A Loan Market survey has identified that 2 out of 3 of respondents expect to see the RBA knife to rates when it meets on February 7. Thirty-nine per cent are forecasting another quarter of a percentage point cut, while 27% expect a deeper 50bp cut.

Rate cut does not only makes loans cheaper it also contributes significantly to consumer confidence and has the overall affect of stimulating the economy.

“The RBA lowering rates in November and December last year came as a welcome relief for borrowers and struggling sectors such as retail, but there are no signs of an improvement in the current global economic environment, particularly the volatile situation in Europe.

How much of the rate reduction will be passed on to holders of home loans, car loans, personal loans and credit cards, remains to be seen.

Even if in some cases a loan offers more flexibility, the financially strapped borrower tends to select loans with lower repayments today than necessarily thinking long term. While this works well in some cases in other cases the borrower is simply postponing the inevitable cost to a later period.

Line-of-credit home loans had fallen to 4 per cent of all mortgages as of November – a 13-year low – from a peak of 10 per cent at the end of December 2005.

An executive director of ING Direct, Brett Morgan, says as well as seeing less take-up of line-of-credit loans, the bank is finding existing customers are paying them down quicker and refinancing to standard home loans with offset facilities or in some cases to fairly basic home loans.

MKM Capital head of operations Michael Watson believes that Australian mortgage brokers can expect to see non-conforming loans and lenders return to the forefront during 2012.

Non-conforming low-doc home loans got a bad wrap with the introduction of NCCP legislation in 2011. However low doc home loans can still be NCCP compliant and should not be avoided.

“The biggest challenge arising from the introduction of the NCCP has been to communicate to brokers that low doc, coded loans can still be written with confidence in the NCCP environment.

Watson said that brokers should capitalise on any non-conforming clients they find, as a continued tough credit and business operating environment is expected this year.

Non conforming loans can bring a far more significant income for the mortgage broker than standard loans.

According to the latest ING DIRECT Financial Wellbeing Index, 65 per cent of  families feel that they have become better off financially during 2011. Consumers have spent the year consolidation debts, repaying loans including car loans, home loans, credit cards etc. and saving more towards the future.

But while the majority of consumers interviewed believe that they have improved their financial position during 2011 and are confident of achieving the same thing in 2012, 32 per cent of households shave reported that their family finances are worse off today than they were a year earlier with escalating debt levels and higher monthly loan repayments.

A common hurdle reported by 71 per cent was increased food, power and transport costs.

While Australians recognise that while they cannot control the direction of the economy they can take positive action to strengthen their own finances by acting responsibly in relation to personal loans and debts.

The Producer Price Index, considered to be a strong indicator of the CPI, came in just below analysts’ expectations at 0.3% for the quarter. With CPI figures expected to be announced tomorrow, Westpac senior economist Justin Smirk has said inflation risks are weighted to the downside.

Other than inflation – there are daily reports of job losses across the board in the car industry as well as in manufacturing. Interest rate reduction can help boost demand in these areas and possibly create more jobs in the longer term.

Should the Reserve choose to move on rates when it next meets, the question remains whether banks will choose to pass on the cut. According to the Australian Financial Review, a Morgan Stanley analysis has predicted the banks will reprice home loans in an effort to offset higher funding costs, passing on only a fraction of any RBA cuts.

If this happens the expectation of cheaper loans as a result of rate cut, may not be fully realized.

The Treasurer, Mr Swan, said that he welcomes new lenders to Australia and believes that they will aid the competition in place for home loans and will only benefit the consumer.

At least three big banks, the $62 billion Mitsubishi UFJ Financial Group, $42 billion Sumitomo Mitsui Financial Group and $35 billion Mizuho Financial Group, are said to be considering operating here, the Daily Telegraph reports.

An OECD ranking of household savings rates places Australia at number 5 from the 23 countries surveyed, with 10.4 per cent of household disposable income going into savings in 2011.

Switzerland has come up as the country with the highest annual rate of saving, with a savings rate of 12.1 per cent in 2011, followed by Sweden (11.7 per cent), Germany (11.3 per cent) and Belgium (10.7 per cent).

Back in 2006, before we were affected by the GFC, Australian household savings rate was 2.1 per cent. Its OECD ranking that year was 16th.

OECD economists are expecting that Australian households will maintain their high savings rate. The forecast for the current year is 10.3 per cent and for 2013 the expected rate is 10.5 per cent.

Recent legislative changes make it illegal for debt collectors to continue to hassle a debtor once asked in writing not to do so.

The two agencies are said to have continued to contact the two Melbourne women after receiving written requests that they either stop contacting them or take legal action against them

The Consumer Action Law Centre is bringing the cases in the Victorian Civil and Administrative Tribunal, on behalf of the women.

The agencies involved are Australian Receivables Limited and Baycorp Collections.

This will be seen as a test case for Debt Collectors and their debt collection strategies.

Baycorp Collections, chasing three debts totalling $2516, has been accused of “undue harassment” in calling more than 10 times after receiving a written request to desist. Australian Receivables Limited, chasing two debts worth $594, is accused of contacting a woman more than nine times after it was sent a letter.

Neither agency had gone to court to recover the money.

Evergreen Finance are a provider of personal loans and personal finance across Australia and New Zealand. They will develop consumer finance products that will be offered to borrowers directly through the  Firstfolio’s national network of finance brokers.

Speaking to The Adviser, Firstfolio’s chief executive officer Mark Forsyth said the joint venture was another step towards the company’s overall goal of creating a holistic and diversified business.Evergreen have developed advanced processing systems that facilitate and assist in the processing of  personal loans.Currently there is significant borrower demand for such products.  The partnership reflects our strategy of introducing additional financial products through Firstfolio’s significant national distribution network,” Mr Forsyth said.

If your client for a home loan is looking for car loans , bad credit car loans or personal loans then it only makes sense that the broker is also able to offer such a service.

Looking forward, Mr Forsyth said the company planned to diversify and ramp up its presence in other markets including the self-managed super fund space.

“We have an SMSF product, but we haven’t really promoted it. I think this is going to be a market that will take off, but for the moment we are just taking a wait and see approach.”

The ABS today said the seasonally-adjusted commitments were down from $7.806 billion in October. This includes, personal loans, car loans, credit cards and the like.

Commercial finance overall also declined during November. There was a drop of 9.6 per cent to $33.098 billion, seasonally adjusted, from $36.624 billion in October.

Lease finance was up 15.1 per cent to $490 million, compared with $426 million October.

Home Loans taken out by owner occupiers increased by 2.2 per cent to $13.790 billion, from $13.487 billion in October.