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Hello,
The rate reduction received on Tuesday 5 November has been warmly received by the industry.
An announcement of a further 0.75% cut to the official rate in addition to the September 0.25% and October 1% cuts, brings rates to a near five year low - industry figures rallied in support of the central banks decision.
The interest rate cuts to date (with more potentially to follow) provide an opportunity for many Australians to enter the home ownership market for the first time. This, coupled with the governments increase to the First Home Buyers grant from $7K - $14K for existing homes, and the increase for newly built homes from $14K to $21K, make it a great time to buy.
In addition, the NSW government has announced a further grant of $3,000 to first home buyers building or buying a newly constructed home for contracts signed from 11th November 2008 until 10th November 2009. Is this wise considering the state budget is in deficit? I am not so sure but if you are a first home buyer no doubt you will take this extra $3,000 with both hands!!
Victorian first home buyers are already eligible for an additional grant of $3,000 for the purchase of existing homes or $5,000 for newly constructed homes known as the First Home Bonus.
Now is a great time to contact us to see how we can assist you and your friends and family with your finances. Even if you have an existing loan now is a great time to call the office and have a no obligation mortgage health check to see if you are still in the best loan possible.
Simply for having an appointment with us you will receive an entry into our latest competition for your chance to WIN a $9500 Flight Centre gift voucher.
We look forward to hearing from you, simply reply to this email with your interest or call the office today on 1300 66 12 11.
Enjoy this newsletter and feel free to pass it on to family and friends.
Authorised under NSW Permit TPLTPS/08/06826, ACT: TP08/02787.1, Vic: Permit No 08/3081, SA Permit No T08/2745
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PO Box 319
Toongabbie NSW 2146| Tel: | 1300 66 12 11 | | Mob: | 0404 037 663 | | Fax: | 02 8214 6592 |
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Lenders Tighten their Belts
One of the fallouts in Australia from the global credit crisis may be that home loans will become harder to get.
Many lenders are tightening their lending criteria to protect their loan books against the difficulties they now face in raising capital.
The changes differ from lender to lender but the overall trend is a move towards more conservative lending.
Among some of the changes has been reductions in the maximum loan-to-valuation ratios. With some applications and property types high loan-to-valuation ratios previously 95 to 100 percent may no longer be available.
Lenders will also be looking more closely at the suitability of line-of-credit loans, as well as the borrower's ability to service their home loan repayments. As a borrower, your savings history and disposable income will be more closely scrutinised.
In addition, your credit history will take on a greater importance. The way you've managed all your past and present credit arrangements will count for a lot. In fact, it's anticipated there will be a significant tightening of low-doc loans, as lenders will favour those with solid credit ratings.
How easy or hard it is to get a mortgage will largely depend on individual lender criteria and how well your finances are in order. As your mortgage broker we can provide invaluable expertise in negotiating on your behalf through these more stringent credit requirements.
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A Recipe for Investment
Sky-high rents and declining interest rates may make a good recipe for property investment.
Although there's much talk of a declining housing market, many analysts believe there's money to be made from property if you choose your investment wisely.
A shortage of housing has pushed rents up to levels not seen in almost two decades. The Australian Bureau of Statistics data shows a 3.7% drop in the number of new residential building construction projects in the June quarter - its lowest level in 12 months. This equates to around 43,000 fewer homes being built over the year.
Rental vacancy rates are averaging less than two per cent across our capital cities, and rental rates for houses increased by 11 per cent over the past 12 months.
RP Data predicts that rents will continue to rise by a similar level over the coming year. With Australia's population increasing at a rapid pace, the demand for accommodation is not expected to slow.
Hot Spots
RP Data research shows that city apartments are considered among the best investment choices for capital growth in the current real estate market.
Inner-city apartments are also showing high rental returns, particularly those in areas known for their cafes, bars and shopping. Convenience and location appeal to a broad cross-section of the marketplace and are a huge draw-card to renters.
Other locations that are considered wise investments include those with close proximity to water - seaside, riverside or lakeside. Properties with views and those on large blocks of land within convenient commuting distance to the city remain popular choices.
Market growth
A lack of buyer confidence, labour shortages and rising construction costs has driven developers away from the market. So too, the uncertain economic conditions has made home owners cautious of investing in property.
However, strong housing demand, October's one-percentage point cut in the official cash rate and the Federal Government's recent stimulus package increasing the first home owners grant to $14,000 for existing homes and to $21,000 for new homes, could see a significant recovery in sales.
That spells good news for both first home buyers and experienced property investors. Please call us and we would be happy to provide our advice and expertise in helping you enter the housing market.
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Book Review
Budget Wise, Dollar Rich - the Australian Guide
Author: Anton Nadilo, Andrew Lendnal & Dr Malcolm Johnson
The authors of Budget Wise, Dollar Rich have years of experience providing budgeting advice. This is a useful guide which includes practical tips and worksheets to help people take control of their finances.
The book is written in easy to understand language that explains how to achieve your financial goals, whether you are saving for something you want now, seeking a larger purchase in the future or for retirement.
The book goes through the budgeting process step by step: how to manage your income, how to pay off debts, setting goals and how to save.
This practical guide is just what we all need in these tough economic times to help us in managing our finances.
Price: $24.95
Publisher: Exisle Publishing
Source: http://www.seekbooks.com.au
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Smart Xmas Spending
Spend big in the lead up to Christmas then pay for it in the New Year. It's an all too common habit that many of us fall into, leaving us in serious debt by the time January rolls around and should be avoided.
Start thinking now about ways to practice safe Christmas spending and you may well avoid that New Year financial hangover. The festive season brings with it many celebrations and dollar spending opportunities, but there's no reason you can't enjoy yourself without overdoing it.
Limit credit
Know that you have the money before you make a purchase. Pay in cash or lay-by your gifts so that you can keep a handle on where your money is being spent. If you have to pay by credit, try to use only one card.
Avoid store cards
Store cards may offer convenience and discounts but they don't come cheap. Interest rates can be up to seven percentage points higher than alternative cards.
Resist impulse shopping
Before you hit the shops, make a list of what you need. Allow plenty of time to do your Christmas shopping to avoid last minute expensive purchases.
Next year why not completely avoid the Christmas rush by grabbing bargains as you see them throughout the year and packing them away. In fact, the best time to begin Christmas shopping is the day after Christmas!
Make a budget
Take a look at what you spent last year and plan your party, gift-giving and decorating costs accordingly. Also set aside money to repay bills and credit in January. It's true that sticking to a budget can be difficult when you're in a celebratory mood, but you'll thank yourself in the long run.
Set a limit
An important part of budgeting is to set spending limits. If you're having a night out or buying a gift, put a dollar limit on your spending. If you don't have enough money for store-bought gifts, use your imagination to create handmade gifts - often the most appreciated presents are those with a personal touch.
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Did You Know?
Here are ten top tips for achieving fiscal fitness in the lead up to Christmas.
- Prepare a written budget
- Stick to it
- Never repay credit cards with other credit cards
- Use credit only if you can afford to pay it back
- If you are experiencing financial difficulties, seek advice
- Build a nest egg
- Be sensible today to reap the rewards tomorrow
- Ask us to help you shop around before applying for loans or credit
- Examine all the pros and cons
- Lead a lifestyle suited to your income, not your wishes.
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Broker Benefits
Good advice is critical when selecting a home loan, according to a recent survey of Australian home-owners.
The survey, conducted by CPA Australia, has found that 94 percent of respondents agree getting good advice is the key to securing a successful home loan arrangement.
Choosing a home loan can be a daunting task and the survey showed that people turn to brokers when they are having difficulty sourcing a mortgage.
As your broker, we are here to help demystify the process of selecting a loan, as well as save you the time and effort of wading through the fine print of so many lenders. A recent survey by the Mortgage and Finance Association of Australia actually shows that the main reason people choose a broker (75.1% of respondents) is that they do all the leg work for you.
Survey respondents also chose brokers because they have a wide loan range (72%) and will help you get the right loan for your circumstance (63.7%). Brokers are cited as experts in their field (71.1%), and as such know the mortgage market inside and out.
It's true that we are able to provide you with expert advice regarding the options available to you. Our access to different loan products gives us the ability to source loans that most closely match your personal financial situation.
We can also provide the added advantage of a speedy application. Our close relationship with lenders enables us to get an answer faster, in most cases, than if you submitted the application yourself.
The personalised relationship that is built between broker and home buyer is another benefit of using our services. We are your single point of contact, so there's no waiting around at the bank or dealing with different staff every time you have an inquiry.
We are passionate about helping you through the complex lending maze to make the right financial choices. As your mortgage broker, we are here to meet your needs, both now and in the future.
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Mortgage & Finance Association of Australia
Mortgage World Australia is a full member of the MFAA. As a member we must adhere to an Industry Code of Practice, which requires professionalism, ethical behaviour, transparency and a commitment to you, the borrower.
This helps to ensure that your best interests are at heart whenever we make a finance recommendation.
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News & Specials
- Bankwest have brought back their Rate Tracker Home Loan which offers a 0.90% p.a. discount off the average standard variable rate of the big 4 banks for the first 3 years of the loan. There is also no early repayment penalty on this loan which means you can refinance after 3 years without being charged a hefty exit fees.
- As of Monday 13th July RAMS are offering a FlexiFix product where up to a maximum of 50% of the loan amount can be fixed for 2 years at 4.99% p.a. rolling over to the Smartway Variable rate after 2 years. Variable portion can only be taken as a Smartway Variable loan which currently offers an interest rate of 5.49% p.a.
- St.George are offering a 0.15% p.a. discount off their fixed rate home loans if taken under their Advantage Package. Westpac are offering a 0.20% p.a. discount off their fixed rates under their Premier Advantage Package.
- Although most lenders are no longer offering cheap low doc interest rates RAMS are still very competitive in this market.
- Go into the draw to win $10,000 in Cold Hard Cash by either booking an appointment with us, using our services to take out a home loan or by referring a friend. Competition ends on 31st July 2009.
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Disclaimer: This newsletter is intended to provide general news and information only. Readers should rely on their own enquiries before making any decisions regarding their own interests. Please do not rely on any part of this newsletter as a substitute for specific legal or financial advice. All material is copyright 2010.
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