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In January we wrote that Australian interest rates were unusually high both for the Government (which had to pay 3.8% to borrow money for 10 years) and for everybody else (the cash rate was 4.25%). These rates were unusually high for an AAA rated country, especially since there are fewer and fewer AAA rated countries around - France just lost its AAA rating and others like the UK are on 'negative watch' which means they too are in danger of losing their AAA rating.

Other people, especially big purchasers of AAA government bonds like the central bank of Switzerland noticed the high Australian rates as well and purchased a lot of Australian government bonds which means that our Government now only pays 3.0% in interest, down from 3.8%. An indirect consequence of the government paying lower interest rates is that the cash rate has gone down from 4.25% to 3.25%. This afternoon (Tuesday, December 4^th) the cash rate went down again to 3.0%.

Are you wondering where residential property prices are heading? I am.

In general, opinions are sharply divided between the many optimists and a few pessimists who receive enormous publicity.

One of them wrote a much-commented on article with lots of very persuasive graphs showing that the Australian property buyer cannot afford to pay any more because our debt levels are already too high.

What, however, if mortgage interest rates drop?

The second half of this newsletter reminds you that you only have a week left to put your hand out for a free $1,000 from the government. But first some really great insurance tips . . .

In this article I am talking about Life, Income Protection and Disability Insurance

Insurance is a lot of fun. There is a huge amount of choice and usually something good for everyone. You just need to find it. Having said that, 80% of the insurance arrangements I see can be improved upon, often by a lot.