Upcoming Election
Grandpa Aerotart
7gcbc a question.
In your (excellent) linked article it mentions '30 year fixed mortgages'. This would seem to be the norm in the US, why not in Oz?
It has always struck me as a little unfair of the banks that if you sign a mortgage contract at say 6.5% it then wanders up ,and occasionally down, but mostly up. If you want a fixed % loan it can only be a short term thing in Oz....up to say 5 yrs.
My question is why is it unreasonable to expect that if I borrow at 6.5% then my interest rate remains at that level for the life of the loan? Similarly if someone else borrows at 5% a year later or 10% 5 years later. I realise people would whinge that they were 'losing' out if interest rates went down but not near as many people would lose their homes when the interest rates inevitably rise over time.
It's clear why interest on saving varies but it seems interest rate variation on loans is just a windfall for banks.
In your (excellent) linked article it mentions '30 year fixed mortgages'. This would seem to be the norm in the US, why not in Oz?
It has always struck me as a little unfair of the banks that if you sign a mortgage contract at say 6.5% it then wanders up ,and occasionally down, but mostly up. If you want a fixed % loan it can only be a short term thing in Oz....up to say 5 yrs.
My question is why is it unreasonable to expect that if I borrow at 6.5% then my interest rate remains at that level for the life of the loan? Similarly if someone else borrows at 5% a year later or 10% 5 years later. I realise people would whinge that they were 'losing' out if interest rates went down but not near as many people would lose their homes when the interest rates inevitably rise over time.
It's clear why interest on saving varies but it seems interest rate variation on loans is just a windfall for banks.
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(Long Term mortgage Fixed Rate agreements) LTMFA's or LTFA's or god knows what they will be called here, are defined by their stability, and therefore their ability to minimise the risk to the borrower and offer predictability, but how does the lender mitigate their risk ? .... by charging for it.
The entry requirements are often quite steep, a minimum of 15-20% deposit is often required, along with a definite margin above the varible interest rate, the internal structure of the product is also geared to reduce the lenders risk asap, thus the early part of the loan term is primarily serving the interest component rather than the principle.
With the mortgage market so competitive, an expensive long term loan (when people change their houses every 6-8 years) is not going to sell , when a comparable variable rate loan costs much less to get into (initially at least,) you are correct
when you say that over the lifetime of a loan , fixed may indeed prove cheaper - but who actually knows what is going to happen ?
There appears to be no reason (other than demand) that long term fixed mortgages are not offered , ,Maybe its cultural, they are also common in France and Spain
They are now doing 35-40 year term loans in Ireland (or so my parents inform me)
It is not unreasonable for anyone to wish for fixed rate over the term, but the lenders will charge for it.
Your basic home mortgage is basically a "swap" at any rate (pun intended), individually they are OK , but when you take into account all the inter bank transfers, interest rate transfers, derivatives and so on, it gets pretty hard to value accurately and follow closely at the consolidated level, so the only thing to do is take a simple view and look at the market at a given time and make assumptions, so the banks have to manage their exposure (risk) (usually called the daily position) , and that is more difficult with long term agreements than with short term variable positions - Hence the preimum.
Agreed (ish) interest on loans is a windfall, but its there since the guy with hair drove the lenders outta the temple, so we're kind of stuck with it...come to think of it, Arab Bank is a pretty low interest charger, then again , you'll probably have asio on your doorstep asking awkward patriotic questions.....
arbitrage (price difference) exists for almost a nano-second across the banks, so there is usually no way to get a "special" rate with out first negotiating it direct
I've got some hillarious yarns about miscalculating a banks(swiss) daily position and watching the risk gnomes (all swiss german) react...
remember, these people invented the cuckoo clock, the pocket knife and the secret bank account, they did not however invent humour..
{big disclaimer, I only work in this industry from a modelling point of view, not from an advice or planner or salesman what ever you wish}
cheers
7g
The entry requirements are often quite steep, a minimum of 15-20% deposit is often required, along with a definite margin above the varible interest rate, the internal structure of the product is also geared to reduce the lenders risk asap, thus the early part of the loan term is primarily serving the interest component rather than the principle.
With the mortgage market so competitive, an expensive long term loan (when people change their houses every 6-8 years) is not going to sell , when a comparable variable rate loan costs much less to get into (initially at least,) you are correct
when you say that over the lifetime of a loan , fixed may indeed prove cheaper - but who actually knows what is going to happen ?
There appears to be no reason (other than demand) that long term fixed mortgages are not offered , ,Maybe its cultural, they are also common in France and Spain
They are now doing 35-40 year term loans in Ireland (or so my parents inform me)
It is not unreasonable for anyone to wish for fixed rate over the term, but the lenders will charge for it.
Your basic home mortgage is basically a "swap" at any rate (pun intended), individually they are OK , but when you take into account all the inter bank transfers, interest rate transfers, derivatives and so on, it gets pretty hard to value accurately and follow closely at the consolidated level, so the only thing to do is take a simple view and look at the market at a given time and make assumptions, so the banks have to manage their exposure (risk) (usually called the daily position) , and that is more difficult with long term agreements than with short term variable positions - Hence the preimum.
Agreed (ish) interest on loans is a windfall, but its there since the guy with hair drove the lenders outta the temple, so we're kind of stuck with it...come to think of it, Arab Bank is a pretty low interest charger, then again , you'll probably have asio on your doorstep asking awkward patriotic questions.....
arbitrage (price difference) exists for almost a nano-second across the banks, so there is usually no way to get a "special" rate with out first negotiating it direct
I've got some hillarious yarns about miscalculating a banks(swiss) daily position and watching the risk gnomes (all swiss german) react...
remember, these people invented the cuckoo clock, the pocket knife and the secret bank account, they did not however invent humour..
{big disclaimer, I only work in this industry from a modelling point of view, not from an advice or planner or salesman what ever you wish}
cheers
7g
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Re US home mortgages, is not the interest on these tax deductible to the owner.??
I understand that this in itself and I dont understand how, has a levelling effect on interest rates.???
I understand that this in itself and I dont understand how, has a levelling effect on interest rates.???
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Given who this came from!!!!!! Wow?????
Dear AOPA Member,
The federal election is upon us and AOPA has recently sought comment from the major parties on how they plan to manage aviation and general aviation in the future.
The Australian Democrats and the Liberal Party took the time to reply and we reviewed the Labor Party’s campaign policy from their website.
From these documents and previous experiences with the major parties, AOPA believes that the following recommendations will give GA the best chance in the coming years.
For the House of Representatives – the Coalition
For the Senate – AOPA believes that if the same party controls both the House of Representatives and the Senate, there will be little that can be done to stop any detrimental legislation or regulation. AOPA sometimes relies on the powers of the Senate to disallow costly and restrictive regulations.
For WA residents – AOPA recommends Brian Greig for the Senate in WA. Brian has helped GA in the past.
AOPA has been making progress in many areas over the past few months and we thank you for your support.
Regards,
Andrew Kerans
AOPA Vice President
Dear AOPA Member,
The federal election is upon us and AOPA has recently sought comment from the major parties on how they plan to manage aviation and general aviation in the future.
The Australian Democrats and the Liberal Party took the time to reply and we reviewed the Labor Party’s campaign policy from their website.
From these documents and previous experiences with the major parties, AOPA believes that the following recommendations will give GA the best chance in the coming years.
For the House of Representatives – the Coalition
For the Senate – AOPA believes that if the same party controls both the House of Representatives and the Senate, there will be little that can be done to stop any detrimental legislation or regulation. AOPA sometimes relies on the powers of the Senate to disallow costly and restrictive regulations.
For WA residents – AOPA recommends Brian Greig for the Senate in WA. Brian has helped GA in the past.
AOPA has been making progress in many areas over the past few months and we thank you for your support.
Regards,
Andrew Kerans
AOPA Vice President
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When I first started to fly i remember the days when almost everything in aviation was tax free. It seems like so long ago but it was not. It was only a few years with the introduction of the GST. My friends that have CPL's all get there tax back but us Private Guys all have to pay 10% on everything from training to sick bags. Remember when avgas was cheaper then hi-octane unleaded.
I would not vote for the party that gave us the highest tax in Australian aviation history.
I would not vote for the party that is introducing the $200 licenses.
I would not vote for John Howard’s conservative party.
As Australians and I like to think as pilots you have will have some common sense. You need to make up your own minds.
I would not vote for the party that gave us the highest tax in Australian aviation history.
I would not vote for the party that is introducing the $200 licenses.
I would not vote for John Howard’s conservative party.
As Australians and I like to think as pilots you have will have some common sense. You need to make up your own minds.
Grandpa Aerotart
7gcbc/Gaunty.
I like to follow the KISS principle as much as possible in my life.
To my simple mind the 'fairest' deal in borrowing money from banks would be;
1/. Reasonable deposit 10-20% and
2/. Fixed interest rate for the term of the loan.
You either can afford it or not...it's unfair to be able to afford it now but not in x years if the interest rates double but your pay has remained static in real terms for all the reasons we see daily.
Currently % rates are around 6.5% ish. That means if I borrow 250k for a house I should chuck in say 25k myself and pay off the rest at 6.5% interest...I see no reason why I should be exposed to the possibility of 10% x years down the track but accept that if people were able to borrow at 5% a few years before me good luck to them.
Thanks to compounding interest we are NOT paying 6.5% anyway...by the time you have paid off the loan, assuming you take the whole 25 yrs, you'll have paid back closer to double what the house cost to buy. Seems the banks have decided (a LONG time ago) that they should not only benefit from the straight profits from lending capital but should also take a large chunk of any future capital growth you may, or may not, get from your investment.
I find that a little obscene...and it goes a long way to explaining why most people hate banks.
On the matter of interest being tax deductable in the US on your home loan, as opposed to investment properties, I have read that too.
I firmly believe that should be the case in Australia too. The Govts of whatever persuasion clearly disagree...particularly strangely enough, conservative ones.
In an era when it has become completely obvious that pension schemes, be they Govt or private, are completely inadequate and will get more so in the decades to come, a tax system that doesn't seek to maximise a persons ability to self fund retirement is obscene in the extreme.
Not only do successive Govts NOT protect by legislation people from predatory profit taking from various retirement schemes but they double tax retirement funds by not making them tax free completely...let alone tax incentivised.
Across the board various 'institutions' make it their lifes work to remove money from one group (the vast majority) and place it in the hands of another (the minority). It's no longer acceptable to make a reasonable profit from whatever business you're in...you must make an increasing profit to appease shareholders. Banks are a CLASSIC example of this.
The price society is paying for this will one day explode in our faces, if it isn't already.
As you so rightly pointed out 7gcbc...people think increased equity in homes/properties means they are increasingly wealthy...they're not and these things merely serve to hide problems that blow up in our faces down the track.
I like to follow the KISS principle as much as possible in my life.
To my simple mind the 'fairest' deal in borrowing money from banks would be;
1/. Reasonable deposit 10-20% and
2/. Fixed interest rate for the term of the loan.
You either can afford it or not...it's unfair to be able to afford it now but not in x years if the interest rates double but your pay has remained static in real terms for all the reasons we see daily.
Currently % rates are around 6.5% ish. That means if I borrow 250k for a house I should chuck in say 25k myself and pay off the rest at 6.5% interest...I see no reason why I should be exposed to the possibility of 10% x years down the track but accept that if people were able to borrow at 5% a few years before me good luck to them.
Thanks to compounding interest we are NOT paying 6.5% anyway...by the time you have paid off the loan, assuming you take the whole 25 yrs, you'll have paid back closer to double what the house cost to buy. Seems the banks have decided (a LONG time ago) that they should not only benefit from the straight profits from lending capital but should also take a large chunk of any future capital growth you may, or may not, get from your investment.
I find that a little obscene...and it goes a long way to explaining why most people hate banks.
On the matter of interest being tax deductable in the US on your home loan, as opposed to investment properties, I have read that too.
I firmly believe that should be the case in Australia too. The Govts of whatever persuasion clearly disagree...particularly strangely enough, conservative ones.
In an era when it has become completely obvious that pension schemes, be they Govt or private, are completely inadequate and will get more so in the decades to come, a tax system that doesn't seek to maximise a persons ability to self fund retirement is obscene in the extreme.
Not only do successive Govts NOT protect by legislation people from predatory profit taking from various retirement schemes but they double tax retirement funds by not making them tax free completely...let alone tax incentivised.
Across the board various 'institutions' make it their lifes work to remove money from one group (the vast majority) and place it in the hands of another (the minority). It's no longer acceptable to make a reasonable profit from whatever business you're in...you must make an increasing profit to appease shareholders. Banks are a CLASSIC example of this.
The price society is paying for this will one day explode in our faces, if it isn't already.
As you so rightly pointed out 7gcbc...people think increased equity in homes/properties means they are increasingly wealthy...they're not and these things merely serve to hide problems that blow up in our faces down the track.
Last edited by Chimbu chuckles; 7th Oct 2004 at 05:40.
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Gday
Now that all that noise has settled, seems that sanity has prevailed through out the whole country, now all we need is Simon Creen to get back as leader and they have even less chance. I loves you comrad Simon.
Cheers Q
Now that all that noise has settled, seems that sanity has prevailed through out the whole country, now all we need is Simon Creen to get back as leader and they have even less chance. I loves you comrad Simon.
Cheers Q
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Chimbu,
A wise strategy, KISS is definitely the smart way to go, play safe and consolidate, thats is what we are doing. the outlook for Commercial Aviation is rather bleak to be honest - at least in the short term (1-5 years)
Oil is a crucial asset, It recently topped 50$ usd a barrell in London for the first time, and given low interest rates and general beneficial economies in the west , this is going against the grain. It will in the short term push costs up, and place pressure on fixed overheads (is salaries - benefits) for those companies operating aircraft.
The debacle in Iraq, whilst I shall not go into my personal reasons lest I get banned, is also putting pressure on this resource, it is precarious and it only needs one or two major terrorist attacks to knock this sideways and that will cause more pressure.
Tourism is a huge contributer to the economic well being of airlines, taken in this context, and considering the overall evolution of terrorism (or if you choose those that disagree with USA), the outlook is not good for non-western countries, there are additional costs incurred here, Security does not come cheap, and it all affects the bottom line. FYI sydney airport authority have a whole separate financial model to manage the security costs vis a vis - rebates from the govermnent, it is that significant that they are required to track it separately.
All these items are simply straws on their own, but which one is going to break the camels back?
I saw on the "Sunday" program , chan 9, or maybe 7, or 10 (I cannot tell the difference - to be honest) that an Sydney investment banker said that this election is probably the best one the ALP could lose, as he did not think the rates were sustainable and serious damage had already been done to the economy. His reasoning ? Why be in power to clean up someone elses screwup.
What information is he basing this on ? To be perfectly candid, it is his job to know this stuff, and whilst they get it wrong occasionally, there is more than a fair buckleys chance he is on the right track.
Don't talk to me about pensions, after spending 8 years in the UK working in and around the finance industry, it is clear to me that pensions are mis-managed all over the globe, if you have your company pension from 5-15 years ago, then you would do well to ensure that you keep it and ensure that legally it is robust enough to legally withstand any "amendments" that you may not agree with.
I dunno mate, all I want to do is get out of this office and fly taildraggers and seaplanes, and its getting harder and harder each letter I type.
The good thing for Aus , is that is percieved globally as a safe place to travel to (Milat and Adelaide excepted
), but that is not immune from oil prices, inflation , security costs and most important of all, the behaviour of the USA.
not a happy post - apologies
7gcbc
A wise strategy, KISS is definitely the smart way to go, play safe and consolidate, thats is what we are doing. the outlook for Commercial Aviation is rather bleak to be honest - at least in the short term (1-5 years)
Oil is a crucial asset, It recently topped 50$ usd a barrell in London for the first time, and given low interest rates and general beneficial economies in the west , this is going against the grain. It will in the short term push costs up, and place pressure on fixed overheads (is salaries - benefits) for those companies operating aircraft.
The debacle in Iraq, whilst I shall not go into my personal reasons lest I get banned, is also putting pressure on this resource, it is precarious and it only needs one or two major terrorist attacks to knock this sideways and that will cause more pressure.
Tourism is a huge contributer to the economic well being of airlines, taken in this context, and considering the overall evolution of terrorism (or if you choose those that disagree with USA), the outlook is not good for non-western countries, there are additional costs incurred here, Security does not come cheap, and it all affects the bottom line. FYI sydney airport authority have a whole separate financial model to manage the security costs vis a vis - rebates from the govermnent, it is that significant that they are required to track it separately.
All these items are simply straws on their own, but which one is going to break the camels back?
I saw on the "Sunday" program , chan 9, or maybe 7, or 10 (I cannot tell the difference - to be honest) that an Sydney investment banker said that this election is probably the best one the ALP could lose, as he did not think the rates were sustainable and serious damage had already been done to the economy. His reasoning ? Why be in power to clean up someone elses screwup.
What information is he basing this on ? To be perfectly candid, it is his job to know this stuff, and whilst they get it wrong occasionally, there is more than a fair buckleys chance he is on the right track.
Don't talk to me about pensions, after spending 8 years in the UK working in and around the finance industry, it is clear to me that pensions are mis-managed all over the globe, if you have your company pension from 5-15 years ago, then you would do well to ensure that you keep it and ensure that legally it is robust enough to legally withstand any "amendments" that you may not agree with.
I dunno mate, all I want to do is get out of this office and fly taildraggers and seaplanes, and its getting harder and harder each letter I type.
The good thing for Aus , is that is percieved globally as a safe place to travel to (Milat and Adelaide excepted
), but that is not immune from oil prices, inflation , security costs and most important of all, the behaviour of the USA.not a happy post - apologies
7gcbc
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Knew you would be hoWARd lover QNIM!
Australia will now get the type of government they deserve. Say goodbye to unions, say goodbye medicare, say goodbye to the peace loving, fair nation that we once were. And as for the envirament.
But who cares hey Australia. We can still make lots of money off investment units, and see who wins Australian Idol on our impressive plasma TV's, can't wait till next years 'baby bonus' so we can all upgrade.
What a sad, pathetic summary of how we think as a nation - down right shamefull.
We would rather now be considered an economy than a soceity?
I give it about a year before this 'economy' is going off it's brain at the changes this government has in store for the majority of us, too late then.
Many people very nervous in this country at the moment, with every right to be.
Australia will now get the type of government they deserve. Say goodbye to unions, say goodbye medicare, say goodbye to the peace loving, fair nation that we once were. And as for the envirament.
But who cares hey Australia. We can still make lots of money off investment units, and see who wins Australian Idol on our impressive plasma TV's, can't wait till next years 'baby bonus' so we can all upgrade.
What a sad, pathetic summary of how we think as a nation - down right shamefull.
We would rather now be considered an economy than a soceity?
I give it about a year before this 'economy' is going off it's brain at the changes this government has in store for the majority of us, too late then.
Many people very nervous in this country at the moment, with every right to be.
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C'mon Boney;
We live in a democracy - where everyone HAS to vote.
It's hard to get a clearer message in an election than that.
Australia has chosen Mr Sheen now 4 times in a row. It's not a fluke.
The standard of living is higher than ever, Australia has ridden out 2 x world economic downturns while the Cheshire Cat has been Treasurer.
As Clinton - the peoples champion in the USA once said - "it's the economy - Stupid"
Sure, 100% of the people are not happy, esp. the tree huggers.
But Mr Man Boobs has 3 years to bite his lip, not beat up any taxi drivers in the meantime and he might have a chance next time around.
The People have spoken.
We live in a democracy - where everyone HAS to vote.
It's hard to get a clearer message in an election than that.
Australia has chosen Mr Sheen now 4 times in a row. It's not a fluke.
The standard of living is higher than ever, Australia has ridden out 2 x world economic downturns while the Cheshire Cat has been Treasurer.
As Clinton - the peoples champion in the USA once said - "it's the economy - Stupid"
Sure, 100% of the people are not happy, esp. the tree huggers.
But Mr Man Boobs has 3 years to bite his lip, not beat up any taxi drivers in the meantime and he might have a chance next time around.
The People have spoken.
I'm with Boney
You wait till they sell off Telstra and we're all paying $50/month line rental in the cities and $100/month in the country.
... and timed local calls, don't forget that.
That is the Telstra that your grandparents paid for and THEN you paid for the shares to buy it back from the govt.
Thank you Mr Howard.
And then there was all the lies and scare-mongering about illegal immegrants and SIEV X
Thank You Mr Howard.
And then we had Mr Reith's son having a run on the taxpayer with the phonecard sandal... that's right TELSTRA again...
Thank you Mr Howard.
And then we had the rather dubious support for the illegall and fraudulently elected president of the United States, rendering Australia just another toady in Mr Bush's world order.
Thank You Mr Howard.
And then the War in Iraq, entered into for dubious reasons and then justified by outright lies.
Thank you Mr Howard.
And most unforgivable of all, the ALP failed to prosecute the attack on the 'Liberals' for fear of upsetting the media or seeming "Anti American".
It would seem that being "anti American" is a greater crime than being "Pro Australian"
Thank you Mr Latham
...and you Mr Howard.
... and timed local calls, don't forget that.
That is the Telstra that your grandparents paid for and THEN you paid for the shares to buy it back from the govt.
Thank you Mr Howard.
And then there was all the lies and scare-mongering about illegal immegrants and SIEV X
Thank You Mr Howard.
And then we had Mr Reith's son having a run on the taxpayer with the phonecard sandal... that's right TELSTRA again...
Thank you Mr Howard.
And then we had the rather dubious support for the illegall and fraudulently elected president of the United States, rendering Australia just another toady in Mr Bush's world order.
Thank You Mr Howard.
And then the War in Iraq, entered into for dubious reasons and then justified by outright lies.
Thank you Mr Howard.
And most unforgivable of all, the ALP failed to prosecute the attack on the 'Liberals' for fear of upsetting the media or seeming "Anti American".
It would seem that being "anti American" is a greater crime than being "Pro Australian"
Thank you Mr Latham
...and
you Mr Howard.
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H.L.
Obviously the Voters did not agree this time around.
Labor and their shirt-lifter, tree-hugging mates in the Greens can have a go again in three years time.
Who knows, if they 100% drop the Greens and move a little to the centre (Kevin Rudd as leader?), I may well vote for them next time around.
I can't wait to read Philip Adam's excuses now.
Anyway, back to Aviation. This is now boring reading the usual excuses every time labor loses (it's never THEIR fault).
Obviously the Voters did not agree this time around.
Labor and their shirt-lifter, tree-hugging mates in the Greens can have a go again in three years time.
Who knows, if they 100% drop the Greens and move a little to the centre (Kevin Rudd as leader?), I may well vote for them next time around.
I can't wait to read Philip Adam's excuses now.
Anyway, back to Aviation. This is now boring reading the usual excuses every time labor loses (it's never THEIR fault).
