Tag Archives for " Interest rates "

Dec 05

Pepper Money Has Implemented A New Offer For Brokers

By Shane | News

Pepper Money is Australia’s leading non-bank lender, which covers both mortgage brokers and for many non-bank lenders as a financer for wholesale. As a non-bank, they operate a slightly different way as compared to banks and other major financing institutions.

With this regard, Pepper Money just released a new offer for brokers and their prime and near-prime customers. Australia’s number one non-bank lender has announced that brokers will be able to offer their customers discounted interest rates offered in various LVR (Loan-to-Value Ratio) bands applicable to all of their prime and near-prime products. It shall cover all full documentation and alternative documentation customers except for construction loans.

In this manner, brokers can now offer their prime home loan customers rates from 3.36% per annum, which has a comparison rate of 3.56% per annum.

At the same time, brokers will also be able to access near-prime rates from 4.26% per annum with a comparison rate of 4.76% per annum. This limited-time offer is valid until August 30, 2019.

The Director of Sales and Distribution for Pepper Money has stated that their goal is to help more families and more people to achieve their dream of homeownership in Australia which we all know that in real life, the right interest rate can make all the difference.

He also added that they are committed to providing brokers and their customers with flexible and competitive home loan products to help them achieve their goals. This is the main purpose of their offering, which is to deliver real-life solutions for all sorts of real-life situations.

Pepper Money’s decision was in addition to the 0.25 percentage point rate cut declared last month. Their declaration also takes place following their move to reduce variable interest rate for their existing customers by 20 basis points, this is in compliance with RBA’s (Reserve Bank of Australia) cash rate decision.

Dec 02

How Can A Recession Affect The Economy

By Shane | Interest Rates

What Is A Recession?

It is a term of an overall economic decline and is usually followed by an immediate decline in the stock market, an increase in unemployment, and a drop in the property market. A recession is normally less serious than depression. It is a decrease in economic activity over a certain period of time.

The Impact Of Recession On The Following Economic Factors

Supply And Demand

Though the Central Bank has other means to adjust the interest rate, it still doesn’t have full control of it. The laws of supply and demand are reasonably affected by interest rates. During a period of recession, people will usually choose to save their money because of their lack of confidence. 

Most people usually are expecting to lose their jobs so they hesitate to spend or borrow, and instead, they chose to borrow. As a result, there is more supply of money than demand in borrowing. During a period of recession, a paradox of thrift is deemed, it is because the consumers chose to save their money rather than use it for consumption, and this causes the recession to get worse.

It is not a bad thing to save, however, if all people chose to save, they further limit the decision of consumers to spend, thus it makes the recession more severe.


While there is a decline in the economy, the demand for borrowing is also decreasing. A lack of demand drives interest rates to decline. Furthermore, the monetary policy employed by the central bank in times of recession is to increase the supply for money to reduce interest rates. Low-interest rates boost economic activity through consumer spending and investment in business and cheaper financing with low-interest rates.

Interest Rates

Interest rates largely depend on the economy’s condition.

When there is economic growth, the demand for money increases, and it influences the interest rate to drive upwards.

On the other hand, the economic downturn affects the downward impact on interest rates. Therefore, interest rates during a recession tend to drop, and this is because the inflation rate is low, and the central bank would like to deal with and encourage the economy.

Essentially, lower interest rates should help the economy from recession, as it reduces the cost of borrowing, and it should promote investment and consumer spending.

Property Values

During a recession, with unemployment continuously increases, it is expected that most of the people will not be able to afford their mortgages, and therefore we can observe home repossessions. In this situation, an increase in the supply of housing but a decrease in the demand is expected.


The investment will drop as companies minimize on taking risks and uncertainty. Borrowing can also be more difficult at this time banks are short of cash.

It comes, and it goes, that is what recession is all about. There are periods of recessions that are more severe and last longer than the others. However, as they say, there is always a rainbow after the rain, and therefore, a recession always ends. When problems in the economy are solved, it is always followed by economic growth.

Nov 28

What Are The Effects Of Negative Interest Rates

By Shane | Interest Rates

We will try to let you understand what Negative Interest Rates truly mean and how does it affect the lives of an ordinary citizen.

Interest rate cuts have been one of the principal means by the Central Bank in adjusting their monetary policies. Thus, every time there is a crisis, the initial solution of the central bank is to lower their interest rates. If the interest rates are already at zero, and the economy is still not well functioning as it intended to be, therefore, the traditional policy of cutting the interest rates into negative will not also work.

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