Friday, February 17, 2012

Get to the top…of something very small

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Cranfield’s use of climbing imagery to promote its MBA program ("...get to the top in today's business environment...") misfires on the basis that this bloke is obviously bouldering, so the thing he’s scaling is probably a full 12’ tall.  Inspirational stuff!

Sunday, February 12, 2012

Adelaide’s first billion dollar homes

gold-houseAdelaide’s Sunday Mail reports today that average house prices in the leafy inner-east suburb of College Park are about to hit $2m. The Mail discusses this with the President of the Real Estate Institute, who explains that he’s not surprised by the news.

"That's because real estate prices traditionally double every seven years," Mr Moulton said.

They double every seven years do they?

On this basis, some simple maths tells us that the current median house price of $395k will grow to – wait for it – one billion dollars by the year 2091.  Incomes will grow as well – allowing for an optimistic 5% growth rate over that period will see the average South Australian pay packet rise from $47k to a seemingly hefty $2.23 million p.a. However, with average house prices at a billion dollars, the would-be home owner will need a deposit of at least $50 million (22 years work!) in order to get a loan of $950 million.  That’s a loan to income ratio of 426, compared with a current maximum of around 5.

I’m glad that’s all clear.

Saturday, February 11, 2012

Westpac’s Defiance!

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Amidst all the mouth-frothing about the decision by ANZ and Westpac to add 0.06% and 0.10% respectively to their standard variable rate home loans, Yahoo news has summed it up neatly with…

“Westpac has become the second of the four big banks to raise interest rates in defiance of the Reserve Bank of Australia”

Defiance?  Reserve Bank?

Some other headlines of note:

Herald Sun – Greedy banks slug you another $240 a year

The Australian – Two of Australia's big four banks have defied Wayne Swan's calls for restraint

Adelaide Now – Banks rake in money, alienate customers

News.com.au – Westpac, ANZ lift variable rates after RBA  keeps them on hold

Sydney Morning Herald – Bold and bootyful ANZ set to lead the rate pack

Bootyful?

Faced with this kind of nonsense it’s surprising that the banks bother to explain what they are up to….it only interferes with the outrage.

Thursday, February 2, 2012

Banana smoothie anyone?

image It seems a fair bet that the RBA will cut rates next week and that some or all of the banks won’t follow suit with their home loans.  This isn’t totally unreasonable given what’s been happening to their cost of funds, but what is unreasonable is the prospect of another “banana smoothie” situation where one of the banks tries vainly to describe what’s happening with interest rates in layman’s terms.

Not exactly Westpac’s  finest hour!

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