Home owners have been battling rising interest rates for over a year and a half now. But a new report reveals the important step some savvy borrowers are taking to rein in higher rates and swap “oh no!” for “ho, ho, ho!”.
It’s no secret that refinancing has the potential to slice a big chunk off your monthly loan repayments.
And according to Canstar, 1 in 10 mortgage holders chased a better deal in 2023 and switched to a new lender to save on their repayments.
But what’s surprising to us is that 9 in 10 didn’t.
So what’s holding them back? Let’s dive in.
To be fair, many home owners have been on the front foot this year.
According to Canstar, 1 in 5 home owners with a mortgage have negotiated a better rate with their current lender – which is great news.
Having a chat with your bank can be a fuss-free way to save, especially if they come to the party with a rate discount.
A further 14% of home owners say they have tried to switch to another lender but weren’t able to do so because they didn’t have enough equity, or didn’t meet the new lender’s requirements.
That’s why it pays to speak with us before talking to a lender.
We have in-depth knowledge of different banks’ lending criteria, so we know which lenders are likely to give you the green light for a better deal.
The thing is, there are plenty of home owners who have just copped rising rates without taking action.
As Canstar puts it: “Too many borrowers remain complacent even in the face of rising repayment costs”.
The scary thing is, half (49%) of Australia’s home owners with a mortgage don’t intend to change lenders at all.
Some believe they have a good interest rate. But as many as 1 in 5 think refinancing is too hard.
Let’s sort some facts from fiction.
First up, it’s great if you think you are paying a competitive interest rate. The key is to know for sure.
Right now, variable home loan rates are anywhere from 5.69% (very rare) through to 9%-plus.
With that sort of range, there’s plenty of scope to save, especially as lenders often make lower rates available to new customers.
There is an easy way to know if you’ve got a good rate: pick up the phone and call us.
And if you’re worried that refinancing is hard work, rest assured that we’ll do the bulk of the leg work for you.
We’ll sort through hundreds of home loan options to find the loan that’s right for your needs. We’ll also make the paperwork easy, liaise with your old lender, and your new bank. Simple.
So if you’re keen to find out if you can do better with your home loan these summer holidays, give us a call and we’ll help you put your best foot forward going into 2024.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If buying a home is at the top of your wish list for 2024, don’t miss our rundown on how the property market has fared in 2023 – and why the new year is shaping up as potentially another big year for real estate.
As we turn the page on 2023, let’s take a quick rear mirror look on how home values moved over the past 12 months.
In a year that saw five official rate hikes, and a cost of living squeeze thanks to high inflation, home prices still jumped by 7% nationally.
Several cities eclipsed those gains, with double-digit price growth in Sydney (up 10.2%), Brisbane (10.7%) and Perth (13.5%).
But it wasn’t just price growth that took everyone by surprise.
The speed of home sales was also astonishing, with plenty of suburbs in Perth, Sydney, Brisbane and Melbourne selling houses in as little as eight to 25 days on average.
Well, higher interest rates are starting to take a little heat out of the market.
According to CoreLogic, home values across Australia rose 0.6% in November – the smallest monthly gain since early 2023.
But here’s the rub.
The factors that pushed prices higher in 2023 are still in place, and plenty of experts are tipping house prices will keep rising in the new year.
Three main drivers look set to support house price growth in 2024, including:
1. Strong population growth: Population growth is rebounding strongly, driven by high immigration levels. More people generally means more demand for housing.
If you’re not convinced, a recent Domain report says “unprecedented” population growth will exert “extraordinary upward price pressure” on the property market.
2. A housing undersupply: On the supply side, we’re just not building enough new homes.
Australia’s housing shortage made headlines through 2023, and it doesn’t look like it’ll get better any time soon. Building approvals for new homes are reported to be well below average levels.
3. A rental market that’s as tight as a drum: Anyone looking for a rental can face an uphill battle. Vacancy rates are at record lows, making rental conditions tough.
This could encourage more people to buy a place of their own through one of the government’s low deposit buying schemes.
The First Home Guarantee scheme for instance, lets first home buyers get into the market with just a 5% deposit and zero lenders mortgage insurance.
Most experts are tipping house prices will keep rising in 2024 though maybe not at the breakneck speed seen nationally in 2023.
That said, price growth won’t be anything to sneeze at.
Domain is forecasting house prices to jump 5-7% nationally, and in each capital city by:
– 7-9% in Sydney
– 2-4% in Melbourne
– 7-8% in Brisbane
– 6-7% in Perth
– 7-8% in Adelaide
– 3-5% in Canberra
– 2-4% in Hobart
The bottom line is that we could be facing another bumper year of price growth in 2024, and if buying is on your radar, it may be worth trying to buy sooner rather than later to potentially avoid paying more.
So call us today to get the ball rolling on a home loan that helps you achieve your new year property goals sooner.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers with a small deposit now have an even wider range of lenders to choose from. We reveal the latest banks to join the 5% deposit scheme that’s helping more buyers get into the market sooner.
First home buyers have just received an early Christmas gift, of sorts, with an uptick in the number of lenders that have signed up to the Home Guarantee Scheme (HGS).
Three Westpac brands, St.George, Bank of Melbourne and BankSA, have added their names to the list of lenders available to first home buyers under the HGS.
If you’re not familiar with the HGS, it gives first home buyers an opportunity to buy a place of their own with as little as a 5% deposit (and no lenders mortgage insurance) through the First Home Guarantee or Regional First Home Buyer Guarantee.
First home buyers aren’t the only ones to benefit. The HGS also includes the Family Home Guarantee, which allows solo parents to buy a home with just a 2% deposit.
According to Housing Australia, which runs the HGS, first home buyers can now choose from 33 lenders participating in the scheme.
This includes most of the big banks (ANZ has not signed up) plus a generous variety of small banks, credit unions and non-bank lenders.
The extra sweetener is that more lenders can boost competition, which potentially encourages banks to keep their interest rates low for first home buyers.
Saving a deposit is often the key barrier for first home buyers. And when home prices and cost of living are rising, it can seem like the goal posts are constantly moving out of reach.
The beauty of the HGS is that it lets first home buyers jump into the property market about four years earlier (on average) than they normally would.
So, it’s no surprise that last financial year one-in-three first home buyers purchased with the help of the HGS.
Better yet, new data from Housing Australia shows that first buyers who have tapped into the scheme are now sitting on $82,000 in home equity, on average.
It’s a great result, especially when you consider that the average first home deposit across the scheme was just $35,200 in 2020, rising to $36,400 in mid-2023.
Compare that to the average deposit of $159,000 across the broader first-home buyer market, and it’s easy to see how the 5% deposit scheme gives first-home buyers a valuable leg-up into the market sooner.
With more than 40 lenders offering 5% deposit home loans under the HGS, the challenge can be choosing the loan and lender that’s right for your needs (or finding one that will take you on if your application is a bit touch and go, or if you’ve just started your own business in recent years).
The simple solution is to give us a call.
We can explain whether you’re eligible for the low-deposit scheme, and answer any questions you may have.
We’ll also take the time to understand your needs, so you can be confident that the lenders and loan products we put forward to you are a good fit.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It may be called the silly season but a few smart strategies could help you enjoy the festive season this year without missing a beat on your home loan. Check out our tips to share the Christmas cheer this year without breaking the bank.
Store shelves are starting to be lined with tinsel, ‘Santa stop here’ signs are popping up around the neighbourhood, and chances are you’re beginning to hum a few bars of Jingle Bells.
Yes, Christmas is just around the corner, and now’s the time to plan for what can be a pricey time of year.
After 13 rate hikes in close succession, plenty of homeowners are feeling the squeeze of higher home loan repayments.
The good news is that you (hopefully) won’t have to cancel Christmas this year. Below are three clever hacks that could help you manage your mortgage over the festive season.
Plan ahead by listing all the fixed expenses you’ll face in December such as utilities, your home loan, car loan, and credit card repayments, as well as less frequent bills such as council rates that may fall due before Christmas.
Add up the total to know how much you need to set aside. It’s a good idea to try and prioritise these bills over seasonal spending.
Next, draft up a Christmas spending budget that allocates money to gifts, food, drinks and decorations.
Finetune your budget based on your ability to pay, bearing in mind the upcoming costs you identified in the bill list.
If things are looking tight this year, consider opting for Secret Santa instead of everyone buying everyone a present.
It can help make the giving experience more personal and is definitely gentler on the hip pocket.
Websites like elfster.com can help keep it anonymous and straightforward for everyone.
It can be tempting to pay for Christmas purchases with a credit card or buy now, pay later. But these options can just mean kicking the can down the road until January when payments fall due.
It’s also worth noting that late payments on either option could affect your credit score for any future home loan applications.
So where possible, consider reaching for your debit card for festive purchases. It’s hard to get into too much trouble when you pay using your own money.
Christmas is the season of giving, so why don’t we hit up your lender for the gift of a lower interest rate?
Reserve Bank data shows there is still a gap between the rates on new versus established loans.
If you took out your loan through us, get in touch and we can either reach out to your lender on your behalf for a discount or, if they don’t come to the party, help you explore your refinancing options with another lender.
It’s easy to get swept up in seasonal good cheer. But it can sometimes be important not to get too carried away with Christmas spending.
If you plan to refinance your home loan or purchase a house in 2024, a lender will likely look at your spending patterns over the past few months.
Hamming up your purchases in December can bump up your average living costs, and if you go way over the top, potentially see you knocked back for a new loan in the new year.
Want more tips to manage your mortgage over the holiday season? Call us today for more festive saving strategies.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If the November rate hike will seriously stretch your finances, one potential solution may be to extend your loan term. It can ease the hip pocket pain by lowering monthly repayments. But taking more time to pay off your mortgage can come with hidden downsides. Here’s what to weigh up.
Will the RBA’s latest 0.25% cash rate rise squeeze you financially? (not to mention the other 12 rate hikes!)
The majority of lenders lost no time increasing their variable home loan rates following the Reserve Bank of Australia’s 0.25% Melbourne Cup Day rate rise.
According to Mozo, the 13th rate hike since May 2022 has pushed up the average variable rate to 6.62%.
On a $500,000 variable rate home loan payable over 25 years, the latest 0.25% rate hike can see monthly repayments jump by $78.
For homeowners who didn’t have much fat left to cut from their budget, those extra dollars can be hard to find.
One potential strategy that may help to lower repayments is to stretch out your loan term.
If you have a 25-year loan, your lender may give you the option to extend for up to five more years, possibly pushing out the term to 30 years.
If you get the green light, this kind of reset can significantly lower your monthly repayments.
On the $500,000 mortgage we looked at earlier, moving from a 25-year loan to a 30-year loan could cut monthly repayments by around $214 – even after allowing for the November rate hike.
There’s a lot to love about the prospect of slashing a couple of hundred bucks off your loan repayments each month, especially as we head into the festive season.
But pushing out your loan term can come with a hidden cost.
Taking longer to pay down your loan means you’re also paying interest for longer. And while your repayments can decrease, the long-term interest cost can skyrocket.
Stretching a $500,000 loan from 25 to 30 years could mean paying a whopping $128,000 more in total interest.
It’s worth keeping in mind though that those extra interest repayments aren’t a given.
You may be able to close the gap and cut down the interest cost by either making extra repayments in the future, loading up an offset account, or paying off the loan early (if, for example, you receive a lump sum inheritance).
So the upshot is that stretching your loan term can be a short-term fix now, but you’ll have to weigh up the costs against the benefits, not to mention whether you think you’ll be in a better financial position later down the track to pay down the loan quicker (and thus reduce the interest payments).
Along with exploring extending the length of your loan, we could also help you look into other solutions to ease the pain of higher rates.
Options that may be available with your lender include:
– temporarily lowering your loan repayments;
– deferring repayments for a while; or
– shifting you to interest-only payments for a set period.
The common thread is that the earlier you reach out for assistance, the sooner we may be able to help you get some financial relief.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate by 25 basis points, taking it to 4.35%. So just how much will this year’s Melbourne Cup day rate hike increase your monthly repayments?
Some more tough news for mortgage holders around the country today.
Despite the official cash rate being on hold since June (and many hoping it would stay that way), the RBA has decided to press ahead with a second consecutive Melbourne Cup day rate rise in an attempt to rein in inflation.
This means we’ve now had 13 hikes rise in 18 months since 1 May 2022, and it takes the official cash rate to its highest level since November 2011.
It also happens to be the first rate hike under new RBA Governor Michele Bullock, who commenced in the role in September.
Governor Bullock said while inflation in Australia had passed its peak, it was still too high and was proving more persistent than expected a few months ago.
“While goods price inflation has eased further, the prices of many services are continuing to rise briskly,” she said.
“While the central forecast is for CPI inflation to continue to decline, progress looks to be slower than earlier expected.”
Governor Bullock added the RBA Board judged an increase in interest rates was warranted today to be more assured that inflation would return to target in a reasonable timeframe.
“If high inflation were to become entrenched in people’s expectations, it would be much more costly to reduce later, involving even higher interest rates and a larger rise in unemployment,” she said.
If you’re on a variable-rate home loan, the banks will likely be increasing the interest rate on it very shortly.
For an owner-occupier with a 25-year loan of $500,000 paying principal and interest, this month’s 25 basis point increase means your monthly repayments could go up by about $76 a month.
That’s an extra $1,211 a month on your mortgage compared to 1 May 2022.
If you have a $750,000 loan, repayments will likely increase by about $114 a month, up $1,816 from 1 May 2022.
Meanwhile, a $1 million loan will increase by about $152 a month, up about $2,422 from 1 May 2022.
Are you feeling the pinch? You’re not alone. Many households around the country are feeling the effects of 14 rate hikes in 18 months.
There are also lots of people on fixed-rate home loans wondering what options will be available to them once their fixed-rate period ends.
Some options we can help you explore include refinancing (which could mean increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a cash buffer in an offset account.
So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage your mortgage moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Mortgage brokers have notched up a new personal best, with seven out of every 10 new mortgages settled thanks to their help! It’s a sure sign that mortgage brokers are delivering the goods when it comes to helping Australians move into their dream homes.
In the nine months to 31 March 2023 (while interest rates were rising), mortgage brokers helped settle more than 70% of all new residential home loans, according to the latest data from the MFAA.
It’s the first time ever that brokers have helped settle more than 70% of home loans over a three-month-plus period.
For context, just two years earlier brokers were helping settle between 50-60% of new home loans.
For starters, it looks like word is getting out about how much help we can provide when it comes to giving you an informed choice with your home loan.
And in this environment of higher interest rates, it’s important to be sure your home loan offers value.
With a wide network of lenders – including big banks, small banks and non-banks – brokers are well-placed to help you choose the loan that’s right for you.
It doesn’t end there, though. Here are five more reasons why Australians are turning to brokers for help.
There are hundreds of home loans to choose from. But who’s got the time to find a loan that suits your needs?
Your broker does.
Better still, your broker does a lot of the legwork, sorting the paperwork and supporting your loan application right through to settlement.
That lets you sit back, relax, and focus on moving into your new home.
You’re busy, right? That’s why brokers offer flexible appointment times.
Want to chat after hours? No problemo.
Prefer to chat online rather than face-to-face? Can do.
It may seem like a minor benefit, but the flexibility brokers offer is a big deal when you’re flat out with work, family, or just busy house hunting.
Brokers provide clear details to help you make informed decisions.
From your borrowing power, to how much of a deposit you really need, and what your loan repayments will be under various scenarios, we’ll crunch the numbers based on your unique situation.
It takes the guesswork out of buying a home and lets you plan ahead.
It often comes as a surprise that a broker’s home loan help comes at no cost to their clients. That’s because brokers are paid a commission by lenders.
Rest assured though that unlike the banks, we’re (happily) bound by a best interests duty that means we’ll always put your best interests first.
So while banks and digital lenders might try to tempt you with cashback offers for loan products that may not really be in your best interests (due to fees, high interest rates, and other undesirable loan terms), we’ll only ever try to match you up with lenders and loans that are in your best interests.
Chances are you’ll have your home loan for quite a few years.
We’ll be with you along the way to help make sure your home loan continues to be the right option for you, no matter how your life changes.
So call us today to see why more Australians than ever are partnering with a broker.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
No matter whether you’re in the market for a home or an investment property, it makes financial sense to buy in an area where values are tipped to rise. But where to look? Today we’ll unveil the Australian cities where population growth is tipped to turbo-charge the property market.
One of the biggest drivers of property price rises right now is … drumroll … population growth, according to PropTrack.
Let’s take a look at the cities more people are expected to call home.
During the height of the COVID-19 pandemic, Australians were flocking to regional areas.
The population of regional Australia grew by 70,900 people during 2020-21 – the first time in over 40 years that the regions outpaced capital cities.
However, the COVID-inspired rush to the regions is reportedly over.
Despite the new work-from-home trend, the reopening of borders is seeing a return to urban living.
According to property exchange platform PEXA, this will see two-thirds of Australia’s population growth concentrated in four cities over the next two decades.
PEXA is predicting population growth of 7.4 million between now and 2041.
That’s a lot of people looking for a place to live.
It’s not just about net migration to Australia, either.
Regional dwellers, especially younger people, are expected to head to urban areas, attracted by the availability of study and work opportunities.
The upshot is that two million new homes will be required over the next 18 years, and 67% of population growth will be concentrated in Sydney, Melbourne, Brisbane and Perth.
The stats are astonishing.
PEXA says the four hotspot cities require vast numbers of new homes:
– 723,000 in Melbourne (that’s 40,000 new homes per year, or 772 per week);
– 582,000 in Sydney;
– 381,000 in Brisbane; and
– 334,000 in Perth.
Adelaide meanwhile is predicted to need at least another 141,000 dwellings between now and 2046.
For starters, increased demand on this scale is expected to continue to push up property prices unless supply can increase at a similar pace.
Despite higher interest rates, already we have seen values rise in all of these four cities over the past 12 months.
CoreLogic says property prices have soared 7.3% in Sydney over the past year, 5.0% in Brisbane, a whopping 8.8% in Perth, and a comparatively modest 1.5% in Melbourne (and 5.0% in Adelaide).
So if you own property in these cities, you could be sitting on more equity than you realise – with potentially more to come.
Or, if you’re considering buying, particularly as an investor, it could be worth looking at one of these hotspot cities – even if you don’t live there yourself.
No matter where you plan to buy, understanding your borrowing power is a key starting point.
Give us a call today to find out how much you can borrow and what grants and schemes you might be eligible for to help fund your next purchase.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Not sure what refinancing is all about? You’re not alone. Our quick explainer lets you master the basics and helps you work out how much you could save.
Home loan refinancing is a hot topic right now.
Ever since interest rates hit an upward trajectory in May 2022, skyrocketing numbers of homeowners – as many as 28,000 each month – have turned their attention to refinancing.
However, plenty of Australians could be missing out on the savings of refinancing simply because they’re unsure of what’s involved.
Research by Finder shows one-in-five people are in the dark about refinancing, while 63% admit to being only “slightly confident” in their knowledge of refinancing.
So, let’s take a quick look at what refinancing is, and how it can reduce stress by potentially putting cash back in your pocket.
Refinancing simply means replacing your old mortgage with a new loan and lender.
The process is similar to the one you followed to apply for your current loan.
You decide the loan you’d like to switch to, make a formal application, and provide evidence of income, expenses, and your personal ID.
If the loan is approved, you can sit back and relax as the new lender arranges to pay out your old loan. When that’s taken care of, you just start making repayments to the new bank.
Refinancing can be a surprisingly simple process. Better still, it can all happen very quickly, usually taking about four weeks from start to finish.
Refinancing can be an opportunity to access home equity, enjoy better loan features, or consolidate several personal debts.
But the number one reason for refinancing is to save money by paying a lower loan interest rate. Those savings can help take the financial pressure off homeowners.
According to Finder, 60% of refinancers admitted to being stressed about their home loan before deciding to switch.
If that sounds like you, making the move to a new loan could be a valuable stress buster.
Potentially, a lot!
That’s because lenders are still saving their best deals for new customers.
The average rate on established loans is currently 6.20%. But if you’re a new customer, you’re more likely to pay an average rate of 5.99%.
That’s an instant saving of 0.21% interest. Think of it as reversing almost one official rate hike.
So what does that rate difference mean for your hip pocket?
Right now, the average loan being refinanced is worth $526,093. On that balance, a 0.21% rate saving could slash more than $70 off each monthly repayment, which equates to $840 in the first year alone, assuming a 30-year loan term.
If you’re starting to feel the interest rate squeeze, give us a call today to discuss your refinancing options.
We’ll help you work out if refinancing is the right step for you and how much you could save by switching to a new loan and lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Know anyone who wants to buy their first home? A new report confirms that low deposit schemes are getting younger buyers into a place of their own sooner.
First home buyers are ignoring headlines warning that it can take years to save a deposit.
Instead, they’re flocking to guarantee schemes that allow them to get into the market with just a 5% deposit – and without the cost of lenders’ mortgage insurance (LMI).
NHFIC, which runs the First Home Guarantee schemes set up by the federal government, says that in 2022/23, close to one-in-three first home buyers tapped into the guarantee schemes.
That’s up from one in seven the year before.
In total, 41,700 home buyers got into the market with the help of guarantee schemes last financial year, following an uptick in the number of places available.
What’s especially exciting about NFHIC’s research is that it shows the schemes are allowing younger buyers to crack the property market.
In 2022/23, more than half of all places in the First Home Guarantee and Regional First Home Buyer Guarantee were taken up by people under the age of 30.
There has also been a fivefold increase in the number of buyers aged 18-24.
The low deposit schemes are also helping a growing number of key workers such as teachers, nurses and social workers purchase a home.
Around 7,721 guarantees were issued to key workers last financial year. Great news for these essential workers in our community!
The First Home Guarantee has at times attracted criticism. This has largely been around the risks of buying with just a 5% deposit, which can mean taking on a larger loan with higher repayments.
But NFHIC data suggests this hasn’t been a problem.
Fewer than 0.1% of homeowners using the schemes have fallen behind on their loan repayments, which is less than the market average for all buyers with a low deposit loan.
Better still, close to 10,000 scheme borrowers (over 12% of total guarantees issued to date) have already transitioned out of the scheme, with most of these buyers having accumulated enough equity to achieve a loan-to-value ratio (LVR) of less than 80%.
If you’re a first home buyer struggling to save a 20% deposit, it’s good to know there is a pathway to home ownership that can get you into a place of your own sooner.
And it can also help you to avoid paying LMI – which can cost you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
Conditions apply for the 5% deposit schemes, but new rules mean you can buy with a sibling or mate and still be eligible for this valuable financial helping hand.
With property values rising in many markets across Australia, time is of the essence.
Call us today to see if you can buy a home with a 5% deposit and zero LMI.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property prices have soared almost 7% this year alone. With the upswing predicted to continue, we unpack what’s driving national housing values higher – and why it could pay to get into the market sooner.
Another month, another round of price upticks.
September marked the eighth consecutive month of home price growth, with CoreLogic saying property values nationally are up 6.6% since January.
That’s a solid price hike. The crazy thing is that prices are soaring despite a whole slew of interest rate hikes over the past 18 months.
The key factor putting a rocket under property prices is a shortage of homes listed for sale.
Homeowners are sitting tight rather than selling across a number of cities, and that’s increasing competition between buyers.
According to CoreLogic, Adelaide, Brisbane and Perth have particularly low levels of homes for sale – around 40% less than previous 5-year averages.
There’s a bit more choice for buyers in Sydney and Melbourne, but both cities are still recording housing price gains (Sydney in particular).
That’s because rising prices aren’t just about a lack of homes listed for sale.
Record levels of net overseas migration are also a contributing factor.
In the year to March 2023, net overseas migration added 454,400 people to our population. That’s an extra 1,245 people each day, all looking for a home.
And according to ABS data, most immigrants settle in Sydney and Melbourne.
So as you can see, despite high interest rates, there’s upward pricing pressure on the nation’s five biggest capital cities (Hobart, Darwin and Canberra meanwhile have all seen house prices drop over the past 12 months).
At the current rate of growth, CoreLogic predicts we could see national housing values reach new highs as early as November.
Already, homes in Perth and Adelaide have smashed previous price records, notching up median values of $618,363 and $691,591 respectively in September.
Brisbane homes look set to reach record values in October, with the city’s current median home value ($761,379) just 0.6% below the previous peak.
As home prices nudge towards new highs, PropTrack says last year’s price falls have been completely reversed.
And most of the data suggests that prices are unlikely to take a tumble any time soon.
That’s because it’s possible that interest rates have peaked, population growth is rebounding strongly, and there is a shortage of new home builds.
Already we’re seeing a surge in home loan applications as more Australians recognise the current market provides a window of opportunity to buy before values rise higher.
No matter whether you’re buying a first home, second home or investment property, buying today could help you beat future price hikes.
So if you’ve got your eye on the property market, call us today and we can help you assess your borrowing power in the current climate, and even help line you up with pre-approval so you’re ready to strike when the opportunity arises.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Apartments stand out as an affordable choice when it comes to cracking the property market, not to mention downsizing. But a looming shortage may soon push unit values higher.
For many of us, buying a house on its own block of land is the ‘great Australian dream’.
While plenty of people achieve this goal, our property journey is often book-ended by apartment living.
For first home buyers, units can be an affordable choice, costing around 30% less than houses according to CoreLogic.
Then, as we head into our senior years, an apartment offers secure, low-maintenance living, often with a wealth of amenities right on the doorstep.
Apartments may be affordable today, but a lack of new apartment construction, coupled with rising immigration levels, points to a looming apartment shortage according to CoreLogic.
And that could push values higher.
Over the next few years, new apartment construction is forecast to be 40% lower in the 2010s, leading to a shortfall of over 100,000 homes by 2027.
Close to 60% of the new home shortfall is expected to be in the apartment market.
On the demand side, CoreLogic says a stronger-than-expected level of migration into Australia has seen overall housing demand “skyrocket”.
Historically, new migrants head to the high-density areas of our big cities, putting extra pressure on the unit market.
As CoreLogic explains, with interest rates potentially easing in 2024, greater demand and tight supply could fuel a “price boom” in the unit market.
Modern apartments are packed with the latest design and sustainability features, meaning they are no longer the poor relation of freestanding houses.
Across our major cities, apartments now account for 30% of all homes, up from 23% in 2010.
And the appeal doesn’t just lie with affordability.
Today’s apartments usually come with a wealth of benefits, including:
Government schemes: because apartments are generally cheaper than houses, they’re more often under the price caps for a range of government schemes, including the Home Guarantee Scheme, stamp duty concessions, and first home owner grants (usually for new builds). These schemes can be combined to potentially save you tens of thousands of dollars and get you into the property market years sooner.
Sought-after locations: apartment living can be the difference between living close to work, or facing a long daily commute from the outer suburbs.
Lifestyle advantages: the days of apartments being cramped and lacklustre are over. A variety of on-site amenities, from barbecue areas to pools, gyms and car-wash bays, make unit living convenient and relaxing.
Low maintenance living: not interested in spending precious spare time mowing the lawns or cleaning the gutters? It turns out plenty of others aren’t either. Unlike houses, units require minimal upkeep, letting residents enjoy more quality time.
Improved security: if you’re after a lock-and-leave lifestyle, modern apartments fit the bill. Advanced security features add up to a safe and secure living environment.
Right now, apartments still present an affordable option for first-home buyers, downsizers and investors.
The median apartment price across our state capitals is currently $637,593 – but if CoreLogic is correct, that figure could soon increase as demand outstrips supply.
So if you’d like help exploring your options to purchase your first property – for example, with just a 5% deposit via the Home Guarantee Scheme – then get in touch today to discover your borrowing power.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
There’s a lot to be said for having your home loan pre-approved. But does pre-approval mean you’re putting the cart before the horse? Definitely not. Here are three ways pre-approval can help you get ahead of the competition.
Here’s a handy tip: you don’t have to wait until you’ve found a home you’d like to buy before making mortgage enquiries with a lender.
It’s possible to have a home loan pre-approved before you’ve even started to wear out shoe leather at open home inspections.
It can mean you’re ready to go with your loan, with only a few formalities to sort out, as soon as you’ve found the right place.
Even better, pre-approval doesn’t mean you’re committed to taking out a loan. It’s not a problem if you have a change of plans.
Here are three ways home loan pre-approval can put you in front in today’s market.
When it comes to a major step like buying a home, there’s no room for guesswork.
With a pre-approved home loan, you know exactly how much you can borrow, and that’s the foundation for your home-buying budget.
It means you can focus on homes within your price range, and make an offer with confidence.
Pre-approval is especially important if you plan to bid at auction. It sets a clear line in the sand for your highest bid.
In today’s market, homes are selling in turbo-charged timeframes.
Figures from CoreLogic show the median selling time across our capital cities is just 27 days. That’s less than a month!
So you need to act fast to avoid missing out. Sellers might not wait around while you head to the bank to see if you qualify for a home loan.
Having pre-approval in place means you can get the ball rolling as soon as you find the right home, without getting pipped by a more organised buyer.
Nothing says ‘genuine buyer’ like home loan pre-approval.
Don’t be shy about letting real estate agents know your loan is pre-approved. It adds clout to your negotiations and gives vendors confidence that you have the finance to follow up any offer you make.
Just consider keeping some information up your sleeve, such as how much you’ve been pre-approved for.
After all, the real estate agent’s goal is to get the best price for the vendor, not the buyer!
Home loan pre-approval is not a guarantee that you’ll get a home loan.
You won’t get the green light for sure until you’ve found a place to buy, and the bank has checked that the property meets their lending criteria.
Your lender will also want to see that your personal finances haven’t changed since your loan was pre-approved.
It’s also worth keeping in mind that while there aren’t many downsides to obtaining a single pre-approval, getting too many over a short period of time with multiple lenders can potentially negatively impact your credit score and ability to take out a loan – as lenders might suspect you’re financially unstable.
Home buyers are often surprised to learn that pre-approval isn’t available with every lender.
Even among banks that do offer this service, not all pre-approvals work the same. One sort is especially worth aiming for.
You may come across two types of pre-approvals:
1. System-generated pre-approvals
This sort of pre-approval is generated by a lender’s computer based on the information you enter about yourself.
You can get a result quickly this way. The catch is that the analysis isn’t thorough, making the outcome unreliable.
In particular, if any of the details you enter are incorrect, the bank’s IT system may wrongly say you don’t qualify for a home loan.
2. Fully assessed pre-approvals
As the name suggests, this type of pre-approval involves your bank’s credit team taking a close look at your finances, credit score and other personal and financial details to be sure you can comfortably manage a home loan.
A full assessment takes more time, but it’s worth the wait. It can help you feel more confident that you’ll be offered a home loan when you find your ideal property.
If you’re looking to buy a home and want to get an edge over the competition (to put in an early offer, for example), then pre-approval might be a much-needed ace up your sleeve.
We can help you work out which lender and which loan product is a good fit for your pre-approval situation.
So call us today to take the guesswork out of home loan pre-approval, and give yourself a head start over other buyers in the market.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The property market has thumbed its nose at higher interest rates, with values rising almost 5% since March. Here’s why national housing prices are climbing higher.
Australia’s housing market is making a bigger comeback than Barbie.
Despite interest rates rising 4% in a year and a cost of living crunch, home values have skyrocketed with prices soaring 4.9% nationally since March 2023.
The strength of the rebound has wiped out about half the losses recorded in the downturn between April 2022 and February 2023, when home values fell 9.1%.
In fact, the value of Australia’s housing market just hit $10 trillion again – the first time the total estimated value hit double digits since June 2022.
CoreLogic says three factors are pushing up property values:
– Net overseas migration: more people are arriving from overseas than are leaving. That’s a lot of extra people looking for a place to live.
– Use of savings, profit and equity: upgraders are using savings, equity or profits from their home to buy their next place instead of borrowing more. This has seen demand for property stay strong even though rates have climbed higher.
– Tight supply: the volume of homes listed for sale is a lot lower than in previous years. That spells competition between buyers, which is putting pressure on prices.
Home values have been rising steadily over the past six months. What happens from here hinges on how interest rates move, and whether the economy stays in good shape.
As a guide, CoreLogic is expecting some heat to come out of the market recovery by the end of 2023.
That’s great news for home buyers – as long as cooler prices aren’t the result of more rate hikes or a sluggish economy.
In today’s environment of rapidly rising home values, home buyers can score a winning edge by having their ducks in a row before inspecting homes listed for sale.
This increasing need to be organised is one of the key reasons why 67% of Australians turn to a mortgage broker for expert support when they buy their home.
And according to research by Helia, prospective home buyers are getting support in the areas of:
– determining their borrowing power – 63% of those surveyed;
– help choosing the right loan – 60%;
– getting a home loan pre-approved – 56%; and
– applying for a loan – 55%.
So if you’d like help in any of these areas, or you want to get into the market before prices rise further, call us today to explore your home loan options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
No change to the cash rate again this month, but lenders’ mortgage rates have been jumping around more than a bunch of toddlers at a Wiggles concert. We reveal the current average rates to see how your loan compares.
Home owners are celebrating the official cash rate staying on hold for several months. But behind the scenes, Mozo reports that lenders have been “astonishingly busy” adjusting their home loan rates – both up and down.
Key movements over the last month include NAB, CommBank and Bank of Queensland lifting some of their variable rates.
However, in the fixed rate market, plenty of lenders including big banks such as CommBank, ING and Macquarie have slashed their fixed rates.
It goes to show, you can’t assume your home loan still offers a competitive rate just because the official cash rate hasn’t budged.
Question is, how does your loan shape up against the market?
Across owner-occupied home loans, the average variable rate right now is 6.60%.
Remember though, this is an average. It can be possible to pay far less.
We are still seeing home loan rates starting with a ‘5’ rather than a ‘6’. This makes it worth checking to see what you’re currently paying.
As of early September, fixed rates are averaging:
– 6.36% – one year
– 6.57% – two years
– 6.60% – three years
If you’re bold enough to fix for five years, the average rate is currently 6.49%.
These fixed rates assume a $400,000 loan with a 20% deposit, meaning a loan-to-value ratio (LVR) of 80%.
It’s the question everyone is asking: when will interest rates start to fall?
First the good news.
A number of banks, including ANZ and Westpac, are tipping the cash rate has peaked and could stay the same for some time.
Westpac thinks we could see the cash rate fall by September 2024. AMP meanwhile is forecasting rate cuts even sooner.
But … not everyone agrees.
NAB economists expect one more rate hike before the end of 2023, with rates likely to fall by next Spring.
And the Reserve Bank of Australia (RBA), which makes the official rate calls, is warning we could see more rate hikes depending on how inflation and the economy are tracking.
Even the experts can’t agree on where rates are heading.
But the banks aren’t waiting around for the RBA to drive their rate decisions, and neither should you.
Call us today to see how your home loan rate compares to the broader market. Chances are there’s a better deal out there just waiting to be claimed.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers who bought into the market using the federal government’s 5% deposit scheme have racked up $82,000 in home equity on average, new data shows.
It’s been three years since the First Home Loan Deposit Scheme was launched, and while it’s known today as the Home Guarantee Scheme (HGS), it’s still helping first home buyers get into the market with just a 5% deposit and no lenders’ mortgage insurance (LMI).
The HGS attracted criticism from some circles – some pundits pointed to the low deposit as a stumbling block that could land homeowners in trouble if property values fell or interest rates rose.
It turns out both have happened, yet first homeowners haven’t let it hold them back.
New data from the National Housing Finance and Investment Corporation (NHFIC), which runs the HGS, shows that first buyers who tapped into the 5% deposit scheme are now sitting on impressive piles of equity.
On average, these first-time homeowners have racked up $82,000 in home equity.
It’s a great result, especially when you consider that the average first home deposit across the scheme was just $35,200 in 2020, rising to $36,400 in mid-2023.
Compare that to the average deposit of $159,000 across the broader first-home buyer market, and it’s easy to see how the 5% deposit scheme gives first-home buyers a valuable leg-up into the market sooner.
Getting a deposit together can be a massive hurdle when buying a home.
Research by Finder shows it can take 12 years for a young Australian to save a deposit for an average-priced apartment, or 16 years to accumulate the deposit for a house.
But if your deposit is lower than 20%, you can get stung with LMI, which can cost you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
But through the NHFIC, the federal government has three low deposit, no LMI schemes – all under the HGS umbrella.
The first two, the First Home Guarantee and Regional First Home Buyer Guarantee, support eligible buyers to purchase a home with a low 5% deposit and no LMI.
The Family Home Guarantee, meanwhile, assists eligible single parents and guardians to buy a home with a deposit of just 2% and no LMI.
Along with the HGS, there can be other options such as family pledge loans, or the use of a guarantor, that could slash the time it takes to buy a home of your own.
So if you want to crack the property market sooner rather than later, call us today to find out if you’re eligible to buy a first home with just a 5% deposit.
You could be in a place of your own by Christmas!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The highly anticipated Help to Buy Scheme will kick off next year, giving more Aussies a chance to score their dream home. Today we’ll unpack how the new federal government scheme will work, who it’ll benefit, and the fine print you need to know.
A key election promise of the Albanese government, Help to Buy is a shared equity scheme aimed at helping 40,000 low and middle-income earners buy a place of their own (10,000 allocations per year).
The scheme involves the government making an equity contribution worth up to 40% of the value of a new home, or 30% of the value of an established home.
But that doesn’t mean Anthony Albanese will be rocking up unannounced to claim the guest bedroom, as we’ll explain further below.
Homebuyers need a minimum 2% deposit, and must be able to qualify for a home loan with a participating lender to fund the balance of the purchase. No lenders mortgage insurance is payable.
Homebuyers can choose to boost their stake in the property at any time, and the government won’t charge rent on its share of the home.
Help to Buy is not limited to first homebuyers.
You do need to be an Australian citizen, and you can’t currently own your home or have a share in a residential home.
Income limits apply too. Singles can earn up to $90,000 annually, or up to $120,000 for couples.
Property price limits apply for Help to Buy across state capitals, regional centres and ‘rest of state’ areas. The price caps are shown below.
NSW capital city and regional centres: $950,000
Rest of state: $600,000
VIC capital city and regional centres: $850,000
Rest of state: $550,000
QLD capital city and regional centres: $650,000
Rest of state: $500,000
WA capital city and regional centres: $550,000
Rest of state: $400,000
SA capital city and regional centres: $550,000
Rest of state: $400,000
TAS capital city and regional centres: $550,000
Rest of state: $400,000
ACT: $600,000
NT: $550,000
Regional centres are Newcastle and Lake Macquarie, Illawarra, Central Coast, North Coast of NSW, Geelong, Gold Coast and Sunshine Coast.
Under Help to Buy, homebuyers can take out a much smaller home loan. This provides valuable savings in loan repayments and interest costs.
The federal government estimates homebuyers can save up to $380,000 on a new home purchased through the scheme, or as much as $285,000 on an established home.
For low and middle-income earners struggling to buy a home, Help to Buy may be a game-changer.
But before you rush in, bear in mind that the scheme will see you share a stake in your home with the government.
So if or when you decide to sell the property, the federal government will put its hand out for a slice of the sale proceeds.
In this way, you won’t get the full benefit of the property’s long-term price growth, but rather a share of the profits in line with the proportion of ownership you hold.
With Help to Buy due to launch next year, now’s the time to start planning.
If it’s something you might be interested in, don’t delay reaching out to us to find out more – it’s bound to be popular, and places are limited, so you’ll want to start preparing now.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
An avalanche of rate hikes over the past 18 months has supersized home loan repayments. But savvy homeowners aren’t panicking. In fact, more mortgage holders than ever before are reaching out to brokers for expert help.
A recent survey by the Mortgage & Finance Association of Australia (MFAA) shows 95% of mortgage brokers are meeting with homeowners who have never used a broker before.
And it’s a move that’s paying off.
The MFAA reports nine out of ten brokers have successfully secured a rate discount for their clients this year.
And more than eight out of ten have helped their clients refinance to a new lender.
It just goes to show that if you’re struggling with mortgage repayments, you don’t have to go it alone.
Part of a broker’s service involves contacting your current lender to negotiate a lower rate.
But if they don’t come to the party, real savings action can lie in refinancing.
Mozo has done the sums on the savings potential of switching from the average variable rates (6.60% for owner-occupiers; 6.96% for investors) to one of the lowest rate loans on the market.
They found that homeowners and investors in capital cities across the country who switch to a new lender can slash their repayments by $474 per month, on average
That’s as much as $5,691 annually.
Now, the lowest rate loan might not be available to you in your situation (we’d have to help you check), but it does highlight that there are big savings to be made if you can refinance to a lower rate.
You’ve probably heard about the ‘mortgage cliff’ – it’s a term used to describe the financial shock that homeowners can face when their super-low fixed rate comes to an end.
And we’re not out of the woods (or away from the cliff) just yet.
The Reserve Bank of Australia says around one million borrowers will come off a fixed rate over the next 18 months.
Crazy thing is, a Finder survey shows more than one in ten people with a fixed rate home loan are in the dark about when their fixed rate will end.
That matters because skyrocketing interest rates mean the average mortgage holder farewelling a fixed rate could face a $1,677 hike in their monthly loan repayments.
So if you’re on a fixed-rate home loan, it might be worth checking when the fixed rate period is due to end, and if it’s soon, what options are available to you.
No matter whether you’re feeling the pressure of higher rates, thinking of refinancing, or unsure about what’s happening with your fixed rate, it’s important to reach out for expert help.
Give us a call today for a helping hand with your home loan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank (RBA) may have kept the cash rate on hold but that hasn’t stopped some lenders from hiking their variable home loan rates. Here’s how borrowers are fighting back.
Home owners may be celebrating two months of the RBA cash rate staying on hold. But don’t pop the champagne cork just yet.
Mozo reports that some lenders have sneakily hiked their variable home loan rates in July despite the cash rate holding firm.
These hikes, known as ‘out-of-cycle’ rate rises, can fly under the radar.
So it’s important to keep an eye on what your lender is doing.
Mozo says ANZ, Commonwealth Bank, Macquarie, Easy Street and Great Southern Bank are among the lenders that have topped up their variable loan rates even though the cash rate has stayed on hold.
In some cases the upticks may be as little as 0.03% – but some lenders have lifted their variable rates by as much as 0.15%.
On a $500,000 loan that could mean paying an extra $750 each year.
And right now every penny counts.
As a result, some home owners are taking matters into their own hands to help stay afloat.
Research by Canstar shows almost half of Australian mortgage holders are navigating higher rates by doing the following:
– 35% are reducing extra repayments,
– 29% are stopping extra loan repayments altogether,
– 26% are tapping into redraw or offset funds to help with repayments,
– 22% are refinancing to a lower rate loan, and
– 12% are extending their loan term.
Other changes involve switching to interest-only repayments, as well as more drastic moves such as selling a home or investment property.
While the above strategies can help get you through a tough time, it would be remiss of us not to mention that some of them can come at a cost over the long term.
Reducing or stopping extra payments, for example, means you’ll likely have your home loan longer and therefore pay more interest.
Likewise, if you tap into your redraw or offset funds, you’ll pay more interest each month.
Last but certainly not least, by extending the term of a $500,000 loan at 6.73% from 20 to 25 years you could cut your monthly repayments by $348. But according to Canstar calculations, it could also mean paying a whopping $123,464 in extra interest over the life of the loan.
Those sneaky out-of-cycle rate hikes aren’t just annoying. They can leave you out of pocket while beefing up your lender’s profits.
But you don’t just have to wear the cost.
The first step is knowing the rate you’re paying.
Check your loan statements, or ask us to investigate for you.
If you’re not happy with the rate, we can help ask your current lender for a discount.
And if they don’t come to the party, we can help you weigh up the possible costs of making a switch.
We can help you crunch the numbers to reveal which strategy will help you save today – and tomorrow.
So give us a call to find out if your lender is quietly lifting your loan rate and what you can do about it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Mortgage holders rejoice – the Reserve Bank of Australia (RBA) kept the cash rate on hold in August for the second month in a row. So have we finally reached calmer waters? Or is there one last rate rise wave headed our way?
In what many will see as better news than a Matildas’ World Cup win, the RBA held interest rates steady in August for the second month in a row.
After a relentless string of rate hikes (12 since April 2022), homeowners may be sceptical about what’s happening.
So is the RBA board finally satisfied we’ve endured enough rate hikes? Or is RBA Governor Philip Lowe saving one last rate hike for mortgage holders as a parting gift before he vacates his position next month?
Let’s take a closer look at some of the underlying data.
The RBA has made it clear that it has been hiking rates to help lower inflation.
So it was welcome news this week when the Australian Bureau of Statistics announced that annual inflation has dropped to 6.0%.
It’s fair to say most of us wouldn’t normally celebrate goods and services prices rising 6% over the past year.
However, it’s a sign that inflation is still falling from its peak of 7.8%, and that’s exactly what the RBA has been aiming for.
The RBA knows it’s treading a fine line with interest rate decisions. At its August board meeting the central bank explained why it kept interest rates in a holding pattern:
– It can take time for the economy to respond to previous rate hikes.
– The outlook for household spending is uncertain. Many households are experiencing a squeeze on their finances. Others are benefiting from rising housing prices and higher interest income.
– Consumer spending has slowed “substantially” due to cost-of-living pressures and higher interest rates.
Inflation is down. Rates are steady.
So far, so good.
But we may not be in calmer waters just yet.
As this diagram shows, inflation is still well above the RBA’s target range of 2-3%.
So the RBA has left the door open for further rate hikes depending on how the economy is tracking, and of course, what happens with inflation.
Indeed, the RBA said as much in its latest rate announcement: “Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe”.
As mentioned earlier, RBA Governor Philip Lowe will vacate the top job on September 17 and be replaced by his deputy, Michele Bullock.
Thus, one might think that if any more rate rises were planned in the short term, they’d take place before that transition occurs to help give Ms Bullock a clean slate to work from (assuming inflation data continues on a downward trend). And there’s only one RBA board meeting between then and now – on September 5.
Indeed, Westpac has made a bold call, saying we could be heading into a lengthy period of stable rates ahead of a rate cut, possibly in the second half of 2024.
So, with any luck, we could be through the thick of it.
Then again, all things considered, interest rates are now much higher than they were 18 months ago and will likely remain so for some time.
So if it’s been a while since you last looked at your home loan and current interest rate, call us today to make sure you’re paying a competitive rate on a loan that’s well-suited to your needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With plenty of pundits tipping interest rates will start to fall in the next 12 months, we look at why the big banks are hiking their fixed rates – and unpack what it means for the rate outlook.
The past few months have seen interest rates on fixed home loans deliver more ups and downs than a rollercoaster.
As recently as April 2023, a number of lenders were starting to cut their fixed rates.
Fast forward to July, and the major banks – NAB, Westpac, ANZ and the Commonwealth Bank – have all upped their fixed rates in the past fortnight.
Now you won’t find a fixed rate below 6% among the big four banks.
Home owners battling high rates are generally being urged to “hang in there” because interest rates are expected to slide down from their current highs over the next 18 months.
Westpac is predicting the Reserve Bank’s cash rate will drop to 3.85% by the end of next year.
Better still, NAB is anticipating the cash rate could dip to 3.10% by late 2024.
Some lenders are stepping up their fixed rates because they believe rates may go higher before they trend lower.
NAB and Westpac are both tipping the cash rate, currently sitting at 4.10%, could go as high as 4.60% by the end of the year.
Over at the Commonwealth Bank, the expectation is for one more rate hike, taking the cash rate to 4.35%, with a chance the cash rate may ratchet up to 4.60%.
This can all be confusing. The main point is that the prospect of rates heading higher before they head south again is a key factor driving some fixed rates higher.
The first step is to bear in mind that forecasts are just that – predictions. Not even the banks have foolproof crystal balls.
And the recent news that inflation slowed in the June 2023 quarter, with quarterly price rises being the lowest since September 2021, could see the Reserve Bank ease back on the interest rate dial. It could even bring fixed rates back down.
It’s also worth pointing out that not every lender is lifting their fixed rates.
A number of smaller lenders have trimmed their fixed rates, with some still offering rates below 6.0%.
That’s why it’s so important to get in touch so we can help you explore a wide range of lenders and loan products.
Locking in your loan rate can bring certainty to your budget, and eliminate the stress of the rollercoaster rate ride.
If you’re not sure whether to go variable or fixed – or a combination of both – get in touch to see how the numbers stack up for your situation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australians are showering their homes with $1 billion worth of love each month as home improvement spending ramps up. We look at the cost of popular renovations – and how to foot the bill.
Belts may be tightening but not, it seems, for renovators.
The latest figures from the ABS show Australians spent a whopping $1,044 million on home renovations in May 2023 alone. That’s up 4.3% on the previous month.
Our passion for renovating may stem from binge-watching home improvement shows through the pandemic. But there could be another factor at play.
It can simply be a lot cheaper to renovate your home than to sell up and buy elsewhere.
If you’re thinking of a few home improvements, here’s what to consider.
The 2022 Houzz & Home Report reveals which rooms Australians have targeted for home improvements.
The kitchen comes up trumps, accounting for almost one in four (23%) renovations.
Other top contenders were living room, bathroom and bedroom makeovers (each 20%).
A key step in planning a renovation is crunching the numbers to know the likely cost. This is a must-do before you start collecting colour charts and carpet samples.
Smaller renovations can be affordable do-it-yourself projects. For any structural or specialist work it pays to call in the tradies – and that’s when the cost can start to escalate.
The latest Archicentre Cost Guide sets out typical costs for popular home improvements.
As a guide, you can expect to pay:
– $75-$120 per square metre to polish timber floorboards;
– up to $35 per square metre for interior painting;
– up to $4,600 for an extension; and
– up to $48,000 for a new kitchen (excluding appliances).
While home improvements may not come cheap, quality renovations can boost your lifestyle and your home’s value.
They can also be a money-saver – ‘green’ improvements such as installing rooftop solar panels can put money back in your hip pocket through lower utility bills.
Working out how you’ll pay for a renovation is an essential part of the planning process.
You need to be sure you can comfortably afford the improvements, and avoid the not-so-exciting prospect of running out of funds mid-way through a project.
Using cash savings or a personal loan may be suitable for smaller projects – the shorter term of a personal loan (usually less than five years) can help keep a lid on the interest cost.
For more expensive projects, a home loan top-up can be a quick and easy solution, though it can hinge on you having sufficient home equity to qualify for additional funds.
At the top end of the scale, a dedicated renovation or construction loan is another option.
These can work by drip-feeding funds as different stages of the project are ticked off. You generally only pay interest on funds drawn down, making the cost more manageable.
If a renovation is on your bucket list, call us to discover the options available to fund your project – and the costs involved.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Buying a home for the first time can be challenging, especially with house prices soaring in recent years. So could switching from house hunting to unit searching be the way forward for you?
There’s no denying that getting into the property market in today’s economic climate ain’t easy.
The average Australian house price is now $725,000 – that’s 30% more expensive than the average national unit price.
Compare the price gap to September 2021, when the national median house price was $570,000 – just 9.6% higher than the median unit price of $520,000.
But is opting for a unit the right move for you?
Today we’ll look into the pros and cons of buying an apartment for your first home.
First the pros: units are usually more affordable than houses.
Median capital city house prices have grown 31.6% in the past five years, while units have only increased by 9.8%.
Lower prices can not only make it quicker for you to save a deposit for an apartment, they could also make you eligible for better stamp duty concessions (either reducing your stamp duty bill or eliminating it entirely, depending on your state or territory).
And while a unit may not always have space to accommodate future expansions to your life and family, they are often located in thriving local community hubs with amenities, shops, and transport on your doorstep – great for young families still wanting to be in the thick of the action.
Admittedly, owning a house can have advantages over owning a unit.
For starters, you don’t have to fork out for body corporate fees. And the capital growth you can gain from owning the plot of land your abode sits on often makes house ownership more attractive.
But buying a unit – rather than holding off until you can afford a house – also offers investment potential.
By purchasing a unit, you’re investing and building up your own equity, rather than paying off someone else’s mortgage if you’re renting.
So while you may not be able to buy the house just yet, an apartment can provide a valuable stepping stone to reaching that goal.
And should you be in a position to hang onto your unit when you upgrade to a home, you may get some decent rental income – if you buy in the right spot.
On top of this, unit upkeep can be easier because those body corporate or strata fees go towards various maintenance activities.
All that said, if apartment living isn’t for you, there are other cost-effective options for you to explore.
You could consider searching slightly further afield, with recent research identifying “sister suburbs” that are up to 200% cheaper than their in-demand neighbouring suburbs.
Rent-to-own arrangements could also make it easier for you to crack the market. These arrangements enable tenants to buy the property they’ve been renting once the lease ends, at a previously agreed price.
And whether you’re in the market for a house or a unit, there are government schemes that can help you fast-track home ownership and save.
The federal government has three low deposit, no lenders mortgage insurance (LMI) schemes available for eligible first-home buyers, regional first-home buyers, and single parents.
Eligible buyers can purchase a home with a deposit as little as 5% through the First Home Guarantee and Regional First Home Guarantee. While the Family Home Guarantee assists eligible single parents and guardians to buy with a 2% deposit.
Not paying LMI can save you anywhere between $4,000 and $35,000 – depending on the property price and your deposit amount.
The good news is that eligible first-home buyers can bundle the federal home guarantee schemes with other state government first-home buyer grants and stamp duty concessions for major savings.
If you’d like to give renting the big swerve and get a place of your own, give us a call.
Not only can we help you find a suitable loan and help organise your finances, we know the government schemes you may be eligible for to help get you into your first home sooner.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Phew! The Reserve Bank of Australia (RBA) has today decided to put the official cash rate on hold. So is the end of this rate hike cycle finally in sight?
The decision to keep the official cash rate at 4.10% will be welcomed by homeowners around the country after monthly repayments increased by about $1,135 per $500,000 loaned (for a 25-year loan) since 1 May 2022.
RBA Governor Philip said as interest rates had been increased by 4% since May last year, the Board decided to hold interest rates steady this month to provide some time to assess the impact of the increases.
“The higher interest rates are working to establish a more sustainable balance between supply and demand in the economy,” he said.
However, Governor Lowe kept the door open for potential rate rises in the months to come.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,” he said.
“In making its decisions, the Board will continue to pay close attention to developments in the global economy, trends in household spending, and the forecasts for inflation and the labour market.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
If the RBA increases the cash rate by another 25 basis points, and your bank follows suit, your monthly repayments could increase by another $76 a month. That’s an extra $1,211 a month on your mortgage compared to 1 May 2022.
If you have a $750,000 loan, repayments would likely increase by about $114 a month, up $1,816 from 1 May 2022.
Meanwhile, a $1 million loan would increase by about $152 a month, up about $2,422 from 1 May 2022.
Are you starting to feel the pinch? You’re not alone. Many households around the country are feeling the pain of all the rate rises over the past 15 months.
There are also lots of people on fixed-rate home loans wondering what options will be available to them once their fixed-rate period ends.
Some options we can help you explore include refinancing (which could involve increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Have you been keen to refinance but told you can’t? You’re not alone. Many Australian households are currently locked into their home loans due to rising interest rates. But some banks have recently started to lower their serviceability thresholds.
As interest rates have climbed, Australians have refinanced in unprecedented numbers.
In fact, a record high of $21.3 billion in refinancing took place in March 2023, according to ABS statistics – 14.2% higher compared to a year ago.
But some people are now unable to refinance and take advantage of potential savings because they don’t meet lender requirements.
They’re locked into what’s called “mortgage prison”.
You see, prudential regulator APRA has guidance in place that requires lenders to stress-test all new mortgage applications at 3% above the interest rate the borrower applies for – even when refinancing.
And since the RBA’s official cash rate has increased from 0.10% to 4.10% in just 13 short months, many mortgage holders are now unable to refinance because they can no longer meet the 3% mortgage serviceability buffer.
But, there is an “exceptions to policy” in APRA’s guidance that states lenders can override the 3% buffer for exceptional or complex credit applications, if done prudently and on a case-by-case basis.
So recently some big players – including Westpac and Commonwealth Bank (CBA) – reduced their refinancing serviceability buffers to as low as 1%, if borrowers meet certain circumstances (more on that below).
Other smaller lenders are making similar moves, including Westpac subsidiaries St George, Bank of Melbourne and BankSA.
Many in the industry hope this will reduce mortgage stress and defaulted loans, given the current financial climate of rising rates and inflation.
They differ from lender to lender.
But for CBA you’ll need to have a loan-to-value ratio of at least 80%, a squeaky clean record of meeting all your debt repayments over the past year, and be refinancing to a principal and interest loan of a similar or lower value.
You’ll need to meet the 1% mortgage serviceability buffer, too.
For Westpac’s new “streamlined refinance”, you must have a credit score of more than 650.
You’ll also need a good track record of paying down all existing debts over the past 12 months, be refinancing to a loan that has lower monthly repayments than your existing one, and meet the 1% buffer test too, of course.
Ok, so under CBA’s new policy, for example, borrowers must extend their loan term out to 30 years.
Obviously this can cost you quite a lot in interest over the long run.
For example, RateCity research shows that if you took out a $500,000 loan with a Big Four bank three years ago, and if you applied for CBA’s refinancing offer today, your mortgage repayments could drop by as much as $235 a month.
But over the long run, you could pay up to an extra $32,117 in interest because you’d be extending your loan by an additional three years.
So while this option could help alleviate some financial stress now, you may have to pay for it over the long run – there’s a bit to weigh up.
Give us a call today to find out more about refinancing and successfully navigating serviceability thresholds.
We can guide you on ways to improve your chances of refinancing success and help you escape “mortgage prison”.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Despite the soaring cost of living and successive interest rate hikes, homebuying intentions have climbed, latest data shows. So why are so many people still chasing the great Australian dream? And what can you do to make your own dream a reality?
Despite a flurry of rate rises, new data this month shows homeownership is once again a top priority for many Australians, with the number of house hunters increasing.
Commonwealth Bank’s Household Spending Intentions Index showed a strong 14.4% increase in homebuying intentions in May, after dropping in April.
May also saw new home sales increase across Australia for the second month in a row.
So what’s driving this appetite for property when finances are increasingly tight for many? And how can you boost your own chances of cracking the market sooner?
Across capital cities and major regional areas, there have been historic rental price increases and low vacancies.
Rental vacancies reached an all-time low of 1.1% in April, with the median price for renting a unit only $39 a week cheaper than renting a house.
Rising overseas migration has contributed to stiff competition in the rental space too – in the March quarter there was a 124% jump in rental enquiries year-on-year from one overseas country alone.
Understandably, many are looking to escape renting and grab their spot on the property market.
But with rate hikes and inflation, saving a deposit is no easy feat for many Australians.
So here are some ways to take the pressure off.
There are many government schemes and grants designed to help you get into the market. And all can be used simultaneously, which can really bring in the savings!
Through the National Housing Finance and Investment Corporation, the federal government has three low deposit, no lenders mortgage insurance (LMI) schemes available for eligible first-home buyers, regional first-home buyers and single parents.
The First Home Guarantee and Regional First Home Guarantee support eligible buyers to purchase a home with a 5% deposit. And the Family Home Guarantee assists eligible single parents to buy with a 2% deposit.
Not paying LMI can save you anywhere between $4,000 and $35,000 – depending on the property price and your deposit amount – which can fast-track your first home-buying goal by four to five years.
Another home-buying cost that can have a real sting in its tail is stamp duty.
Fortunately for first-home buyers though, state governments have stamp duty concessions available – including South Australia, which announced last week that it was scrapping the tax for first-home buyers on new homes valued up to $650,000.
Meanwhile, Victoria, New South Wales, Queensland, Western Australia, Tasmania, the ACT, and the Northern Territory also offer stamp duty concessions. This can either eliminate or reduce the cost of stamp duty, if eligible.
Most state governments also offer first homeowner grants to help you get the keys to your own home.
Victoria, New South Wales, Queensland, Western Australia, Tasmania, Northern Territory, and South Australia all offer first homeowner grants.
If eligible, you could receive a grant of between $10,000 and $30,000 depending on your state and other eligibility criteria.
It’s important to note that spots for some of these schemes, such as the federal government’s first home guarantee, are limited.
And they’re popular, so it’s best to get in quick.
So if you’d like to kick renting to the curb, get in touch with us today.
We’ll help you work out your borrowing power, your loan options, and factor in what schemes you may be eligible for.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Mortgage serviceability can feel like a frustrating hurdle to clear. But it’s an important safeguard against borrowing too much, particularly in the current interest rate landscape.
It’s in the best interests of all parties involved if your mortgage is chugging along with regular repayments being made.
Borrowing an amount you don’t have a hope in hell of repaying can mean heartache for you, and can land your lender and broker in hot water.
Enter mortgage serviceability.
Before approving your loan application your lender will take a good look at your finances to see if you can meet repayments.
We’ll break down just what to expect with a mortgage serviceability test, and how you can improve your chances of gaining home loan approval.
Lenders and brokers have a duty of care to ensure you’re not provided with a loan that’s beyond your means.
In fact, the National Consumer Credit Protection Act (2009) is in place to ensure lenders and brokers are following responsible lending practices (here’s that hot water we were talking about earlier).
While this protects consumers from landing in financial dire straits, (which doesn’t have anything to do with getting money for nothin’, unfortunately) … it means that lenders and brokers are serious about checking serviceability, which can create some strict hoops for you to jump through.
Your serviceability is calculated by looking at your income and subtracting your expenses and debt repayments (including your new home loan repayment amount).
We then need to work out what portion of your monthly income can go toward repayments. This is called your debt service ratio.
It’s also important to calculate your debt-to-income ratio, which is a measurement used to compare your total debt to your gross household income.
Your credit card limit will also be taken into account and you may need to prove that you have the means to pay off the limit within three years, even if the balance is $0.
Finally, a serviceability buffer is applied to the current interest rate to see if you’ll be able to continue repayments should interest rates rise.
In 2021, the Australian Prudential Regulation Authority (APRA) raised the serviceability buffer from 2.5% to 3%.
This buffer amount has been the topic of much discussion, with some arguing it’s making it tough for people to pass the assessment and refinance to a lower-rate loan. But APRA is remaining firm at 3% given the current state of interest rates.
Here are our top tips for increasing your serviceability score and improving your chances of home loan approval:
– Pay down your debts to improve your debt-to-income ratio.
– Reduce your expenses by cutting out non-essentials and looking for better deals on utilities.
– Reduce your credit limits or cancel credit cards you’re not using, if appropriate.
– Increase your income by starting a side hustle, asking for a raise, landing a higher-paying job, or even a second one (which we fully acknowledge is not possible for many families).
Other ways you can increase your chances of home loan approval:
– Improve your credit score. Lenders will delve into your credit history to see if you’re good at making repayments.
– Look at spending habits. Lavish overspending on non-essentials could raise a lender’s eyebrows.
– Make savings. Showing that you can put away money on a regular basis will look good on your application.
Buying a home is an exciting prospect, but you don’t want to stretch yourself beyond your means.
This is especially important given the recent RBA interest rate hikes over the past year.
But we’re here to help you crunch the numbers and find a loan that will work for you, not against you.
If you’d like to find out your borrowing power and what loan options are available, give us a bell.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Drumroll … The RBA has hiked the official cash rate for the 12th time since April 2022, increasing it to 4.10%. How much will this increase your monthly repayments? And how long does Philip Lowe plan to keep marching to this beat?
Another month, another 25 basis point cash rate rise. It’s now apparent the cash rate pause back in April was nothing but a false peak.
Reserve Bank of Australia (RBA) Governor Philip Lowe explained in a statement that while inflation in Australia had passed its peak, at 7% it was still too high and it would be some time yet before inflation was back in the 2-3% target range.
“This further increase in interest rates is to provide greater confidence that inflation will return to target within a reasonable timeframe,” he said.
Governor Lowe added that some further tightening of monetary policy may be required to ensure that inflation returned to target in a reasonable timeframe, but that would depend upon how the economy and inflation evolved.
“If high inflation were to become entrenched in people’s expectations, it would be very costly to reduce later, involving even higher interest rates and a larger rise in unemployment,” Governor Lowe explained.
“Recent data indicate that the upside risks to the inflation outlook have increased and the Board has responded to this.”
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan very shortly.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $76 a month. That’s an extra $1,135 a month on your mortgage compared to 3 May 2022.
If you have a $750,000 loan, repayments will likely increase by about $114 a month, up $1,702 from 3 May 2022.
Meanwhile, a $1 million loan will increase by about $152 a month, up about $2,270 from 3 May 2022.
A lot of households around the country will now be feeling the pain of these 12 rate rises. So if your household is one of them, know that you’re not alone.
Similarly, there are likely a lot of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends.
Whatever your situation, please know that there are options we can help you explore.
Some of those options might include refinancing (which could involve increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re worried about how you might meet your repayments going forward, give us a call today.
The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australians are increasingly “thinking small” when it comes to buying a home and cracking the property market. And with perks like affordability, more desirable locations, and lower maintenance, it’s little wonder why.
Many Australians are crossing the McMansion off their wish list in favour of smaller, smarter, low-maintenance homes.
A recent ING study surveyed over 1000 Australians about their home preferences.
Over a quarter (26%) said the cost of maintaining and running a larger home would see them gravitate to a smaller abode.
And 19% said they’d consider a smaller outdoor area for ease of maintenance.
Australia has some of the biggest homes in the world, according to the 2020 CommSec Home Size Report. But it seems that there’s a swing in the other direction.
A 2022 Australian Bureau of Statistics (ABS) report shows that Australian homes are being built on smaller blocks, with a size decrease of 13% over the past 10 years in capital cities.
What are two things we all wish we had more of?
Money and free time, am I right?
With the cost of living rising (as well as the cash rate!), cracking the property market can feel like a slog. But revising your wish list to include a smaller (and smarter) home could make it easier.
On average, smaller homes, townhouses, and units tend to be more affordable. And this can be a great option for those wanting to get into the housing market in a more attractive location.
But a smaller dwelling delivers other perks, too.
ING’s study highlighted the growing preference for lower-maintenance homes to simplify lifestyles.
According to the ABS, Aussies spend around three hours a day on domestic activities.
But a smaller space can reduce cleaning time. And with a smaller outdoor area, you can reclaim your weekend and say goodbye to all that gruelling yard work.
Also, smaller homes can be more efficient when it comes to energy consumption.
If you’re a first-time home buyer, the Home Guarantee Scheme could give you the extra boost you need to get into the market.
Being eligible could shave, on average, five years off your home-buying process.
The First Home Guarantee and Regional First Home Guarantee offer loans with a low deposit of 5% with no lenders mortgage insurance (LMI).
And the Family Home Guarantee offers eligible single parents loans with a deposit of just 2% and no LMI.
However, the eligibility criteria include property price caps that are dependent on the state and geographical area you buy in.
Opting for a smaller, more affordable property could help you meet the eligibility criteria and speed up your home-buying journey.
But get in quick as places are limited, with a fresh round of intakes available from July 1.
While you search for the perfect small abode, we can get to work on the home loan hunt.
If you’re a first home buyer, we know all the ins and outs of applying for government schemes, like the Home Guarantee Scheme.
Not all lenders participate, but we know who does and can give you some options to compare.
We’re also clued in on other government schemes you may be eligible for to help stack up the savings.
So if you’d like to find out more, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Navigating the Australian property market over the past year has felt like standing on shifting sands. But is the market starting to regain stability? And if so, what can you do now to make sure you’re ready to buy?
Anyone with an eye on the property and finance market over the past few years has seen their fair share of thrills and spills. It’s been anything but uneventful.
But with the RBA’s rapid-fire rate hikes slated to peak in 2023, is there a property upswing afoot?
Westpac’s economists seem to think so – they’re predicting that the housing correction is winding down. The bank forecasts that Australian property prices will grow by 5% in 2024 after stabilising throughout 2023.
So this week we’ve looked into data from some of Australia’s leading property market and finance institutions.
The RBA has raised the cash rate an eye-watering 11 times in 12 months, with the official rate reaching 3.85% in May 2023.
Understandably, this has made some would-be buyers gun-shy when it comes to pulling the trigger on applying for a home loan and buying a house.
But Australia’s four major banks have tipped that 2023/2024 could see the cash rate start to decline. Here’s what they’re each predicting:
Commonwealth Bank: peak of 3.85% reached, and will drop to 2.60% by August 2024.
Westpac: peak of 3.85% reached, and will drop to 2.10% by May 2025.
NAB: peak of 3.85% reached, and will drop again in 2024.
ANZ: peak of 4.10% by August 2023, then will drop to 3.85% by November 2024.
So, whichever financial institution you choose to listen to, it looks like we’ve either reached the cash rate peak, or are very close to it. And what goes up must (hopefully) come down.
In 2022 we saw national property prices take a small, but not insignificant, hit.
In response, sellers started waiting it out for a better price, creating a slim-pickings situation for house hunters.
However, Property Investment Professionals of Australia (PIPA) chair Nicola McDougall has stated that property prices look to be stabilising, partly due to the low volume of housing stock for sale.
Meanwhile, CoreLogic data shows that the three months to April marked the first quarterly boost to national property values since this time last year, with a 1% rise.
Why is this good news if you’re looking to buy? Well, hopefully you’ll soon have more suitable housing options to choose from as owners start to list again.
And with interest rates predicted to decline in 2023/2024, getting prepared now could put you in good stead to buy when the time is right.
With all the above in mind, getting your pre-approved finance in place now could have you primed to pounce on your ideal home ahead of the next property market upswing.
And if you don’t think your deposit is quite there just yet, keep in mind that a new round of the federal government’s low deposit, no lenders mortgage schemes are set to become available from July 1, which can help first home buyers, regional buyers and single parents crack the market 5-years sooner, on average.
If you’d like to find out more, get in touch today and we can run you through your options and help arrange your finances.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
When buying property, it’s good to know the market value. After all, you want to know you’re paying a fair amount. But the property’s value is an important consideration for your lender too. And their valuation may be quite different.
Just how much is a property worth? Well, it depends on who’s asking.
When buying a property you’ll find there are different terms to estimate how much it’s worth, including market value, market appraisal and bank value.
And you’ll most likely find they can differ, which can be confusing.
Fortunately, we’ve got the low down to help you understand the difference. And how bank valuations affect your loan.
So, what is the difference between them all?
A market valuation, which is usually undertaken by a professional and qualified valuer, gives an estimate of the expected sale price of the property on the open real estate market.
It’s based on current market trends and is valuable to both sellers and buyers during sale price negotiations.
It can also be conducted for tax purposes for owners (ie. to calculate the taxable capital gain or capital loss).
A market appraisal (aka market estimate), on the other hand, is usually completed by a real estate agent and is often done to give homeowners an idea of how much their property could sell for in the current market.
But a bank valuation has an entirely different purpose.
When you’re buying a home or refinancing your loan, the bank will often need to conduct a bank valuation.
And it can feel like a real sting if the bank valuation comes in lower than expected.
But there’s a reason for this.
Banks are in the risk mitigation business. So their valuation is designed to provide an estimate of the property’s sale price as security against your loan should you default.
The valuations can be more conservative because lenders don’t take into consideration the property’s value in terms of an investment.
They’re looking at the property in terms of recouping loan costs with a quick sale.
And, rather than being provided by a real estate agent who may have a vested interest in price, bank valuations must be conducted by an accredited valuer.
When conducting a bank valuation, typically, the following factors are considered by the appraiser:
Current market conditions – just like with a market valuation, the current market climate and recent sales data for your area are examined.
Physical attributes – the location of the property, surrounding amenities, its layout, fixtures and features, size, structural condition, and council zoning information are considered.
Upon completion of the valuation, a report is provided to the lender to be used in assessing your loan application.
This brings us to our next point.
They say that being forewarned is forearmed. So here are some pitfalls to be aware of when it comes to bank valuations.
Say you apply for pre-approval, find a place and make an offer, but then the bank valuation is a lot less.
Or you pay a deposit on a $700,000 off-the-plan property, only to have your bank come back with a $650,000 bank valuation when it’s time to move in.
If the bank valuation is less than expected, it may lead to the bank loaning you less than you hoped for.
You may need to come up with extra funds to close the gap or pay lenders mortgage insurance (LMI), which can cost thousands of dollars.
Alternatively, your loan application could be rejected outright.
Therefore, it’s a good idea to save up a bit of a buffer to handle any valuation headaches that may crop up.
Working with an experienced broker, like us, can help you to prepare for any nasty surprises and make for a smoother home-buying journey.
If you’re on the hunt for the perfect home, let us help you track down the right loan and lender for you.
We’ll be there every step of the way to help you navigate the loan process with ease, and help get the keys in your hand.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the full cost have just over a month to act.
That’s because the temporary full expensing scheme is set to expire on 30 June 2023.
It will be superseded by a much less generous scheme, known as the instant asset write-off, so if your business could do with expensive new equipment, an asset or commercial vehicle, you might want to act quick!
Temporary full expensing is similar to the popular instant asset write-off scheme, but with an expanded scope.
Originally a stimulus measure to address the effects of the COVID-19 pandemic, the scheme allows businesses to make significant asset investments.
Businesses can have eligible depreciating assets immediately written off in full with no cost limit.
Yep, that’s right … no cost limit on eligible assets.
Applied for with your tax return, the scheme can reduce the amount of tax you have to pay for the financial year – which means you can reinvest the funds back into your business sooner.
Trucks, coffee machines, excavators, and vehicles are just some examples of assets eligible under the scheme.
But to take advantage of it, the asset must be installed and ready to roll by 30 June 2023.
So you’ll have to act quickly!
To be eligible for temporary full expensing, the depreciating asset you purchase for your business must be:
– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);
– first held by you at or after 7.30pm AEDT on 6 October 2020;
– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023; and
– used principally in Australia.
If you miss out on the 30 June 2023 deadline, or your order doesn’t arrive in time, hope may not be lost.
You may still be able to take advantage of the instant asset write-off.
This scheme will allow for eligible purchases of up to $20,000 to be written off by 30 June 2024, as recently unveiled in the 2023 Federal Budget.
However, as you might have noted, the available write-off amount is significantly lower than the temporary full expensing scheme that’s coming to an end.
When purchasing an asset with the intention of using this scheme, it’s crucial to select a finance option that’s suitable for your business.
And that’s where we can help out. We can present you with financing options that are well-suited to your business’s needs now, and into the future.
So if you’d like help obtaining finance that’s gentle on your cash flow, and helps you achieve your long-term goals, please get in touch ASAP so we can help you beat the EOFY deadline.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
More Australians (and permanent residents!) will soon be eligible for a leg up into the property market under an expanded Home Guarantee Scheme. Today we’ll run you through all the upcoming changes to the low deposit, no lenders mortgage insurance scheme.
Officially unveiled as part of the 2023 federal budget, the expanded Home Guarantee Scheme will have broader eligibility criteria from 1 July 2023.
So if you’re a single parent or guardian, first home buyer, haven’t owned property for a decade, permanent resident, or looking to buy a home with your friend or sibling – be sure to read on to find out if you’re eligible.
Getting a deposit together can be a massive hurdle when buying a home.
And if your deposit is lower than 20%, you can get stung with lenders mortgage insurance (LMI), which can cost you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
But through the NHFIC, the federal government has three low deposit, no LMI schemes.
Which means if you’re eligible, you won’t need to wait until you’ve reached the standard 20% deposit.
The First Home Guarantee and Regional First Home Buyer Guarantee support eligible buyers to purchase a home with a low 5% deposit and no LMI.
And the Family Home Guarantee assists eligible single parents to buy a home with a deposit of just 2% and no LMI.
Access to these schemes can, on average, bring forward the home-buying process by five years!
It’s worth noting there is an eligibility criteria, which covers property types, locations and prices.
But an experienced broker (that’s us!) will be across all the ins and outs to help you work out if you qualify.
Good news if you are among the increasing number of Australians joining with friends, siblings, and other family members to buy a home.
Come 1 July 2023, you may be eligible to lodge a joint application under the First Home Guarantee and Regional First Home Buyer Guarantee; previously you could only apply as an individual or married/de facto couple.
Meanwhile, the Family Home Guarantee is set to expand to include single legal guardians, such as an aunt, uncle or grandparent. Previously it was only for eligible single natural or adoptive parents.
All three schemes will expand to eligible borrowers who are Australian permanent residents, in addition to citizens.
And all three guarantees will include eligible borrowers who haven’t owned a property in Australia in the last ten years.
The Home Guarantee Scheme can be a great way to fast-track getting into the property market.
But you’ll have to get in quick because places are strictly limited.
That includes 35,000 places per financial year across the First Home Guarantee, 10,000 places per financial year under the Regional First Home Buyer Guarantee, and 5,000 places per financial year under the Family Home Guarantee.
Also, not all lenders are involved with the scheme. But we can help you to identify and compare participating lenders.
So give us a call today to get the ball rolling.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate for the 11th time in the past year, taking it to 3.85%. Have we finally reached the peak of this cycle? And how much will this latest rate hike increase your monthly repayments?
In what will undoubtedly be tough news for many households around the country, this latest rate hike comes despite many pundits predicting the RBA would keep the cash rate on hold for at least another month.
RBA Governor Philip Lowe said while inflation in Australia has passed its peak, at 7% it was still too high and it would take some time before it was back in the target range of 2-3%.
“Given the importance of returning inflation to target within a reasonable timeframe, the Board judged that a further increase in interest rates was warranted today,” he said.
However, in what may come as welcome news to mortgage holders, Governor Lowe softened his language around the possibility of further rate hikes.
“Some further tightening of monetary policy may be required to ensure that inflation returns to target in a reasonable timeframe, but that will depend upon how the economy and inflation evolve,” he said.
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan very shortly.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $1,060 a month on your mortgage compared to 3 May 2022.
If you have a $750,000 loan, repayments will likely increase by about $112 a month, up $1590 from 3 May 2022.
Meanwhile, a $1 million loan will increase by about $150 a month, up about $2,130 from 3 May 2022.
Economists at the big four banks are forecasting that the cash rate will now either remain at 3.85% or have one more hike to 4.10%.
Assuming you’re an owner-occupier with a 25-year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:
– $500,000 loan: approximately $75 more = up $1135 from 3 May 2022, to a total of approximately $3,470 per month.
– $750,000 loan: approximately $112 more = up $1702 from 3 May 2022, to a total of $5,200 per month.
– $1 million loan: approximately $150 more = up $2280 from 3 May 2022, to a total of $6,950 per month.
There’s no denying that a lot of households around the country are feeling the pain of these rate rises.
There are also lots of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends.
Some options we can help you explore include refinancing (which could involve increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With every RBA rate rise announcement, mortgage holders brace themselves for impending repayment increases. Here’s how to stay on top of your mortgage and feel financially secure.
Let’s face it, the RBA’s rate rise cycle hasn’t been easy for mortgage holders, with average monthly repayments now hundreds of dollars (and in some cases, thousands of dollars) more expensive than they were a year ago.
Pair this with the rising cost of living and many Australians are eager to bolster their finances to weather the storm, especially as there are one or two more rate rises predicted to come.
But rest assured, there are things you can do to help manage your mortgage and stay on top of your finances.
Regularly reviewing your loan can help you assess whether it’s best suited to your current situation.
You may be able to access features that may benefit you such as an offset account. And even get a better interest rate.
Canstar research shows 63% of Australians haven’t attempted to negotiate their interest rate with their lender in the last year.
And only a quarter of those who did were knocked back. But you don’t have to run the risk of rejection yourself.
Get in touch with us and we can go in to bat for you.
And if we don’t think your lender is playing fair, we can help you look elsewhere. Which brings us to our next point…
Canstar research shows that 77% of mortgage holders may be paying more than if they switched loans.
And RBA data from November 2022 shows that on average, existing variable owner-occupier home loan rates were 5.29%, while new loans had an average rate of 4.79%.
This is known as the “loyalty tax” – where banks often only pass on better interest rates and features to new customers.
But we can help you out.
Let us do the legwork and find suitable refinancing options so you can save.
Before you refinance, it’s good to get a picture of your debt-to-income and loan-to-value ratios.
This can help you avoid being trapped in a mortgage without the ability to switch to a better interest rate.
Your debt-to-income ratio is your total debt divided by your gross income. Lenders use this to assess how you manage money and to calculate your borrowing power.
So if you’re seeking to refinance a $700,000 home loan (and have no other debt), and you have $160,000 in gross household income, your DTI is 4.375 – a ratio most lenders would be very comfortable with.
So make sure your other debts – such as car loans, and credit cards – are being managed, as well as your mortgage. It can help bolster your credit rating.
Your loan-to-value ratio is the comparison between your loan amount and the assessed value of your home.
This means that a drop in your property’s value can affect your ability to refinance.
And thus, if your equity drops below 20% some lenders may not accept your application to refinance. So refinancing at the right time (ie. before prices fall too low) can help you avoid being locked into your current mortgage.
If all this sounds complex or you just don’t have the time, we’re only a phone call away.
Like many of us, you’ve probably cut back on spending already.
But there’s a popular saying that rings true: “what gets measured gets managed.” Track your spending and see where additional changes can be made.
It can be a real eye-opener.
You may think “they can pry my daily cafe-bought triple shot latte from my cold dead hand” … but when the cost is tallied up, you may change your mind.
And that streaming subscription you never use and forgot about is still coming out of your bank account like clockwork.
Want a hand with all the above?
We can help you to refinance, consolidate your debts, manage application processes, and much more.
Get in touch today and we can help you through the refinancing process, even if there is possibly another rate rise or two to come.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
As property prices start to climb, listings are following suit. So if you’re hunting for a home, what does this mean for you?
If you’ve been looking at the property market over the last six to 12 months, you probably already know that while property prices have dropped, it’s been a case of slim pickings due to the drastically low number of listings.
But prices look like they are starting to bounce back, with March heralding a 0.6% increase in national property prices, according to CoreLogic. And listings are following suit.
PropTrack data for March showed new listings on realestate.com had risen by 10.5% month-on-month, making it the busiest month for new listings since May 2022.
So why has the market changed? And what does it mean if you’re looking to buy?
When the RBA announced its rate rise pause in April, we all let out a collective sigh of relief.
And many financial and property analysts, including CoreLogic, estimated the pause may give rise to increased prices due to a boost in buyer confidence.
But there are other compounding factors that were influencing the pricing upswing before the rate rise pause.
Record low listings, a competitive and expensive rental market, and elevated migration placed increased demand on limited housing supply.
And prices started to climb despite consecutive rate rises.
Rising prices, combined with the Autumn selling season, have seen vendor confidence pick up and property listings increase.
But how does this affect you if you’re looking to buy?
If you’ve been ready to buy but haven’t been able to find the right place due to low supply, now may be the time to purchase – before FOMO starts to kick into the market.
More listings mean you’ll have a greater chance to find a suitable abode, rather than sifting through the dregs.
But before you pounce on that perfect property, it helps to have your finance sorted.
Finding out your borrowing capacity and loan options are important steps when planning to buy.
And while the RBA’s pause bolstered our spirits, it’s wise to be mindful that there are a couple more cash rate rises expected.
Getting advice on the right type of loan, assessing your borrowing power, and organising your finances could make things smoother.
So if you’re keen to purchase in 2023, give us a call and we’ll get cracking on finding you a mortgage solution that will suit your individual needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’ve probably heard the term “fixed-rate cliff” bandied about in finance news feeds. But what is it? And if you’re about to head over it, how can you prepare for a soft landing?
A staggering 880,000 fixed-rate loans are set to end this year, and when they do, many Australian households will be facing significantly higher mortgage repayments.
That’s because the variable interest rates now on offer are much higher than the fixed rates locked in years ago.
So today we look at what this so-called “cliff” might mean for your budget and how you can reduce the impact by refinancing.
Before 2020, fixed-rate mortgages equated to about 20% of total Australian home loans.
But during the pandemic, the RBA dramatically slashed the cash rate to a record low of 0.10%, and many savvy Australians pounced on the opportunity to lock in a low interest rate in early to mid-2021 for two to three years.
This saw 2021 fixed-rate borrowing basically double to 40% of total Australian home loans.
However, as with all good things, the low rate times came to an end.
Since May 2022, the RBA has hiked the official cash rate back up to 3.60%.
Those on fixed-rate loans have had a reprieve, until now – with 880,000 mortgage holders set to start rolling off their fixed rate throughout 2023.
And CoreLogic warns “the pain will be felt most acutely from April” this year.
According to CoreLogic data, a mortgage holder who took out an average-sized loan of $538,936 with a fixed rate of 1.98% could see their repayments increase by over $1000 per month when rolling over to a standard variable rate.
Those who locked in 2020/2021 interest rates that hovered around the 1.75 to 2.25% range will be transitioning to interest rates as high as 5 to 6%.
That’s an increase greater than the 3 percentage point minimum interest rate buffer that lenders use to assess the serviceability of home loan applications.
When a fixed-rate loan period ends, lenders often don’t roll existing clients over to the best rates they have on offer.
The most attractive interest rates are usually reserved for new customers as an incentive.
But by refinancing with another lender you can access lower introductory rates, which can potentially save you thousands of dollars in repayments over time.
Working with a broker like us can take the stress off your shoulders when navigating the end of a fixed rate period.
We’ll use our vast network of lenders to zone in on suitable loans and lenders that are right for you.
And importantly, we’re (happily) bound by a best interests duty.
So while banks and digital lenders might try to tempt you with cashback offers for loan products that may not really be in your best interests (due to fees, high interest rates, and other undesirable loan terms), we’ll only ever try to match you up with lenders and loans that are in your best interests.
Is your fixed-rate cliff looming?
Get in touch today and we’ll get to work on finding you great refinancing options to soften the landing.
And if the landing is still looking a little bumpy, we can help you explore some additional options, such as increasing the length of your loan and therefore decreasing monthly repayments, debt consolidation, or helping you identify ways to build up a bit of a cash buffer in the meantime.
Whatever your situation, the earlier we sit down with you and help you make a plan, the better we can help you manage the transition.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
And … exhale. After 10 straight rate hikes the Reserve Bank of Australia (RBA) has today decided to put the official cash rate on hold. But for how long?
The decision to keep the official cash rate at 3.60% will be welcomed by homeowners around the country after monthly repayments increased by about $1000 per $500,000 loaned (for a 25-year loan) since 1 May 2022.
RBA Governor Philip said the RBA board took the decision to hold interest rates steady this month to provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.
“The Board recognises that monetary policy operates with a lag and that the full effect of this substantial increase in interest rates is yet to be felt,” he said.
However, while the cash rate was not increased at today’s RBA meeting, Governor Lowe signalled there might be more rate hikes in the coming months.
“The decision to hold interest rates steady this month provides the Board with more time to assess the state of the economy and the outlook, in an environment of considerable uncertainty,” he said.
“In assessing when and how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market.”
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
The wave of 10 successive rate rises means the repayments on your mortgage have increased by about $985 a month compared to 1 May 2022.
If you have a $750,000 loan, repayments will likely have increased $1,478 from 1 May 2022.
Meanwhile, a $1 million loan is up about $1,980 from 1 May 2022.
Economists at the big four banks have forecast that the cash rate will peak at either 3.85% or 4.10% in the months to come (so, just one or two more cash rate hikes to go).
Assuming you’re an owner-occupier with a 25-year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:
– $500,000 loan: approximately $75 extra per rate rise = up $1135 from 1 May 2022, to a total of approximately $3,470 per month.
– $750,000 loan: approximately $112 extra per rate rise = up $1702 from 1 May 2022, to a total of $5,200 per month.
– $1 million loan: approximately $150 extra per rate rise = up $2280 from 1 May 2022, to a total of $6,950 per month.
Despite today’s reprieve, there’s no denying that a lot of households around the country are feeling the pain after 10 successive rate rises.
There are also lots of people on fixed-rate home loans wondering what options will be available to them once their fixed-rate period ends.
Some options we can help you explore include refinancing (which could involve increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We all know being on our monetary best behaviour can help to land a home loan. But did you know there are common spending habits you may have that are red flags to lenders?
Smart money management and cutting back on expenses can help your home loan application. That’s no secret.
But a bit of measured discretionary spending can add a little spice to life. We’re human after all. And lenders will see this as normal.
However, there are certain spending habits and types of transactions that can be a red flag to lenders. And these may hinder your chances of home loan approval.
Check out our list of potentially problematic spending habits below; avoiding them just might make all the difference when you apply for your next home loan.
There’s nothing inherently wrong with using PayPal. It’s often a convenient and safe way to make online purchases.
But many expenses that lenders may scrutinise, such as online gambling, and other unmentionable vices, use PayPal with vague descriptors.
This makes it easier to hide spending habits some may not want the world to know about.
And even if your PayPal spending is mundane, if the descriptions are vague, lenders may still raise an eyebrow.
Purchases through bank accounts on the other hand make it easier for lenders to see your spending habits when assessing your application.
It can be tempting to use a buy now, pay later (BNPL) service to splurge on a new outfit and leave future you to stump up the cash.
However, even though BNPL services aren’t traditional credit products, they can still affect your credit score.
That’s because when you apply for a BNPL service, there’s a chance it may be recorded as an enquiry on your credit report – and these enquiries may impact your credit score.
Worse still, a few missed payments later and that purchase may not seem like such a hot idea – BNPL services can notify credit reporting agencies that you’ve defaulted on a payment, leaving you with a blemish on your credit report.
Last but not least, the Australian Prudential Regulation Authority (APRA) recently amended its framework to include BNPL debts in the reporting of debt-to-income (DTI) ratios.
And a high DTI can lessen your home loan borrowing capacity, or even lead to rejection.
Having regular savings locked away, untouched, and accruing interest … well, that can make lenders smile when assessing your mortgage application.
But as we all know, life happens. Unexpected expenses may crop up that require you to dip into your savings.
This isn’t the end of the world when applying for a mortgage, but pinching too much from your piggy bank might get lenders thinking that you’re unable to put money aside and budget.
This could lead lenders to believe that you will struggle to make regular repayments.
Many stores will entice you with swanky perks in return for signing up for their credit card. But often, when you look past the interest-free period sparkle, the interest rates are rubbish.
One or two forgotten payments can really end up costing you.
Also, lenders may view having a multitude of store cards as “fishing for credit” – sourcing credit from different places may make it look like you’re scrambling for money.
And every time you apply for a store credit card, your credit report is pinged, which as mentioned previously, can harm your overall score.
Some people still prefer to use cash, which is fine. But keep in mind that in the eyes of lenders it may make your spending habits hard to track.
Lenders may question your withdrawals. If you have a fair explanation, and possibly some supporting documentation, then cash withdrawals likely won’t have a negative effect on your application.
However, keep in mind that withdrawing a few hundred dollars every Friday night at the local service station or bottleo ATM isn’t a great look.
Nobody likes the sting of rejection.
But fear not because we’re experts in helping people shape up their finances for a schmick mortgage application.
So if you’re thinking about buying but are worried about how some of your recent transactions or money habits might look to a lender, get in touch today and we can help you start to smooth things out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Home loan headlines have been, let’s face it, a bit of a downer of late. But the good news is that first-home buyers are now reaching their 20% deposit goal faster.
First home buyers have been delivered a bit of well-deserved good news with the findings of the 2023 Domain First Home Buyer Report.
The analysis shows that first-home buyers aged between 25 to 34 are hitting their house deposit saving goal more quickly compared to April 2022 – a month before the first of ten consecutive cash rate hikes.
Sydney experienced the biggest decline – a whopping 17-month drop in average deposit-saving time frames, with it now taking 6 years and 8 months to save a deposit compared to 8 years and 1 month in April 2022.
Brisbane (now an average of 4 years to save a deposit) and Canberra (now 6 years) came in second, both experiencing a 14-month drop.
Melbourne (now 5 years 7 months) and Darwin (3 years 6 months) came next, both with an 11-month decrease in saving periods.
Hobart (5 years 8 months), Perth (3 years 7 months) and Adelaide (4 years 9 months) all saw smaller drops of 5 months, 2 months and 1 month respectively.
Well, 2022 saw a steady decline in national house prices in response to increasing interest rates. In January 2023, CoreLogic reported a record national home value decline of 8.40%.
And as property prices fall, so too does the cost of your 20% deposit.
Also contributing to the shorter savings periods is ABS data showing that wages have grown in both public and private sectors, while the unemployment rate is hovering at a low 3.5%. Rate hikes meanwhile have seen savings accounts accrue more interest.
Despite the promising new CoreLogic findings, saving a 20% deposit can still be a stretch for many.
The increased cost of living means just paying for essentials takes a big chunk of the paycheck, leaving less for savings.
And with home loan interest rates on the up, borrowing capacity has dropped and mortgage serviceability can be difficult.
Also, CoreLogic has reported that house prices have begun to stabilise.
So, as a first-home buyer, how can you speed up the buying process?
Taking advantage of government schemes can speed up your home-buying journey by 4 to 4.5 years, on average.
For example, the First Home Guarantee could see you paying a deposit of just 5% while avoiding an eye-watering lenders’ mortgage insurance fee.
But you’ll have to be quick because spots are limited and can disappear quickly. The next allocation period in July is creeping up, so getting on board with a mortgage broker (like us!) ASAP is a good idea.
We’ve got the know-how to get your First Home Guarantee application on track.
And, we can see if you’re eligible to maximise your savings by combining other government incentives.
If you’re ready to take the plunge and buy your first home we can help get a plan in place to make it happen.
We’ll calculate your borrowing power, assess your finance options, and assist in taking advantage of government incentives.
Call us today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Rate rises can affect the property market, as we’ve all seen of late. But there are other factors that appear to hold longer-term sway over national house prices.
In a bid to bust inflation, the Reserve Bank of Australia (RBA) has been on a rate rise run that’s seen the official cash rate go from a record-low of 0.10% to 3.60% in just 10 short months.
Along the way, we’ve seen property prices across Australia decline.
As rates rose, Australia saw the largest and swiftest property price drop on record, with a 9.1% fall from April 2022 through to February 2023.
But a recent study by Domain, which examined 30 years of data, suggests that population and migration growth have greater and more long-lasting effects on property prices.
The study shows that a 1% mortgage rate increase may result in Australian house prices falling by 1.34%, on average.
But in comparison, national house prices could jump by 8.18% with a population increase of only 1%.
So let’s examine the effects of mortgage rate rises and population growth so you can navigate the market.
When interest rates rise, your borrowing power can dip. And the rise in the cost of living can hit the hip pocket.
So, under these conditions, fewer people may be willing to buy property.
With less demand, vendors may need to lower prices in order to sell homes. And if you’re ready to buy you may be able to negotiate a great price.
But the RBA can’t keep raising the cash rate forever (surely!).
In fact, economists at each of the big 4 banks have forecast that the RBA will announce just one or two more rate rises by 2 May 2023, with a peak cash rate of 4.10% predicted.
Corelogic stated in their recent three-year post-pandemic market report that once we get a rate hike reprieve, property sale and price volatility may lessen.
While mortgage rate rises do affect property prices, other factors appear to have more long-term effects.
Doman’s findings outlined that property prices are reactive to rate rises within the same quarter, whereas movement in population and migration numbers is cumulative and the effects are longer lasting.
So as migration numbers continue to rebound following COVID-19 lockdowns (and lockouts), it’s likely we’ll see an increase in property demand, which could cause prices to rise.
For example, Domain says Melbourne has “made a quick population recovery” since the COVID-19 lockdowns and is slated to nab the title of Australia’s most populated city by 2031-2032.
Melbourne had an 8.1% property price drop in 2022, while Sydney experienced a heftier reduction of 12.1%.
Domain’s study suggests that Melbourne’s population boom, and the resulting increase in housing demand, are behind the more moderate price drop.
And so, while it’s worth considering mortgage rates when surveying the property market, other factors like population and migration – which feed directly into supply and demand – are certainly worth considering too.
If you’d like to dig into the modelling further, the Australian government’s Centre for Population website has a great interactive tool that you can use to check out migration forecasts for each state and territory.
Keeping an eagle eye on property prices is a great idea if you’ve got home ownership in your sights.
And while you’re busy researching the market, we can get cracking on helping to find the right loan for you.
We can also help you get financially savvy with tips to boost your borrowing power. That way you’ll be ready to pounce when the time is right.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate for a tenth straight meeting, taking it to 3.60%. How much will this rate hike increase your monthly mortgage repayments, and how many more rate rises are expected to come?
The RBA’s latest move takes the cash rate to its highest level since May 2012.
However, in somewhat hopeful news for mortgage holders, RBA Governor Philip Lowe has softened his language around the timing of future rate hikes.
While last month he said “further increases in interest rates will be needed over the months ahead”, no such statement was included in this month’s rate hike announcement.
In assessing when and how much further interest rates need to increase, Governor Lowe said the RBA board will be “paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market”.
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that,” he added.
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan very shortly.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $985 a month on your mortgage compared to 1 May 2022.
If you have a $750,000 loan, repayments will likely increase by about $112 a month, up $1478 from 1 May 2022.
Meanwhile, a $1 million loan will increase by about $150 a month, up about $1,980 from 1 May 2022.
The big four banks are forecasting that the cash rate will peak at either 3.85% (CBA’s prediction) or 4.10% (NAB, Westpac and ANZ).
Assuming you’re an owner-occupier with a 25-year loan, here’s how much more you could be paying each month if the cash rate reaches 4.10%:
– $500,000 loan: approximately $75 extra per rate rise = up $1135 from 1 May 2022, to a total of $3,470 per month.
– $750,000 loan: approximately $112 extra per rate rise = up $1702 from 1 May 2022, to a total of $5,200 per month.
– $1 million loan: approximately $150 extra per rate rise = up $2280 from 1 May 2022, to a total of $6,950 per month.
There’s no denying that a lot of households around the country are feeling the pain of these rate rises.
There are also lots of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends.
Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re worried about how you might meet your repayments going forward, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you manage any further rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The property market has had more plot twists than a daytime soap opera in recent years. So getting the skinny on current trends is helpful when you’re planning to buy. Here’s the lowdown on the latest surprising bit of data.
Despite all the media doom and gloom predicting that the Australian housing market would tank in 2023, national property prices actually rose ever-so-slightly in February.
So what the heck is going on?
You may have heard it’s been a bit of a buyer’s market in recent times. Over the past 12 months, property prices were down 7.2%, the biggest annual drop since May 2019.
With rising interest rates, buyer demand slowed. This saw properties sitting on the market for longer.
And to entice sales, vendor discounting rose to -4.3% in January 2023 from -2.9% in November 2021.
However, recent data shows things may be starting to turn.
A PropTrack analysis shows that Australian property prices actually rose by 0.18% in February 2023.
And here’s why …
If you’ve been house hunting recently you may have noticed it is slim pickings. In fact, as of December 2022, new listings were 20.4% lower year-on-year.
Lower listing volumes for most states has created increased buyer competition, which has helped drive prices up slightly.
Now, this may just be a blip – listing volumes can experience seasonal fluctuations and if supply increases again prices may drop back down.
But it just goes to show how hard the market is to predict. And those who are holding out on buying until the market drops further might want to start preparing their finances sooner rather than later.
Why were national property prices expected to drop in 2023? And why might they still fall?
Well, successive rate rises have seen the RBA’s official cash rate hit 3.35%, up from 0.10% in May 2022.
And in a recent statement, RBA governor, Philip Lowe announced the Board expects more rate hikes for 2023.
As interest rates rise, so too do mortgage repayments, which means buyers are unable to borrow as much – leading to downward pressure on property prices.
But as we’ve seen in February, other factors – such as the number of homes available to buy – can counteract that downward pressure.
Keeping your finger on the pulse of the property market is tough enough – let alone finding the right home loan, organising your finances and navigating the application process … buying a home can feel like a full-time job in itself!
But we’re here to help. We can use our network of lenders to find the right home loan for you, so you can focus on nabbing your new home.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Have recent rate hikes made you nervous about taking the plunge into the property market? You’re not alone; it’s a buyer’s market for a reason. Here’s how to stay cool and calm when buying your next property.
As you’ve probably seen in the news, the Reserve Bank of Australia (RBA) has increased the official cash rate from 0.10% to 3.35% in just nine months.
It’s now the highest it’s been since September 2012 – so it’s only natural to feel a bit hesitant about buying property right now.
But rest assured with the right buying strategies in place, you can navigate rate hikes and mitigate potential financial stress.
Get to know your borrowing capacity, and consider leaving yourself a bit of a buffer by purchasing under the maximum amount.
That’s because over the many years it takes to pay off a home loan, your financial or personal circumstances may change, and interest rates could rise further.
Buying a bit under your capacity allows you to create a financial buffer to adjust and adapt to any unforeseen changes.
We can help you calculate your borrowing capacity before you start house hunting – so you don’t fall in love with a place that could create more financial stress than it’s worth.
With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.
According to CoreLogic, “it’s a buyer’s market”!
In the three months to December, the median time a property spent on the market increased to 31 days across the capital cities and 41 days in regional Australia.
That’s a big increase from a median of 20 days in November 2021.
“Buyers are no longer facing a sense of urgency to make a purchase decision and they can negotiate on price more aggressively,” explains CoreLogic’s executive research director Tim Lawless.
“If they don’t secure a price they think reflects good value, they can simply move on to the next property amid persistently declining prices.”
And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).
There are various government schemes that may help reduce the size of your new mortgage and other associated costs.
For instance, the federal government offers low deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC.
The schemes can save eligible first home buyers thousands of dollars and speed up home ownership by 4 to 4.5 years on average.
Meanwhile, all state and territory governments (except the ACT) offer first-home buyer grants, while most (except South Australia) offer concessions to take the stamp duty sting out of house buying.
On average, stamp duty can tack an extra 3-4% onto your property value, depending on the state and property price, so keeping this hefty sum in your pocket is a good deal.
We have all the low-down on government schemes and can help you navigate eligibility criteria. We can also explore the possibility of bundling the schemes together for more savings.
That super low-interest rate loan you saw on a Facebook ad might have looked like an absolute steal, but did you notice the eye-watering fees in the fine print?
And did you know that shopping around for a home loan by sending in multiple loan applications can negatively impact your credit rating?
Speaking to a mortgage professional like us can help you avoid these common pitfalls, and others.
We can help you find the right lender, home loan rate and terms that’ll suit your individual needs.
Better still, we can help you organise your finances for your application and navigate all the red tape.
So if you’ve been a bit nervy about purchasing in this current financial climate, give us a call today. We love nothing more than helping people navigate the complexities of the finance and property markets.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Do you have a fixed-rate mortgage contract that’s coming to an end soon? It can be a stressful time, particularly with rate rise news dominating the headlines. So today we’ve got some tips for a smooth transition.
Like many Australians, you may have taken advantage of the interest rate good times by locking in a cracking rate.
But as they say, all good things must come to an end.
Indeed, the Reserve Bank of Australia (RBA) has estimated that 800,000 fixed-rate loans will end this year.
If that includes your loan, below are some tips to help you navigate the transition to higher repayments smoothly.
Variable interest rates have been rising in recent months. And you can expect your mortgage repayments to follow suit once your fixed-rate loan contract ends.
Do you know how much extra you may have to pay each month? And where will you find the extra cash?
Giving your budget a tidy-up now may put you in a better position to decide what loan product will suit you going forward to help you meet your repayments.
Consider cutting back on non-essentials (streaming services, takeaway coffees, alcohol, restaurants) and look for cheaper offers on your big-ticket bills like insurance and utilities.
Doing so now can also help you save up a buffer that’ll ease your transition to future higher loan repayments.
One of the worst things you can do when rolling off a fixed-rate loan is to simply accept the variable rate your lender automatically provides.
Lenders are more likely to offer attractive rates to new customers, not their existing ones. It’s often referred to as the “loyalty tax”.
Before your fixed-rate contract ends, we can talk to your lender and let them know you’re exploring your options.
In order to keep you on board they may very well make an offer you find acceptable.
Continued rate rises are expected in 2023 and, depending on your situation, you may wish to refix your loan.
You could also consider a split loan – where part of your loan has a variable rate, and the other part is fixed.
That said, not all lenders allow you to refix all or part of your loan.
If you want a fixed or split loan and your current lender won’t provide it, then you may want to explore your options elsewhere by refinancing.
This brings us to our next point.
If your existing lender doesn’t come up with the goods then refinancing is an option.
Refinancing may get you access to rates and features that banks use to woo new customers. And it can potentially save you thousands.
According to 2022 PEXA data, refinancers saved on average $1,524 per year. The ACCC reported in 2020 that mortgagors with 3 to 5-year-old loans paid an average 58 basis points more in interest than new lenders.
If you’re considering refinancing, you may want to act sooner rather than later. With house prices falling, it’s important to make sure you have enough equity in your home to refinance.
Last but not least, come and chat with us well before your fixed rate ends – not after.
We can help you crunch the numbers, negotiate a new rate, and help with refixing and/or refinancing.
Acting early means we’ll have plenty of time to explore plenty of different options for you and help you find a solution that will allow for a smooth transition.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has kicked off 2023 by increasing the cash rate a further 25 basis points to 3.35%. How much will this rate hike increase your mortgage repayments in 2023, and how high is the cash rate expected to go?
This is the ninth rate hike by the RBA in as many meetings (since May 2022), and it takes the cash rate to its highest level since September 2012.
RBA Governor Philip Lowe said in a statement that the RBA board expects that further increases in interest rates will be needed over the months ahead to ensure that inflation returns to target and that this period of high inflation is only temporary.
“In assessing how much further interest rates need to increase, the Board will be paying close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market,” said Governor Lowe.
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $910 a month on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $115 a month, up $1365 from May 1.
Meanwhile, a $1 million loan will increase by about $150 a month, up about $1,830 from May 1.
Here’s what economists from the big four banks are currently predicting for the rest of 2023, and what also could be possible:
CommBank – no more increases for 2023 (prediction made prior to statement by Governor Lowe).
NAB – rates rising to 3.60% by May 2023. However, there’s a risk of a peak towards 4%.
Westpac – rising to 3.85% by May 2023. First rate cut should arrive by March 2024.
ANZ – rising to 3.85% by May 2023, but possibly 4.10% if inflation keeps rising.
Let’s not beat around the bush here: there are a lot of households around the country really feeling the pinch of all these rate rises.
Similarly, there are a lot of people on fixed-rate home loans wondering just what options will be available to them once their fixed-rate period ends and they have to transition over to a variable rate home loan.
Some options we can help you explore include refinancing (which could include increasing the length of your loan and decreasing monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re concerned about how you might meet your repayments in 2023, give us a call today. The earlier we sit down with you and help you make a plan, the better we can help you over the period ahead.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Home loan not up to scratch? Looking for a better rate? Or do you want to unlock equity? Then refinancing could be for you. But there are some important questions to ask first.
If you’re considering refinancing your mortgage, you’re not alone.
With the rising cost of living and interest rates hitting the hip pockets of many Australians, it’s a popular move.
According to ABS data, November 2022 saw refinancing values reach a record high of $13.4 billion.
Refinancing may offer you opportunities to unlock equity, land a better rate and avoid what’s known as “loyalty tax”. Sticking to the same loan could see you missing out on favourable rates and features lenders like to use to woo new customers.
Or maybe you’re about to come off a fixed loan period and are bracing for a potential rate hike.
Whatever your reasons for refinancing, we’ve got some questions to help you through the process.
Banks want to take a squiz at your financial profile before lending you a chunk of change. So check that your credit score is healthy to avoid disappointment.
Look at your budget to see how much you can afford to pay toward your mortgage.
Include interest, repayments, and service fees. And factor in possible additional refinancing costs such as application and valuation fees.
You can also consider how the length of your loan impacts your budget. A longer-term loan usually comes with lower repayments but more interest over the lifetime of your loan.
A shorter-term loan on the other hand would usually mean you make higher repayments now, but you could save on total interest payments.
Whichever way you’re leaning, we can help you crunch the numbers.
Having 20% equity in your home is typically a lender requirement when refinancing.
But what is equity?
It’s the difference between the market value of your property and the balance of your mortgage. And with the recent decline in property values, it’s an important thing to check.
The 20% equity typically acts as a deposit. Not having 20% may mean you have to pay lenders’ mortgage insurance, which may make refinancing not worth your while.
And negative equity – when your mortgage balance exceeds your property’s value – would most likely put the brakes on refinancing plans.
But if you have additional equity you may be able to unlock it when refinancing.
Let’s look at an example – say your house is now worth $1 million. But you bought it for $800,000 a few years back with a $600,000 loan that you’ve paid down to $500,000.
Banks typically allow a loan for 80% of a property’s market value (depending on your financial position and other factors). So if you refinanced your $500,000 loan to an $800,000 loan, that could unlock $300,000 for things like reno projects or investments.
Now it’s time to think about what you want from a loan.
A better interest rate is usually top of the list. But what other features could benefit you?
An offset account may be something you want to reduce interest. Or the ability to make additional repayments without incurring penalties.
Depending on what you’re after, you may not need to move to another lender. We can always talk to your current lender first to see if they will come to the party.
If not, we can then explore your options further afield.
Want to refinance to unlock a better interest rate, features and benefits, or equity in your home? Give us a call.
We can help assess your situation to see what’s possible. And locate loans and lenders that are a great fit for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Changing jobs may offer more perks – higher income, greater fulfilment, and the opportunity for growth are often things people look for in a new gig. But could it also impact your mortgage application?
January and February each year is typically prime time for people considering switching jobs – the Christmas holiday period is in the rearview mirror and a new year of possibilities lies ahead.
In fact new LinkedIn research shows 59% of workers are thinking about leaving their job in 2023, with more than half saying they’re confident of finding something better.
Coincidentally, 2023 could also be a good time to start considering your next property purchase, with house prices reaching a record decline of -8.40% in January from the May 2022 peak.
So could a job change impact your mortgage application? The short answer is it could.
But how much of an impact it has depends on a few factors.
Employment histories with frequent job changes over short timeframes can raise lenders’ eyebrows.
But even with a rock-solid employment profile, lenders may view a fresh job change as an added risk.
Lenders love to see stability. Staying in a job and building up your employment and financial profile will improve your mortgage approval chances.
A new job is less stable than one you’ve been in for a long time. There could be probation periods for both you and your employer to see if the role fits.
But you still may be able to land a mortgage with a new job.
Some job changes are low risk, with possibly minor effects on your mortgage application.
And some are high-risk and may result in delays and more hoops to jump through.
A change lenders consider less risky is switching to a permanent, salaried role in your current industry.
This is because you have a proven record of holding employment in this field and have the promise of a steady paycheck streaming into your bank account.
Typically, lenders want to see at least two to three of your most recent payslips. Some may require you to have your new job for at least three months.
So as long as you have a good financial profile, meet the requirements, and don’t have an unstable employment history, you may experience minimal impact.
But ultimately this depends on the lender and the loan.
Considering a complete career overhaul, starting a business, or switching to casual, contract, or freelance work?
These are exciting changes that may result in more fulfilment, flexibility and money, if the stars align.
But while opportunity is on the cards, so too is risk – as far as lenders are concerned.
This is because sometimes to enter a new industry you have to accept lower-paying roles. Or because it can take some time to thrive in a new industry or business.
Similarly, casual work (and similar) often has higher pay rates. But part of this is to offset the lack of benefits you may receive, such as job security, severance pay and sick leave.
Suffice to say, all these types of job changes may make the mortgage application process more difficult.
However, there could be lenders who will consider your application if your financial profile is otherwise hunky dory and your previous employment history is stable.
Lenders may want to see more than the typical two to three payslips. Some may also require you to be employed in your new role for at least three to six months.
And self-employed applicants typically need to show at least a year’s worth of business income records.
These added requirements may result in a need to delay applying for a mortgage for a little while.
Switching up your employment and landing a mortgage can be tricky. But having a helping hand can make the process easier.
We can point you in the direction of lenders more likely to consider your situation and help put together an application that presents your situation in the best possible light.
So if both a career change and a new property are on the cards for you in 2023, give us a call today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Having a spruced-up home feels great. And it can also boost your home’s value. But, as exciting as the prospect of rolling up your sleeves and getting on with a reno can be, there are certainly pitfalls to avoid.
New year, new you, new reno?
Renovating is exciting. Having aesthetics and function on point can make your home feel new again. And possibly add to its value should you want to sell or refinance.
But we’ve all heard reno horror stories: shonky tradies, budget blowouts and permit nightmares, not to mention the recent supply chain disruptions.
So we’ve compiled some tips to help you avoid these perils (and associated headaches!).
As Benjamin Franklin said, “if you fail to plan you’re planning to fail”. Bit harsh, but it rings true. Especially for a reno.
It’s a good idea to keep organised with a to-do list and a timeline.
You’ll need to check for council restrictions and permit requirements. Ignoring this could mean hefty fines. Or having to tear down your hard work (it does happen!).
Contracts should be set in place with tradies, the correct materials purchased, and a budget set … you’ll have a lot on your plate.
It’s a no-brainer that a reputable and skilled tradie will most likely provide better outcomes. But they usually come with a higher price tag.
The temptation to hire that cheap as chips mate of a mate is real.
But it’s important to hire licenced tradies. Most state fair trading websites offer a free online service for you to check.
Not doing so runs the risk of fines, shoddy work and costly re-dos. And the work of an unlicenced tradie most likely won’t be covered by insurance.
Also, be sure to check out any reviews and examples of their work.
Having a budget is an important step. You need to be realistic about how much your project is going to cost and whether you can afford it.
It’s also wise to have a contingency.
Unexpected costs can really add up – just ask anyone who has completed a reno. Being prepared with a buffer can give you peace of mind to forge ahead in the face of surprises.
Also, having a broker like us on your side can help make funding your reno more straightforward.
We’ll help you explore your financing options, which might include unlocking the equity in your home to fund your reno or any added costs.
Not only can we help you find a competitive rate. We can also track down flexible loans, such as a line of credit, to help cover any unforeseen costs that crop up.
To get a reno done, it’s best to be flexible.
It’s not unheard of to uncover issues during a reno – such as structural problems, water damage, asbestos and faulty wiring – which require you to deviate from your original plans and budget.
The building industry is also facing supply chain disruption due to recent world events, including the COVID-19 pandemic and the war in Ukraine.
As a result, wait times and costs are blowing out for some materials and so a specific item you had your heart set on may need to be replaced with an alternative.
But by being flexible – including having a flexible line of credit – you can adapt and move forward with your reno.
We know a thing or two about financing a reno.
Our team can find flexible loan options, lines of credit and competitive rates to suit you. And if you’ve got equity in your home, we can help you unlock it.
So if you’d like to find out more, get in touch today. We’re ready to help make your 2023 reno dreams a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Finding the time to delve into your finances can be a struggle. But the school holidays can offer the perfect time, especially for teachers. Get cracking on your financial to-do list these holidays by looking into refinancing your mortgage.
Planning on giving your finances a boost by refinancing your mortgage?
Well, you’re not alone. Following a string of rate rises last year, borrowers are refinancing in record numbers, according to PEXA research.
And ABS finance and wealth spokesperson, Katherine Keenan, says recent data shows owner-occupier refinancing with different lenders remained at record levels in 2022, above $12 billion.
For many, mortgage repayments take the biggest chunk of the household budget which has become increasingly stretched by the rising cost of living.
So, the school holidays could provide some spare time to give your mortgage a thorough look over.
We’ll fill you in on why it may be a good idea to refinance your mortgage, what to look out for, and how you can get a helping hand.
If it’s been a while since you’ve revisited your mortgage, you could be paying a higher interest rate than you need to. This is commonly known as the loyalty tax.
Lenders like to offer all the bells, whistles, and better rates to new customers in a bid to get their business.
Since they’ve already won you over, you often don’t get invited to the party.
But by refinancing, you could have lenders offering sweet new customer deals to woo you.
And if your fixed-rate mortgage good times are about to stop rolling, you too could get in on the new customer woo-fest and shop around for a better interest rate.
With the right offer, it can really pay off – refinancers saved on average $1,524 per year, according to 2022 PEXA data.
Over three years, that adds up to an extra $4,572 in your pocket for renovations, savings, extra repayments, or whatever you like.
And you don’t always need to move to another lender to see savings. You could refinance or negotiate with your existing lender, depending on their policy.
They may be open to offering you a deal to keep you on as a customer.
If you’d like to find out more about refinancing, get in touch today.
We know all the ins and outs of refinancing and can shop around to find the most suitable loans for you.
So let us do the legwork on your refinancing goals these holidays so you can maximise your R&R.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Buying a rental property is a popular way to invest. But where do you stand if the property you’re eyeing off already has a tenant? We’ll fill you in on what you need to know.
So you’re primed to expand your financial horizons and want to buy an investment property?
2023 may provide promise, with double-digit percentage gains for rental returns predicted in 11 out of the 14 major Australian residential markets.
But what happens if the property you want to buy already has tenants?
Depending on your plans, this could be a major boon. With tenants in place, the rental income can roll in from day dot!
But if you want to make changes to the property or the tenancy agreement … things get more complex.
So without further ado, here are the ins and outs of buying a tenanted investment property.
When you’re buying an occupied property, it’s wise to learn about the tenants.
If the rental history shows you’ve got stellar tenants, that’s super!
You can have rent coming in straight off the bat – all without the need to advertise or wade through applications.
But if the rental history is a grim read, you can’t just switch tenants on a whim.
As the landlord, you’re obligated to honour the existing lease. There is state and territory government legislation you’ll need to adhere to as an owner, with certain processes and procedures to follow if you want to go down the road of ending a tenancy.
Be thorough in investigating the condition of the property and ask if there are outstanding maintenance requests. This can help you avoid unexpected costs.
As the owner, you’re responsible for ponying up for most repairs. You need to ensure the property is maintained in a timely fashion as per the tenancy agreement.
So if there’s a laundry list of things to be fixed, you‘ll want to budget for it.
You’re obligated to honour the term of the existing lease. That means if you want to make changes to the tenancy agreement (like increasing the rent amount), you’ll need to wait.
Say you want to make non-routine renos to your property during the lease period – that’s possible, but you’ll have to negotiate with your tenants.
Extensive renos could affect their enjoyment of the property, which may mean they reject your request to carry out the works and you have to wait until their lease expires.
Ultimately, the only way you can make changes while the lease is in place is through mutual agreement with your tenants.
A good property manager will fill you in on your obligations and maintain the smooth running of the tenancy.
If you like the way things have been handled, you can choose to stick with the existing manager.
But if you want to change, you can. You’ll most likely have to provide a period of notice to the property manager. The duration depends on which state or territory your property is located in.
Alternatively, you can manage the tenancy yourself. Just be sure you’re across all the legislation.
Property management can be a demanding job, so make sure you know what you’re getting yourself into before taking it on!
Ready to jump into property investment? Get in touch today!
We can help you navigate the process by finding suitable loans, unlocking existing equity and working out your borrowing power.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
As the sun rises on January 1, many Australians will be getting started on their new year’s pacts. The gym will be full of determined resolution keepers; the pavement pounded by brand-new sneakers. But what about shaping up your finances?
There’s no denying 2022 was a tough year for many mortgage holders – with eight rate rises since the start of May – and unfortunately 2023 is tipped to bring more rate increases.
But by kicking off the year with a few tweaks to your budget and habits you could be in a much better position to ride out future hikes.
Here are 4 simple new year’s resolutions that can help keep your finances fighting fit.
The 2022 rate rises had a lot of us trimming back our budgets. But expenses can creep back in. Before you know it, those “free trials” you forgot to cancel become paid monthly subscriptions.
It’s good to get into the habit of conducting regular expense audits – cut down on streaming services, take-away meals and impulse purchases to make savings.
That said, you don’t have to become an extreme penny-pincher. Little tweaks here and there can add up.
For example, a daily $4 take-away coffee habit costs you $1460 per year! But switching to a DIY French press brew can cost just $260-$400.
The last few years have taught us to expect the unexpected. Having money tucked away for emergencies, or more rate rises, can give you added peace of mind.
You can use unlocked savings from your expense audit to start building up an emergency buffer.
And consider adding even more to this fund by selling any unused or unwanted items on ebay or Gumtree.
That way, if rates go up further, you lose your job, or have unforeseen medical expenses, you’ll have the funds on hand.
And you can get rid of some clutter in the process. It’s a win-win!
Christmas is a time many of us cut a little loose on our spending (and fair enough!). But it’s also important to make sure you pay off any debts quickly.
Now may be a good time to either start paying back any money owed on credit cards, get ahead on your mortgage (if you’re able to), or vanquish any other debts you might have.
Also, consider avoiding credit card or buy now pay later purchases if possible. If you forget to pay these on time, you could incur interest and/or late fees.
You may also find that quickly reducing debt tastes sweeter than a take-away mochaccino. And your credit score might thank you for it too, which can make purchasing your first home, new property, or refinancing that little bit easier.
Last but not least, if you’ve had your home loan for a while, you could be paying something called “the loyalty tax”.
This is where lenders don’t pass on new borrower rates to existing customers.
An RBA study found that compared to new loans, borrowers are charged an average of 40 basis points higher interest for loans written four years ago.
Arranging regular home loan health checks can potentially uncover opportunities for savings.
Not only could you secure a lower interest rate, but you could refinance to a mortgage with other features that may be a better fit for your circumstances – such as an offset account, fixed period, or a linked debit card (to name a few).
To get started on your home loan health check and prepare for whatever 2023 throws at you, get in touch.
We’ll look at your financial footing, your mortgage, and the market to scope out suitable loan products and potential savings.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
End-of-year festivities have snuck up on us! Wishing you and yours a swell Noel and a wonderful new year.
It’s time to dust off that kitsch Christmas t-shirt, deck the halls, and give Bing Crosby a spin.
We hope you have the happiest of holidays and a cracking 2023.
As we all bid adieu to 2022, it’s a great time to reflect on the year past. And to dream up plans for the year ahead.
This year had a few challenges for us all (hello rate rises). So we hope you get to enjoy some well-earned rest, and all the merriment the season has to offer.
We are truly grateful to you, our fabulous clients, for your ongoing support and loyalty. May 2023 bring you opportunities to flourish and thrive.
If you’d like to get the ball rolling on those 2023 financial goals, get in touch. We’d love to help you make them happen!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Repeated cash rate hikes have put many first home buyer plans on hold. So could you swoop in and reap the benefits with less competition in the market?
In case you missed it, from May to December the RBA lifted the cash rate from 0.10% to 3.10%.
This has no doubt hit many mortgage holders hard, but it’s also pumped the brakes on the number of first home buyers looking to enter the property market.
In fact, current Australian Bureau of Statistics data shows that the number of first-home buyers fell 3.2% to 8,576 in October alone.
That’s almost half the 16,187 first home buyers who entered the market during the January 2021 peak.
So, if you’re looking to buy, how can this benefit you?
Let’s take a look.
From mid-2020 to the end of 2021 we saw a house buying frenzy. And house hunters who were unable to compete had to make do with the leftovers.
But fewer buyers on the market means there’s less of a chance you’ll have to duke it out for your chosen property.
There could also be more favourable homes for you to choose from, without the overcrowded open houses.
And with fewer buyers making offers, sellers could have concerns about offloading their property.
November 2022 CoreLogic data shows the median days a property sits on the market is 35, compared to just 20 days in 2021.
So, if you’ve got your financial ducks in a row and are prepared to negotiate … flex that bargaining power and try for a great price.
High demand in recent years saw property reach eye-watering prices. But over the past three months there’s been a decline around most parts of the country (barring regional South Australia and regional Western Australia).
In fact, national data has shown the biggest annual decline in home values since 2019, with a 3.2% drop over the past year.
In some instances, it could be cheaper to buy than rent. National median weekly rental prices rose by 4.3% in September this year – a record-breaking price hike.
And a recent analysis found that for 518 Australian suburbs, home loan payments were more affordable than renting.
Escaping the rent crunch and buying your first home in an opportune area could be a smooth move if your finances are in decent shape.
And you might want to get the ball rolling sooner rather than later.
That’s because prices could go up again as early as next year if the RBA pauses rate rises and inflation drops, according to SQM Research’s Housing Boom and Bust Report for 2023.
Taking advantage of government incentives puts the keys in first home buyers’ hands 4 to 4.5 years quicker, on average.
Giving lenders mortgage insurance the big swerve, paired with a low deposit of 5%, is an enticing deal.
And if you’re eligible, that’s what the government’s First Home Guarantee can offer.
Spots are limited though and have historically been snapped up quickly.
But with fewer first home buyers entering the market, you may have more of a chance of nabbing a spot in the scheme.
So, if you’re ready to make the big leap toward home ownership, give us a call.
We’ve got the know-how to help you work out your borrowing capacity and your mortgage options.
We’ll take the confusion out of financing your new home, so you can get on with swooping in on the house of your dreams.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has driven the cash rate up by another 25 basis points to 3.10%. Find out how much this final cash rate hike of the year has increased your mortgage repayments in 2022, and what you can expect in 2023.
The good news? This is it. You can head into the summer holidays knowing this is the last rate rise until at least February when the RBA board will meet again (thankfully they take January off!).
The cash rate now sits at 3.10% following eight months of consecutive rate hikes.
RBA Governor Philip Lowe said in a statement the RBA board expects to increase interest rates further over the period ahead, but it is not on a pre-set course.
“Inflation in Australia is too high, at 6.9% over the year to October,” said Governor Lowe.
“There has been a substantial cumulative increase in interest rates since May. This has been necessary to ensure that the current period of high inflation is only temporary.
“High inflation damages our economy and makes life more difficult for people.”
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $835 a month on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1250 from May 1.
Meanwhile, a $1 million loan will increase almost $150 a month, up about $1,680 from May 1.
Here’s what economists from the big four banks are predicting in 2023:
CommBank – no increases in 2023. Dropping to 2.60% by December 2023.
NAB – rising to 3.60% by May 2023 and then staying steady.
Westpac – rising to 3.85% by May 2023, then dropping to 2.85% by November 2024.
ANZ – rising to 3.85% by May 2023, then dropping to 3.50% by November 2024.
If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your budget in 2023, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So don’t spend the holiday season sweating on next year’s mortgage repayments – get in touch now so we can work out a plan together.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Inheritances can be a bittersweet part of life. But an inheritance alone won’t always cut it when applying for a home loan. Having genuine savings can help show lenders you’ve got what it takes to meet mortgage repayments.
With many older Australians having accumulated a decent amount of wealth throughout their years, it’s not uncommon for some of their younger family members to receive a leg-up into the property market when they pass away.
But an inheritance alone won’t always cut it to land a home loan.
In addition, you may be expected to show proof of genuine savings. This says “hey, I can put money aside to meet repayments” – which is music to a lender’s ears.
So today we’ll break down what may or may not be considered genuine savings, and how you could use your inheritance towards a home loan.
Genuine savings are funds that show off your saving prowess.
Lenders typically look for genuine savings that amount to 5% of the property purchase price. They also like to see that these savings have been held or accumulated for a minimum of three months.
Here are some examples of commonly accepted genuine savings:
– Regular deposits into a savings account over a three month period.
– Term deposits held for at least three months.
– Shares or managed funds held for at least three months.
– A deposit paid to a real estate agent, builder or developer that was originally in your savings account prior to being paid.
Some lenders may also accept your rental payment history as genuine savings.
And some may accept equity in existing property, bonuses, cash gifts, and even your inheritance as long as it has been held in your account for at least three months.
But then again … some may not.
Genuine savings policies often differ between lenders. So it’s important to know just what will be accepted by your lender of choice – and we can help with that.
So now we know what may be accepted. Here are examples of funds that lenders commonly don’t consider:
– Gift from parents or family.
– First Home Owner’s Grant (FHOG).
– Borrowed funds (for example money taken from a personal loan).
– Money from selling assets (for example selling a car or furniture to raise cash).
– Tax refunds.
– And today’s topic … inheritance.
But ultimately, it depends on the policy of the lender you’re applying with, because some of these examples (such as your inheritance) may be accepted under certain circumstances.
Some lenders will allow you to use your inheritance towards genuine savings … but with caveats.
They’ll need proof that the money is in fact yours.
Your lender may ask you for a letter of validation from the executor of the will. They may want to see a copy of the will and grant probate (which proves it’s legally binding).
They’ll also want proof the amount has been deposited into your bank account. Or, they’ll want proof from the executor (or a solicitor) showing you have legal access to the money.
And finally, some lenders require you to hold the funds in your bank account for a minimum of three months before they’ll count your inheritance as genuine savings.
It’s important to get clear on the requirements of your lender of choice.
This brings us to our next point …
If you’re looking to use your inheritance for a home loan, give us a call.
With different home loan policies for different lenders, it can be confusing.
We can help you work out who accepts what for genuine savings. And show you which lenders are willing to work with your inheritance, so you can make the most of it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
What’s more important: your new phone or your next home loan? Well, we were stunned to see a recent survey that showed Australians put more effort into researching phone plans than they did their home loan. Here’s how we can help you get the balance right.
More than 70% of Australians say they’re more likely to spend time looking at options for phone and internet plans, car insurance and even electronics purchases, than researching a home loan – according to a recent Pepper Money survey.
And look, we get it.
Selfies, Netflix, Uber Eats, Instagram, Tinder … phones are pretty damn nifty.
Home loans? Admittedly, not so much.
But that’s no excuse to cut corners when it comes to making what could be the biggest financial decision of your life.
By allowing yourself to get so daunted that you just go with the bank you’ve had a savings account with for years, you could potentially lock yourself into a lemon of a loan.
So today we’ll explore why 7-in-10 Australians now use a broker to help them choose the right home loan for them – and why 86% say they’d use a broker again.
Applying for a home loan can be a full-time job in itself. The research, piles of paperwork, back-and-forth queries and requests …
With busy modern lives, finding the time can be tough.
A broker can save you time by doing the legwork and comparisons for you. We use our industry knowledge and connections to find suitable home loans with competitive rates.
We’re also aware of the type of additional fees and costs that some loans may have. And this could potentially save you money.
A broker can assess your situation and point you in the direction of lenders who may be more likely to say yes.
For example, say you’re working as a casual or are self-employed. There are some banks out there who don’t really favour these kinds of employment arrangements.
However, mortgage brokers have access to a wider range of options and can put forward several potential lenders who are more likely to consider your application.
This targeted approach is important because submitting too many applications can hurt your chances of loan approval.
Each time you apply for a loan, your credit history is pinged. And too many hits on your credit score can lead to lenders seeing you as risky, potentially reducing your options. A broker will take this into account.
What’s my borrowing power? How do I fill out an expense report? What documents do I need?
The application process can be a lot, especially when you’re busy. And the financial wizardry and jargon involved can be downright confusing.
But a broker can provide you with expert guidance.
We’ll look after the application process for you and help you organise your finances and prepare the documentation you’ll need.
You’ll also (hopefully) only have to supply that documentation once, rather than over and over again with different lenders.
So if you’re ready to find a mortgage and streamline the process, it’s time to put that all-important phone to use and give us a call.
We can help you get your ducks in a row and use our expert knowledge and experience to line up with the right kind of loan for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Whether it’s your love life or your home loan application, no one likes getting rejected. There are many reasons why it could happen, and some can come as a big shock. So today we’ve outlined five surprising reasons to help you avoid home loan heartbreak.
There are few words would-be home buyers dread more than: “your home loan application has been rejected”.
It can feel like a real kick in the guts. And some of the reasons can be surprising.
A rejected loan application can hold up your home-buying plans and could have a negative effect on your credit score. So it can be important to avoid this scenario.
Below we’ve outlined five reasons your next application could be rejected – so you can start heading them off now.
Most people know that spending too much is a major red flag for lenders. So limiting your unnecessary expenses is important.
But drastically slashing costs and living a very meagre existence can also be a concern.
Lenders can see this as unrealistic and unsustainable, and they can remedy it during assessment by applying the household expenditure measure (HEM) instead.
HEM is a standardised benchmark used to estimate annual living expenses. And if your standard, reasonable budget is on the super savvy frugal side, there’s a chance HEM may be higher.
Having multiple credit cards and performing several balance transfers can affect your application.
Every time you apply for credit an inquiry is logged on your credit history. And lenders will likely take notice.
Even your “just in case” credit card can have an impact. You may need to prove you have the means to pay off the limit within three years, even if the balance is $0.
‘Tis the season for shopping. And buy now pay later (BNPL) schemes will be rolling out the red carpet.
But it might be worth resisting the temptation.
The Australian Prudential Regulation Authority (APRA) amended its framework this year to include BNPL debts in the reporting of debt-to-income (DTI) ratios.
Lenders will likely include BNPL debt in your DTI ratio to see your total debt in relation to your income. And a high DTI can result in limited borrowing capacity or even rejection.
Your credit history is a finicky thing.
Even a few late payments can cause your credit score to drop. So it’s important to make sure your bills are paid on time.
Also, applying for too many credit cards or other loans can impact your credit score, and therefore your home loan application.
And with increasing news of scams, data breaches, and identity theft … it’s a good idea to check your credit history health.
You can request a free credit report once a year from one of three national credit reporting bodies which are listed on this government website.
Your type of income could make or break your application.
Lenders typically favour traditionally employed applicants with a steady and reliable income.
Many lenders consider self-employment carries a greater risk for less consistent income, and some can reject applications on these grounds.
So if you’re self-employed, when applying for a home loan it’s important to target lenders who are more open to lending to small business owners (we can give you the down-low on this).
Also, word on the street is that tax debt is increasingly becoming an issue for self-employed applicants. So if you have a large tax debt, it might be worth getting on top of that if you can.
If you’re not the kind of person who likes being rejected, well, the good news is that we’re not the rejecting type.
We’d love to have a chat about your home-buying dreams to see if we can match you with the right loan and lender for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
For many Australians, rate hikes and inflation have made the dream of property ownership feel ever more distant. But a recent analysis shows that meeting mortgage repayments could actually be cheaper than renting for more than a third of Australian properties.
Look, we get it. Often the biggest obstacle in the way of home ownership is saving up for a deposit.
But once you’ve got that sorted – which we’ll help you tackle below – a recent CoreLogic analysis found servicing a mortgage was more affordable than average rent prices in 518 Australian suburbs. In fact, in some areas there were savings of over $900 a month.
Not to mention that with rental prices surging by about 10% across Australia over the past year and vacancy rates at a record low 1.1%, home ownership has possibly never looked more appealing!
So we’ve got some tips to help you switch from renter to homeowner in a timely (and confident) way.
Buying now or in the near future could mean less competition for properties, price drops and sellers willing to negotiate.
And recent rate hikes mean that, even during the spring selling season, we’re seeing fewer buyers. In fact data shows the median number of days that properties sit on the market is now 35, compared to 20 days last year.
And in response, property prices are falling. September data showed a 1.4% drop.
So by shopping around in the right areas and putting your negotiator hat on, you may get a price that could make buying cheaper than renting.
And most importantly, buying property and making mortgage repayments can create equity for you … instead of your landlord.
There’s no denying that saving a big enough deposit to buy can be a bit of a slog.
But what if there was a way to sidestep the standard 20% deposit? And possibly avoid stamp duty too?
There are a number of government schemes you may be eligible for that can fast-track house buying by an average of 4 to 4.5 years.
The federal government offers low deposit, no LMI loans for eligible first home buyers, single parents and regional first home buyers.
Also, all state governments (except South Australia) have first home buyer stamp duty concessions for those eligible.
And you can stack these schemes together for more bang for your buck.
But you’ll have to move quickly on the no LMI schemes – they’re allocated on a first-come, first-served basis every financial year.
Keen to make the leap from renter to home owner? If so, you’ll be busy researching the market and learning the art of the deal – so why not get a helping hand with your finances?
We can help find the right loan for you and provide you with helpful guidance that could increase your chances of mortgage application success.
And while we’re at it, we can assist you in applying for any money-saving government incentives you may be eligible for.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Whoa, Nelly! The Reserve Bank of Australia (RBA) has lifted the official cash rate again, this time by another 25 basis points to 2.85%. How much will this rate rise increase your monthly mortgage repayments, and when are the hikes expected to stop?
Dubbed the “rate that stops the nation”, today’s Melbourne Cup RBA board meeting did not see board members rein in the rate rises.
Back in May the official cash rate was just 0.10%. Today it was increased for the seventh straight month to 2.85%.
RBA Governor Philip Lowe said in a statement that the RBA board expected to increase interest rates further over the period ahead.
“The size and timing of future interest rate increases will continue to be determined by the incoming data and the Board’s assessment of the outlook for inflation and the labour market,” said Governor Lowe.
“The board remains resolute in its determination to return inflation to target and will do what is necessary to achieve that.”
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $760 on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1140 from May 1.
Meanwhile, a $1 million loan will increase almost $150 a month, up almost $1,530 from May 1.
The good news is that most economists believe we’re through the bulk of the rate rises, and they could stop as early as next month.
Here’s what economists from the big four banks are predicting:
CommBank – one rate rise to go, peaking at 3.10% in December 2022.
NAB – three rate rises to go, peaking at 3.60% in March 2023.
Westpac – three rate rises to go, peaking at 3.85% in March 2023.
ANZ – three rate rises to go, peaking at 3.85% in May 2023.
If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
So if you’re concerned about how you might meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You may have heard that property values are on the decline. But what does this mean if you’re planning to refinance? We’ll discuss how falling housing prices may affect your refinancing application and what you can do about it.
With the rising cost of living and climbing interest rates, you may be looking to refinance your mortgage.
Depending on your circumstances, it can be a great way to get a better interest rate on your loan.
Not to mention that if you need access to funds for an investment property or renovation, refinancing can allow you to cash out equity in your home to use for other purposes.
But, according to CoreLogic, 79.5% of house and unit market values are on the decline across Australia. And this can affect refinancing outcomes.
We’ll walk you through just what the effects of a property value drop can mean for refinancers and how you can take action now to get ahead of the curve.
Rising rates have contributed to declining property values in some areas around the country.
For example, Sydney property prices have declined 10% since they peaked in February this year, according to the latest CoreLogic data, and many economists believe they’ll fall even further.
And as a homeowner, a drop in property value can affect your equity.
That’s because equity is the difference between your property’s (market) value and your mortgage balance. And it’s a number that lenders pay attention to when assessing refinancing applications.
Refinancing before your equity drops may see your refinancing application have a greater chance of success.
You see, most lenders will typically require you to have 20% equity in your home to refinance, which essentially serves as a deposit.
And according to this graph here, if you’ve bought a house in Sydney (for example) since June 2021, due to the recent property price declines you soon may no longer have 20% equity in your home.
If you don’t have 20% equity, you could still refinance by paying lenders mortgage insurance – but that would likely defeat the purpose of refinancing in the first place.
And if you fall into negative equity – where your home’s value drops below your mortgage balance – then refinancing most likely won’t be on the cards at all and you’ll be stuck with your current lender.
So, if you’re interested in refinancing your loan to get a better rate, sooner may be better than later … depending on how your property value is fairing.
If you’re keen to unlock some equity – you’re not alone!
According to NAB research, seven in 10 mortgage holders recently cashed out equity while property prices were high and used the money to renovate, invest in property or shares, or boost their superannuation
So how does cashing out equity work?
Let’s say you bought an $800,000 house five years ago that is now worth $1 million.
And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (you little beauty!).
By refinancing that $500,000 loan into an $800,000 loan (banks will typically let you borrow up to 80% of a property’s market value), you can unlock $300,000 in equity.
However, if you delay a year or so, and national property prices decline 10% over this period, your house might only be valued at $900,000.
That would mean if you wanted to unlock 80% of your property’s market value, you could only refinance your $500,000 mortgage into a $720,000 loan – and therefore only unlock $220,000 in equity.
If you’ve been considering refinancing lately, contact us to find out more. Whether you’re looking to land a better rate or unlock equity in your home, we can help you with all the particulars.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’ve bought a home. And now you might be considering adding an investment property to your portfolio. But have recent interest rate hikes cooled your heels? We’ve outlined reasons why now may still be a good time to buy.
To buy or not to buy, that is the question.
There’s no denying that rolling rate rises might have some sections of the media spouting doom and gloom.
After all, national property prices have dipped and higher interest rates can lower your borrowing power.
However, if you’re in a position to buy now, the current climate can provide less competition and more power to negotiate a good price.
Also, rental tenancy vacancy rates have reached record lows, meaning the demand for rentals is high.
So if you’re ready to dip your toe into property investment, we’ve outlined below why it could be a good time to do so.
With rising interest rates and inflation, there’s been a softening of the market and this may reward those who are ready to buy now.
CoreLogic data shows there are fewer buyers at present, and properties are increasingly sitting on the market.
In the three months to September, median days on the market increased to 35 days. That’s a big increase from a median of 20 days in November 2021.
Fewer buyers can mean more property options for you to choose from and less competition when putting in an offer.
And by targeting properties that have been on the market for a while, you could potentially have more bargaining power (just be sure to do your due diligence!).
Currently, there is a high demand for rental properties across Australia.
At 0.9%, the current national rental tenancy vacancy rate is the lowest it has been since 2006, according to SQM Research.
That means the likelihood of your investment property sitting empty now is low.
People are looking for solid rental properties. And if you’ve got just the thing, your investment property could have a number of good tenants putting in applications.
When purchasing an investment property, you’re not locked into buying in your home state or city.
You can set your sights further afield to make the most of what the current property market has to offer.
You can look to buy in areas where property prices have already dipped and leverage the current buyer’s market to negotiate. Also, consider purchasing in an area with a healthy demand for rental properties.
That way, you can make a financially sound purchase and increase the chances of having a good tenant in your property sooner.
You’re most likely more discerning when shopping for a property you want to live in – we all have personal preferences we want met.
And unfortunately, lists of non-negotiable bells and whistles usually come with primo pricing.
But when buying an investment property, you can be more flexible, which can open up more affordable options.
Look for the essentials that tenants want, such as a safe, comfortable, and low-maintenance property. And with lower competition now, there could be more viable properties to choose from.
The french door, olympic-sized pool, and ocean-view wish list that usually blows up budgets need not apply.
If you’re ready to dive into property investment, come and talk to us.
We can walk you through what you need to consider when it comes to your finances, such as your borrowing power, unlocking the equity in an existing property, finding the right loan, and much, much, more.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Nurses, midwives and other important healthcare professionals can now qualify for a lenders mortgage insurance (LMI) waiver policy. Here’s how it could save them thousands and fast-track their journey into home ownership.
Are you a nurse or a midwife? Or do you know someone who is?
There was a pretty big announcement recently that allows eligible nurses and midwives (who earn over $90,000 per annum) to buy a home with just a 10% deposit and avoid paying LMI with a Westpac home loan.
It’s an extension of the bank’s existing low deposit, no LMI home loan policy that’s also available to the following allied health professionals who meet the minimum income threshold:
– dentists
– general practitioners
– hospital-employed doctors
– optometrists
– pharmacists
– veterinary practitioners
– medical specialists
– audiologist
– chiropractors
– occupational therapists
– osteopaths
– physiotherapists
– podiatrists
– psychologists
– radiographers
– sonographers, and
– speech pathologists.
For starters, there are around 450,000 registered nurses and midwives in Australia – so that’s a pretty big chunk of the population who might be eligible for this policy.
Not to mention that buying a home without a typical 20% deposit can be fairly costly due to having to fork out for LMI.
Essentially, LMI is an insurance policy that protects the bank against any loss they may incur if you’re unable to repay your loan.
And if you have less than a 20% deposit when applying for a home loan, a bank will often require you to pay for LMI because they see you as a higher risk.
So by getting an LMI waiver, you can save anywhere roughly between $8,000 and $30,000 in LMI, or shave years off your efforts to save the magical 20% deposit amount.
If you’re not a healthcare professional, you may still be able to get in on the action for a low deposit, no LMI home loan.
Other lenders have similar no LMI loans for lawyers and accountants.
There are also government schemes that allow eligible first-home buyers and single parents to borrow high loan-to-value ratios with no LMI.
The first home guarantee supports eligible first home buyers to purchase their first home with a small 5% deposit.
The family home guarantee helps eligible single parents buy a home with a deposit as low as 2%.
And the good news is there are other government incentives (such as stamp duty concessions) that may be combined with no LMI home guarantee schemes to stack up the savings (subject to eligibility).
If you’d like to find out more about a no LMI home loan, give us a call today.
We can walk you through available LMI waiver options to help take the financial sting out of buying a home, and we’ll help you navigate the different price caps and application criteria.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has hiked the official cash rate by another 25 basis points to 2.60%. How much will this rate hike increase your monthly mortgage repayments, and when will it kick in?
It’s hard to believe that at the beginning of May the cash rate was just 0.10%. Today it was increased for the sixth straight month to 2.60%.
The 25 basis point increase surprised many economists who were predicting a fifth straight 50 basis point rise.
It’s worth noting the cash rate hasn’t been this high since July 2013; almost ten years ago.
RBA Governor Philip Lowe said in a statement further increases were likely to be required over the period ahead.
“The cash rate has been increased substantially in a short period of time. Reflecting this, the (RBA) board decided to increase the cash rate by 25 basis points this month as it assesses the outlook for inflation and economic growth in Australia,” said Governor Lowe.
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 25 basis point increase means your monthly repayments could increase by almost $75 a month. That’s an extra $685 on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $110 a month, up $1030 from May 1.
Meanwhile, a $1 million loan will increase almost $150 a month, up $1,380 from May 1.
Ok, so once the RBA hikes the official cash rate, your bank will usually announce its own interest rate hike (and have its own notice period) for variable rates in the days to come.
We’ll run you through a quick example.
Let’s say your monthly mortgage repayments are made on the 20th day of each month.
Let’s also assume you receive a notice from your lender this Friday (October 7) of their own subsequent rate increase, with a 30-day notice period.
By the time October 20 arrives, you won’t be paying higher repayments, as the full 30 days notice would not have passed.
When that 30 days notice finishes on November 6, the daily interest rate you’re charged would increase to the new amount.
That means when your monthly repayment on November 20 rolls around, you’d be charged at the new, higher rate (but calculated only from November 6).
By the time December 20 arrives, the monthly repayment amount you’re charged would fully reflect the new rate.
If you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
If you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The recent decline in rental properties has caused many to feel uncertain about their housing situation. Here’s how you can leave renting in the dust and make homeownership a reality.
Dwindling rental supplies in many parts of the country and soaring rental prices have many tenants looking for an escape.
Terms like “housing crisis” are being bandied about, and in many ways, homeownership has never looked more enticing.
The government has brought forward the regional first home buyer guarantee by three months to October 1, meaning regional Australians will soon have additional assistance to buy their first home.
But that doesn’t mean city slickers can’t get in on the action, too.
There are many government schemes designed to help you get into the market – all of which can be used simultaneously, meaning big savings for you!
The federal government offers a bunch of low-deposit, no lenders mortgage insurance (LMI) schemes through the NHFIC, which can fast-track your home buying process by 4 to 4.5 years on average, because you don’t have to save the standard 20% deposit.
Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
1. First home guarantee: helps up to 35,000 eligible first home buyer applicants this financial year purchase their first home with as little as a 5% deposit.
2. Regional first home buyer guarantee: supports eligible regional Australians to purchase their first home with a deposit of 5%, commencing on 1 October 2022.
3. Family home guarantee: assists eligible single parents to buy a home with a low 2% deposit.
Note that price caps apply to eligible properties and vary according to the application year and property location.
Stamp duty: two words that send a shiver down the spine of even the most seasoned property investor.
Fortunately for first home buyers, all state governments, except South Australia, have stamp duty concessions available for eligible applicants.
The Victorian first home buyer duty exemption, concession or reduction (for properties up to $750,000), and the New South Wales (NSW) first home buyer assistance scheme (for properties up to $800,000), help reduce or eliminate stamp duty expenses.
Queensland’s first home concession applies to eligible first home buyers purchasing a property valued under $550,000. Non-first home buyers may be eligible for the home concession.
Western Australia’s (WA) first home owner grant recipients can also apply for first home owner duty concession for eligible properties.
Tasmanian eligible first home buyers can apply for the established homes duty concession to receive a 50% discount on stamp duty for homes valued at $600,000 or less.
Northern Territory (NT) stamp duty concessions are available for eligible applicants buying house and land packages.
The Australian Capital Territory’s (ACT) home buyer income threshold scheme assists eligible parties to avoid or reduce stamp duty, depending on their income.
Most state governments (except the ACT) offer first home owner grants (FHOG) to help you achieve homeownership.
Victoria’s FHOG offers $10,000 towards the purchase of a new home valued at $750,000 and under. As does the NSW FHOG.
WA’s FHOG also offers $10,000 for new homes, with property value thresholds dependent upon location. The NT FHOG also offers $10,000, but with the added bonus of no income or property value thresholds!
Queensland’s FHOG of $15,000 is available for eligible first home buyers purchasing a new home valued below $750,000. SA’s FHOG offers the same, but for property valued at $575,000 and below.
Tasmania’s FHOG packs a wallop, offering up to $30,000 for eligible applicants.
Property prices might be on the decline for a little while yet, but don’t let that deter you from acting now: it’s a buyer’s market.
It’s also important to note that spots for these schemes, such as the federal government’s first home guarantee, are limited and get snapped up quickly.
So if you’d like to make the move from renter to home owner, get in touch with us today and we’ll help you work out your borrowing options, factoring in what schemes you may be eligible for.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Household budgets around the country are feeling the brunt of five back-to-back rate hikes. And we’ve been warned more are on the way. But just how long does it take for each rate rise to impact your monthly mortgage repayments?
As you’re probably aware, in early September the RBA raised the cash rate to 2.35%.
It was the fifth cash rate hike in a row and the fourth straight double rate increase of 50 basis points.
In response, many lenders have increased their variable interest rates.
But thankfully, lenders don’t slug you with a mortgage repayment hike straight away – there’s always a little bit of lag time to help you prepare.
Just how long? Let’s take a look.
After the RBA hikes the official cash rate, your bank will (usually) announce its own interest rate hike from a particular date.
But this doesn’t mean your repayments will immediately increase when that day arrives.
Exactly when your rate rise kicks in depends on your lender, their policies and your home loan agreement, and your repayment schedule.
Lender notice periods for interest rate rises also differ from bank to bank – with CBA’s lasting 20 days, Westpac 30 days, NAB 32 days, and ANZ 30 days.
We’ll run you through a quick example.
Let’s say your monthly mortgage repayments are made on the 20th day of each month.
Let’s also assume the RBA increases the cash rate on October 4 next month, and you receive a notice from your lender on October 7 of a subsequent rate increase, with a 30-day notice period.
By the time October 20 arrives, you won’t be paying higher repayments, as the full 30 days notice will not have passed.
When that 30 days notice finishes on November 6, the daily interest rate you’re charged will increase to the new amount.
That means when your monthly repayment on November 20 rolls around, you’ll be charged at the new, higher rate (but calculated only from November 6).
But hey, at least you got a 44-day heads up from your lender – and it won’t be a full increase yet either.
By the time December 20 arrives, the repayment amount you’re charged will fully reflect the new rate.
If you’ve received your rate rise notice and your budget forecast is looking tight, rest assured there are steps you can start taking now to help ease the pain.
First and foremost, if you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.
For example, let’s say you refinance your variable rate home loan this month from 5% down to 4.5%.
If the RBA raises the cash rate by 0.50% next month, and your bank follows suit, your interest rate will then be 5% – not 5.5% like it could have been if you didn’t refinance.
Another option is consolidating multiple loans – such as car or personal loans – into your mortgage to reduce your monthly expenses.
However keep in mind that, because home loans are longer, consolidating means you’ll pay more interest over the lifetime of the car and/or personal loan than you would have otherwise.
Similarly, you can consider refinancing to extend the term of your mortgage to help reduce monthly repayments.
Once again, you’ll end up paying more interest over the life of your loan (but hey, it could get you out of a pickle now).
Everybody’s situation is different. And we understand some of the ideas listed above might not suit your financial or personal situation – but there are others that could.
So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today and we’ll sit down with you to help work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Recent back-to-back interest rate hikes have led to a cooling of the property market, and with more rate rises predicted, you may feel like pumping the brakes on purchasing. But could the current climate offer opportunities?
With the predictions of coming rate rises and falling house prices, it’s not surprising many potential buyers are holding off.
But if you’re ready to buy, now could be an ideal time to strike – with other buyers holding back you could have more homes to choose from, less competition and more bargaining power against the vendor.
It’s a sentiment that’s starting to show in polling, with the Westpac-Melbourne Institute Index of Consumer Sentiment lifting by 3.9% between August and September – the first increase in the index since November last year.
Similarly, CommBank’s Household Spending Intentions index showed a 10% increase in home buying intentions this past month.
So if you’re ready to buy, or you’re on the fence, read on. We’ve outlined why it could be a good time to do so.
Competition has been fierce and housing supply limited over the past few years, leaving slim property pickings for many.
But recent rate rises and inflation have made potential buyers hesitant.
We saw this in auction clearance rates at the opening of the spring buying season – typically a busy time for sales.
However this year the combined capital city auction clearance rate is sitting at 62%, according to CoreLogic, down from 74% a year ago, and a peak of 80% in March 2021.
And a softer market may not only mean less competition on auction day, but more choice and time to comprehensively evaluate properties without jostling with other contenders.
Less competition also means the power balance has shifted to the hands of buyers, which brings us to our next point.
Are you ready to rock and roll with your finances? Then you could be in a position to negotiate on price and terms.
CoreLogic data shows fewer people are buying, with properties now sitting on the market for longer. In the three months to August, median days on market shot up from 20 days to 33.
Vendors want sales and are anxious about moving their property.
If you’re prepared to negotiate, consider targeting properties that have been on the market for a while – you may land a good price.
Property prices dropped 1.6% in August, the largest national monthly decline since the 1980s. And ANZ economists are predicting a 15-20% drop next year.
But once those prices bottom out, you’re likely to face stiff competition – with plenty of other would-be home owners flocking to take advantage of relatively low prices.
And as we know in the property world, what goes down must come up, with prices expected to recover in 2024.
So if you’re ready to buy and want to take advantage of falling prices, sooner may work better than later.
It feels like another month, another rate rise. The RBA recently hiked interest rates for the fifth month in a row. And the RBA governor has indicated more rate rises to come. It may seem odd, but buying now could be of benefit.
You see, lenders assess your borrowing capacity at an interest rate of 3% more than the loan you’ve applied for. That means as rates go up, the hurdle you need to clear for loan approval increases.
In other words: your borrowing capacity falls.
So getting ahead of rate rises now may make for a smoother loan approval process and higher borrowing power.
There’s no denying that picking the market can be tricky.
But finding the right home can be trickier, and you just never know when it’s going to pop onto the market.
So if you see a home you like and it’s in your buying range, get in touch today to find out your finance options and borrowing capacity.
We can help take care of the finance side of things, while you concentrate on the house hunting and negotiations!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has hiked the official cash rate by another 50 basis points to 2.35%. Here’s how much you can expect to pay on your mortgage going forward and how we could give you a helping hand.
This is the fifth month in a row the RBA has increased the cash rate, and the fourth straight double rate increase of 50 basis points.
It’s also a seven-year high for the RBA cash rate.
RBA Governor Philip Lowe said in a statement that today’s increase in interest rates will help bring inflation back to target and create a more sustainable balance of demand and supply in the Australian economy.
“The (RBA) board expects to increase interest rates further over the months ahead, but it is not on a pre-set path,” said Governor Lowe.
It means a household with an $800,000 variable rate loan will pay an extra $1,000 a month than they were before the cash rate hikes at the start of May (with repayments going from $3300 up to $4300 in that time).
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 paying principal and interest.
This month’s 50 basis point increase means your monthly repayments could increase by about $140 a month. That’s an extra $610 on your mortgage compared to May 1.
If you have a $750,000 loan, repayments will likely increase by about $215 a month, up $920 from May 1.
Meanwhile, a $1 million loan will increase $290 a month, up $1,230 from May 1.
ANZ and Westpac are both forecasting the RBA cash rate will increase to 3.35% by November and February (respectively) next year.
So that’s another two double cash rate (50 basis points) rises.
Commonwealth Bank and ANZ are a little more conservative with their predictions. They’re tipping rates will hit 2.60% or 2.85% respectively, with just one more single or double rate rise left to go come November.
So where the cash rate lands could be somewhere around those four predictions.
Everybody’s situation is different. So if you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
If you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
They say all good things come to an end, and that includes your ultra-low fixed-rate home loan period. So what can you do to ensure a smooth transition?
With the past couple of years offering historically low interest rates, many Australians have been able to lock in an ultra-low fixed-rate home loan.
In fact, in July 2021, a whopping 46% of home loans taken out that month were fixed, which the ABS says was the peak period for fixing.
That means the peak time for borrowers rolling off their fixed-rate period will be between July and December 2023, according to RBA research.
And that time is fast approaching.
A looming fixed-rate cut off date can be daunting, particularly in the face of recent interest rate hikes. But you do have a few different options available, namely the three Rs: reverting, refixing and refinancing.
If your fixed period ends and you haven’t made other arrangements, typically your loan will revert to the standard variable interest rate.
And this is set to give many home owners around the country a bit of a rude shock if they don’t start planning ahead.
In fact, RBA deputy governor Michele Bullock has warned that half of fixed-rate loans may face an increase in repayments of at least 40% when they roll straight onto a variable mortgage rate around mid-2023.
So before your fixed period ends, get in touch with us and we’ll help you explore your options. Which takes us to our next points – refixing and refinancing.
Depending on the terms and conditions of your mortgage, you may be able to refix your loan with your existing lender.
It’s worth noting though, that due to the official cash rate going up dramatically over the past few months, it’s unlikely that you’ll be put on a fixed rate similar to the one you’re currently on. But there’s always the potential for negotiation.
The usual maximum time frame for fixing a loan is five years – but you can lock in shorter periods, too. So look into the current financial climate before deciding on whether to fix, and then the term length.
All that said, other lenders might be willing to offer you a better rate – be it fixed or variable – than your current lender, which brings us to refinancing…
If your current lender doesn’t want to come to the party, refinancing your loan elsewhere could potentially score you a better deal.
Rising interest rates have brought on record levels in refinancing. In fact, more owner-occupiers refinanced in June than ever before, according to ABS data.
This means the home loan market is highly competitive right now and lenders are keen for borrowers who have a good amount of equity and are on top of repayments.
If that sounds like you, then it’s certainly worth exploring your options, which we’d be more than happy to help you do.
If you’re coming off a fixed-rate loan in the near future, there are other steps you can also take to smooth the transition.
First and foremost, start planning ahead now. That includes building up a buffer of savings to cover higher repayments each month and if things are looking tight, cutting back any unnecessary expenses.
Last but not least, get in touch with us well in advance of your fixed rate ending, so we have plenty of time to model different options for you – whether that’s reverting, refixing or refinancing.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property prices are predicted to fall over the coming year, but it’s always hard to know exactly when they’re going to start trending back up again. So if you’re interested in taking advantage of the dip, it could pay to start preparing now.
Earlier this year, Domain’s June 2022 Quarterly House Price report showed national property prices were starting to slightly dip.
And ANZ economists are predicting a 15-20% drop by the end of next year, before starting to recover in 2024 (prices never seem to dip for too long!).
So how can you prepare to take advantage of lower prices if you’re in the market to buy?
Here are our top five tips to help you get ahead of the curve.
Think about what you’re looking for in a property. Where do you want to live and what features are you looking for in a home? What can you realistically afford?
Then start researching market prices on realestate.com.au or Domain so you can compare similar properties in your preferred locations.
This gives you a benchmark to aim for while you’re saving your deposit, and when the time comes, you’ll be able to tell if the home you’ve set your eyes on is a great deal or not.
Having your tax returns ready to roll is a crucial step in the mortgage application process.
Before a lender can approve your application, they need to know all about your income and ability to meet repayments.
Your financial picture helps lenders to assess the risk of lending you money and what your borrowing capacity is.
Some accountants have a four to six week lead time on completing tax returns – not to mention the time it takes for you to get your paperwork together and get an appointment – so if your tax returns aren’t up to date, best to get onto it now.
Lenders also like to see whether you’re a splashy spender or savvy saver. It’s all about assessing the risk of lending you a hefty sum.
Go through your expenses and see where you can trim the fat. Excessive streaming services, too many takeaway meals, unused memberships and such can add up.
You don’t have to become a full-on minimalist. But tweaking your expenses can make you look good to lenders.
And the savings you unlock can go towards your deposit, which brings us to our next point…
Now that you’ve got an idea of market prices, you can work out how much you’ll need for a deposit.
Generally, a 20% deposit is regarded as a great savings goal, but there are certainly ways to get into the market with as little as a 5% deposit, such as the federal government’s First Home Guarantee.
Whatever deposit amount you’re aiming for, don’t forget to factor in a little extra to cover purchasing costs such as conveyancing fees, building inspections, and stamp duty.
Lenders will look for a portion of your deposit to consist of genuine savings – at least 5% of the purchase price. Some of the more commonly accepted examples of genuine savings are:
– Accumulated funds or regular deposits in a savings account in your name for at least 3 to 6 months.
– Term deposit savings accounts held for at least 3 months.
– Shares or managed funds held for at least 3 months.
– Rental history for the past 6 months.
Knowing your borrowing capacity or getting your finance pre-approved gives you a great insight into your borrowing limit.
After all, you likely won’t know what kind of home you can afford to buy if you don’t know how much you can borrow.
And that’s where we come in – we can help you assess your borrowing capacity or obtain finance pre-approval.
So if you’ve got your eye on buying during the predicted dip over the next year or so, reach out today and we can help you start planning ahead.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
You’ve probably heard that interest rates are on the rise and national property prices are on the way back down. Here’s how you can kill two birds with one stone: by refinancing to unlock equity and giving your home an energy-efficient makeover at the same time.
Did you know that energy-efficient homes generally attract premium prices and sell faster than non-eco listings?
That’s according to the 2022 Domain Sustainability in Property Report, which found an energy-efficient house in the median range sells for $125,000 more (+17.1%) on average than a non-sustainable house.
The results are quite good for apartment owners too, with energy-efficient units selling for $72,750 more (+12.7%) than non-energy-efficient apartments.
Dr Nicola Powell, Domain’s chief of research and economics, says more and more sellers are addressing the demand for eco-friendly homes, as online listings with popular eco features attract 8.7% more views on average.
“More than half of all for sale listings in all states and territories contain energy-efficient keywords,” she says.
Here are the top three eco features popular in house listing searches right now.
1. Solar power: Australia has no shortage of sunshine. And there’s no shortage of demand for houses with solar panels either. A 2020 Origin Energy survey showed 77% of Australians view houses with solar panels as being more valuable. And 55% of renters said they would consider paying increased rent for solar panels.
2. Water tanks: if you have a sizable garden or lawn, a sustainable irrigation system can help keep your water bill down. Make use of the rainy season by collecting water in tanks. When the dry season hits, you’ll be prepared with free, nutrient-dense rainwater to lavish on your garden.
3. Insulation and glazing: window glazing and insulation can help stop your heating and cooling efforts from leaching out. You’ll also reduce the summer heat and winter chill invading your home.
Depending on your situation, many lenders now offer green loans to help homeowners install environmentally sound features – and the good news is that lenders usually offer lower interest rates on green loans in an effort to encourage sustainability.
Another option at your disposal is to unlock the equity in your home to fund your eco reno.
And it’s not a bad time to consider doing so, as property prices increased 23.7% in 2021.
So how does ‘unlocking equity’ work?
Well, let’s say you bought an $800,000 house three years ago that, due to last year’s property price surge, is now worth $1 million.
And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (hurrah!).
By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations.
It’s also worth noting that banks will typically let you borrow up to 80% of a property’s market value.
And don’t forget to check out any government rebates that may be available for eco your installations.
If all of this seems confusing, don’t fret! We’re more than happy to help you navigate loans, equity, and refinancing for your eco reno.
And if you decide to proceed, the good news is that part of the process can include refinancing your home loan.
Why’s that good news?
Well, just because interest rates are going up, doesn’t mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.
So if you’d like to discuss your reno and/or refinancing options, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Thinking about refinancing? As interest rates rise, so do the hurdles you need to clear. Here’s why you might want to look at refinancing soon to avoid potentially missing out.
When was the last time you refinanced?
If the answer is “never”, or you can’t actually remember, there’s a good chance you’re paying a higher interest rate than you could be due to the “loyalty tax”.
You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates to new customers in a bid to win them over – as proven by the RBA.
In fact, a recent RateCity analysis found that customers who stay loyal to their bank could be hit with an extra $5,101 in interest over the next three years alone (based on a $500,000 loan taken out with CBA in 2019).
For a $750,000 loan that would be an extra $7,652 in interest, and for a $1 million loan it’s $10,202 extra.
This is a big reason why owner-occupier refinancing across the country rose 9.7% in June to a new record high of $12.7 billion, according to the Australian Bureau of Statistics.
Ok, so when you refinance, your new lender must assess something called your “home loan serviceability”.
Basically, that’s your ability to meet your home loan repayments at an interest rate that’s at least 3% above the rate you’re being offered.
And as you might have seen on the news, the big four banks are tipping the RBA’s official cash rate to increase from 1.85% in August to anywhere between 2.60% (Commbank forecast) and 3.35% (ANZ forecast) by November.
That means as interest rates go up, so too will the hurdle you’ll need to clear for home loan serviceability when refinancing.
All in all, that means the sooner you refinance, the lower the hurdle you’ll need to clear to ensure you’re not stuck with your current rate and lender.
This is the easy bit! Simply get in touch today and we’ll help you get the ball rolling.
And even if you don’t want to refinance with another lender, there’s always the option of asking your current lender to review your rate, indicating that you’re prepared to refinance if they don’t come to the table.
After all, loyalty should be a two-way street!
So if you’d like to find out more about what options are available to you, give us a call or flick us an email today – we want to help you through the period ahead as much as we possibly can!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate by another 50 basis points to 1.85%. Here’s how to hang in there and keep up with all these monthly cash rate hikes.
Another month, another RBA cash rate hike – that’s four months in a row now!
It’s hard to believe that at the beginning of May the cash rate was just 0.10%. Today, it was increased to 1.85%.
RBA Governor Philip Lowe said in a statement that today’s increase was a further step in the normalisation of monetary conditions in Australia.
“The increase in interest rates over recent months has been required to bring inflation back to target and to create a more sustainable balance of demand and supply in the Australian economy,” said Governor Lowe.
“The (RBA) board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path.”
If you’re having a little trouble hanging in there, below is a condensed version of an article we put out last week to help you alleviate some pressure on the household budget.
There are no two ways about it – interest rates will only continue to climb in the months ahead.
That means it’s important to start planning ahead now, if you can, by building up a buffer.
This usually includes putting extra money into an offset account, redraw facility, or savings account – usually a facility that’s attached to your mortgage or easy to access.
Stan, Netflix, Spotify, Amazon, Audible, Apple TV, Disney, Paramount+, Kayo, Binge … how much do you spend on subscriptions each month? And how many can you cut out?
Next on the hit list: takeaway coffees. Six takeaway coffees a week costs you about $120 per month, or $240 per couple.
Instead, you can brew your own (barista-quality) coffee at home for $30-$70 a month.
And if you can, try to cut back on takeaway meals – they can really add up over time and home-cooked meals provide more leftovers for lunch the next day, too.
A recent Choice study found Aldi to be the cheapest grocery store. Failing that, this ING survey found the average Australian family saves $114 a month simply by doing their grocery shopping online.
And don’t forget to look around for better deals on your car insurance, pet insurance (sorry Rex!), home insurance, utilities, your phone bill, and your internet bill.
If you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.
And you may want to get the ball rolling sooner rather than later.
That’s because lenders need to stress test your ability to meet your home loan repayments at an interest rate that’s at least 3% above the loan product rate you’re being offered.
So as interest rates go up, so too will the hurdle you’ll need to clear to pass that test (aka home loan serviceability).
Another option to consider is consolidating multiple loans – such as a car or personal loan – into your mortgage to reduce your monthly expenses.
Similarly, you can also consider refinancing to extend the term of your mortgage, which could help reduce your monthly repayments.
Both these options come with a downside, however, as by extending them you’ll pay more interest on the loan than you would’ve otherwise (ie. car loans are shorter than home loans).
But if you need cash flow now they can be an option to get you out of a jam.
Last but not least, if you’re concerned about what’s going on with interest rates, inflation and/or how you’ll meet your home loan repayments, please don’t hesitate to get in touch with us.
Everybody’s situation is different. And we understand many of the ideas we’ve listed above might not suit your financial and personal situation.
So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We’ve seen interest rates bounce back up over the past three months, and most economists are predicting more increases to come. If you’re starting to worry about your finances, rest assured there are several steps you can take now to get on the front foot.
The days of ultra-low interest rates are officially over (it was nice while it lasted!).
And while all the talk of doom and gloom you see in the media about rapidly rising interest rates can be a bit spooky, now’s not the time to panic.
Check out this Reserve Bank of Australia (RBA) graph here, for example. It shows interest rates are currently lower (as of July 2022) than they ever were prior to May 2019.
So the current cash rate is nothing extraordinary – although it might come as a shock to newer borrowers, as we previously hadn’t had a cash rate hike since November 2010.
Still, there’s no denying that some households are starting to feel the squeeze, and if you put yourself in that category, now’s the time to consider implementing one or more of the below measures.
There are no two ways about it – interest rates will go up over the next few months.
Currently, the RBA cash rate is at 1.35%.
Economists from the big four banks are predicting it could increase to anywhere between 2.60% (Commbank) and 3.35% (ANZ) by November.
That means it’s important to start planning ahead now, if you can, by building up a buffer.
This usually includes putting extra money into an offset account, redraw facility, or savings account – usually a facility that’s attached to your mortgage or easy to access.
Stan, Netflix, Spotify, Amazon, Audible, Apple TV, Disney, Paramount+, Kayo, Binge … the list goes on.
How much do you spend on subscriptions each month?
While they helped us get through lockdowns, these subscription services (that you might have forgotten to cancel) could be costing you a lot more than you realise.
In fact, the average Australian household spends $55/month on entertainment subscriptions.
Next on the hit list: takeaway coffees.
Six takeaway coffees a week costs about $27, which is about $120 a month, or $240 per couple.
Instead, you can brew your own (barista-quality) coffee at home for $30-$70 a month.
Then there’s Uber Eats, Menulog, DoorDash, Deliveroo – sure, takeaway dinner is great every now and then, but if you’re making a habit of it then it’ll really start to add up.
And the best part about home-cooked meals is the leftovers for lunch the next day – that’s two meals for the price of one.
A recent Choice study found Aldi to be the cheapest grocery store. So that’s a start when it comes to your weekly food bill (which is also going up each month thanks to inflation).
Failing that, this ING survey found the average Australian family saves $114 a month simply by doing their grocery shopping online (must be because you spend less time in the choccy aisle, and more time buying just the essentials!)
But it’s not just your groceries that you can shop around for a lower price on.
Car insurance, home insurance, utilities, your phone bill, and your internet bill are other monthly expenses you can usually find a better deal on.
While we’re on the subject of shopping around, it goes without saying that if you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.
But why refinance now if interest rates will just keep rising anyway?
Well, let’s say you refinance your variable rate home loan this month from 3.50% down to 3%.
If the RBA raises the cash rate by 0.50% next month, and your bank follows suit, your interest rate will then be 3.50%.
But if you choose not to refinance (and your bank follows the RBA’s lead) it’ll be 4%.
This 0.5% gap would remain for all subsequent upcoming interest rate rises – so long as the banks increase their interest rates in lockstep with the RBA.
Another option you can consider is consolidating multiple loans – such as a car or personal loan – into your mortgage to reduce your monthly expenses.
Now, it’s important to note that if you do this you’ll pay more in interest on the car and/or personal loan over the lifetime of those loans, but if you need cash flow now, this could be a possible solution.
Similarly, you can also consider refinancing to extend the term of your mortgage, which could help reduce your monthly repayments.
Once again, you’ll end up paying more interest over the life of your loan with this option, but it can give you more breathing space if you need it.
Last but not least, if you’re concerned about what’s going on with interest rates, inflation and/or how you’ll meet your home loan repayments, please don’t hesitate to get in touch with us.
Everybody’s situation is different. And we understand many of the ideas we’ve listed above might not suit your financial and personal situation.
So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Seven in 10 homeowners have recently used the equity in their home to renovate, invest in property or shares, or boost their superannuation. Have you thought about how you could take advantage of last year’s property price spike?
You might have heard that property prices spiked 23.7% in 2021, yeah?
That’s quite the growth spurt!
So how do you take advantage of that growth without (or before) selling your home?
Well, one way to do so is to cash out equity while property prices are high (which we’ll explain in a little more detail below).
According to NAB research, three in 10 mortgage holders have recently done just that and have used the money to give their home a facelift by renovating.
Other popular options include using unlocked equity to buy an investment property (16% of homeowners), invest in shares (12%) and boost super balances (8%).
It might sound complicated – but we promise it’s not.
Let’s say you bought an $800,000 house three years ago that, due to last year’s property price surge, is now worth $1 million.
And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (you little beauty!).
By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations or to buy an investment property.
It’s also worth noting that banks will typically let you borrow up to 80% of a property’s market value.
So if you upped the ante and refinanced to an $800,000 loan, you’d be able to unlock $300,000 in equity.
If it still all sounds a little confusing, don’t stress, we’d be more than happy to sit down with you and help you work out how much equity you can unlock.
And if you decide to proceed, the good news is part of the process can include refinancing your home loan.
Why’s that good news?
Well, just because interest rates are going up, doesn’t mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.
So if you’d like to explore your options when it comes to unlocking the equity potential in your home, get in touch today – we’d love to help you crunch the numbers.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Got your eye on a luxury car that’ll make your mates jealous? Or perhaps something that’s a little more fuel-efficient and environmentally friendly? Today we’ll run you through a new tax change that could help you buy something a little more la-de-da.
Have you heard about the luxury car tax (LCT) threshold?
Basically, if you buy an imported car with a GST-inclusive value that’s above the LCT thresholds, the tax man slugs you with an extra 33% tax on the exceeded amount (minus the GST component).
But the good news is the LCT thresholds have just been given a pretty decent boost – the third one in a row.
From July 1, the threshold has been boosted by $5,257 to $84,916 for fuel-efficient vehicles, and by $2,697 to $71,849 for other regular vehicles (all inc. GST).
According to the ATO, a fuel-efficient vehicle is one with fuel consumption that doesn’t exceed 7.0L/100km on the combined cycle.
Ok, so this threshold boost isn’t just good for people wanting to buy a vehicle under the threshold.
It’ll also make cars above the threshold more affordable, too.
Let us explain.
Say you want to buy a Tesla Model 3 Performance, which has a GST-inclusive price of $93,325.
Under last financial year’s LCT threshold of $79,659 for fuel-efficient vehicles, you would have paid a LCT tax of $4,100 (exceeds LCT threshold by $13,666, subtract GST component paid, multiply by 33% = $4,100 LCT).
But now that the LCT threshold for fuel-efficient vehicles has been boosted to $84,916, you would only pay LCT of $2522 ($8,409 – GST component paid x 33% = $2522).
And if you wanted to avoid paying the LCT altogether, you could instead purchase a Model 3 Long Range, which has a GST-inclusive price of $81,725.
That means this financial year, it’s below the LCT threshold, but last year you would have been slugged with a LCT of $620.
If you’ve got your eye on a particular vehicle – luxury or not – and you’d like to explore some finance options to help purchase it, give us a call today.
We can help you find the right loan for your circumstances, depending on whether the vehicle is for business, personal use, or a mix of both!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Single Australians under 30 snare the lion’s share of spots in the federal government’s 5% deposit first home buyer scheme, according to new data. Here’s how to secure one of the highly coveted 35,000 scheme spots released on July 1.
Long gone are the days when you had to scrimp and save for a 20% deposit to buy your first home (that’s so 2019).
These days, you can crack the property market with just a 5% deposit and pay no lenders’ mortgage insurance (LMI), thanks to the federal government’s First Home Guarantee (FHG) scheme.
NAB – which is one of two major lenders (alongside dozens of non-majors) that provides finance under the scheme – recently released some pretty insightful data on just who is jagging the limited spots each year.
The data shows almost two-thirds of people (63%) who purchased a house under the scheme were single buyers – whereas for non-scheme purchases, single buyers only made up 49% of borrowers.
Of the single people snapping up First Home Guarantee spots, 59% were female and 41% were male.
Government data also shows that the median age of people using the scheme is 25 to 29 years old.
“People going at it alone shouldn’t be disadvantaged and we are seeing the scheme help them buy a property,” says NAB Executive Home Ownership, Andy Kerr.
First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.
Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
This is exactly what helped car salesman Rihan Nasser purchase his villa unit last August.
Initially, Rihan had been crunching the numbers on what he’d need to do to save a 20% deposit, admitting “it would have taken him years”.
“The scheme fast-tracked the process by maybe two, three or four years and made it easier to come up with the deposit to buy,” says Rihan.
“Once I knew I needed 5%, I knuckled down on the saving. It took me about a year and a half. I would 100% recommend the scheme. It made it so much easier.”
Ok, so here’s the catch: places in the First Home Guarantee scheme are generally allocated on a first-come, first-served basis.
And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.
So if you’re a first home buyer looking to crack the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, check if you’re eligible, and then help you apply through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate by another 50 basis points to 1.35% amid continuing inflation pressures. How much will this third consecutive rate hike increase your monthly mortgage repayments?
At the beginning of May, the cash rate was 0.10%.
Today, it was increased by the RBA to 1.35% – the second double-barrel 0.50% hike in a row.
RBA Governor Philip Lowe said in a statement that the cash rate rise was the result of high inflation, both in Australia and around the world.
“Global factors account for much of the increase in inflation in Australia, but domestic factors are also playing a role,” said Governor Lowe.
“Strong demand, a tight labour market and capacity constraints in some sectors are contributing to the upward pressure on prices. The floods are also affecting some prices.”
Unless you’re on a fixed-rate mortgage, the banks will likely follow the RBA’s lead and increase the interest rate on your variable home loan soon.
Let’s say you’re an owner-occupier with a 25-year loan of $500,000 (paying principal and interest).
This month’s 50 basis point increase means your monthly repayments could increase by about $137 a month.
If you have a $750,0000 loan, repayments will likely increase by about $205 a month, while a $1 million loan is expected to cost an extra $273 a month.
But that’s just factoring in this month’s latest cash rate hike.
Let’s take a look at how much more you can expect to pay moving forward, compared to when the cash rate was 0.10% in April.
For a $500,000 loan, you’ll likely be paying an extra $67 (May hike), $133 (June hike) and $137 (July hike) = $337 per month in interest repayments.
For a $750,000 loan, you’ll likely be paying an extra $100 (May hike), $200 (June hike) and $205 (July hike) = $505 per month in interest repayments.
For a $1,000,000 loan, you’ll likely be paying an extra $133 (May hike), $265 (June hike) and $273 (July hike) = $673 per month in interest repayments.
As you can see, unless you’re on a fixed rate, your monthly mortgage repayments will likely have gone up quite a bit since the end of April.
And it’s likely that we’ll see a couple more RBA cash rate hikes before the year is out.
So if you’re starting to feel the pinch and are worried about what interest rate rises might mean for your monthly budget, feel free to contact us today.
Some options we can help you explore include refinancing (which could include increasing the length of your loan to decrease monthly repayments), debt consolidation, or building up a bit of a buffer in an offset account ahead of more rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough. Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements.
In the past, if you were unable to meet your loan repayments, you could enter into a financial hardship arrangement with your lender and it couldn’t be reported in official credit reporting systems.
In many cases, the repayment history in your credit report would show a blank month or possibly a missed payment during the hardship arrangement period.
Neither of these two approaches told the full story about your credit history and that a financial arrangement had been agreed upon with your lender.
Ok, so from July 1, the credit reporting system will introduce financial hardship information into credit reports.
This means that if you enter into a financial hardship arrangement that reduces your monthly loan repayments, then for the next 12 months your credit report will show:
– that you were current and up to date with your payments for that hardship month, provided you made your reduced payments on time; and
– a flag alongside your repayment history information for the hardship month, indicating a special payment arrangement was in place.
The flag in the credit report will be referred to as ‘financial hardship information’ and can take two forms (A or V) depending on the type of arrangement:
A indicates there was an arrangement for the month that temporarily deferred your repayments (which will need to be repaid later or be subject to a further arrangement).
V on the other hand means the loan was varied that month to reduce your repayments.
The good news is that the financial hardship information flag will only stay on your credit report for 12 months, whereas regular repayment history information stays for 24 months.
Well, like most changes in life, it comes with pros and cons.
The changes are intended to give you the ability to ‘protect’ your credit report if you experience financial hardship – in no way are they designed to exclude you from applying for credit.
However, a financial hardship arrangement flag may prompt prospective lenders to make further inquiries to better understand your situation.
If, for example, the hardship arose because of a temporary reduction in your work hours, but you’re now back in stable employment, in most cases it shouldn’t cause any major issues for your loan application – especially if we can provide proof to your prospective lender.
Additionally, hardship arrangements can stem from a natural disaster that’s completely outside your control, such as a flood or bushfire, which can be explained to a lender.
Importantly, the financial hardship information cannot be used by a credit reporting body to calculate your credit score, whereas regular repayments that are missed outside a hardship arrangement will impact your credit score.
As you’ve probably noticed, the Reserve Bank of Australia has been aggressively raising the official cash rate in recent months, which means your monthly repayments would most certainly have gone up if you’re on a variable loan rate.
And if you’re on a fixed loan rate, you also need to think ahead to what your monthly repayments might be when the fixed-rate period ends and reverts to a variable rate.
So if you think more rate rises may soon strain your monthly budget, now is a good time to start putting extra money away into an offset or savings account to build up a buffer.
Other options we can help out with are refinancing and debt consolidation, both of which can help reduce your monthly repayments.
Whatever your circumstances, we’re here to support you however we can over the period ahead.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We’re just days away from 35,000 first home buyer scheme spots becoming available on July 1. If you’re keen to snare a place in the scheme – and buy your first home sooner – here’s how to get ahead of the pack.
Have you heard about the federal government’s Home Guarantee Scheme? (previously called the First Home Loan Deposit Scheme).
It allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI)
First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit.
Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
But once July 1 arrives, competition for the 35,000 spots will be fierce, so here’s how to give yourself the best possible chance of securing a place.
End-of-financial-year: it’s a phrase that usually sends a shiver up your spine.
But getting your 2021/22 tax return in order asap can give you the inside lane when it comes to jagging one of those 35,000 FHB spots come July 1.
That’s because lenders require your most recent financial information when assessing your home loan application, and that will most likely include your latest tax return.
So now is the time to:
1. Speak to your employer to make sure they’ll provide your PAYG summary in a timely fashion.
2. Book an appointment with your accountant in July (before availability fills up).
3. Start compiling all your work-related expenses.
Getting your tax return completed is just one (important) step in the process.
But it’s far from the only one.
When assessing your application, lenders require you to provide them with an accurate picture of your monthly expenses and discretionary spending, which can take a little time to put together.
And that’s where we come in.
Not only can we help you calculate your monthly budget – which includes your income and expenses – but we can help you crunch those numbers to give you an idea of your borrowing capacity, and therefore, what you can afford to buy.
This is especially important if you want a spot in the Home Guarantee Scheme because it has borrowing caps depending on where you want to buy.
And lenders these days are increasingly strict when it comes to your debt-to-income ratio and home loan serviceability – both of which contribute to your borrowing capacity.
Last but not least, you might have heard that interest rates are almost certain to increase over the next 12 months – so it’s also important to factor in a little buffer if needed.
Places in the Home Guarantee Scheme are generally allocated on a first-come, first-served basis.
And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.
So if you’re a first home buyer looking to crack into the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, help check if you’re eligible, and take steps to get the ball rolling.
Then when spots become available on July 1, we’ll be ready to help you apply through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Tax time is just around the corner and the ATO has sent out a warning to businesses around the country that owe it money: the COVID-19 moratorium on debt collection has come to an end. Rest assured though, you’ve got some options.
During the early days of the pandemic, the ATO says it deliberately shifted its focus away from firmer debt collection action to help businesses that were experiencing challenges.
However, the ATO has been busy in recent months sending out almost 30,000 awareness letters for business tax debts and 52,319 awareness letters about the use of Director Penalty Notices.
“We’ve seen an encouraging response. More than 20,000 taxpayers have already responded to our awareness letters by making payments or entering into payment plans,” says ATO Deputy Commissioner Vivek Chaudhary.
In a nutshell: nothing good.
The ATO has already issued nearly 300 intent to disclose notices and has commenced disclosing some debts to credit reporting bureaus Equifax and Creditor Watch.
The ATO is also currently issuing 30 to 40 Director Penalty Notices each day and expects that daily number to increase.
If you get one of these notices, you’re in hot water and need to act quickly.
Worst case scenario, if you don’t immediately pay back the debt, the ATO could sue you in court, which could lead to your business going into liquidation or voluntary administration.
And if you have a business loan that’s secured against your family house, that could be at risk, too.
First and foremost, if you receive any correspondence from the ATO about a tax debt you should contact your registered tax professional straight away, or call the ATO to engage in a payment plan.
Mr Chaudhary says the ATO’s preferred approach is always to work with taxpayers to resolve their situation through engagement rather than enforcement.
“We understand that a lot of people – especially small businesses – have done it tough through COVID and may now have a tax debt,” says Mr Chaudhary.
“But don’t stick your head in the sand. Even if you can’t pay the full amount owed straight away, please contact us or your registered tax professional to discuss and we will work with you to set up an appropriate payment arrangement.”
That said, not everyone enjoys the ATO hovering over their shoulder waiting for them to pay off a large tax debt.
If you’re one of those people, feel free to get in touch with us to explore some of your other options with business loan lenders.
The SME lending space is growing each month, with a surge of new lenders and products recently hitting the market – some of which offer flexible repayment options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Rising interest rates got you feeling a little vulnerable? It might be time to take some control back by refinancing or asking for a rate review. Here’s why we’re seeing refinancing numbers surge across the country.
In just two months we’ve seen the Reserve Bank of Australia (RBA) increase the cash rate from a record-low 0.10% to 0.85%, and it hasn’t taken long for most lenders to pass those rate increases on to customers.
Unfortunately, the RBA has warned that more rate hikes are on the way, which might have left you feeling at your lender’s mercy.
But there are ways you can make yourself feel more in control, including by doing what tens of thousands of mortgage holders around the country did in May: refinancing or asking their current lender for a better rate.
According to PEXA’s latest refinancing insights, refinancing increased by more than 20% in May (from April) across each of Australia’s four most populous states.
Here’s a quick breakdown:
NSW: 10,838 refinances. That’s up 20.8% on April, and up 15.6% year on year.
VIC: 11,500 refinances. May up 26.7% on April, and up 23.3% year on year.
QLD: 6,699 refinances. May up 21.8% on April, and up 49.6% year on year
WA: 3,244 refinances. May up 25% on April, and up 46.1% year on year
Lenders now, more than ever, need to attract and retain borrowers.
So just because rates are going up, doesn’t mean you can’t scope out a better deal – especially if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.
If that sounds like you: you’re a good customer. And lenders want good customers.
The other big reason for the recent surge in refinancing is that smaller lenders are stealing more and more borrowers away from the major banks with super-competitive rates.
In fact, in NSW, Victoria, Queensland and Western Australia combined, the major banks and their subsidiaries had a net loss of more than 5,000 borrowers to non-major lenders in May, according to PEXA.
Competition is fierce!
The amount of loans being written by brokers continues to grow.
In fact, brokers are currently writing 70% of all new home loans in the country – the biggest market share ever.
And as you know, brokers are loyal to you, not to any particular lender.
That means that if we think you can get a better deal elsewhere, we’ll encourage and help you to do so – not hope that you’ll stay put on your current rate.
And even if you don’t want to refinance with another lender, there’s always the option of asking your current bank to review your rate (and indicating that you’re prepared to refinance if they don’t come to the table).
So if you’d like to find out more about what options are available to you, get in touch with us today – we’d love to help you feel like you have some agency in the period ahead.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate by 50 basis points to 0.85%. How much extra should you expect to pay on your home loan?
Today’s cash rate hike is the second in as many months, with the RBA last month increasing the official cash rate from a record-low 0.10% to 0.35% amid high inflation concerns.
Before then, we hadn’t had a cash rate hike since November 2010.
Now usually, the RBA increases or decreases the cash rate by 0.25%.
However, today’s larger than expected 0.50% cash rate hike is due to inflation in Australia having “increased significantly”, said RBA Governor Philip Lowe in a statement.
“Given the current inflation pressures in the economy, and the still very low level of interest rates, the Board decided to move by 50 basis points today,” said Governor Lowe.
“Higher prices for electricity and gas and recent increases in petrol prices mean that, in the near term, inflation is likely to be higher than was expected a month ago.”
Unless you’re on a fixed-rate mortgage, it’s extremely likely the banks will follow the RBA’s lead and increase the interest rate on your home loan very soon.
How much your repayments will go up each month depends on a number of factors, including how your particular bank responds to the cash rate increase and the size of your mortgage.
But let’s say you’re an owner-occupier with a 25-year loan of $500,000 (paying principal and interest).
This month’s 50 basis point increase to 0.85% means your monthly repayments could increase by about $133 a month.
If you have a loan of $750,0000, repayments will likely increase by about $200 a month, and a $1 million loan is expected to cost an extra $265 a month.
It’s very likely that we’ll see more RBA cash rate hikes before the year is out.
In fact, the RBA has basically said as much.
So if you’re worried about what interest rate rises might mean for your monthly budget, feel free to get in touch with us today to explore some options.
This could include refinancing or locking in a fixed rate ahead of any other future rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Some of Australia’s biggest banks have tightened their mortgage lending criteria, meaning you might not be able to borrow as much from them. How might this affect your next purchase?
This week ANZ lowered a key lending cap, indicating it will no longer lend to borrowers with a debt-to-income (DTI) ratio above 7.5 (meaning people can borrow up to seven and a half times their gross annual income).
NAB meanwhile has reduced its cap to eight times a borrower’s income.
Up until this month, both banks had been willing to lend up to nine times a borrower’s income.
In effect, the changes mean the maximum amount you can borrow with them to buy a property will be reduced.
Fellow big four banks CBA and Westpac have not announced any reductions but have said they’re already applying tighter lending rules to borrowers seeking loans with high DTI ratios.
The increased focus on lending caps comes as financial institutions and the industry regulator, the Australian Prudential Regulation Authority (APRA), prepare for the impact of higher interest rates (many economists are tipping another rate hike in June).
APRA started making moves as early as late last year when it announced new borrowers would need to be tested to see if they could cope with interest rates at least 3% above the current rate (up from 2.5% previously).
Then, this week APRA Chair Wayne Byers indicated the regulator was concerned about the rise in high DTI loans being issued by some banks.
“We will also be watching closely the experience of borrowers who have borrowed at high multiples of their income – a cohort that has grown notably over the past year,” he told the AFR Banking Summit in Sydney.
“Interestingly, this growth has not been an industry-wide development, but rather has been concentrated in just a few banks.”
Your DTI ratio is very simple to work out.
The formula is: total debt / gross income = debt-to-income ratio.
So, if you’re seeking a $700,000 home loan (and have no other debt), and you have $160,000 in gross household income, your DTI is 4.375 – a ratio most lenders would be very comfortable with.
However, a household in the same financial position seeking to borrow $1.4 million for a home would have a DTI of 8.75, putting it above the caps now being imposed by ANZ and NAB.
There’s a fine line between maximising your investment opportunities and stretching yourself beyond your limits, especially with interest rates on the rise.
And that’s where we come in.
It’s not only important to stress-test what you can borrow in the current financial landscape, but also against any upcoming headwinds that are tipped to hit borrowers – such as multiple interest rate rises.
So, if you’d like to find out your borrowing capacity and options, get in touch today. We’d love to sit down with you and help you map out a plan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small businesses around the nation are once again confident about their future and ready to start driving toward their next phase of growth, according to new research.
The research, carried out by small business lender Prospa, found that 81% of Aussie SMEs expect their businesses to grow over the next 12 months.
This is despite 87% of business owners anticipating challenges within the same timeframe.
“Small business owners have not had an easy ride navigating through the pandemic, supply chain issues, staff shortages, and now increasing operating costs,” says Beau Bertoli, co-founder and chief revenue officer at Prospa.
“Despite ongoing challenges, the majority of small business owners have been working hard to make smart decisions to drive new revenue and become more efficient to propel growth.”
The research found that 7 out of 10 business owners have either made, or are in the process of making, changes to their business.
This is combined with 71% of business owners expressing that they plan to embark on accessing funds in the short-term, ahead of possible further interest rate rises.
“Small businesses are not only confident, but studies show business owners are planning to apply for funds sooner to spare them from paying extra on their repayments,” adds Mr Bertoli.
Another key reason why small business owners are looking to access funds over the next few weeks is to take advantage of the federal government’s temporary full expensing scheme this financial year.
The scheme allows businesses keen to invest in their future to immediately write off the full value of any eligible depreciable asset purchased, at any cost.
This can help with your cash flow, as it allows you to reinvest funds back into your business sooner.
Trucks, coffee machines, tools, excavators, and vehicles are just some examples of assets eligible under the scheme.
But here’s the catch: the asset must be installed and ready to use by June 30 in order to be eligible for this financial year.
So if you’d like help obtaining finance to make the most of temporary full expensing ahead of the impending EOFY deadline, get in touch with us today.
We can help you with financing options that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Property investors beware: the Australian Taxation Office (ATO) has revealed the four key areas it will be targeting this tax year, and rental property income/deductions and capital gains are high on the hit list.
Tax office Assistant Commissioner Tim Loh says this tax season the ATO will be targeting four key problem areas where it commonly sees people making mistakes, including:
– rental property income and deductions;
– capital gains from property, shares and crypto assets;
– record-keeping; and
– work-related expenses.
“We know there are still some weeks left until tax time, but if you start organising the income and deductions records you’ve kept throughout the year, this will guarantee you a smoother tax time and ensure you claim the deductions you are entitled to,” says Mr Loh.
If you’re a rental property owner, it’s important to include all the income you’ve received from your rental in your tax return, including short-term rental arrangements, insurance payouts and rental bond money you retain.
“We know a lot of rental property owners use a registered tax agent to help with their tax affairs. I encourage you to keep good records, as all rental income and deductions need to be entered manually,” explains Mr Loh.
He adds that if the ATO does notice a discrepancy it may delay the processing of your refund as it may contact you or your registered tax agent to correct your return.
“We can also ask for supporting documentation for any claim that you make after your notice of assessment issues,” Mr Loh adds.
For more information visit ato.gov.au/rental.
If you dispose of an asset such as property, shares, or a crypto asset including non-fungible tokens (NFTs) this financial year, you will need to calculate a capital gain or capital loss and record it in your tax return.
Generally, a capital gain or capital loss is the difference between what an asset cost you and what you receive when you dispose of it.
“Through our data collection processes, we know that many Aussies are buying, selling or exchanging digital coins and assets so it’s important people understand what this means for their tax obligations,” adds Mr Loh.
For those who deliberately try to increase their refund, falsify records or cannot substantiate their claims, the ATO warns it will be taking firm action against them this year.
If you’re not in a rush to complete your tax return, it might be better to wait until the end of July, which is when the ATO can automatically pre-fill a lot of information for you.
“We often see lots of mistakes in July as people rush to lodge their tax returns and forget to include interest from banks, dividend income, payments from other government agencies and private health insurers,” the ATO says.
Just note that not all information can be pre-filled for you, so be careful to double-check.
“While we receive and match a lot of information on rental income, foreign-sourced income and capital gains events involving shares, crypto assets or property, we don’t pre-fill all of that information for you,” adds Mr Loh.
Many people around the country have changed to a hybrid working environment since the start of the pandemic, which saw one-in-three Aussies claiming work-from-home expenses in their tax return last year.
“If you have continued to work from home, we would expect to see a corresponding reduction in car, clothing and other work-related expenses such as parking and tolls,” says Mr Loh.
To claim a deduction for your working from home expenses, there are three methods available depending on your circumstances.
You can choose from the shortcut method (all-inclusive), fixed-rate method, or actual cost method, so long as you meet the eligibility and record-keeping requirements.
For more information visit ato.gov.au/deductions.
The end of financial year is a busy time for all finance professionals – and mortgage brokers are no different, as there are plenty of important June/July deadlines we can help you with.
That includes helping your business obtain finance to make the most of temporary full expensing before CoB June 30, and assisting potential first home buyers apply for the Home Guarantee Scheme come July 1.
So if there’s something you think we can help you with this EOFY period, please don’t hesitate to shout out – we’d love to help you out.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Housing affordability is one of the key battlegrounds ahead of the federal election this Saturday. So what is each of the two major parties proposing to help first home buyers crack the market? Let’s take a look.
Now, before we get into the nitty-gritty, we’d like to stress that we’ll be doing our darndest to make this article as non-partisan as possible.
We understand that everybody has their preferences, priorities and beliefs – and housing affordability might not factor very highly for you – so what we’ll do below is simply run you through each of the policy’s details.
As is customary with these kinds of things, we’ll kick it off with the incumbent government’s policy pitch first.
If re-elected, Prime Minister Scott Morrison (Liberal Party) is promising to allow first home buyers to use their superannuation to help supplement a house deposit under its Super Home Buyer scheme.
It won’t be open slather on your super account, though.
You would need to have a 5% house deposit saved up before you could apply.
And you could only access up to 40% of your superannuation, to a maximum of $50,000.
The scheme would apply to both new and existing homes and there would be no income or property price caps under the scheme
Also, if you decided to later sell the property, you would have to return the money taken from your superannuation account, including a share of any capital gains.
Opposition Leader Anthony Albanese (Labor Party) meanwhile has pitched to first home buyers a “Help to Buy” scheme.
If elected to government, Labor has promised to help you buy a house by purchasing up to 40% of it with you for new builds, and 30% for existing homes.
Eligible first home buyers would need to have saved a minimum deposit of 2%, and the scheme would be limited to individuals earning less than $90,000 or couples earning $120,000.
Under the scheme, which would be capped at 10,000 spots each year, the government would own the relevant percentage of your house that they contribute, which you could choose to buy back over time.
If your income increased above the thresholds, you’d have to start buying the government’s share back, and if you sold your home, the government would claim back its share (along with the relevant proportion of any capital gains).
Property price caps would also apply, including $950,000 in Sydney, $850,000 in Melbourne, $650,000 in Brisbane, $600,000 in ACT, and $550,000 in Perth, Adelaide, Tasmania and NT.
No matter which party wins the federal election, rest assured that we’ll be across the details of its home buying and economic policies and ready to support you on your home buying journey.
Likewise, if you have any concerns about the housing market or the interest rate outlook over the next 12 to 24 months, please don’t hesitate to get in touch.
We’re more than happy to run through your situation and help you weigh up your options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small business owners wanting to buy a vehicle, asset or important piece of equipment and immediately write off the cost have just over a month to act this financial year.
There’s nothing like an impending deadline to get you moving.
And with June 30 now just over a month away (didn’t that sneak up on us!), time is running out for your business to take advantage of the federal government’s temporary full expensing scheme this financial year.
Temporary full expensing is basically an expanded version of the popular instant asset write-off scheme.
It allows businesses that are keen to invest in their future to immediately write off the full value of any eligible depreciable asset purchased, at any cost.
This helps with your cash flow as it allows you to reinvest funds back into your business sooner.
Trucks, coffee machines, excavators, and vehicles are just some examples of assets eligible under the scheme.
There is just one small catch though …
The asset must be installed and ready to use by June 30 in order to be eligible for this financial year.
But rest assured that even if you do order the asset, and then miss the June 30 deadline because it doesn’t arrive in time, you can still write it off next financial year because the scheme is set to run until 30 June 2023.
To be eligible for temporary full expensing, the depreciating asset you purchase for your business must be:
– new or second-hand (if it’s a second-hand asset, your aggregated turnover must be below $50 million);
– first held by you at or after 7.30pm AEDT on 6 October 2020;
– first used, or installed ready for use, by you for a taxable purpose (such as a business purpose) by 30 June 2023; and
– used principally in Australia.
Being able to immediately write off assets is one thing, but if you don’t have access to the right kind of finance to purchase them now, the scheme won’t be much use to you this financial year.
So if you’d like help obtaining finance to make the most of temporary full expensing ahead of the impending EOFY deadline, get in touch with us today.
We can help you with financing options that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Rate rises are a bit like taking off in a plane. Sure, it’s a bit nervy, but so long as you’ve run through your pre-flight check, have a well-serviced aircraft, built-in some contingencies (a buffer!), and have a handy co-pilot (us!), you should reach your destination no worries.
As you’re likely aware, earlier this month the Reserve Bank of Australia (RBA) increased the official cash rate by 25 basis points to 0.35% due to high inflation concerns.
While it was the first cash rate hike since November 2010, RBA Governor Philip Lowe was quick to give mortgage holders a heads-up that there would be more hikes to come.
“The Board is committed to doing what is necessary to ensure that inflation in Australia returns to target over time. This will require a further lift in interest rates over the period ahead,” Governor Lowe said.
Well, the Commonwealth Bank is predicting that the RBA will increase the cash rate to 1.35% by the end of the year.
That could mean four more 25 basis points increases, with hikes in June, July, August and November 2022.
Fortunately, according to results from a recent Money Matchmaker survey, eight in 10 borrowers have built up a savings buffer and nearly two-thirds are ready to meet a 0.5% rate rise or more.
This echoes research from the Australian Prudential Regulation Authority (APRA), which shows the average balance sitting in mortgage offset accounts is now nearly $100,000 – up almost $20,000 since the pandemic kicked off in March 2020.
As we’ve seen from this month’s RBA cash rate rise, the banks are quick to pass on rate hikes when it comes to mortgages, but not so quick when it comes to savings accounts.
Therefore one way you can prepare for this upcoming period is to consider adding an offset account to your home loan.
In a nutshell, an offset account is a regular transaction account that is linked to your home loan.
The advantage is that you only pay interest on the difference between the money in the account and your mortgage.
Some banks allow you to have 10 offset accounts attached to your mortgage, too, with cards linked to them that you can use for everyday spending.
This means that if your lender is quicker to pass on rate rises on your home loan than they are your savings account, your money will be working harder for you in the offset account than a savings account.
And, by building up extra funds in your offset account, you will also have peace of mind knowing that you have a buffer – in the right place and ready to go – for more interest rate rises down the track.
So if you’d like to talk to us about your options to prepare for any upcoming rate rises – be that refinancing, fixing your rate, or adding an offset account – get in touch with us today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The Reserve Bank of Australia (RBA) has increased the official cash rate by 25 basis points to 0.35% amid high inflation concerns and has signalled more cash rate increases will likely follow.
This is the first RBA cash rate hike since November 2010, and the first time the cash rate has moved since it was cut to a record-low 0.10% in November 2020.
The increase comes a week after Australian Bureau of Statistics (ABS) data showed the cost of living had jumped 5.1% over the past year – the highest annual increase in more than 20 years.
RBA Governor Philip Lowe said the board judged that it was the right time to begin withdrawing some of the “extraordinary monetary support” put in place to help the Australian economy during the pandemic.
“The economy has proven to be resilient and inflation has picked up more quickly, and to a higher level, than was expected,” said Governor Lowe.
Governor Lowe added that the board was committed to doing what was necessary to ensure that inflation in Australia remained in check.
“This will require a further lift in interest rates over the period ahead. The board will continue to closely monitor the incoming information and evolving balance of risks as it determines the timing and extent of future interest rate increases,” he said.
High inflation is bad because it means the real value of your money has dropped and you can buy less goods and services than you could previously.
High inflation also has a habit of getting out of control, because one of the drivers of inflation is people expecting inflation.
Economists would argue that raising interest rates now is a hit we have to take to ensure we don’t end up with runaway inflation (short term pain trumps long term disaster).
Higher interest rates cool inflation in a number of ways, but one of the main ways they can actually save you money right now is via the exchange rate.
If the RBA didn’t raise rates, investors would likely decide they could get better returns elsewhere around the globe, thereby lowering demand for our currency.
And if Australia’s exchange rate falls, the cost of imported goods, including the oil you fuel your car with, could go up even higher.
Well, unless you’re on a fixed-rate mortgage, it’s extremely likely the banks will follow the RBA’s lead and increase the interest rate on your home loan very soon.
How much your repayments will go up each month will depend on a number of factors, including how your particular bank responds to the cash rate increase and the size of your mortgage.
If you’re worried about what interest rate rises might mean for your monthly budget, feel free to get in touch with us today to explore some options, which could include refinancing or locking in a fixed rate ahead of any other future RBA cash rate hikes that the RBA has signalled.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australian small businesses are investing in their recovery through a surge in machinery purchases, IT and office technologies, and sustainable business assets, according to Commonwealth Bank (CBA) data.
The CBA research shows small business financing for equipment and machinery is up 17% so far this financial year compared to last year.
The research also shows 67% of businesses have budgeted for new equipment in the next 12 months, with 55% of those businesses specifically planning to invest in IT and office technology.
“As organisations welcome employees back into offices, they are investing in new technology to attract and retain staff, and many are demanding sustainable business investments,” explains Grant Cairns, CBA’s Executive General Manager for Business Lending.
Across the small business sector, the biggest investment boosts have been in electric cars (156%), trailers (312%), and forklifts (395%).
According to CBA’s data, an increasing number of small businesses are taking advantage of discounts on financing for energy-efficient vehicles, equipment and projects.
“We’ve seen an uptake in hybrid and electric vehicles, as well as investments across other assets including IT equipment,” he adds.
“More small businesses are also seeing the benefits – including the financial benefit – of replacing old equipment with energy-efficient alternatives.”
Mr Cairns says the growing rate of investment is underpinned by a range of government incentives.
That includes attractive interest rates for the SME Recovery Loan Scheme; the extension of the federal government’s temporary full expensing scheme (aka instant asset write off) to mid-2023, and tax incentives announced in the federal budget that encourage small businesses to invest in technology and training.
Those tax incentives allow small businesses to receive a $120 tax deduction for every $100 they spend on training staff or investing in technology, up to a maximum of $100,000 a year.
“Government incentives have played a significant role in lifting business investment over the past few years,” says Mr Cairns.
“Since July last year, we’ve seen continued growth in asset finance in the small business sector, with the instant asset write-off scheme providing a good reason for customers to upgrade equipment and technology.”
To make the most of the government incentives outlined above, it’s important to get the ball rolling now.
For example, the government-backed SME Recovery Loan Scheme is only available until 30 June this year.
And to make the most of temporary full expensing (aka the instant asset write-off) this financial year, the asset you purchase must be installed or ready for use by 30 June.
So if you’d like to explore your finance options for purchasing an asset for your business, as well as any government schemes or energy-efficiency discounts your business might be eligible for, get in touch today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The chances of the Reserve Bank of Australia (RBA) lifting the official cash rate on Tuesday just increased dramatically after figures showed the cost of living jumped 5.1% over the past year – the highest annual increase in more than 20 years.
Economists around the country say the unexpectedly high jump in inflation means a May rate hike is now on the cards when the RBA board meets on Tuesday.
“Expect the RBA to start hiking next week. First hike should be +0.4%,” said AMP chief economist Dr Shane Oliver.
ANZ Bank meanwhile immediately called for the Reserve Bank to raise the cash rate to 0.25%.
“A cash rate target of 0.1% is inappropriate against this backdrop,” said ANZ head of Australian economics David Plank.
Cost of living – aka the Consumer Price Index (CPI) – rose 2.1% in the March 2022 quarter and 5.1% annually, according to Australian Bureau of Statistics (ABS) data released on Wednesday.
According to the AFR, market economists were tipping headline inflation to jump to 4.6% year-on-year, so this has smashed those expectations.
ABS Head of Prices Statistics Michelle Marquardt said a combination of soaring petrol prices, strong demand for home building, and the rise in tertiary education costs were the primary factors driving up inflation.
It’s also worth noting that the RBA’s preferred measure of inflation – underlying inflation – which strips out the most extreme price moves, came in at 3.7%.
That’s now well above the 2-3% target range the RBA has previously stated was a key measure for triggering a cash rate hike.
High inflation is bad because it means the real value of your money has dropped and you can buy less goods and services than you could previously.
High inflation also has a habit of getting out of control, because one of the drivers of inflation is people expecting inflation.
Economists would argue that raising interest rates now is a hit we have to take to ensure we don’t end up with runaway inflation (short term pain trumps long term disaster).
Higher interest rates cool inflation in a number of ways, but one of the main ways they can actually save you money right now is via the exchange rate.
If the RBA doesn’t raise rates, investors will likely decide they can get better returns elsewhere around the globe, thereby lowering demand for our currency.
And if Australia’s exchange rate falls, the cost of imported goods, including the oil you fuel your car with, would go up even higher.
So it’s a tough pill to swallow for mortgage holders, but inflation can get out of hand if left unchecked. Prime examples include high inflation in Australia in the 1980s, and more recently Zimbabwe.
Well, if the RBA increases the official cash rate on Tuesday, as many economists are now predicting, unless you’re on a fixed rate mortgage, it’s likely the banks will follow suit and increase the interest rate on your home loan.
How much your repayments will go up each month will depend on a number of factors, including if the RBA increases the cash rate to 0.25% or 0.5%, how your bank responds, and the size of your mortgage.
If you’re worried about what interest rate rises might mean for your monthly budget, feel free to get in touch with us today to explore some options, which could include refinancing or locking in a fixed rate ahead of any other future RBA cash rate hikes.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers with a deposit of just 5% will soon have more purchasing power thanks to an increase in property price caps for the highly popular Home Guarantee Scheme.
Most capital cities will get a $100,000 boost to their property price cap from July 1, while regional areas around the country will get a boost of between $50,000 and $150,000 (exact details below).
It’s all part of the Home Guarantee Scheme (previously the First Home Loan Deposit Scheme), which allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI).
First home buyers who use the scheme fast track their property purchase by 4 to 4.5 years on average, because the scheme means you don’t have to save the standard 20% deposit.
Better yet, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.
The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but next financial year it’s opening up 35,000 spots.
The new property price caps below don’t just apply to the Home Guarantee Scheme.
They’ll also apply to the Family Home Guarantee for single parents, in which 5,000 spots will be allocated next financial year.
NSW capital city and regional centres: $900,000 (up from $800,000)
Rest of state: $750,000 (up from $600,000)
VIC capital city and regional centres: $800,000 (up from $700,000)
Rest of state: $650,000 (up from $500,00)
QLD capital city and regional centres: $700,000 (up from $600,000)
Rest of state: $550,000 (up from $450,000)
WA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)
SA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 ( up from $350,000)
TAS capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)
ACT capital city and regional centres: $750,000 (up from $500,000)
NT capital city and regional centres: $600,000 (up from $500,000)
The capital city and regional centre price thresholds apply to areas with a population over 250,000 people, including Newcastle, Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast.
Places in these schemes are generally allocated on a first-come, first-served basis.
And don’t let the expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.
So if you’re a first home buyer or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail and help check if you’re eligible.
And when the spots do become available over the next few months, we’ll be ready to help you apply through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It’s the hope that kills you. Just ask Carlton fans, NSW Blues supporters, Wallabies sufferers, and hopeful homebuyers who have fallen victim to underquoting. Obviously, you can’t change your footy team, but you can follow these tips to avoid the sketchy real estate practice.
If it hasn’t happened to you, it’s probably happened to someone you know.
You find a dream home that appears within your budget, you get your finance pre-approved, you get your hopes up, and … you get blown out of the water come auction day because the agent has underquoted the property.
But hang in there – all is not lost, as we’ll touch upon below.
Underquoting is the misleading practice of advertising a property with a price guide that suggests to hopeful buyers that it could sell below market value, or for less than what the agent knows the vendor will accept.
Accusations of underquoting have been rife in recent times, as national property prices have soared 24% over the past year alone.
Now, there’s no doubt that some agents out there have been intentionally underquoting properties to drum up interest. But not always.
Real Estate Buyers Agents Association (REBAA) president Cate Bakos says on many occasions selling agents get blamed unfairly for their reluctance to predict a strong competitive result, and in many circumstances, vendors exercise their right to change their price expectations without prior consultation with their agent.
“Underquoting is amplified by a rising market,” adds Ms Bakos.
Which means as property prices peak in Sydney and Melbourne, and the rest of the country starts to follow a similar trend, less underquoting should occur.
The main reason vendors and agencies underquote, explains Ms Bakos, is based on the belief that an underquoted property will attract more prospective buyers.
It’s hoped that these buyers will fall in love with the property so much that they’ll find a way to compete against more cashed-up buyers, helping to push the property’s final price up in the process.
“The reality is that many buyers find themselves shortlisting properties that are beyond their financial constraints, and this can lead to disappointment, wasted expenditure for building reports and due diligence, and lost opportunity,” says Ms Bakos.
Ms Bakos said while price guide legislation varied between states and territories, the problem was relatively endemic in many cities across the nation.
She said while underquoting was illegal, there were still many legal loopholes that existed in current legislation, particularly in Victoria.
“In Victoria for instance, vendors are not required to state their reserve price for an auction until moments before the auction,” says Ms Baokes.
“And some offending agencies take advantage of this by pitching the property at a price lower than that of a reasonable price expectation or a realistically anticipated reserve.”
Rather than rely on the price guide the real estate agent gives you, do your own homework.
You can do this by looking at comparable sales within the last month or two (on websites such as Domain and realestate.com.au), and compare like-for-like properties and locations.
“It’s an approximation, but it’s more helpful than living in the past and working off older, unreliable sales,” adds Ms Bakos.
Here are the REBAA’s other top tips to avoid becoming a victim of underquoting:
1. Compare comparable properties by location, land size and condition.
2. Spend the months leading up to active bidding time (while obtaining finance pre-approval) to inspect, inspect and inspect as many properties and neighbourhoods as you can.
3. Look at other similar properties in the area and see what the agent’s initially-published estimate price range was; what the reserve price was; and what it finally sold for.
4. Consider consulting and engaging a REBAA-accredited buyer’s agent to take care of the process so you can “buy with confidence.”
And last but not least, don’t forget to get in touch with us in advance to get your finance pre-approved.
That way, come crunch time, you can spend less time on your finance application, and more time doing your homework to make sure the properties you’ve got your heart set on haven’t been underquoted.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Car enthusiasts around the nation got a bit of a shock this week when the Tesla Model 3 rocketed up the sales leaderboard to place third for all new vehicles sold in March. How did that happen?
You might have seen an article by us a few weeks back about the sales of electric vehicles (EVs) almost tripling in the past year – from 6,900 in 2020 to 20,665 in 2021.
Great growth for sure, but when you consider that 101,233 vehicles were sold across the country in March alone, you wouldn’t expect any one EV model to threaten the big players such as Toyota, Mazda or Mitsubishi anytime soon.
Well, we got quite a shock when we looked at the Federal Chamber of Automotive Industries’ (FCAI) March sales figures leaderboard and saw that the Tesla Model 3 had rocketed up to third place.
Apparently more had sold than the Mazda CX-5 (fifth place), the Mitsubishi Triton (fourth), and were outsold only by the Toyota HiLux (first) and Toyota RAV4 (second).
Turns out that Tesla’s third placing is accompanied by an asterisk.
FCAI chief executive Tony Weber explains that this is the first month that EV brands Tesla and Polestar have been included in monthly sales figure reports.
And as such, “when interpreting the data for March 2022, care should be taken as the Tesla data represents the company sales for the first three months of 2022”.
Still, that’s a fairly promising sign for EV enthusiasts out there – just three months of sales put them in a podium position with 4417 vehicles sold.
It wasn’t the only bit of promising news for EV fans this week, either.
Hyundai’s release of 109 electric SUVs – the Ioniq 5 – sold out in less than 7 minutes. In fact, 18,000 Australians registered their interest.
Meanwhile, Honda and General Motors have announced that they’ll be teaming up to build EVs that will sell for less than US$30,000 – potentially removing the all-important cost barrier.
Did you know some lenders are offering lower rates on electric vehicles?
Macquarie, for example, recently sent out an email promoting comparison rates on electric cars to homeowners from 2.99% per annum (based on a loan of $30,000 and a term of five years).
That’s down from anywhere between 6.48% and 7.15% for a new internal combustion engine vehicle (depending on the loan-to-value ratio).
And as EVs become more popular in Australia, it’s a safe bet that we’ll see more and more lenders get their elbows out to offer competitive rates in this space.
So if you’re considering making the jump to an EV, get in touch and we can help you crunch the numbers on whether an electric vehicle loan is the right fit for you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It’s taking young couples roughly five years on average to save for a 20% home loan deposit, according to new research. Want to hear something crazy, though? We know how to quarter that timeframe…
Real talk: it’s never been tougher to save up a deposit for your first home.
In Sydney the average timeframe is 8+ years. In Melbourne 6.5 years. And most other places across the country, 4 to 6 years.
That is unless you happen to know a finance professional who can help first home buyers purchase a home with just a 5% deposit – and not pay any lender’s mortgage insurance in the process.
And how do we do that?
Well, if you’re eligible, we can hook you up with the First Home Guarantee (FHG) scheme – which will release 35,000 places from July 1 (more on this below).
By getting in early on this scheme and reserving a spot, you can quarter the amount of time it takes you to save up for your first home deposit.
Below you’ll see how long it’s currently taking first home buyers across the country to save for a 20% home loan deposit (according to Domain data), compared to saving just 5%.
Sydney: 8 years 1 month (20%), down to 2 years (5%).
Melbourne: 6 years 6 months (20%), down to 1 year 7 months (5%).
Brisbane: 4 years 10 months (20%), down to 1 year 3 months (5%).
Adelaide: 4 years 7 months (20%), down to 1 year 2 months (5%).
Perth: 3 years 7 months (20%), down to 11 months (5%).
Hobart: 5 years 10 months (20%), down to 1 year 5 months (5%).
Darwin: 4 years 3 months (20%), down to 1 year (5%).
Canberra: 7 years 1 month (20%), down to 1 year 9 months (5%).
Combined capital cities: 5 years 8 months (20%), down to 1 year 5 months (5%).
Combined regionals: 3 years 10 months (20%), down to 11 months (5%).
Australia-wide: 4 years 5 months (20%), down to 1 year 1 month (5%).
So if you’ve been saving towards a 20% for at least a year, you could be ready to hit the ground running when the 35,000 FHG schemes become available July 1.
Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).
This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount (it’s also worth noting that property price caps apply).
But places in this scheme are on a first-come, first-served basis.
So don’t let the recent expansion to 35,000 spots lull you into a sense of complacency.
They’ll go fairly quickly, which means if you’re interested you’ll want to get in touch with us asap to ensure you’re ready to lodge the application come July 1.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
First home buyers, regional buyers and single parents keen to crack the property market are the big winners in this year’s federal budget – with 50,000 low deposit, no LMI scheme spots up for grabs.
Want to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance?
You could be in luck – the federal government is expanding its hugely popular First Home Guarantee scheme to 35,000 places from July 1, 2022.
First home buyers who use the First Home Guarantee scheme fast track their property purchase by 4 to 4.5 years on average, because the scheme means they don’t have to save the standard 20% deposit.
The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but next financial year it’s upping the ante.
It’s worth noting that the similar New Home Guarantee scheme for first home buyers (10,000 spots for new builds only), isn’t expected to continue next financial year.
However, regional buyers (10,000 spots) and single parents (5,000 spots) will benefit from similar schemes, which we’ll run through in more detail below.
Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).
This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
But places in this scheme are on a first-come, first-served basis.
So don’t let the expansion to 35,000 spots lull you into a sense of complacency.
They’ll go fairly quickly, which means if you’re interested, you’ll want to get in touch with us asap to ensure you’re ready to hit the ground running come July 1.
Regional homebuyers will benefit from the announcement of the Regional Home Guarantee.
Under the scheme, 10,000 guarantees each year (from 1 October 2022 to 30 June 2025) will be made available to support eligible regional homebuyers.
The good news is that this scheme will also be made available to non-first home buyers, and permanent residents, to purchase or construct a new home in regional areas.
Details on this scheme are still fairly limited, though.
For example, it’s not confirmed in the budget papers or ministerial statements whether it will be a 5% deposit scheme like the first home buyer one.
And what’s classified as a “regional area” hasn’t been disclosed yet, but rest assured we’re watching this space closely.
For single parents, 5,000 guarantees will be made available each year from July 1, expanding upon the Family Home Guarantee announced in last year’s budget.
The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2%, regardless of whether the single parent is a first home buyer or has owned property before.
Previously, it was planned that just 2,500 spots would be up for grabs each year over four years, so it’s good to see the federal government expand this scheme until June 2025.
With these schemes, allocations are generally snapped up fast.
So if you’re a first home buyer, regional buyer, or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail and help check if you’re eligible.
And when the spots do become available over the next few months, we’ll be ready to help you apply for finance through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Most of you would have noticed that car prices have gone up significantly over the past two years. But how much have they gone up exactly? Let’s take a look.
You’re not imagining things – both new and used vehicle prices have gone up over the past two years (not to mention, house prices, petrol, groceries – everything, it seems, except wages).
Reasons for car price hikes include supply issues stemming from a semiconductor shortage, increases in cost for raw materials, complications around shipping and parts procurement, factory shutdowns and other pandemic-related issues.
But just how much have these disruptions sent car prices up? And what options are available if you need help financing your next purchase?
Let’s take a look.
The price of new cars has gone up as much as 25% since before the pandemic, according to an ABC article quoting website pricemycar.com.au.
A detailed analysis of 1100 models by goauto.com.au meanwhile calculates that as of March 2022, the average price of a new car is up 7.6% since pre-pandemic times.
However, it varies a lot from manufacturer to manufacturer, and even model to model.
For example, some models such as the Toyota Yaris have gone up by as much as 37% ($7290 extra).
Here’s how much some of the more prestigious manufacturing brands have increased prices:
Land Rover: 9.01%, Audi: 8.59%, BMW: 8.42%, Jaguar: 5.33%, Lexus: 3.36%.
And here’s how much some of the more mainstream manufacturers have increased prices:
Volkswagen: 9.83%, Hyundai: 9.06%, Jeep: 8.91%, Nissan: 8.59%, Toyota: 7.70%, Fiat: 7.21%, Mitsubishi: 6.80%, Renault: 6.60%, Subaru: 6.00%, Citroen: 5.93%, Mazda: 5.30%, Ford: 2.73%.
It appears that because of the wait times for new cars (due to supply constraints), used car prices have gone up even more.
Used cars have risen 50%, Datium Insight’s price index in this ABC article shows.
Meanwhile, car valuation expert Redbook.com.au estimates a 25 to 35% increase in recent years.
Been wondering about how your neighbour bought that fancy new car?
Well, there’s a better than even chance they took out finance to purchase it, with Mozo research showing that 52% of car buyers took out a loan to buy a vehicle in the past decade, for an average loan size of $25,000.
And when it comes to timeframes to pay that loan back, while most car loan providers offer a maximum term of up to 7 years, the average loan is usually repaid in the 2-3 year range.
It’s also worth mentioning that if you’re purchasing the vehicle for your business, the federal government’s temporary full expensing scheme can help your business’s cash flow ahead of the financial year deadline of June 30.
So if you’d like to find out more about financing your next vehicle purchase – whether it be for your household or business – get in touch with us today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Think property prices have gone a little bonkers? You’re not the only one. Which is why a report with 16 recommendations to tackle housing affordability has just been plonked on pollies’ desks in Canberra. Today we’ll run through them for you (succinctly, we promise).
You might have noticed that property prices have skyrocketed over the past 18 months, to the point where a lot of first home buyers are now having real difficulties cracking the market.
So how is the government looking at addressing it?
Well, a House of Representatives committee (made up of both Liberal and Labor MPs) tabled a report titled ‘The Australian Dream’ in federal parliament last week outlining 16 ways to improve housing affordability and supply across the country.
Below, we’ve summed up all 16 recommendations for you, starting with a few of the report’s more eye-catching proposals.
States and territories should replace stamp duty with land tax, the committee recommends.
This should be implemented over time, so that those who have already paid stamp duty, or recently paid it, don’t face double taxation.
The committee says this change would increase housing turnover, remove an unnecessary obstacle to homeownership, and stabilise government revenues.
In the meantime, a transition review is recommended and states and territories should adjust stamp duty brackets to redress decades of stamp duty bracket creep.
The Australian Government should allow first home buyers to use their superannuation as security for home loans, the committee says.
“Allow first home buyers to use their superannuation balance as collateral for a home, without using the funds themselves as a deposit, thereby expanding the opportunity for home buyers,” the committee says.
“This recommendation will therefore remove the largest barrier for home buyers; being the deposit.”
However, the committee warns this recommendation should only be implemented in conjunction with some of the other proposals on this list that increase housing supply.
“Otherwise, an increase in households’ ability to borrow would likely increase property prices,” they add.
The Australian Government should implement schemes to encourage private sector partnerships to deliver rent-to-own or discount-to-market affordable housing.
“This will diversify the housing market as well as provide affordable housing options for low to medium-income earners, people experiencing homelessness, women escaping domestic violence, parents and children,” the report states.
Increase urban density in appropriate locations: specifically areas well-serviced by under-used transport infrastructure.
Incentivise planning and property administration policies: provide incentive payments to state and local governments to encourage better planning and property administration.
Pay states and localities to deliver more affordable housing: grants could be in the form of cash or infrastructure.
Adopt recommendations from the Inquiry into homelessness.
Increase the supply of critical housing such as crisis housing.
Don’t mess with negative gearing: the committee recommends the Australian Government not change its current negative gearing policy.
Reform developer contributions: work with state and territory governments to reform developer contributions, so value-adding and in-demand infrastructure is delivered.
Review the build-to-rent housing market: in particular how it’s affected by current regulations and tax policies.
APRA to continue monitoring lending standards.
No changes to the RBA’s charter: ensuring that house prices are not a specific objective of monetary policy.
Up-to-date forecast data: implement ways to get more up-to-date forecast data on population, housing approval and completions.
Unlock new housing supply: concessional loans to infrastructure projects and community housing providers that will unlock new housing, particularly affordable housing.
Here’s the most important thing, though. You don’t have to wait for the government to get the ball rolling on the above recommendations to help you crack the property market.
For first home buyers, most states offer grants and stamp duty concessions/exemptions to help give you a leg up.
There’s also a number of federal government options back up for grabs from July 1, including the popular First Home Loan Deposit Scheme and New Home Guarantee initiatives, which enable first home buyers to make their home purchase four to 4.5 years sooner, on average.
That’s right – four years sooner!
So if you’d like to find out about ways to overcome housing affordability issues, get in touch today – we’d love to help you come up with a plan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
New data from the lending watchdog reveals almost one in four new mortgages are risky. How are they deemed risky? Well, it’s got something to do with your debt-to-income ratio, which we’ll explain in this week’s article.
Your debt-to-income (DTI) ratio might sound complicated, but it’s really very simple to work out.
Basically, your DTI is a measurement used by lenders that compares your total debt to your gross household income.
The formula is: total debt / gross income = debt-to-income ratio.
So if you’re seeking a $700,000 home loan (and have no other debt), and you have $160,000 in gross household income, your DTI is 4.375 – a ratio most lenders would be very comfortable with.
Well, December quarter data just released by the Australian Prudential Regulation Authority (APRA) shows 24.4% of new mortgages have a DTI ratio of 6 or higher.
At the 6+ ratio, APRA (aka the banking watchdog) deems these loans as risky.
And they’re keen to see the percentage of these loans that lenders approve start to come down.
That’s because they’ve been steadily on the rise for a while now.
In the September 2021 quarter, for example, new mortgages with a DTI of 6 or higher were at 23.8%, while in the December 2020 quarter it was at just 17.3%.
“However, the rate of growth in the [most recent] quarter slowed,” APRA points out (probably with a sigh of relief) in their latest release.
The recent rise in high DTIs has most likely got a lot to do with the phenomenal price growth (and resulting FOMO!) we’ve seen across the country over the past 12-18 months.
In fact, new data released by the Australian Bureau of Statistics shows that in the 12 months to December 2021, residential property prices rose 23.7% – the strongest annual growth ever recorded.
The mean price of residential dwellings in Australia now stands at $920,100.
That’s a jump of $44,000 from the September quarter ($876,100), and a jump of $176,000 in 12 months from the December 2020 quarter ($744,000).
So with property prices increasing at such a sharp rate, and people stretching themselves to their limits to buy into the market, it has resulted in upwards pressure on high DTI percentages.
The good news is that as the property market starts to cool, so too should the growth rate of risky DTIs, which is what APRA alluded to above.
There’s a fine line between maximising your investment opportunities and stretching yourself beyond your limits.
Especially so as RBA Governor Dr Philip Lowe this week warned Australians to start preparing for higher interest rates.
And that’s where we come in.
It’s not only important to stress-test what you can borrow in the current financial landscape, but also against any upcoming headwinds that are tipped to hit borrowers – such as interest rate rises and possible tightening lending standards.
But hey! Everyone’s financial situation is different. Some lenders will take into account your particular circumstances and accept a loan application where a DTI is higher than 6.
So if you’d like to find out your borrowing capacity and options, get in touch today. We’d love to sit down with you and help you map out a plan.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Home and business owners impacted by the floods in New South Wales and Queensland can apply to their lender for a three-month loan deferral or reduced payment arrangement. Here’s how to apply if you or someone you know has been impacted.
Another year, another disaster.
In 2019 it was the bushfires. In 2020 it was COVID-19 (which, you know, is still hanging around). In 2021 a mice plague. And now to kick-off 2022 we’ve had half the eastern seaboard inundated with floods.
Fortunately, just as they did for the bushfires and COVID-19, lenders are offering up to three months deferral on loan repayments for those customers affected by the flooding disasters in NSW and Queensland.
“Once the worst of the emergencies are over and the clean-ups begin, we want Australians who have been impacted to know their bank is ready with tailored support to assist as they recover,” says Australian Banking Association CEO Anna Bligh.
“Don’t tough it out on your own. Loan deferral or reduced repayment arrangements for home, personal and some business loans are being offered across individual banks.”
Depending on your family’s or business’s circumstances, assistance from your lender may include:
– Deferring scheduled loan repayments, on home, personal and some business loans for up to three months.
– Waiving fees and charges, including for early access to term deposits.
– Debt consolidation to help make repayments more manageable.
– Restructuring existing loans free of the usual establishment fees.
– Offering additional finance to help cover cash flow shortages.
– Deferring upcoming credit card payments.
– Emergency credit limit increases.
There’s also a range of federal and state government financial grants your household or business might be eligible for, including:
– Australian government disaster recovery payment: eligible individuals can claim $1000 per adult and $400 per child. If you’re in NSW click here, QLD click here. A further $2000 per adult and $800 per child is available for residents in Richmond Valley, Lismore and Clarence Valley.
– Australian government disaster recovery allowance: a short-term payment of up to 13 weeks for eligible people for loss of income. NSW click here and QLD click here.
– NSW disaster relief grant for individuals: financial assistance to eligible individuals and families whose homes have been damaged by a natural disaster. Click here or phone 13 77 88.
– NSW storm and flood disaster recovery small business grant: eligible small businesses can apply here for a grant of up to $50,000 to help pay for the costs of clean-up and reinstatement.
– QLD emergency hardship assistance grants: grants of up to $180 are available per person and $900 for a family of five or more. Click here or call 1800 173 349.
– QLD essential household contents grant: up to $1,765 for eligible single adults and $5,300 for families to replace/repair (uninsured) household contents. Click here or call 1800 173 349.
– QLD structural assistance grant: grants of up to $10,995 for eligible single adults and $14,685 for families for one-off (uninsured) structural home repairs. Click here or call 1800 173 349.
– QLD essential services safety and reconnection grant: up to $200 for a safety inspection and, if required, up to $4200 to repair/reconnect essential services. Click here or call 1800 173 349.
– QLD extraordinary disaster assistance recovery grants: up to $50,000 grants for small businesses that experienced damage from the flooding event. Click here or call 1800 623 946.
Last but not least, it’s also worth noting that there are both refinancing and/or loan restructuring options you can explore in order to reduce your business or home loan repayments each month (without hitting the pause button).
These include:
– asking for a better rate or moving to a lender that can provide one;
– extending the length of your loan; and
– consolidating your debt.
So if your business or household is one of the many doing it tough right now and you need a little breathing space, please don’t hesitate to pick up the phone and give us a call today – we’re here and ready to assist you any way we can.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It’s a three-speed property market across the country right now, with two capital cities showing signs prices might’ve peaked, three cities looking like they could soon peak, and three still going strong. How is the market performing in your neck of the woods?
While national housing prices have increased a staggering 20.6% over the past 12 months, every capital city and broad ‘rest-of-state’ region is now recording a slowing trend in value growth, according to the latest CoreLogic figures.
However, some areas are faring better than others, as we’ll run you through below.
Sydney and Melbourne showed the sharpest slowdown in February, with Sydney (-0.1%) posting its first decline in housing values in 17 months (since September 2020), while Melbourne housing values (0.0%) were unchanged over the month.
That’s a pretty big drop off for Sydney in particular, which recorded 0.6% growth in January, while Melbourne recorded 0.2%.
A major contributing factor to this slowdown is that there’s now more property stock for buyers to choose from.
In Melbourne, advertised stock levels are now above average and tracking 5.5% higher than a year ago, while in Sydney advertised stock is 6.3% higher than last year.
CoreLogic’s director of research Tim Lawless says more choice translates to less urgency for buyers and some empowerment at the negotiation table.
“The cities where housing values are rising more rapidly continue to show a clear lack of available properties to purchase,” Mr Lawless explains.
The three capital cities that showed signs of slowing down in February – but not yet peaking – are Perth (0.3%), Canberra (0.4%) and Darwin (0.4%).
To put those figures into context, in January Perth (0.6%), Canberra (1.7%) and Darwin (0.5%) all recorded higher housing growth figures.
And over the past 12 months, Perth (8.3%), Canberra (23.8%) and Darwin (12.3%) have all performed quite strongly.
Conditions are easing less noticeably across Brisbane (1.8%), Adelaide (1.5%) and Hobart (1.2%).
Similarly, regional markets have been somewhat insulated from slowing growth conditions, with five of the six rest-of-state regions continuing to record monthly gains in excess of 1.2%.
The stronger housing market conditions in Brisbane and Adelaide in particular can be seen in the quarterly growth figures, with Brisbane housing values rising 7.2% over the past three months, and Adelaide up 6.4% over the same period.
So while Brisbane and Adelaide have slowed down a touch, a shortage of listings in those markets is helping to keep pushing prices up.
“Total listings across Brisbane and Adelaide remain more than 20% lower than a year ago and more than 40% below the previous five-year average,” explains Mr Lawless.
“Similarly, the combined rest-of-state markets continue to see low advertised supply, 24.9% below last year and almost 45% below the five-year average.”
With property prices slowing down around the nation, now’s a good time to take stock and work out what you can and can’t afford over the year ahead – be that buying your first home or adding to your investment portfolio.
And part of that process is finding out your borrowing capacity before you start house hunting, so you don’t stretch yourself beyond your limits.
So if you’d like to find out what you can borrow – and therefore afford to buy – get in touch today.
We’d love to sit down with you and help you map out a plan for your 2022 finance and property goals.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
It wasn’t long ago that the idea of buying an electric vehicle (EV) seemed like a bit of futuristic science-fiction. But with interest rates on EV loans recently dropping to under 3%, going electric is now more in the realms of an everyday, mundane, household budget decision.
According to the latest Electric Vehicle Council data, sales of plug-in EVs almost tripled in the past year – from 6,900 in 2020 to 20,665 in 2021.
That means EVs now account for 1.95% market share of new vehicles.
Now, that might not sound like a lot. But the federal government projects it to rise to 8% by 2025 and 30% by 2030.
And we’re seeing major lenders start to jostle for pole position in the EV market too.
Macquarie, for example, sent an email out this week promoting comparison rates on electric cars to homeowners from 2.99% p.a. (based on a loan of $30,000 and a term of five years).
“We’re proud to be the first Australian banking group to offer a specialised electric car-buying service that can help you make the transition to an electric car,” the Macquarie email reads.
Ok, so let’s say you were also thinking of going with Macquarie to buy a standard vehicle with an internal combustion engine (ICE).
You’re looking at a comparison rate of anywhere between 6.48% and 7.15% for a new ICE vehicle, depending on the loan-to-value ratio.
That’s quite a big difference from the new EV rates.
Increasing model availability, decreasing vehicle cost, and growing awareness of the economic and environmental benefits of EVs are changing the way people think about their transport options, according to the Electric Vehicle Council.
Here’s a guide to what you can currently buy in Australia. One of the cheapest options currently available is the MG ZS EV, which is around $48,990.
Hyundai and Nissan also have options in the $53,000 to $55,000 range.
It’s also worth noting that governments are making big moves in this area too, with some state governments offering $3,000 rebates.
And earlier this month, the New South Wales government (for example) announced plans to build more than 1,000 fast-charging stations for EVs over four years.
As electric vehicles become more popular in Australia, it’s a safe bet that we’ll see more and more lenders get their elbows out to offer competitive rates in this space.
So if you’re thinking of buying a vehicle to last you the next 5 to 10 years, and are considering making the jump to an EV, get in touch and we can help you crunch the numbers on whether an electric vehicle loan is the right fit for you.
And if it’s not quite right just yet, well, we can help you out with a good ol’ fashioned ICE vehicle loan instead!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Keen to tackle a renovation project in 2022? You might have noticed that tradies are hard to pin down at the moment. So if you live in one of the suburbs in this week’s article, you might want to get the ball rolling sooner rather than later…
If you’ve ever watched The Block, you’ll know that a good team of reliable tradies can be the difference between a home reno project running smoothly, and everything going to hell in a handbasket.
But where in the world are all the good tradies right now?
If you’ve tried to source one recently for your own reno project, you might’ve noticed that quotes are up, calls are going unanswered and unreturned, and wait times are through the (unfinished) roof.
Well, it turns out Australians have been spending record amounts on renovations, which in turn has led to a surge in tradie demand.
“Home renovations have boomed nationwide as more time spent at home combined with ultra-low loan rates, government grants and improved household savings became the perfect combination of factors to drive heightened demand for renovations,” explains PropTrack senior economist Eleanor Creagh.
Like most things in the world of property and finance, some areas are busier than others.
Below are the top ten most in-demand suburbs in each state, according to online tradie directory hipages, as well as the most in-demand suburbs across the country.
National: Point Cook (Vic), Berwick (Vic), Craigieburn (Vic), Frankston (Vic), Kellyville (NSW), Werribee (Vic), Tarneit (Vic), Blacktown (NSW), Baulkham Hills (NSW), Castle Hill (NSW).
NSW: Kellyville, Blacktown, Baulkham Hills, Castle Hill, Quakers Hill, Campbelltown, Sydney, Penrith, Schofields, Maroubra.
VIC: Point Cook, Berwick, Craigieburn, Frankston, Werribee, Tarneit, Melbourne, Truganina, Pakenham, Hoppers Crossing.
QLD: Buderim, Southport, Upper Coomera, Surfers Paradise, Robina, Coomera, Forest Lake, Brisbane, Helensvale, Springfield Lakes.
WA: Canning Vale, Baldivis, Mandurah, Dianella, Scarborough, Thornlie, Willetton, Perth, Morley, Armadale.
SA: Adelaide, Morphett Vale, Hallett Cove, Mount Barker, Paralowie, Golden Grove, Aberfoyle Park, Parafield Gardens, Prospect, Mawson Lakes.
ACT: Kambah, Canberra, Ngunnawal, Belconnen, Amaroo, Gordon, Wanniassa, Gungahlin, Banks, Casey.
TAS: Hobart, Devonport, Launceston, Glenorchy, Sandy Bay, Kingston, Howrah, Lenah Valley, Claremont, Bellerive.
NT: Alawa, Darwin, Anula, Archer, Bakewell, Bagot, Alice Springs, Darwin City, Palmerston, Durack.
With wait times for reliable tradies blowing out, and supply chain issues when it comes to materials like timber also causing disruptions, the last thing you need is more delays to your reno project due to finance complications.
And that’s where we come in.
Not only can we help you secure funding at a great rate, but we can also help you select a loan that allows flexibility for any unforeseen contingencies along the way.
So if you’d like to explore your reno finance options, get in touch today – we’d love to help you turn your 2022 reno dreams into a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Hold onto your hats, things are about to get a little bumpy. Economists from Australia’s biggest bank are predicting the Reserve Bank will raise the official cash rate as early as June – and we’re already seeing fixed interest rates increase significantly.
Commonwealth Bank (CBA) economists have brought forward their forecasted Reserve Bank of Australia (RBA) cash rate hike from August to June, making it the earliest prediction amongst the big four banks.
We’ll go into more detail on why CBA has brought forward their prediction below, but first something a little more concrete: we’ve definitely noticed fixed rates trending up in recent months.
For example, back in November, for a $700,000 loan at 80% loan-to-value ratio, a two-year fixed rate with one particular lender was 1.84%.
That rate has since gone up to 3.04% – a staggering increase.
While not every lender has increased fixed rates so significantly, we are seeing them go up across the board.
So if you have been umming and ahhing about fixing your rate lately, you’ll want to get in touch with us sooner rather than later.
Because while most lenders have recently reduced their variable rates to compensate a little, with news now that the cash rate is being tipped to increase mid-year, you can expect variable rates to increase with the cash rate.
Ok, so back to CBA’s June cash-rate hike prediction and why they’ve brought it forward from August.
In a nutshell, CBA senior economist Gareth Aird is anticipating inflation to be a lot stronger than the RBA is forecasting.
As a result, Mr Aird believes this will lead to a rise in the cash rate to 0.25% at the June board meeting (currently it’s at a record-low 0.1%).
“We are very comfortable with our expectation that the quarter-one 2022 underlying inflation data will be a lot stronger than the RBA’s forecast,” explains Mr Aird.
And here’s the thing: it’s not the only cash rate hike CBA is predicting the RBA will make over the next 12 months.
Mr Aird is expecting a further three rate increases over 2022 to take the cash rate to 1%, with another move to 1.25% in early 2023.
That’s five cash rate hikes over 12 months!
Believe it or not, there are more than 1 million mortgage holders out there who have never experienced a rate rise (the last RBA cash rate hike was in November 2010).
And if the CBA’s prediction of five rate hikes over the next 12 months proves right, then some households will be in for a bumpy ride as they face hundreds of dollars in extra mortgage repayments each month.
So if you’re keen to act before the RBA increases the official cash rate, get in touch with us today. We’d love to sit down with you and help you work through your options in advance.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
What’s most important to you when selecting a lender to provide finance for your small business right now? Well, Australian small business owners have put ‘flexibility’ when it comes to loan repayments right up there on their priority list.
And that should come as no surprise given the disruptive nature of the economy that most businesses have had to endure over the past two years.
In fact, research conducted by RFi Group, commissioned by small business lender Prospa, found one-third of SMEs (33%) would more likely choose a lender with more flexible repayment options when applying for funds over the next 12 months.
Well, when respondents were given the opportunity to define flexible repayments, one key theme was prevalent: flexible timeframes.
Many SMEs associated flexible loan repayments with the ability to repay loans earlier, extend repayment periods, or make no repayments for a given time (ie. up to 8 weeks).
“Small businesses were required to adapt, shift, or pivot over the past two years,” explains Prospa national sales manager Roberto Sanz.
“Therefore, it is understandable that business owners are looking for flexibility to work through changing market conditions and make necessary adjustments to keep their business moving.”
Prospa’s research is in line with that of SME non-bank lender ScotPac, which found that cash flow was a top-three concern for business owners right now, with 81.5% of SMEs admitting it had them worried.
The SME lending space is an evolving one, with a surge of new lenders and products recently hitting the market.
And one key emerging trend is, yep, you guessed it: flexibility.
So if you’re an SME owner who might be in need of flexible funding, get in touch today. We’d love to help your business explore its options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Construction costs just rose at the fastest annual pace since 2005. So why is it getting so expensive to build your own home? Today we’ll look at the materials that are becoming more expensive and why all homeowners should take note – not just renovators and builders.
“Your grandpa built this place with his own two hands”, or so your dad used to boast.
So if Pop could do it with his trusty hammer, some nails, and a bit of hard yakka, why is it so expensive to build a home of your own these days? (Your own handiwork inadequacies aside…)
Well, for starters, national construction costs increased 7.3% in the 2021 calendar year alone, which was the highest annual growth rate since March 2005.
And the not-so-great news is that property market data company CoreLogic is expecting growth in residential construction costs to remain above average over the coming quarter as supply chain disruptions persist.
“There is a significant amount of residential construction work in the pipeline that has been approved but not yet completed,” explains CoreLogic research director Tim Lawless.
Data shows that cost increases are being driven primarily by timber (mostly structural timber).
In fact, in the final quarter of 2021, the value of select wood imports reached their highest level on record, says Housing Industry Association (HIA) economist Thomas Devitt.
“Timber is predominantly produced domestically but excess demand, such as in a boom year like 2022, is largely sourced from overseas markets,” says Mr Devitt.
Other segments of the market also remain volatile, with increasing pressure currently on metal costs.
“With some materials such as timber and metal products reportedly remaining in short supply, there is the possibility some residential projects will be delayed or run over budget,” adds Mr Lawless.
And with building approvals for detached housing recording their strongest year on record in 2021 (with 150,000 approvals), demand isn’t expected to slow down anytime soon.
“This boom is set to keep builders busy this year and into 2023,” adds Mr Devitt.
Mr Lawless says: “With such a large rise in construction costs over the year, we could see this translating into more expensive new homes and bigger renovation costs, ultimately placing additional upwards pressure on inflation.”
Higher construction costs are likely to add to affordability challenges in the established housing market, making it harder for homeowners to upgrade.
And CoreLogic Head of Insurance Solutions Matthew Walker warns that higher building costs mean homeowners and property investors should also review their insurance cover.
“In these times of rapidly rising home and construction costs, under insurance can quickly become a real threat to what is a most valuable asset,” says Mr Walker.
“It’s important that homeowners keep track of their sum insured and annually check that it is sufficient should the worst occur by using their insurer’s rebuild calculator or giving them a call.”
Finding the right kind of finance for a construction project can be tricky at the best of times – let alone when building supplies are becoming more expensive and wait times are blowing out due to supply constraints.
That’s why it’s important to team up with a professional like us when looking for a construction loan.
Not only can we help you secure a great rate, but we can also help you select a loan that allows flexibility for any unforeseen contingencies.
So if you’d like to explore your options for your next building or reno project, then get in touch today – we’d love to help you map out a plan for your 2022 building and property goals.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
National property prices are predicted to rise by up to 9% in 2022, according to REA Group, but which cities are tipped to lead the way in price growth this year? Let’s take a look.
National housing values grew a whopping 22.1% in 2021, and while things are expected to slow down throughout 2022, the fun ain’t over yet.
Especially so if you’re a homeowner in Hobart (9% to 12% predicted growth), Brisbane (8% to 11%), Adelaide (6% to 9%) and Canberra (6% to 9%).
“Brisbane and Hobart have the strongest price growth forecasts among the capital cities thanks to their low supply of stock for sale, heightened demand and relatively lower prices compared to Sydney and Melbourne,” explains Cameron Kusher, REA Group’s executive manager of economic research.
Meanwhile, property prices in Perth (3% to 6%), Sydney (4% to 7%), Melbourne (4% to 7%) and Darwin (5% to 8%) are still expected to grow – just not as much.
“Perth has shown a stronger slowdown in price growth already relative to other capital cities, while the more expensive property prices in Sydney and Melbourne may increasingly see demand shift to more affordable housing markets,” adds Mr Kusher.
Here’s the predicted price growth for 2022 for each capital city, broken down for you in a nice and easy format:
Sydney: 4% to 7%
Melbourne: 4% to 7%
Brisbane: 8% to 11%
Adelaide: 6% to 9%
Perth: 3% to 6%
Hobart: 9% to 12%
Darwin: 5% to 8%
Canberra: 6% to 9%
All capital cities combined: 6% to 9%
For starters, it’s because buyers can expect more choice in 2022.
Buyer demand peaked in August 2021, according to REA Group’s PropTrack data, and a more balanced market is expected in 2022.
For vendors, this means that they may have to lower their price expectations, warns Mr Kusher, and the increase in housing stock, should it continue, will likely contribute to a slowing of price growth in 2022.
“The recent lift in new listings should go some way to allow more buyers to find a home,” adds Mr Kusher.
“After that, the question will be … How large is the next wave of buyers? We believe this next wave is likely to be big, but not as large as the current one, so that should result in a better supply and demand balance.”
“We expect a smaller wave of buyers because prices have increased, rapidly pricing some buyers out.”
As property prices are tipped to continue rising throughout 2022, it’s never been more important to have a broker like us in your corner when it comes to securing your next property purchase – be that your dream home or adding to your investment portfolio.
In the current market, it’s also important to know your borrowing capacity before you start house hunting so you don’t stretch yourself beyond your limits.
If you’d like to find out what you can borrow – get in touch today. We’d love to sit down with you and help you map out a plan for your 2022 finance and property goals.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Ever dreamed about telling your boss to “shove it” and starting up your own business? Well, there’s been a big jump in Millennials and Gen Zs who are saving up to do just that (well, maybe except for the “shove it” part!).
There’s something romantic about the notion of starting your own business.
You know, opening up a hole-in-the-wall cafe or little alleyway bar, growing a loyal band of merry locals, and waxing lyrical with them into the wee hours of the morning.
Of course, as any small business owner will attest, the realities of running a business are very, very different.
Say one thing for the Millennials and Gen Zs of the country, and that is that they’re an entrepreneurial bunch who won’t let something like a once-in-century-pandemic get in the way of their business aspirations.
According to a ME Bank survey of young Australians with no children, 18% stated their current financial goal was “investing in their own business”.
That’s up from just 4% six months prior!
To put that into a bit of perspective – compared to some of the other 15 options they could choose from – the top response was “paying off a mortgage” at 34%, while 19% of respondents were aiming to “save enough to buy a property to live in”.
So, not far behind the top two responses at all!
What a lot of young Australians don’t realise is that you don’t have to bootstrap your way into starting up a business.
There are finance and funding options we can help you explore to accelerate your launch – and they’re not as scary as they might sound (5-in-6 businesses don’t find it difficult to pay back their business loans).
So whether your financial priority in 2022 is starting your own business, or trying to buy your first home, get in touch with us today. We’d be excited to help you take that first step.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
With all the talk of record-breaking property growth throughout 2021, do you know how exactly your suburb and property type performed? Today we’ll show you how to find out in just a few clicks.
You’ve probably heard all the talk of national housing values soaring in 2021 – by 22.1%, to be exact.
But that doesn’t really tell you much about how your particular neck of the woods fared, does it?
Well, you can find out a bunch of important property information about your suburb’s houses and apartments, and those in surrounding suburbs, using realestate.com.au’s recently released PropTrack 2021 Suburb Report Card (desktop version, mobile-friendly link).
Ok, so the two main functions of the PropTrack tool are the ability to select “suburb” and “property type”, which is broken up into houses or units.
This is important because PropTrack data shows house prices grew 26.8% nationally in 2021, much more than the 13.4% growth in unit prices.
Also worth noting is that you can see how much change in demand there was for your suburb and property type, and even how many “highly engaged buyers” there were throughout 2021.
Other important insights you can check out include “average estimated value”, “average weekly rental value”, “rental yield” and “median days on market”.
While using the tool, you can immediately see how your suburb compares to its immediate neighbouring suburbs.
But if you also want to see how your suburb stacked up against your state’s best, you can do so via the below direct links.
Just click the > button at the bottom (or top) of each linked page to scroll between the national and state tables.
– Suburbs with largest growth in average estimated house value.
– Suburbs with largest growth in average estimated unit value.
– Suburbs that were most in-demand in 2021.
– Suburbs with largest growth in demand in 2021.
– Suburbs with shortest median days on market in 2021.
With house prices having just experienced their fastest pace of growth since 2004, it’s as important as ever to find a finance option that’s right for you.
This is especially true as the finance market is starting to go through a shift, with more and more economists predicting the RBA will increase the official cash rate this year.
So if you’re a keen homebuyer who wants to explore what options are available to you – whether that be upgrading your home or buying an investment property – get in touch today to discuss your borrowing capacity. We’d love to run through it with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Ever thought about buying a property with a friend or family member? You’re not the only one. The rising cost of property and FOMO has led to more than a quarter of Australians considering buying a property with a ‘non-traditional’ partner.
Most of us long for a place to call our own.
But what do you do if the price of your dream home seems to be rising out of reach?
Well, more and more young Australians are shedding the “mine” mentality, and adopting the “ours” approach in order to get a foot on the property ladder.
In fact, according to a 1,000 person nationwide survey by CommBank, a quarter of home buyers have considered buying a property with their mates, siblings or parents because of increasing concerns about housing affordability.
And this co-ownership mentality is being strongly driven by the fear of missing out (FOMO), with 35% of respondents admitting to being bitten by the FOMO bug.
In a nutshell: housing affordability, with more than 60% of survey respondents worried about being priced out of the market.
Other driving factors for teaming up with a mate or family member include being able to buy a bigger and better property, as well as spreading the financial risk if anything goes wrong.
And then there’s additional pressure from family and friends!
More than 4-in-10 prospective buyers admitted to feeling pressure from friends/colleagues who have already bought, or their parents/family who want them to buy.
So, if purchasing a property with family or friends is a viable option, why don’t more people do it?
Well, that’s because there are a number of challenges involved.
For example, the vast majority of respondents said they harboured concerns about putting their relationship with a family/friend under strain/pressure.
Meanwhile, 1-in-10 respondents didn’t even know co-ownership with friends or family was possible.
Another hurdle is that co-buying and co-owning can be a more complicated process.
But rest assured that if it is possible and suitable for you, we can help guide you through it, including making sure that all involved parties are across their financial and legal obligations.
Co-ownership with friends or family, or having a parent go guarantor for you, isn’t suitable or possible for everyone.
But there are people out there for whom it might be a good fit.
If you think that could be you, and you want to learn more, then please get in touch.
We’d be happy to run you through a number of possible structured options and opportunities, as well as the challenges, hurdles and pitfalls you’ll want to consider.
And if co-buying doesn’t look like a good fit for you, we can run you through a range of other buying options – including federal government schemes – that might be more suitable.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Ever thought about taking out a loan for your business but hesitated because you were worried about meeting your repayments? Don’t worry, it’s a common concern. But some promising data has just come out that might help you put those fears aside.
You gotta spend money to make money, so the saying goes.
But what if your business’s cash flow has been heavily impacted this year due to COVID-19? What options do you have at your disposal?
Well, according to the Australian Banking Association’s latest report, $10 billion in new lending was made to small businesses in the three months to August 2021 – a 26% jump ($7.9 billion) on last year.
Which means as many as 50% of SMEs now hold a borrowing product of some sort.
So while taking out finance for your business might feel daunting, rest assured it’s something most businesses do, and there are a range of different finance products and options available to suit businesses of all shapes and sizes.
So, here’s the good news.
Despite the difficult business conditions during 2021, just 1-in-6 small businesses (16%) found it difficult to meet their financial commitments.
That’s opposed to 41% of SMEs that found it “easy” or “very easy”, while 36% were indifferent.
And many of these businesses are taking out finance to help keep their doors open and operations running smoothly.
The top reason small and micro businesses gave for recently seeking finance was to ‘maintain short-term cash flow or liquidity’ (about 50%), while the second most common reason was to ‘ensure survival of the business’ (about 40%).
Replacing, upgrading or purchasing equipment or machinery came in third (20-30%).
The SME lending space is an evolving one, with a surge of new lenders and products recently hitting the market.
And as brokers, we’re constantly upskilling and learning to make sure we stay abreast of the expanding options available to small business owners.
So if you’re an SME owner who might be in need of funding, get in touch today.
The sooner we can discuss your options with you, the better placed your business can be to hit the ground running in 2022 and thrive beyond.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Want to buy your first home with a deposit of just 5% and pay no lenders’ mortgage insurance? You could be in luck – the federal government will soon reissue up to 4,651 unused Home Guarantee Scheme spots.
First home buyers who use the Home Guarantee Scheme fast track their property purchase by 4 to 4.5 years on average, because the scheme means they don’t have to save the standard 20% deposit.
The government usually issues spots in the scheme once a year (July 1), but this time it’s reissuing guarantees that went begging earlier.
The government states the scheme will reissue “up to” 4,651 unused guarantees for first home buyers from the 2020-21 financial year”.
It adds many of the spots have been unused because of COVID disruptions, but it’s unclear exactly how many guarantees will be made available.
It’s also unclear exactly when the spots will be reissued, with the government entity overseeing the scheme – the NHFIC – saying it’s working with its panel lenders and “looks forward to reissuing unused guarantees soon”.
All in all, that means we’re going to have pretty short notice of when these spots officially become available to apply for, and they could be in short supply.
So if the guarantee is something you’re interested in, you’ll want to get in touch with us today so we’re ready to act when the spots do drop.
Ok, so the Home Guarantee Scheme is broken up into three separate schemes: two for first home buyers, and one for single parents called the Family Home Guarantee scheme.
At this stage, it’s believed (but not confirmed) that the reissued spots will mainly be for the first home buyers through the New Home Guarantee scheme (new builds) and First Home Loan Deposit Scheme (includes existing builds).
These two schemes allow eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).
This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.
Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.
There are price caps on eligible properties, ranging from $950,000 for new builds in Sydney, Newcastle, Lake Macquarie and Illawarra, down to $350,000 for existing properties in regional South Australia.
A full list of the price caps can be found here.
With these schemes, allocations are generally granted on a “first come, first served” basis.
And it’s worth re-iterating that spots this time will be limited and will likely fill up fast.
So if you’re a first home buyer looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail.
And when the reissued spots become available, we can help you apply for finance through a participating lender.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
To all our terrific clients: thank you for your ongoing support and for being such wonderful, loyal clients.
We are always so appreciative of any opportunities – be they big, small, or anywhere in between!
Life has thrown many of us all sorts of challenges these past two years, so we hope you’re shifting into holiday mode and getting ready to relax and unwind (or looking forward to a few public holidays at least!).
Whether you’re planning to feast alongside family and friends you haven’t seen in a while, or go on a long-overdue holiday somewhere a little more exotic than your local park, we hope you have a Merry Christmas and Happy New Year!
It’s been an absolute pleasure and an honour working with you towards your lifestyle and business goals in 2021. We look forward to helping you towards a prosperous 2022!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Cut calories, increase your steps, abstain from alcohol: each year we set ourselves some pretty lofty New Year’s resolutions, most of which are doomed to fail. So why not add a nice straightforward financial goal to the list this year? Here are three to get you started.
Ambition is an admirable quality, but somewhere between the Christmas pudding and the “three, two, one, Happy New Year!” we tend to overcommit.
So this year, we’re encouraging you to add a financial goal to your list of New Year’s resolutions.
Here are three to get you started.
Perhaps you’ve reached a point in your life where you can start making additional payments on your mortgage each month.
Or, you might have saved up enough money to buy your first investment property, or upgrade from an apartment to a house.
Or maybe the thought of owning your first home still feels a long way off, but you haven’t yet heard about the federal government’s First Home Loan Deposit scheme, which helps first home buyers crack the market four years sooner, on average.
Whatever your position, consider taking stock of what you want to achieve in 2022 so that you can work out a plan to achieve it.
And when you narrow in on what it is you to achieve, get in touch with us to explore some funding options that can help turn your goal from pipe dream to reality.
Do you know the interest rate on your home loan?
Don’t fret if you don’t, about half of mortgage holders can’t recall it.
But not knowing the rate is usually a good sign that it’s time for a home loan health check.
That’s because an RBA study found that for loans written four years ago, borrowers are charged an average of 40 basis points higher interest than new loans.
For a loan balance of $250,000, that equates to an extra $1,000 in interest payments per year.
Other good reasons for a home loan health check could include seeing whether locking in a fixed rate might suit you better over the next few years, or switching to a home loan that has extra features, such as an offset account.
Rest assured we’ll make it all very quick and painless. Simply get the ball rolling by giving us a call today.
When was the last time you had a thorough look through your spending account?
Subscription services have taken off in recent years in Australia, so much so that the average Australian household pays $42 per month for their streaming service.
If you can halve that, you can save between $200-$300 per year.
Other micro-transactions that most families can cut back on include food delivery services such as Uber Eats, as well as alcohol, and takeaway coffees.
In fact, buying a $4 takeaway coffee each day costs you a whopping $1460 per year, whereas making it yourself using a french press or Aeropress costs just $260.
That’s another $1200 in savings each year. And for two family members, you can save $2400.
Resolution inertia can be a real thing – it sets in when once you’ve set your goals, and when you realise now you’ve actually got to start taking steps to achieve them.
That’s where we come in – get in touch today for resolutions one and two: setting yourself a property/finance goal and getting a home loan health check.
And by getting the ball rolling on these resolutions you can be well on your way to resolution three: saving money!
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
National housing values grew 22.1% in 2021, and there are two capital cities and one region in particular that are not ready to slow down just yet. Can you guess where?
Happy New Year everyone! To kick off 2022, we’re looking at how the property market performed across 2021, and what we can expect over the next 12 months.
The most recent CoreLogic data reveals there’s a two-speed housing situation emerging across the country, with prices in Sydney (+0.3%), Melbourne (-0.1%) and Perth (+0.4%) slowing down in December.
On the other hand, Brisbane (+2.9%), Adelaide (+2.6%) and regional Queensland (+2.4%) are set to defy 2022 slowdowns, with CoreLogic saying there’s “no evidence of their growth slowing just yet”.
In fact, the monthly rate of growth for each of these regions reached a new cyclical high in December.
“In Brisbane and Adelaide, housing affordability is less challenging, advertised stock levels remain remarkably low and demographic trends continue to support housing demand,” explains CoreLogic’s Research Director Tim Lawless.
Hobart (+1%), Canberra (+0.9%), and Darwin (+0.6%) meanwhile performed smack bang in the middle of the pack in December.
The annual housing value gains in the nation’s two biggest cities, Sydney (+25.3%) and Melbourne (+15.1%), were stellar in 2021.
But momentum has slowed sharply, with both cities recording their softest monthly reading since October 2020.
The slowing trend can partly be explained by a bigger deposit hurdle caused by higher housing prices alongside low-income growth, says Mr Lawless, as well as negative interstate migration.
“A surge in freshly advertised listings through December has (also) been a key factor in taking some heat out of the Melbourne and Sydney housing markets,” adds Mr Lawless.
Slower conditions across the Perth housing market, meanwhile, may be more attributable to the disruption to interstate migration caused by extended closed state borders.
“This has had a negative impact on housing demand,” adds Mr Lawless.
For starters, housing stock is very low across regional Australia in particular, with advertised stock levels finishing the year 35.9% below the five-year average.
This compares to combined capital cities seeing stock 14.2% below the five-year average.
“It is likely regional markets, especially those with lifestyle appeal, will continue to benefit from higher demand as remote working policies are more normalised, and demand for holiday homes remains strong amid continued international border restrictions,” says Mr Lawless.
“However, as interest rates begin to bottom out, and affordability constraints extend to regional markets, these housing markets may also move into a downswing phase over the course of 2022.”
And while sellers held the upper hand at the negotiation table in 2021, buyers are expected to regain some leverage in 2022.
That’s because the average time properties spend on the market is beginning to increase, while auction clearance rates are trending down.
The juxtaposition of higher housing values against low-income growth has resulted in higher barriers to entry.
“It is becoming increasingly harder to raise a deposit and fund transactional costs such as stamp duty,” says Mr Lawless.
This is why it’s never been more important to have a broker like us in your corner when it comes to securing your next property purchase, be that your dream home or adding to your investment portfolio.
In this current market, it’s also important to know your borrowing capacity before you start house hunting so you don’t stretch yourself beyond your limits.
So if you’d like to find out what you can borrow – get in touch today. We’d love to sit down with you and help you map out a plan for your 2022 property goals.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Australian homeowners are loading up their offset accounts in record amounts, so much so that the average household is now almost four years ahead on their mortgage payments.
Quick question: do you have an offset account (or several) attached to your mortgage?
They’ve become quite popular in recent years, especially since the RBA’s official cash rate has hit record low levels and impacted the amount of interest you can earn in savings accounts (which we’ll explain in more detail further below).
Research from the Australian Prudential Regulation Authority (APRA), provided to The Australian, shows the average balance sitting in offset accounts is now nearly $100,000 – up almost $20,000 since the pandemic kicked off in March 2020.
In total, $222 billion was in offset accounts across the country as of September 2021 – up almost $50 billion from $174 billion in March 2020.
In fact, in the September 2021 quarter alone, offset account balances increased by 10%.
All of this has helped contribute to mortgage holders now being, on average, 45 months ahead on their repayments – up from 32 months prior to the pandemic.
In terms of the various ways Australians have gotten ahead, 57% of prepayments came from offset accounts, 40% via available redraw balances, and 3% through other excess repayments.
Basically, an offset account is a regular transaction account that is linked to your home loan.
The advantage is that you only pay interest on the difference between the money in the account and the mortgage.
Some banks allow you to have 10 offset accounts attached to your mortgage, too, with cards linked to them that you can use for everyday spending.
Say you owe $350,000 on your mortgage, and have $50,000 in a savings account.
If you move that $50,000 into a full offset account, you’ll only pay interest on $300,000 (which is the loan value minus the amount in your offset account).
The offset account can then continue to be used for all your daily needs, like receiving your salary or withdrawing cash.
With the RBA’s cash rate at record low levels, the interest rate you’ll receive on the balance in your bank’s savings account is also at record low levels too.
Say for example that you had a savings account with a 1% interest rate and a mortgage with a 2.2% interest rate.
By allocating money into your full offset account, you’d save more money on interest than you would earn in your savings account.
Additionally, interest on your savings accounts is subject to tax, whereas the interest-saving on your mortgage isn’t.
Of course, there are additional factors you’ll want to consider, such as account keeping fees and the minimum amount needed in the account to make it useful.
And obviously, savings accounts and offset accounts are not the only two places you can park your hard-earned money. Depending on your risk appetite, there are other options you could consider that might yield a higher return.
The long and the short of it is everyone’s situation is different, but if you think an offset account might be for you, get in touch and we can help you explore your options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Some of us buy cars for work, others for play. So it’s no surprise that the top two cars in 2021 can do both. But which vehicle took the crown? Well, it was super close, so let’s have a look.
Ok, let’s cut straight to the chase.
Taking out pole position in 2021 was the Toyota HiLux with 52,801 new vehicles sold, very closely followed by the Ford Ranger (50,279 new vehicles sold).
And get this: with 1,049,831 new vehicles sold across Australia in 2021, those two particular models made up almost 10% of all new vehicles that hit the road over the past 12 months, according to Australia’s peak body for the automotive industry, the FCAI.
While the HiLux took out the top spot, it must be noted that the Ranger is closing the gap – in 2020 a total of 40,973 new Rangers were sold, compared to 45,176 Toyota HiLuxes.
So it’ll be interesting to see what happens in 2022!
While light commercial vehicles, including utes, have dominated the top two spots in recent years, far more SUVs are sold across the board.
In fact, a total of 531,700 SUVs were sold in 2021, compared to 253,254 light commercial vehicles.
The highest selling SUV in 2021 was the Toyota RAV4 (35,751), which came in at 3rd place overall.
Rounding out the top five was the fourth-placed Toyota Corolla (28,768) and the Toyota Landcruiser (26,633) in fifth.
And yep, as you might’ve noticed, Toyota impressively took out four of the top five spots.
Below is a full list of the top 20 models sold in Australia throughout 2021, including the number of vehicles sold (got your eye on anything below?).
1. Toyota HiLux – 52,801 (new vehicles sold)
2. Ford Ranger – 50,279
3. Toyota RAV4 – 35,751
4. Toyota Corolla – 28,768
5. Toyota Landcruiser – 26,633
6. Hyundai i30 – 25,575
7. Isuzu Ute D-Max – 25,117
8. Mazda CX-5 – 24,968
9. Toyota Prado – 21,299
10. Mitsubishi Triton – 19,232
11. MG ZS – 18,423
12. Kia Cerato – 18,114
13. Mazda BT-50 – 15,662
14. Nissan Navara – 15,113
15. Mitsubishi ASX – 14,764
16. Mitsubishi Outlander – 14,572
17. Hyundai Tucson – 14,194
18. Mazda3 – 14,126
19. Nissan XTrail – 13,860
20. MG MG3 – 13,774
If you’re thinking of purchasing a new vehicle and want to explore your finance options for it, then please get in touch.
Taking out a loan for a vehicle is much more common than you might think. In fact, recent research shows 52% of car buyers took out a loan for their vehicle purchase in the past decade, with an average loan size of $25,000.
And just like using a broker to finance a home purchase, using our services when purchasing a vehicle also comes with a number of advantages, which we’d be more than happy to run you through.
So to find out more, please get in touch with us today – we’d love to help you hit the road in a new set of wheels.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
How much do you need to borrow to buy a typical Australian home these days? Well, the average loan size has increased dramatically over the past year – up almost $100,000.
The national average loan size for owner-occupier dwellings rose to an all-time high of $596,000 in November 2021, according to the latest Australian Bureau of Statistics data.
And the national average has been going up (and up and up) in recent months.
In October it was $571,000, while in November 2020 it was $503,000.
And with wages not growing anywhere near as fast, it’s more important than ever to have a professional like us in your corner when it comes to securing finance for your next home purchase.
Average loan sizes reached new highs in all states and territories in November 2021, except Western Australia (which only dropped a smidgeon below its October record high).
Here’s a quick state-by-state breakdown as of November 2021, compared to November 2020.
NSW: $769,000 – up from $644,000 (in November 2020)
Victoria: $619,000 – up from $499,000
Queensland: $514,000 – up from $440,000
South Australia: $422,000 – up from $384,000
Western Australia: $440,000 – up from $417,000
Tasmania: $446,000 – up from $373,000
Northern Territory: $433,000 – up from $380,000
ACT: $586,000 – up from $527,000
Here’s the good news – especially for first home buyers.
Most of the average loan values listed above still fall below the state and territory property price caps for a number of federal government schemes, such as the First Home Loan Deposit Scheme and New Home Guarantee initiatives.
These two schemes allow eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI), which on average helps people purchase their first home 4 to 4.5 years sooner.
That’s right – 4 years sooner!
Another factor working in your favour is that the RBA’s official cash rate is at a record low and interest rates are also very low as a result (which helps when it comes to your borrowing capacity).
Speaking of which, one very important step you can take is to get in touch with us so we can help you assess your borrowing capacity.
This way, you can work out whether that property you have your eye on is a goer, and if not, identify steps you can take to help bring it within reach.
To find out more, give us a call today – we’d love to help you explore your borrowing options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
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