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Increasing Interest in the Mortgage Broking Arena

I thought I would just comment on what seems to be some increasing interest in the Mortgage Broking arena at the moment – certainly in my arena anyway.

Mortgage Broking Arena

It’s refreshing to see so many First Home Buyers coming back to the market, plus it’s also very reassuring to see new and existing property investors looking at their options while prices are lower.

From where I’m sitting, there is a broad mix of finance activity lately, whether it’s just

1. Existing borrowers looking for a cheaper, more suitable loan/lender

2. It could be renters looking to enter or re-enter the property market

3. First Home Buyers as I mentioned earlier

4. Investors looking to get in while prices are ‘low’ (buy at the bottom of a property cycle and sell near the top?)

5. Debt consolidations

6. Renovations of existing homes

7. Divorces/separations (each moving onwards to their own properties)

With Home Loan Interest Rates as low as I can remember and property prices as ‘reasonable’ as they’ll probably ever be in the near future, the opportunities are certainly there for borrowers or potential borrowers to get themselves sorted for the possible path ahead.

If nothing else, it’s worth catching up for a conversation or two, to at least review your current financial situation so you can make an informed decision moving forwards.

This is just my opinion of course, but most people leave it too late, whether buying late in a property cycle or copying their friends activity which can quite often be too little too late.

In the end it’s you and your situation that matters, not what anyone else is doing, but an Annual Review of your financial situation certainly wouldn’t hurt. There is no obligation or cost when dealing with me but it could certainly be worthwhile.

Just my opinion, of course.

Is the Housing Market Turning and How Could this Affect You?

As always this is just my opinion but I feel the need to voice it.

As you all would know, the housing market has been very poor over the last few years with house prices falling due to too much stock for sale and not enough demand. The post Global Financial Crisis (GFC) belt tightening from the lenders out there has also been a serious handcuff to the market place.
Home Buyers

In recent times, with house prices dropping, First Home Buyers have started re-entering the house buying market which has coincided with numerous investors selling their investment properties. This is certainly stimulating the market but it is also reducing the amount of rental properties available as those that were rentals are becoming homes to these First Home Buyers. The snowball keeps rolling meaning that due to there being less rental properties available, the demand is increasing and this drives up the cost of rent. This then makes more people look at buying, and so the cycle continues.

Obviously this is just part of the vast ebb and flow of the property cycle which may normally go up and down progressively over a 7-10 year cycle. All I’m trying to highlight is that this seems to be the turning point for house prices to start heading back upwards again. I could be wrong but as more people look to buy houses with lower prices and lower interest rates, you would think that it has to have a positive effect on the housing market as far as prices go. It should also, in the coming years, reduce the burden on the rental market, in theory anyway.

The main issue is that houses cannot be built quickly enough to satisfy either the buyers or those who are needing rental accommodation. The lending market is still getting its confidence back also so there is no quick fix. If you ask any investment guru (of which I’m not one) they always say to sell at the top and buy at the bottom of a property cycle, now would seem to be that time if you believe the theory.

I just wanted to highlight where I think the market is and where it could be going.

Well it’s my opinion anyway.

Western Australia Home Ownership Can be a Reality with the Help of Mortgage Brokers

Home sales for detached properties in Western Australia have recently posted the highest increase since the 2008 global economic crisis. Although the overall figure was just 9.3% for the June quarter, economists say that there are several reasons why the Australian property market will not crash, and therefore it’s worthwhile for people to consider home loans. Rockingham and local area families and others should take into account the various positive factors about Australia’s overall situation and consider talking to a mortgage broker to review some options.
Mortgage Brokers Cockburn

A Healthy Economy

As a starting point, the economy is generally in good standing and envied by others. In fact, some people in the struggling European countries, such as Ireland are moving to Australia in vast numbers to seek employment. This boost should factor into the housing market, as well. For example, as more people explore Australia as a place to settle, rental properties will become scarcer. And, the increasing demand for rental properties is already causing prices to spike in some areas. By instead choosing to work with a mortgage broker, Cockburn residents as well as those in other parts of Australia can avoid having to deal with rising rental costs at all by choosing to take steps to buy their home, instead.

Debt and Home Ownership Trends

Some economists also note that although Australians are still borrowing consistently, debts are being paid off quickly. Also, since people are taking on less credit card debt overall and speedily paying off home loans. Kwinana and other local families we talk to are feeling that the dream of home ownership is finally something that’s attainable. Some statistics note that an overwhelming percentage of Australians are paying off their own homes sooner, and do not have any debt against them.

Affordability of Homes is Increasing

Although property prices remain high, an increasing number of people are able to afford them due to factors such as rate cuts, increases in wages and appealing offers worked out between banks and mortgage brokers.

Western Australia residents (such as those in Kwinana, Cockburn, and Rockingham), along with people in other areas are also noticing that some investors feel that the Australian property market is beginning to stabilise, which increases affordability, as well.

Whether you’ve found yourself saddled with the increasing burden of growing rental costs, or are simply looking forward to finally realising your dream of owning a home, consider looking to mortgage brokers to help you navigate through all phases of the process. Our broker team is happy to answer any questions as you go along.

With Help From A Mortgage Broker, You Can Weigh Options

Although several regions in Australia have experienced a property price spike over the June quarter, Perth is unique because it ranks as the sole major Australian capital city that actually indicated a climb during a year prior to the current period overall. In addition to this increase that began in 2011, it also enjoyed a 0.6% gain in the most recent quarter. Additionally, Darwin saw property price gains of 12.3%, making it the only other major city of Australia to see such a gain.
Mortgage Broker

Rental Costs are Climbing

For the 18 months prior however, Perth properties were going through a long-term recession. Now, prices for current properties in Perth are approximately $480,000 as an average house value. However, current trends are indicating that there may be a growth in terms of a desire for home loans. Rockingham residents and others are often faced with rising rental costs, making it more and more appealing for people to consider buying instead of continuing to rent.

Some real estate experts note that the average house rental cost has climbed more than 10% in just the last year. However, an accompanying upward trend for sales is a positive sign for mortgage brokers. Kwinana, Cockburn, and Rockingham area families could easily become persuaded to take the plunge by making a purchase for their first home, particularly if they have already been considering it for a while, and do not want to contend with growing rental costs.

With a Mortgage Broker, Consumers Feel Confident

At first, homeownership may feel like something that’s not within reach. However, families can simply choose to meet with a company that is well versed in helping with the process from start to finish. With their assistance, a goal of owning a home as opposed to sending in a rent check every month is a dream that’s not so far into the future after all.

When meeting with mortgage brokers, families get the resource of professionals who act as a go-between to interface with the lender, which is often a bank. They can also help a homebuyer get their possible loan at appealing interest rates. This allows an increase in confidence, because potential buyers feel more certain that they are making this move at the proper time, and that their investment will more than pay for itself in the end.

By making the decision to apply for home loans, Perth and the surrounding area’s residents and others can discover the satisfaction that comes from participating in home ownership and investing in their own financial future instead of continuing to rent their property.

Home Sales Could Help Mortgage Brokers and Other Investors

Australian property prices in the June quarter posted an unexpected 0.5% rise after an upwardly revised 0.1% drop in the March quarter. This is in stark contrast to the results initially predicted by economists, who forecasted a 0.5% decline during the June quarter.
Home Sales

An Unsettled Past

Although some homebuyers felt uncertain about the property market’s outlook, others turned to mortgage brokers. Rockingham and other local area residents may have been wary, because throughout 2012 up to June, prices for houses actually fell 2.1%, following an upwardly revised 3.5% drop in the year through March.

In fact, the Australian Bureau of Statistics noted that the decline was the fifth quarterly decline in a row in terms of a year-on-year basis for the Australian Bureau of Statistics series, which started in 2003. However, many economists believe that improvements are ahead, especially since the Australian economy is stronger than many other countries in the world. So, there is no need for past events to dictate what’s ahead for Australia’s property market.

Reasons for Increased Prices

Although the property market has been on the decline for a prolonged period, the sudden strength in the market could be favourable to providers of home loans. Residents may benefit from recent Reserve Bank rate cuts, too. These cuts have occurred four times since last November and economists say that the cuts played a role in the reason why home prices increased in June and July.

Additionally, economists note that the market sentimentality is still very weak, which is causing some people to delay their plans to meet with a mortgage broker. Cockburn and other local families, as well as others elsewhere in Australia are still demonstrating relatively slow sales activity throughout the market as a whole, and there is a feeling among some economists that rate cuts alone will not be enough to stimulate further sales over a long-term basis. However, New South Wales and Victoria have both instituted incentives for first-time homebuyers, and these likely contributed to the increase noted in some areas.

Brokers Can Give Assistance

Some economists believe that current statistics point to market stabilisation. Furthermore, climbing property prices may assist in building the appeal of companies that offer services as a mortgage broker, Rockingham and local area families, along with those elsewhere in Australia can get the help of these companies to secure a strong loan and negotiate with lenders.

Whatever the future holds, there will always be a need for home loans and residents with the dream of ownership can experience the milestone of homeownership with help from their local mortgage brokers. Contact us – we serve Cockburn, Rockingham, Kwinana, and the surrounding areas.

For Home Loans, Rockingham Families and Others Look to Smaller Banks

Now that Australian families no longer have to worry about getting hit with fees for leaving a current bank that has given them a mortgage, more and more of them are leaving the bigger banks and choosing to refinance with help from a mortgage broker. Rockingham brokers and other smaller options that are not affiliated with the four major banks enjoyed a 24% growth rate in the first half of 2012. Also, data shows that 35% of people who held a current mortgage chose to refinance it as opposed to buying a new piece of existing property, or building on a lot.
Rockingham Family

Reasons for the Change

Some people may be curious about why there is such a change in attitude regarding home loans. Kwinana, Rockingham, and other nearby residents, as well as people throughout the rest of Australia may be feeling particularly eager to refinance because they are spurred by the attitude of Treasurer Wayne Swan. He states that because the Australian government has recently authorised reforms, more power has now been given to the Australian people who may be feeling that they are being treated unfairly by their current banking choice.

Areas Where the Mortgage Changes Are Most Noticeable

New South Wales, Victoria and Western Australia are just three places that have seen an upturn in the amount of mortgages getting refinanced. In fact, a recent article shows that in some areas, the rate of refinancing was as high as 37%.

The Larger Banks Still Play a Role

It is important to note that big banks are far from being obsolete when compared with other solutions from mortgage brokers. Cockburn, Kwinana, Rockingham, and other Australian residents, still held 86% of all housing loans at large banks as of June 30. Although, even as the larger banks still hold a significant share, they did notice that new lending instances shrank, as people began looking into exploring other options proposed by mortgage brokers. Rockingham families, along with the rest of Australia at large actually allowed the smaller banks to see a 24% growth in terms of home loans. Furthermore, in terms of monthly lending, trends for the bigger banks decreased by 2%, while wholesale lenders experienced a 27% increase in their amount of monthly loans.

Although these current trends could certainly change by the year’s end, the statistics so far are already demonstrating some interesting ideas about the future for big banks versus smaller borrowing options in regard to home ownership. Consider meeting with a mortgage broker today and explore the possibility of working out a good plan for you to own your home.

Is Your Age a Restriction to You Getting a Home Loan?

The short answer is no… but there are some qualifying factors.

In my mind a bank cannot discriminate because of age, but if you’re talking out a 30 year loan at the age of 60 and planning to retire at 65, the bank has a reasonable expectation for you to have an ‘exit strategy’.

Old Man What I mean by this is “how will you keep making the payments once retired?” Or will you keep working til 75? Or will your Superannuation be enough to clear the loan?

It’s not an unreasonable question for you to justify how you’ll manage the debt. It could be as simple as supplying your superannuation statement or just explaining the nature of your particular type of work. If your strategy is reasonable then why wouldn’t the bank/lender approve the loan? We just have to paint a solid picture for them, but also to be realistic with yourself as to how you’ll manage down the track.

For people with investment properties it’s easier still as they may just sell a property to reduce or clear any debt. Another option really that doesn’t wipe out your Superannuation.

In the end you have to sleep at night with the decisions you make, but if I can do anything to help make that process a little clearer, even if it’s just me playing devil’s advocate, it’s worth consideration.

Do it right the first time.

Best wishes.

Buying an Investment Property

Some of this may sound too obvious or simple but you’d be surprised by how many people get it wrong.

The most basic rule in Real Estate in my opinion is the “buy at the bottom and sell at the top” philosophy. It may sound overly simple but, you want to buy an Investment property when prices are down and get in while the market is slow, this is normally referred to the bottom of a property cycle. To me anyway, when the property market is quiet and there are lots of properties to choose from, you’re in a strong position to negotiate and get the ‘most feasible’ deal. Investment Property

Unfortunately a great deal of Investors wait until their friends are doing something or the news articles come out, by which time the market and house prices are moving upwards again so the benefits are not so great.

Here in Western Australia property values normally double every 7 to 10 years statistically. You can check this yourself through places like REIWA or the Bureau of Statistics. Property values will go up and down along the way and not all property cycles will be the same but it’s a pretty good guideline in my opinion.

Maybe your next question is ‘what do we do between cycles?’ To me the simplest thing is to diversify your portfolio. What I mean by this is there are property cycles all over the country and they’re all different so there are most likely opportunities elsewhere if the market isn’t conducive where you currently live. I’m a mortgage Broker so my opinions on buying property are obviously biased but there is plenty of information, seminars, research you can do to be comfortable with your own decisions.

Ideally if you have enough equity in your home, you don’t need to use any savings so financing there properties can be quite straight forward. Obviously as part of the process, you will want to talk to your Accountant and preferably a good Financial Planner too so you can make a well informed decision about your possible purchase. Lets’ “do it right once” as they say.

In the end you do what’s right for you, but hopefully this has helped your overall picture of the possibilities.

Best wishes.

What Will 2012 Bring?

Well, after a little break from blogging I thought I’d recommence with some thoughts and ponderings on the year ahead.

I hear many people wondering about what the year ahead will bring, more interest rate cuts perhaps? 2012

It needs to be remembered that the Reserve Bank reduces Interest Rates to help stimulate the economy. Currently house prices are relatively low and the demand for rental accommodation is high. At some point there will be a transition where those renting are paying the equivalent of home loan/mortgage payments in rent. These people then start looking more at buying than renting.

At the same point in time, property Investors are returning to the market to buy while property is relatively cheap as any good investor knows, you buy near the bottom of the market and sell near the top. By the time most people get on the bandwagon the market is too hot so they don’t make the returns they dream of.

Historically you can see in Australia that on average, property tends to double in value every 7-10 years. If you don’t believe me there’s plenty of data available for you to research for yourselves. Whether a residential home buyer or an investor, you’d like to think you’ll make some money on your purchase. Maybe now is that time?

On a different note, there are some very good fixed interest rates out there at the moment. They could be viewed as an indicator that variable rates may drop further. Or they could just be viewed as some great peace of mind for those out there who are financially stressed. A guaranteed interest rate for a set period of time can bring great peace of mind and potentially relieve some of that financial stress.

What do you think? Am I right or wrong? Only time will tell, but we’ve always had property cycles and I believe we always will. Maybe they won’t all be quite as I’ve described but I think they will.

Best wishes.

Mortgage Fixed Interest Rates Cheaper than Variable Rates

Due to the worsening global economic crisis, the Reserve Bank of Australia has decided to cut the standard cash rate further. This scenario leads to the decreasing percentage of home lenders who avail of mortgage with fixed interest rates.
As the Europe debt situation continually affects the world market, interest rates for a 3-year mortgage deal has become lesser having an average rate of 0.6% compared to the standard variable rate which evidently is much cheaper.

From the earlier months, fixed interest rates were prompted to be more expensive compared to loans with variable rates. This has created a notion that the RBA will regularly cut rates to protect Australia against the threatening economic malaise that currently takes place globally. The Reserve Bank of Australia has taken a cash rate of 4.25% interest last November and December 2011.

The Central Bank’s minutes during the monetary meeting held last December 20, 2011 has decided to make a close call noting that the Reserve Bank of Australia noticed that the domestic economy has performed a bit stronger compared to the case over the last six months. The Central bank has also warned that Europe already has experienced consistent downside and has increased the risk of unstable economy affecting many nations worldwide, including Australia.

Most home lenders would base the fixed loan pricing from the movement of money on the market rather than the cash rate released by RBA. However, truth is the rates in the money market are still influenced by the policy settings of the bank.

As of December 20, Ratecity – a comparison group – found out that home loan clients are paying an average rate of 6.29% to cover a 3-year fixed mortgage, rather than the 6.89% standard variable rate. Last June, the standard variable rate was 7.30%, higher than the 7.42% rates that fixed loans offer to clients.

On the same month, the 3-year fixed loans has actually dropped by 1.13% points, just after the turn down in the Bank Bill Swap rate, which was considered the key standard of the money on the market that financial institutions will use to set the pricing of loans. At the same period, the official cash rate of the RBA has decreased into 0.50% point.

There were also signs that deadlines on fixed rates were slowing down along with the 3-year loans, decreasing from 6.41% (December 1), and 6.29% (December 20). The rates were smaller compared to the 0.25% point reduction in the official cash rate of the RBA last December 6.

Ratecity Chief Executive Damian Smith has pointed out that fixed rates are decreasing and there is a lesser chance for clients to see 3-year fixed rates going down at the same interest rates that they already have. Rates will continually come down at a much decreased rate compared to what they have from the previous 6 months.

At the end of the RBA minutes, economists has concluded that RBA would cut down rates over again on its next scheduled Monetary meeting, which will be on this coming February 2012.

Ben Jarman, JPMorgan Economist said that they view the current policy setting as appropriate, so the RBA would be on its feet from the worsening economic outlook. Jarman added that they expect more bad news from both local and international economy, which will permit RBA to ease over the line.

Bill Evans, Westpac Chief economist considered the case as significantly strong for a 0.25% point easing by the Reserve Bank of Australia on February, and will be followed by another quarterly reduction on May, making a cash rate decrease of 3.75%.

Evans further said that the RBA monetary policy meeting has concentrated on the European situation, which shows the RBA board members are completely concerned.

According to Paul Bloxham, HSBC Chief Economist, the minutes of the monetary policy meeting demonstrates that the global economic risk has greatly affected the rate cuts as the RBA is seeking to apply insurance for protection on the threatening global growth, which the board now expects. RBA is confident on their inflation outlook and this only means that they will cut rates on the first quarter of 2012.

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