first-home buyer, buy.
• 26:02
  SPEAKER_01: I don't think you'll get a better position like this.
• 26:05
  SPEAKER_01: Yeah.
• 26:06
  SPEAKER_01: Right?
• 26:08
  SPEAKER_01: Give you a bit of an insight.
• 26:10
  SPEAKER_01: 2008, 2008, cash rate was 7.25%.
• 26:17
  unknown: Okay?
• 26:18
  SPEAKER_01: Your borrowing rates were uh ranging between 8.5 and 9.5%.
• 26:23
  SPEAKER_01: 2008.
• 26:26
  SPEAKER_01: I was fortunate enough to come to the market where the rates started coming down.
• 26:31
  SPEAKER_01: Rates started coming down to about uh 4.85, 4.75% cash rate, where the borrowing rates were about 7.5 and 8.5%.
• 26:43
  SPEAKER_01: Okay.
• 26:44
  SPEAKER_01: Those properties some more.
• 26:46
  SPEAKER_01: I mean, those properties.
• 26:46
  SPEAKER_01: The first property I bought, I mean, I'm I'm laughing on it.
• 26:54
  SPEAKER_01: It's that it's that good.
• 26:55
  SPEAKER_01: Yeah.
• 26:57
  SPEAKER_01: Right?
• 26:58
  SPEAKER_01: None of my other investment properties can give me what it it has given me.
• 27:03
  SPEAKER_01: My tax-free money as well, by the way.
• 27:07
  SPEAKER_01: Right.
• 27:07
  SPEAKER_01: So so so we have to understand where we are in terms of our cash rate, in terms of our borrowing rate, in terms of our borrowing power, and what we should afford and what we shouldn't.
• 27:22
  SPEAKER_01: And what's out there in the market, what kind of properties we should buy, and what kind of property we shouldn't buy.
• 27:32
  SPEAKER_01: It is totally up to you now.
• 27:35
  SPEAKER_01: Rates are gonna come down whether you like it or not.
• 27:40
  SPEAKER_01: So if you're gonna capitalize it, if you really want to capitalize, this is your time to capitalize.
• 27:51
  SPEAKER_01: I'm changing my structures, I'm doing new things.
• 27:55
  SPEAKER_01: I like these kind of things, what's happening in the market?
• 27:59
  SPEAKER_01: It's challenging, it's not it's not how it used to be.
• 28:03
  SPEAKER_01: It's good, but I'm doing certain changes and it keeping me on my toes as well.
• 28:09
  SPEAKER_01: So, why am I doing that?
• 28:12
  SPEAKER_01: Because I want to make more success.
• 28:16
  SPEAKER_01: Yeah.
• 28:16
  SPEAKER_01: From my investment, nothing else.
• 28:18
  SPEAKER_02: So even with your investment strategy, you've got to constantly adapt.
• 28:22
  SPEAKER_02: Absolutely.
• 28:22
  SPEAKER_02: And change it accordingly.
• 28:24
  SPEAKER_02: Absolutely.
• 28:25
  SPEAKER_01: So that's how uh people need to start think uh start thinking about this.
• 28:29
  SPEAKER_02: If the finance strategy, right, even if you're a first home buyer with your loan structure, your strategy, you need to look at refinancing and changing it.
• 28:37
  SPEAKER_01: If Westpac is predicting a 50 basis per increment, yeah, factor that into your uh planning.
• 28:45
  SPEAKER_01: Don't factor what's going to happen in the middle of the next year.
• 28:49
  SPEAKER_02: Yeah.
• 28:50
  SPEAKER_01: Right.
• 28:51
  SPEAKER_02: So, Prabhupada, the the picture you're painting is the whole today is a small excell for the market, but not a recovery signal.
• 29:01
  SPEAKER_02: The pain is already in the system, the market is repricing, and the question is really whether this is the bottom or whether August brings another kick.
• 29:13
  SPEAKER_02: Look, I I So let's talk about let's let's talk about August specifically, right?
• 29:19
  SPEAKER_02: I mean, because that's when the next decision is uh gonna be made.
• 29:24
  SPEAKER_01: So in August.
• 29:26
  SPEAKER_02: Yeah.
• 29:26
  SPEAKER_01: What are we looking what are we what are we thinking?
• 29:28
  SPEAKER_01: What are you thinking?
• 29:29
  SPEAKER_01: Let's go with Westpac.
• 29:30
  SPEAKER_01: Rate goes up.
• 29:31
  SPEAKER_01: Yeah.
• 29:32
  SPEAKER_01: 25 basis points go up.
• 29:36
  SPEAKER_01: What's gonna happen?
• 29:38
  SPEAKER_01: Nothing much.
• 29:42
  SPEAKER_01: Right?
• 29:42
  SPEAKER_01: Because August is the spring market.
• 29:47
  SPEAKER_01: Next month is the spring market, literally.
• 29:49
  SPEAKER_01: Yeah, a lot of people have been saving money, has got their pre-approval, they're ready to go.
• 29:57
  SPEAKER_01: Some investors or some people are ready to downsize, sell their properties.
• 30:02
  SPEAKER_01: They're gonna put the properties to the market.
• 30:04
  SPEAKER_01: So there is gonna be a bit of supply.
• 30:08
  SPEAKER_01: Okay?
• 30:08
  SPEAKER_01: Yeah.
• 30:09
  SPEAKER_01: So when when the supplies go up a little bit, there's gonna be certain window discounts coming into play.
• 30:17
  SPEAKER_01: Market is gonna move move forward.
• 30:19
  SPEAKER_02: And and these are specifically discounts, not the property market, like not that property prices are gonna come down.
• 30:26
  SPEAKER_02: No, no, it's window discounts.
• 30:27
  SPEAKER_02: Exactly.
• 30:27
  SPEAKER_02: Yeah.
• 30:28
  SPEAKER_01: So the so if some someone needs to work out what's the window discount is, you know, I'm pretty sure you can use the AI and Google or whatever.
• 30:35
  SPEAKER_02: Yeah.
• 30:36
  SPEAKER_02: Work it out.
• 30:36
  SPEAKER_02: Vendor discounts.
• 30:37
  SPEAKER_02: Some people might mistake a window discount for oh, the market is crashing because this property is no.
• 30:42
  SPEAKER_01: I mean, every every spring market the window discounts go up a little bit.
• 30:48
  SPEAKER_02: Yeah.
• 30:48
  SPEAKER_02: So that there you go.
• 30:49
  SPEAKER_02: I mean, if anyone's in the market or you know, thinking about buying property around that August mark, because they it's it's a it's a very slight amount.
• 30:58
  SPEAKER_01: It's not like we'll do it's gonna discount you by 10%.
• 31:01
  SPEAKER_01: No, yeah, so is it a buyer's market or a seller's market?
• 31:04
  SPEAKER_01: Right now, there are a lot of people are a lot of people are talking about it, saying it is going towards a buyer's market.
• 31:13
  SPEAKER_01: Okay.
• 31:13
  SPEAKER_01: Okay, yeah, it's not a bias market, going towards a buyer's market.
• 31:18
  SPEAKER_01: Now, beyond uh Westpack prediction, the other three banks prediction comes in August.
• 31:26
  SPEAKER_01: Cash rate is held.
• 31:28
  SPEAKER_01: Literally, all the banks said till next year cash rate is held at 4.35.
• 31:33
  SPEAKER_01: Then what's gonna happen to the spring market?
• 31:36
  SPEAKER_01: Do you think it's gonna be when those discounts are happening?
• 31:38
  SPEAKER_01: No, no, right?
• 31:46
  SPEAKER_01: When the mar buyers are going to the market, they're gonna compete with each other.
• 31:52
  SPEAKER_01: Most of the time, it'll start going up when the competition is higher.
• 31:57
  SPEAKER_01: Yeah.
• 31:58
  SPEAKER_01: Right now, we can already see after the budget that a lot of people are buying house and land properties.
• 32:04
  SPEAKER_01: They're buying in different locations.
• 32:06
  SPEAKER_01: That's another podcast that we have planned for the next next next episode.
• 32:10
  SPEAKER_01: We're gonna be we're gonna we're gonna drop some hot suburbs where most of our investors are investing and making a killing out of it already.
• 32:18
  SPEAKER_01: Right.
• 32:18
  SPEAKER_01: So that is also going to happen.
• 32:22
  SPEAKER_01: By that time, it is a matured market as well.
• 32:25
  SPEAKER_01: Right now it's brand new.
• 32:27
  SPEAKER_01: You know, whoever comes in, they they'll they'll they're gonna make a good killing out of it now.
• 32:33
  SPEAKER_01: But then, you know, comes to September, October, November.
• 32:36
  SPEAKER_01: Yeah, a lot of people know about those markets as well.
• 32:39
  SPEAKER_01: That's also gonna have a bit of competition.
• 32:42
  SPEAKER_01: So, so I think um cash rate is not something that I would be looking at and making my decision, right?
• 32:53
  SPEAKER_01: Yes, I will look at my trends, yeah.
• 32:56
  SPEAKER_01: What's happening, who's buying, where they're buying, etc.
• 33:00
  SPEAKER_01: But again, back to old school, I always say, you know, I won't think uh where the poor man like to think.
• 33:08
  SPEAKER_01: Yeah, it's a fair goal for me.
• 33:12
  SPEAKER_01: Why can't somebody else have a uh chance?
• 33:15
  SPEAKER_01: I don't think like that.
• 33:16
  SPEAKER_01: Very sorry if you don't like me, you don't like me, I don't care.
• 33:19
  SPEAKER_01: Um I will look at the numbers perspective and see what's my investment, XML, what is the return on investment I can get from the time period that I want to invest that money.
• 33:36
  SPEAKER_01: Whether it's my first home, whether it's my investment property, it doesn't matter.
• 33:42
  SPEAKER_01: That's where I would look at it very simply.
• 33:45
  SPEAKER_02: So, Prabhupada to uh finish this off, right?
• 33:49
  SPEAKER_02: Uh here's a if you can I'll I'll point a question at you.
• 33:53
  SPEAKER_02: Yeah, right.
• 33:54
  SPEAKER_02: Uh from the view of one of the listeners.
• 33:57
  SPEAKER_02: Yeah.
• 34:00
  SPEAKER_02: So if if someone's sitting at home right now and they've got a variable rate mortgage, you know, uh at 4.35% plus their respective banks margin added on top of that.
• 34:12
  SPEAKER_02: Yeah, so let's say about what 6.25?
• 34:14
  SPEAKER_02: 6.25.
• 34:15
  SPEAKER_02: Yeah.
• 34:16
  SPEAKER_02: So what are their uh so I mean the repayments are brutal, right?
• 34:21
  SPEAKER_02: Now, if they're wondering what to do, what is the actual practical advice for borrowers and investors right now that you can give as a senior mortgage broker who's been in the industry?
• 34:33
  SPEAKER_01: If you are wondering that you can't pay 6.25, you haven't done your numbers right.
• 34:43
  SPEAKER_01: You're really screwed.
• 34:46
  SPEAKER_01: If Westpec prediction happens, 50 basis points up, you're screwed.
• 34:57
  SPEAKER_01: You really need to start doing your numbers now.
• 35:01
  SPEAKER_01: As I always say, when we buying properties when the retail rates are about 3.5%, 4%, we do numbers at 7%.
• 35:12
  SPEAKER_01: We always keep a buffer.
• 35:14
  SPEAKER_01: Absolutely, double double the retail rate to see whether you can afford it.
• 35:20
  SPEAKER_01: Yeah, yes, you might see, oh shit, that's gonna be very, very I mean gonna be tough, but then it'll help you to understand if that happens, what are the things I must do?
• 35:34
  SPEAKER_01: So right now you haven't done numbers, you originally based on numbers of 5% or 4.5%.
• 35:41
  SPEAKER_01: Now it's six and six point two five.
• 35:43
  SPEAKER_01: Now you are struggling that because you haven't planned.
• 35:46
  SPEAKER_01: You can't rely on the market to pay your mortgage off.
• 35:50
  SPEAKER_01: You gotta rely on yourself.
• 35:53
  SPEAKER_02: So it all comes down to planning, structuring, and start earning more.
• 35:59
  SPEAKER_01: And a good financial strategy.
• 36:01
  SPEAKER_01: Yeah, somebody asked me that question, I will say start earning more.
• 36:04
  SPEAKER_01: If you can't afford it, don't sell it.
• 36:10
  SPEAKER_01: That's the loser's game.
• 36:12
  SPEAKER_02: Yeah, find ways to increase your income.
• 36:14
  SPEAKER_02: Yeah, increase your income.
• 36:17
  SPEAKER_01: Work maybe smart rather than hard.
• 36:22
  SPEAKER_01: Earn a bit more to pay it off.
• 36:25
  SPEAKER_01: So I I don't think even 50 basis for an increment shouldn't be an issue if you know what to do if it happens.
• 36:35
  SPEAKER_01: Yeah, right.
• 36:37
  SPEAKER_01: Maybe start reducing some of the unnecessary expenses for temporary basis.
• 36:44
  SPEAKER_01: What's wrong with it?
• 36:46
  SPEAKER_01: Yeah, no, true.
• 36:49
  SPEAKER_02: Makes sense.
• 36:51
  SPEAKER_02: All right, Pram, as always.
• 36:53
  SPEAKER_02: Thank you.
• 36:54
  SPEAKER_02: And thank you guys for tuning in.
• 36:55
  SPEAKER_02: This was a very last-minute episode.
• 36:57
  SPEAKER_02: You know, the RBA just released the yeah, uh had the rate announcement today, and then we we hopped on it.
• 37:03
  SPEAKER_02: We wanted to get an episode out sooner than later.
• 37:05
  SPEAKER_02: Little excuse for me to have a quick drink.
• 37:08
  SPEAKER_02: I jumped onto it.
• 37:10
  SPEAKER_02: So, look, if you guys are uh property investors and you're currently looking at where to invest or buy your next investment property, where are the hotspots, where are people buying?
• 37:22
  SPEAKER_02: Um we've got an we've got an episode coming up.
• 37:25
  SPEAKER_02: Yes, to give you just that.
• 37:27
  SPEAKER_01: Yeah, stay tuned for that.
• 37:28
  SPEAKER_02: Stay tuned for that.
• 37:29
  SPEAKER_01: That's going to be like really cool one.
• 37:31
  SPEAKER_01: We're gonna use some actual scenarios, we're gonna use some actual property investment analysis that we have done for those investors.
• 37:40
  SPEAKER_01: And we're gonna drop those locations as well.
• 37:43
  SPEAKER_01: Yes, so that's we're gonna drop them.
• 37:45
  SPEAKER_00: I mean, yeah, yeah, maybe we're gonna drop them.
• 37:47
  SPEAKER_02: Yeah, we'll drop, we'll drop like one or two.
• 37:49
  SPEAKER_01: Maybe give a couple of hints.
• 37:51
  SPEAKER_01: Maybe.
• 37:52
  SPEAKER_02: Maybe we'll we'll give like bordering suburbs so they can figure it out.
• 37:58
  SPEAKER_02: We have existing.
• 37:59
  SPEAKER_02: Yeah, uh anyone looking to buy an investment under SMSF, we are gonna have Sunali uh back on the podcast as well.
• 38:07
  SPEAKER_02: Oh wow, that's gonna be good.
• 38:08
  SPEAKER_02: Yeah, and we're gonna go full we're gonna go on a full-on deep dive into SMSF buying investment properties under SMSF.
• 38:14
  SPEAKER_02: So stay tuned for that as well.
• 38:16
  SPEAKER_01: And also, we must also say to our listeners, um, we're gonna bring a buyer's agent into in in into one of the episodes.
• 38:24
  SPEAKER_01: Couple episodes, actually.
• 38:25
  SPEAKER_01: Couple of episodes, yeah.
• 38:27
  SPEAKER_01: Uh we're gonna talk about how the bias agency is supposed to be working.
• 38:32
  SPEAKER_02: Yeah, and we're gonna and we're gonna get the bias agent to give us his in-depth analysis on certain suburbs.
• 38:40
  SPEAKER_02: Yes.
• 38:41
  SPEAKER_02: Metro suburbs is not regional suburbs.
• 38:43
  SPEAKER_02: So yeah, yeah, yeah.
• 38:44
  SPEAKER_02: Interesting, interesting episodes coming up, guys.
• 38:46
  SPEAKER_02: Stay tuned.
• 38:47
  SPEAKER_02: Stay tuned.
• 38:47
  SPEAKER_02: Thank you for tuning in to another episode of the TFS Podcast, where we turn knowledge into action and big goals into real results.
• 38:58
  SPEAKER_02: Don't forget to like and subscribe and share this episode with someone working towards the next financial step.
• 39:06
  SPEAKER_02: Now, with that being said, until next time, keep building.