Archive for Interest Rates

This month the RBA announced that it would leave the official cash rate at 1.5%*

How Much Can I Borrow?

Before you can set a realistic budget for buying your dream home, you’ll first need to find out how much you can borrow.

Your borrowing power depends on your income, assets and current living expenses, as well as the size of your deposit and credit history.

Here are three things to consider in order to potentially improve your borrowing power.

1. How much can you save for a home loan?

Living expenses have a way of eating into your cash flow, so keep a record of what you’re spending. You might be surprised to see where your money is going – and how much you can save.

Cutting back on large and unnecessary expenses might help boost your borrowing capacity, but you don’t have to be too strict with your budget – make sure there is a little wiggle room for things like holidays or brunches with friends.

2. How much deposit do you need for a home loan?

As a general rule, the more money you can put down upfront the better. Sometimes this isn’t an option, therefore a Low Deposit Loan might suit you – often referred to as a No deposit home loan- although this shouldn’t be your first preference.

Not only does a bigger deposit mean you won’t have to borrow as much, it may also help you avoid paying LMI ( Lenders Mortgage Insurance) protects the lender if you default on your repayments.

You are typically required to pay LMI if you need to borrow over 80% of the purchase price, but even a 20% deposit may not cover stamp duty and other fees and charges associated with buying a property.

If you need to add these costs onto your home loan, you may end up over the 80% threshold and liable for LMI, so aim to save at least 25% of the purchase price to create a bit of a buffer.

3. How is your credit rating?

Potential home loans lenders will access your credit history to see if you can afford the loan you are applying for, and whether or not you are likely to repay it.

Having a bad credit history may reduce your borrowing power and can potentially increase your interest rate, so make sure you review your credit history every 12 months to correct any mistakes.

It’s also a good idea to try to avoid extending the limit on a credit card or taking out a loan for a new car in the months before applying for a home loan, as the number of times lenders request your report can impact your credit score.

Understanding your financial position is the first step to boosting your borrowing power. Budgeting carefully, setting a savings goal and building a strong credit history can all help take the stress out of applying for a home loan.

 

 

 

Housing affordability has declined in all states and territories, according to a new report.

New report shows housing affordability has declined in Western AustraliaNEW
12 March 2018

The Real Estate Institute of Australia (REIA) have released the findings of its latest Housing Affordability Report, which found housing affordability declined in Western Australia in the December 2017 quarter.

The national report, which is produced in partnership with Adelaide Bank, showed housing affordability had declined across all states and territories, and rental affordability had declined in every state and territory except for Western Australia and New South Wales.

REIA President Malcolm Gunning said a coordinated and aligned approach by all three levels of Government were needed to address the housing affordability issue.

“We need to address this with some urgency and reform the planning and approval process. We need all tiers of Government involved and implementing change.

“REIA believes a first step in this is the appointment of a Minister of Property Services. This would also recognise the importance of the property sector as a driver of economic growth and employment. Property investment supported by historically low interest rates has been a significant contributor to growth in the Australian economy since 2013-14 as we transition away from a decade-long reliance on mining,” Mr Gunning said.

Housing affordability results for WA
There was a mixed bag of results across WA in the December 2017 quarter, with housing affordability worsening over the quarter but improving when compared to the December 2016 quarter.

The report found the proportion of income required to meet loan repayments increased 1.5 per cent to 23.9 per cent in the three months to December 2017 and declined by 0.3 per cent decline compared to the December 2016 quarter.

First home buyers

The number of first home buyers in WA decreased to 3,996 in the December 2017 quarter, a decrease of 9.8 per cent over the quarter but an increase of 4.9 per cent compared to the same time last year.

Of all Australian first home buyers over the quarter, 12.9 per cent were from WA, while the proportion of first home buyers in the state’s owner-occupier market was 34 per cent.

The average loan to first home buyers increased to $316,067, an increase of 4.1 per cent over the quarter but a decrease of 1.5 per cent compared to the December quarter 2016.

Loans

The total number of loans (excluding refinancing) in WA decreased to 11,744, a decrease of 4.2 per cent over the quarter and a decrease of 2.7 per cent compared to the same time last year.

The average loan size increased to $352,796, an increase of 6.8 per cent over the quarter and 0.5 per cent compared to the December quarter 2016.

Perth rental market

Rental affordability in WA remained stable during the December quarter, with the proportion of family income required to meet the median rent remaining at 16.4 per cent, the same as the previous quarter but a decrease of 1.3 percentage points compared to the year before.

For more information about the WA property market, visit the WA market page.

https://reiwa.com.au/

Perth property market begins its recovery in December quarter

Perth property market begins its recovery in December quarterNEW
06 February 2018

The Perth property market ended 2017 on a positive note, with December quarter data showing improvements in median prices, sales activity, listing levels and average selling days.

REIWA President Hayden Groves said it boded well for Perth that all key indicators had improved over the quarter.

“The Perth market found its floor and stabilised in the back half of 2017. We now appear to be entering a recovery phase, though REIWA remains cautious about expectations of rapid growth in the next 12 months,” Mr Groves said.

Median house and unit price
Perth’s preliminary median house price increased 1.2 per cent to $516,000 in the December quarter 2017.

“Once all sales have settled, we expect the final December quarter median to lift to $520,000, which is a notable improvement on the September quarter median of $510,000.

“On an annual basis, the Perth market is very stable. We’ve observed consistent price levels between the December 2016 and 2017 quarters which is a strong signifier the market has turned a corner,” Mr Groves said.

Perth’s median unit price is $405,000 for the December 2017 quarter which is a 1.3 per cent increase on the September quarter.

“It’s encouraging to see Perth’s house and unit medians increase over the quarter because it suggests one sector hasn’t recovered at the expense of the other,” Mr Groves said.

Sales activity
There were 4,946 dwelling sales in Perth in the December quarter.

Mr Groves said this figure was expected to lift to 6,700 once all sales had settled, putting it significantly above the September quarter sales figure.

“Traditionally, the September quarter outperforms the December quarter, but that wasn’t the case in 2017. The December quarter is on track to record 14 per cent more sales than the September quarter,” Mr Groves said.

REIWA analysis shows the composition of sales shifted in the December quarter in Perth, with more transactions occurring above $700,000.

“We’ve observed a surge of activity in Perth’s aspirational suburbs, with buyers recognising there is good opportunity to secure a home in these areas which might have previously been considered unattainable by many,” Mr Groves said.

“This spike in sales above $700,000 has also contributed to Perth’s median house price increasing over the quarter.”

Listings for sale
There were 13,088 properties for sale in Perth at the end of the December quarter.

Mr Groves said this was on par with the September quarter figure and six per cent less than the December 2016 quarter figure.

“There were 800 fewer listings in Perth at the end of 2017 than there was in 2016 and some 1,300 less than there were at the same time 2015. We have consistently seen stock levels decline over the last two years as the market trends towards parity,” Mr Groves said.

“Declining listing levels combined with notable improvements in sales activity has helped restore net-demand. With buyer activity increasing, stock levels are being absorbed faster,” Mr Groves said.

Average selling days
It was 10 days faster to sell in the December quarter than it was in the September quarter, with it taking on average 60 days to secure a sale.

It’s been two years since it was this quick to sell in Perth. The combination of sellers’ preparedness to meet the market and buyer appetite for well-priced property has significantly shortened days-on-market,” Mr Groves said.

View more WA market information

https://reiwa.com.au/about-us/news/perth-property-market-begins-its-recovery-in-december-quarter/

Interest rates this Month unchanged. RBA kept it on hold

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Interest rate update from the RBA today

April 4, 2017

The RBA have decided to keep cash rates unchanged today.

april

The REIQ welcomes the RBA decision to leave cash rates on hold at the current historic low of 1.5 per cent.

REIQ CEO Antonia Mercorella said the housing market throughout Queensland, and most of the country, would benefit from continued low rates.

“Our economy in regional Queensland is far from strong and giving people access to affordable loans is a key part in strengthening the housing market, which underpins the broader regional economy,” she said.

Conditions in the global economy have improved over recent months. Both global trade and industrial production have picked up. Labour markets have tightened in many countries. Above-trend growth is expected in a number of advanced economies, although uncertainties remain. In China, growth is being supported by higher spending on infrastructure and property construction. This composition of growth and the rapid increase in borrowing mean that the medium-term risks to Chinese growth remain. The improvement in the global economy has contributed to higher commodity prices, which are providing a significant boost to Australia’s national income.

Headline inflation rates have moved higher in most countries, partly reflecting the higher commodity prices. Core inflation remains low. Long-term bond yields are higher than last year, although in a historical context they remain low. Interest rates have increased in the United States and there is no longer an expectation of additional monetary easing in other major economies. Financial markets have been functioning effectively.

The Australian economy is continuing its transition following the end of the mining investment boom. Recent data are consistent with ongoing moderate growth. Most measures of business confidence are at, or above, average and non-mining business investment has risen over the past year. At the same time, some indicators of conditions in the labour market have softened recently. In particular, the unemployment rate has moved a little higher and employment growth is modest. The various forward-looking indicators still point to continued growth in employment over the period ahead. Wage growth remains slow.

The outlook continues to be supported by the low level of interest rates. Lenders have recently announced increases in mortgage rates, particularly those paid by investors. Financial institutions remain in a good position to lend. The depreciation of the exchange rate since 2013 has also assisted the economy in its transition following the mining investment boom. An appreciating exchange rate would complicate this adjustment.

Inflation remains quite low. Headline inflation is expected to pick up over the course of 2017 to be above 2 per cent. The rise in underlying inflation is expected to be a bit more gradual with growth in labour costs remaining subdued.

Conditions in the housing market continue to vary considerably around the country. In some markets, conditions are strong and prices are rising briskly. In other markets, prices are declining. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. Growth in rents is the slowest for two decades.

Growth in household borrowing, largely to purchase housing, continues to outpace growth in household income. By reinforcing strong lending standards, the recently announced supervisory measures should help address the risks associated with high and rising levels of indebtedness. Lenders need to ensure that the serviceability metrics that they use are appropriate for current conditions. A reduced reliance on interest-only housing loans in the Australian market would also be a positive development.

Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time.

RBA Leaves Rates on Hold in March

The Reserve Bank of Australia (RBA) has announced it will hold the official cash rate at 2% in March.

The decision comes as global economic indicators continue to deteriorate. In January, the commodity price index dropped to a 10 year low of 83.1. The International Monetary Fund (IMF) expects a downgraded forecast for economic growth in 2016, to 3.4%.

Source: RBA Leaves Rates on Hold in March

3 ways to help prepare for interest rate rises

The latest news that all of the big four banks have lifted their interest rates on owner occupier home loans, and a number of non-major banks following suit, will see many Australians will now be facing an increase in mortgage repayments.

This will no doubt impact a lot of household budgets and to help you prepare here are three things you can do;

1. Do the Numbers

First work out how much your additional payments will be. Knowing exactly how much extra you will pay each month and year will help you prepare your budget.

To help you do the sums; you can use our mortgage calculator by inputting your exact mortgage details or speaking with your mortgage broker – they can run the numbers for you.

2. Set a new Budget Plan

There’s not a lot of point of working out how much extra you have to pay on your home loan if you don’t apply it to your household budget.

Write a new budget plan with your new mortgage repayments and assess how comfortably you can meet it. You may find that you are going to struggle financially, so take the time to look for areas where you can save money. It may be necessary to change your spending habits in order to adjust to the increased repayments.

The important thing is to plan straight away to avoid any nasty surprises down the track.

3. Consider your Options

An interest rate rise is something you need to prepare for, do your research and make the right, sometimes difficult choices.

Doing the numbers and setting a plan are two parts of the puzzle but in the end you still need to make your payments.

Have you looked into changing the frequency of your repayments? It might be easier to manage and less of a burden paying weekly or fortnightly repayments rather than monthly – or vice versa.

Maybe you have some savings and are able to make a lump sum payment? A lump sum payment could make a dent in your mortgage and could even help offset an interest rate rise by putting you ahead.

Is refinancing or fixing your interest rate an option? This is probably the hardest question to answer and requires a lot of research.

To get help you make the right choices with the research done for you, my advice would be to see your mortgage broker or let me know and I can put you in touch with my mortgage Guru!

How To Value Your Sorrento Property For Sale, Insurance and Remortgage

Sorrento property owners should evaluate its market price and replacement cost periodically because knowing the current market rates and trends will help them in different circumstances – like, selling their home or insuring or remortgaging it.  Let’s discuss each case in detail:

VALUATION FOR SALE OF PROPERTY

Every Sorrento property owner who’s out to sell his home desires the best possible price. This is but natural – sellers expect high rates while buyers dream of bargain prices. The deal is actually struck somewhere in between or close to the edges depending how ready or desperate the buyer or seller is.

If you are out to sell your home, then you should first arrive at its true market value. Here’s how you do that:

1.       Start by figuring out where the market’s at. You need to know whether buyers outnumber sellers or whether things are in reverse. You will be surprised to learn that despite the slowdown and the oversupply of homes in Perth, there are suburbs where listed properties have almost dried up. You also must figure out the average number of days it will take before your house is sold.

For example, it takes about 74 and 88 days for a Sorrento house and unit to sell, respectively. The median sale price is $1 million for houses and $440k for units. House prices have appreciated by 5% year on year, while unit prices have jumped 12% for the same period. This data tells us that the number of properties in Sorrento is limited and that the market values will either hold or move up slowly depending on the demand.

You also should check auction clearances.  The recent clearances in Western Australia were just 30% implying low sales and many passed-in properties. This percentage strictly does not imply that the demand for Sorrento homes is on the decline – Western Australia contains many areas and therefore interpreting the aggregate percentage could send the wrong signals to sellers based in Sorrento.

Your best source of information is your real estate agent. And hey, I’m assuming you are working with a professional with many years of experience.

If you are still left unsure, hire a licensed valuer. He will charge you money, but you will get an unbiased opinion.

These moves will help you arrive at the true current market value of your house or unit. Remember that knowledge is power, once you understand the market, no fancy sales talk or rumor on earth will make you budge from your asking price.

2.       Research the sold section on Sorrento-focused real estate sites. That will give you an idea of the current prices.

3.       Analyze the current interest rates. RBA’s (Australia’s Central Bank) current official cash rate is pegged at 2%. Mortgage loans are typically available at 2%-2.5% higher than RBA’s cash rate. Therefore, current home finance rates can vary between 4%-5.5% depending on borrower’s credit score and the financing institution.

Low rates induce people to borrow and invest in homes. Right now, the rates are low and therefore this seems like a good time to buy considering the fact that the market is sluggish.

Researching these factors will help you arrive at the fair market valuation. Next, you should set the lowest price you are willing to go down to and make a steely resolve not to go below that number.

VALUATION FOR REMORTGAGE

Remortgaging involves paying off your existing mortgage by obtaining a mortgage from another lender. It makes sense in the following circumstances:

1.       When interest rates have dropped dramatically over a period of time. For example, let’s assume you had obtained a mortgage in 2011 @ 7.5%. The rate these days is about 4%. If you remortgage now, you can save 3.5% which could save you 1000s of dollars in real terms.

It could turn out to be a bonanza if you get a low introductory rate for the first few years.

2.       Remortgaging also makes sense if your home’s market price has appreciated considerably. You can borrow extra and use the excess funds to fulfill other pressing needs too. Follow the guide contained in the last section to know how to determine the fair and current market value of your home.

3.       You also can consider a remortgage when you figure that interest rates will shoot up or when your current mortgage is about to end or when your lender refuses to accept an overpayment.

Before you decide to remortgage, know that there are costs involved. Mortgage closing costs can include prepaid charges (like loan originating fee), insurance, sales tax, stamps, other fees (underwriting, legal, courier, credit fee, and more), early closure fees, etc. Work these all out and ensure that you are getting into a winning situation before opting for a remortgage.

HOME VALUATION FOR INSURANCE

Home insurance at replacement cost valuation is extremely important. You must value your home at replacement cost and then insure it because underinsurance can place your finances at risk if something unforeseen does happen. Consider the following factors:

1.       Home building costs do not remain static or fall – they keep rising.

2.       Homes surrounded by a lot of fencing, or homes that are built on slopes are more expensive to rebuild.

3.       Replacement costs can also significantly vary depending on the contents and the quality of furnishings in your home.

4.       Every time you add to your home, you must re-evaluate its insurance.

You don’t need to arrive at the home’s selling price – all you need to do is determine its replacement value. If anything happens, the sum you receive from the insurance company will help you restore or rebuild your home back to its original state.

Here’s Help

Talk to us if you would like an appraisal on your Sorrento home for sale, mortgage or insurance purposes. Not only can we help you arrive at the fair selling price and fill you in with market data, we also can put you in touch with experienced and professional valuers, and recommend insurance companies.

RBA Announcement – June 2015

The Reserve Bank of Australia has made the decision to leave the cash rate on hold at 2.0% for June 2015.

As predicted by the majority of leading economists, the Reserve Bank of Australia has made the decision to leave the cash rate on hold at 2.0% for June 2015.

This decision follows rate cuts in February and May this year which have lowered the cash rate to an all-time low for Australia.

The decision follows pressure on the Reserve Bank to help boost economic growth whilst also keeping house prices in Sydney and Melbourne under control.

With the cash rate at an all-time low, and interest rates also extremely low, now is the time to review your home loan to make sure you are using the most suitable financial solution for your personal circumstances.

Reserve Bank cuts interest rates to fresh record low of 2 per cent

At its 5th May meeting, the RBA decided to lower the cash rate to 2 per cent. With interest rates continuing to fall, it’s an ideal time to review your loan. Talk to your bank if you’d like to look at what new options are available.

Three of the big four banks have kept some of the Reserve Bank’s 0.25 per cent rate cut to themselves, with both NAB and Commonwealth Bank reducing their standard variable mortgage rate by 0.2 per cent and Westpac by 0.22 per cent.

But Westpac and CBA have raised some of their deposit rates. Term deposit rates on CBA’s eight month and Westpac’s nine month term deposits have risen to 3.05 per cent. CBA also raised rates on its “GoalSaver” account to 3.05 per cent.

All three have passed on the full 0.25 per cent cut to business customers, a further signal that fierce competition for mortgages and regulator pressure to curb home lending to investors is causing the banks to shift their growth plans to business.

Three of the big four banks kept some of the RBA’s rate cut for themselves, with two raising deposit rates, NAB will cut its standard variable rate to 5.43 per cent, its lowest level in 37 years, on May 13.

 

Do you believe in Real Estate as an Investment with the new Interest Rate low?

At its meeting on 3 February 2015, the Board of the Reserve Bank of Australia decided to lower the cash rate by 25 basis points to 2.25 per cent, effective 4 February 2015 which is a new 60 year low.

TWO of the Big Four banks, Commonwealth Bank and Westpac have already cut their rates as well as smaller banks such as Bank of Queensland, ING Direct and ME Bank all cutting the full 25 basis points following the RBA’s move.

The pressure is now on for the other two big banks, ANZ and NAB, to pass on the full rate to its customers. ANZ said it will announce a decision by Friday 6th February.

What does this mean to you? Will you look at getting a loan to purchase a property and lock in these lower interest rates? Is now the perfect time to purchase new equipment for your business?

Perhaps now you can look at selling your current property and look at upgrading?

NOW is when you need to take advantage!

Are you paying high rates on your mortgage? Talk to my Guru and save buckets of money!

Every time I learn something new I do some research on it and when I am sure of all the facts I like to share my knowledge and help everyone.

I am a slow learner… Even though I buy investment properties, I had always trusted someone else to look after me with my mortgage rates as I was too busy selling real estate… until not too long ago!

Just by accident, speaking with someone about rates I discovered that I could go directly to my bank and ask them “what can you do about dropping the interest rate that I am currently paying” And guess what? They did!

After more research I found out that I could ask my bank if they could drop to 4,65% as another “mob” was offering me that rate  and guess what? Yep, they did! Gosh! That was amazing!

So I told a friend of mine to do the same with her bank but her bank was not able to offer what mine did for me. Even when she asked them how much it will cost to discharge her mortgage so she could go elsewhere, her mortgage officer did not try to retain her by offering a better rate.

I cannot assure you that you can get 4.65% rate or better but I can direct you to the right person to find out how much you can be offered.

It will cost you nothing to ask. Its never too late! I learned now, still in time to get the benefit of what I learnt.

Call me and I will redirect you to my “Guru” to help you to save “buckets of money” like me!