Australian Mortgage and Loan Information

Home loan interest rates are still very low. Indicator home loan rates last 50 years.

The RBA has lifted rates by .25% today. For home mortgage holders this means a minimum increase of $47 a month on an average $300,000 mortgage. However, I expect the banks to increase above the RBA. They have been issuing spin on the subject for the last six weeks or so to soften the blow.

Australia’s reliance on all things imported and high currency value has distorted the CPI figures to the extent that the RBA feels it has to appear to be doing something about it. The truth is, the rise will just suck money from an already dry economy.

Look for a rise in house values. The higher interest rates should make it easier to borrow money. Get on the phone to your mortgage broker, find out if you can afford an investment property. Property is still the darling asset of Australians.

If you dont have a mortgage broker, click the link below. It will take you to Mortgage Choice. They will tell you the truth and help you if they can. Their service is first class and they are funded by commissions, so they work hard to get you a good deal.


Our Specialist will compare up to 400 Mortgage Products to find the Loan that Suits You.

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• Typical application fee: $600 to $800 (May be less if you already have a loan).

• Be prepared to pay a higher application fee if you are buying a unit or property off the plan.

• If you plan to repay or refinance your loan within 4 years from the date of first loan drawing, you may also be slugged a “Deferred Establishment Fee”. This fee can vary from $700 to $2000 depending on the lending institution.

• Loan service fees: Usually $8 to $10 per month.

• Settlement attendance fee, usually $150 to $350.

• If you are changing lenders, you will also usually have to pay a security discharge fee of between: $350 and $1000 for the privilege.

• Be prepared to pay big if you want out of a fixed rate loan early. Lenders usually will not give any leeway to contract breakers. Picking the direction of home loan rates can be tricky. Just look at the historical rates for the last 50 years.

This is just a snapshot of the fees you can expect when taking out a new fixed rate home loan or changing from a standard variable home loan to a fixed rate home loan. Be sure to get a comprehensive list of fees from your lender or mortgage broker before you sign on the dotted line.

When the Board of Reserve Bank of Australia announce a rate cut, they are talking about a thing called the cash rate. The cash rate is the overnight money market interest rate. The overnight money market is where many home loan lenders source some of their money for home loan mortgage lending.

The recent cut of .75% in this rate should bring about further relief for home mortgage borrowers who have standard variable or market rate loans. This recent cut is the third in three months and now sees the cash rate at 5.25%. There is usually a gap of around 1.8 to 2.50% from the cash rate to the rate your lender may be charging you. This gap plus account keeping fees is your lenders profit. Historically home loan rates will take a week or so to come down. So check your next statement and remind your lender of the cut if they have not made the change.

When ever there is a change of interest rate, there is an opportunity for you lender to make a mistake with your mortgage interest figures. And unless you pick it up you could be adding years to your loan and be ripped off thousands of dollars. I implore you to get some mortgage checking software. Check all your statements including your credit cards.

All the major banks have announced further cuts to their standard variable mortgage interest rates in recent days.

Most have bought their rates down by .21%. I take this as proof that the Federal Government’s bail out of the finance sector has eased the pressure within the lending community. Ahmed Fahour, chief executive of The National Australia Bank is even quoted as saying he thought “further home loan mortgage rate cuts were possible in the near future“.

The banks have changed the names and descriptions of their variable or basic home loan product many times in recent years. So how do you tell if you have one of these loans and will you benefit from the rate cut? It is not easy.

For example ANZ offer home loans under the banners of: “Simplicity Plus” or just straight “Variable” the current rate is 8.57% with a comparison rate of 8.69% for the “Variable” and 7.87% and 7.92% for the “Simplicity Plus”. Both are touted as being variable. I remember my loan was variable, but which one do I have, my statement does not tell me much?

Now, I actually know which one I have, but my point here is, we should not only be aware of what type of home loan mortgage we have, but we must also know what sub category or name it is known by. The banks and other lenders will do their best to confuse, as it helps them justify the fees and charges on various products. The media reports only standard variable rates for convenience, so they are really no help. To understand our individual historcal home loan rates, we have to narrow down our focus or get help to make sense of the mumbo jumbo of home loan talk.

A competent mortgage broker will help you sort the wheat from the chaff when it comes to home loan mortgages. Get friendly with one as soon as possible. You don’t need to be refinancing to use their service, a good mortgage broker will help you anyway. You can then reward them by referring friends or transferring your loan administration to their “book” if you like their service.

Home Loan Rates in the 5% range not out the question.

Continued pessimism and low clearance rates for property sales in Australia has led to a chorus of economists predicting official interest rates will be near zero by 2010. Home loan rates are linked to official rates, so it would appear we could be in for some welcome news and lower mortgage stress over the next few years. Analysts expect the Australian cash rate to be close to 3.75% by March 2009, so home loan rates could be as low as 5.75%. Historically they have been lower, in fact as low as 5% in my lifetime.

Whilst many politicians and media pundits have publicly lauded the Australian Governments bail out of our economy, privately there is pessimistic talk that the global financial system meltdown will drag on for years and our economy may still require a further injection of cash to prop it up over the long term. I for one hope Mr Rudd increase’s the age pension or at least the rental subsidy for non home owner age pensioners. I would also like him to consider our manufacturing sector. We need jobs in our cities.

Whatever the Government decides to do with interest rates and pensions, people still want to come to Australia and live. They will need accommodation, This means opportunity for property investors. It is time to do some homework. Visit your local council, find out what new developments they are planning. Are they planning to change the zoning regulations in an old industrial area?

The Reserve Bank has come to the rescue of big business, now Mr Rudd please come to the rescue of the less fortunate.

The Board of The Reserve Bank of Australia today decided to lower the official Government cash interest rate by 1% from 7.0% to 6%, effective Wednesday 8 October 2008. For standard variable home loan mortgage borrowers, this drop may translate to a 0.5% to 0.8% reduction in their individual rate.

This huge drop is a direct response to the turmoil in world financial markets. The Bank in my opinion, is attempting to stimulate lending in both business and home loan sectors. Both benefit the bank executives and the top end of town. The benefit to ordinary home owners is a fortunate side dish winner for a government craving credibility, and wondering what will become us if China stop buying our commodities at an obsene rate. The drought has ment our ability to produce food for export is diminished and our manufacturing sector is almost dead after decades of neglect by sucessive governments. I guess we still have mountains of gold somewhere in the outback.

I hope the radical rate drop works, despite my misgivings for its reason, but I for one would also like to see an increase in all Centrelink payments, including the age pension and newstart allowance. This act will stimulate the economy, as the less fortunate will spend their money giving a boost to our biggest industry, retail.

If your Bank or Lender does offer to reduce your rate, please check their work. Banks and other financial institutions make huge profits and sometimes huge errors. Get some mortgage checking software, keep them honest.
Stumble It!

Australian Property, Boom or Bust on US crisis?

Could Australian property prices collapse and go bust as part of a domino effect from the US Sub Prime crisis and credit default swap dilemma?

Last week many popular media outlets reported that the US credit markets may be headed for the drain. Maybe it could happen, and maybe Australian property owners and mortgage holders would be hit with more mortgage stress. Well that was until the US government stepped in with a so called “conservatorship” of the two giant us domestic mortgage providers Fannie Mae and Freddie Mac in a bid to avert what many doomsayer’s prophecy as a global financial system meltdown. The US government as I understand it have taken over the running and financial backing of these two companies.

What a great move. In the past all I have ever seen is governments selling off public assets in a time of crisis. Literally, throwing billions of potential income to the private sector. Buying private assets when they are cheap? This surely is a move in the right direction. This purchase may give the government of the US the largest public ownership of housing outside the China and Russia. You see in the US, mortgage holders are not as personally liable for the mortgage debt as they are in Australia, they can simply just hand back the keys to the house and walk away, leaving the bank to worry about the mortgage and the house. People are dying to get to the USA to improve their lives, and they will want the American dream. Watch out China, this could be the catalyst for the USA economy and its people to resurrect the great boom nation and move it to a new higher plain of economic strength.

If sanity prevails and greed is good as the fictitious Gordon Gecko from the movie Wall Street extols, the worlds debt security markets should be back on track in no time. The US government and therefore tax payers may even make some profit from the recovery. Please be assured, someone will profit big.

Historical Australian Mortgage Interest Rates may indicate more than you think? Cast your mind back to when our Australian Mortgage Interest Rates were 18%. I am sure some people got rich in property, by making a few sacrifices? Recent financial media speculation centres around our Australian Mortgage Interest Rates moving down. I hope they are right. With the downward move I expect an improvement in the liquidity of Australian Property, but maybe not a price increase. The US credit situation will continue to dampen enthusiasm.

My advice? Start scouting for your next property. Some folks will get scared with all this media doom and gloom and sell up, in that case you could find some bargains in the Australian Property market very soon. Make an appointment with your mortgage broker or mortgage home loan coach and be prepared to move quickly before everybody gets on the property boom band wagon again.

Good news for home buyers mortgage holders, mortgage stress relief on the way.

The Reserve Bank of Australia Board have cut the official cash rate by 1/4 of a percent. Home loan rates have historically followed cash rates. The press release from the RBA is below.

STATEMENT BY GLENN STEVENS, GOVERNOR
MONETARY POLICY
“At its meeting today the Board decided to lower the cash rate by 25 basis points to 7.0 per cent, effective 3 September.

Inflation in Australia has been high over the past year in an environment of limited spare capacity and earlier strong growth in demand. In these circumstances, the Board has been seeking to restrain demand in order to reduce inflation over time.

As a result of increases in the cash rate last year and early this year, additional rises in market interest rates and tougher credit standards, financial conditions have been quite tight. Some further tightening has occurred over the past couple of months. Conditions in international financial markets remain difficult, with heightened concerns over credit persisting.

The evidence is that the tight financial conditions, in conjunction with other factors including higher fuel costs and lower asset values, have exerted the needed restraint on demand. Indicators of household spending have recorded subdued outcomes over recent months, and credit expansion to both households and businesses has slowed. Surveys suggest a softening in business activity and growth in production has slowed. Indicators of capacity utilisation, while still high, are declining and there have also been some signs of an easing in labour market conditions.

The rise in Australia’s terms of trade that has occurred is working in the opposite direction, adding substantially to national income and ability to spend. Fixed investment spending by businesses continues to be very strong. At the same time, high prices of oil and a range of other commodities have added to global inflationary risks. They are also dampening growth in a number of countries.

Given the opposing forces at work, considerable uncertainty has surrounded the outlook for demand and inflation. On balance, however, it is looking more likely that household demand will remain subdued and overall economic growth slow over the period ahead. Inflation is likely to remain relatively high in the short term, with the CPI affected by the high global oil prices in mid year and other increases in raw materials prices. But looking further ahead, the outlook for demand suggests that inflation in both CPI and underlying terms is likely to decline over time, provided wages growth remains contained. The Bank’s forecast remains that inflation will fall below 3 per cent during 2010.

Weighing up the available domestic and international information, the Board judged that there was now scope for monetary policy to become less restrictive. The Board will continue to assess prospects for demand and inflation over the period ahead, and set monetary policy as needed to bring inflation back to the 2-3 per cent target over time.”

Make an appointment with a reputable Mortgage Broker to check out all the new refinance deals once the dust settles on the announcement. Now is a good time to check your mortgage statements for errors. Any change in interest rate is an opportunity for Banks and other Major Lenders to make mistakes. Don’t get ripped off. Get some reputable mortgage checking software asap.

Will they or won’t they?

If the reserve bank puts up interest rates in August, I think we could see house prices fall across the board. My gut feel is that many home owners are on the brink. Successive rate rises have seen household budgets stretched to almost breaking point, especially those who have purchased in the last four years. The RBA should ignore inflation figures as they have been fuelled (Pardon the pun) by the flow on from skyrocketing fuel prices. Home owner’s have already felt the pain at the pump and the supermarket, they should not be punished further. Maybe we have to live with a little inflation, after all the world is changing. China is thirsty for fuel and needs to sell manufactured goods to the world for continued growth and world domination of manufacturing.

Of course, one man’s pain could be anothers gain if you are cashed up at the moment and can time your purchase. There will be some bargains to be had. I suggest esplanade/seafront/waterfront addresse’s or very near. Some wealthy folks are about to take a big hit if the RBA tries to strike a blow against inflation.

Take a look at the historical home loan mortgage rates for the last fifty years. See a trend you would like to comment on?

Oh! And if rates do go up, check your statement for any errors. A rate rise is an opportunity for a lender to over charge.