Australian Mortgage and Loan Information

Where there’s smoke there is usually a little flame.

The Assistant Governor of the Reserve Bank yesterday fanned these flames by complimenting home loan lenders on their increased levels of loan application scrutiny. He particularly lauded Westpac and Commonwealth Bank for increasing the amount of deposit required by home loan applicants.

Making it harder for borrowers will mean a reduction of the number of potential home buyers in the market. The RBA is also on record in saying it will increase official rates, so things are going to get tougher for home mortgage aspirants and current owners. Increasing Mortgage stress is a likely result.

I think as interest rates rise, we may see a flood of properties coming on the market. “For-closure sale”, may be the new catch cry of the real-estate industry moving forward.

Delutter your Home for a more peaceful and profitable likestlye.

Are Loan Break Costs Deductible?

Are you thinking of selling your rental property to take advantage of the first home owner property bubble? Do you have a fixed rate loan?

If you are going to break a fixed interest loan agreement to sell a rental property, you should be able to claim the penalty interest as an outright tax deduction. This is because the penalty interest is a discharge cost and specifically allowed by the tax office. You must have received rental income in the year of your claim or it will not be an immediate deduction. The penalty interest and fees will be added to the cost base of your property if you have not been getting income. You won’t miss out on a tax break either way. Ask your accountant for clarification.

Check with your lender before you consider selling your rental property. You need to know exactly what fees and penalties you are up for! Also, check your current loan statements for errors.

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Although the First Home Owners Grant Boost has only been extended for a short time, the original grant will continuing to give first home buyers a leg up past December 31 2009. The boost was a top up of the original FHOG of $7000 for both new builds and established houses. So any extension represents a bonus.

Don’t forget you can still save for your first home with the Governments “First Home Buyers Deposit Saver Scheme.” No need to rush, house price’s may well come down 20% post 31 December 2009, as the depression deepens! So keep saving.

In the mean time speak to a quality Mortgage Broker about how much you need to save.

Good news for you first home buyers busily saving for your first home. You now have an extra six months to take advantage of the Rudd governments $7000 or $14000 boost.

It seems all the original criteria remain the same, with just the date for expiry extended to 30th September 2009, in its current form and to 31st december 2009 with slightly reduced benefits. So get your skates on, free up your cash. Sell that expensive car and take the bus, cut out excessive spending on entertainment and clothes, give up smoking and take a part-time job. Above all save, save, save.

Unfortunately property prices have gone up because of the boost, but there are still some reasonably priced properties available and interest rates are at historical lows.

Do you have a granny who is ready for the nursing home? Why not buy her house? You could even let her stay as boarder after you take over. You will save on agents fees at least. She may be happy that her home is staying in the family.

There are heaps of things you can do to find a reasonably priced home. Please be innovative, think outside the square. However, make sure you abide by the rules of the boost. I hear the government will be checking up on people.

If you dont have a contact with a Bank or Mortgage Broker, I am now using Easy-Loans for my customers. All the work is done either by email, instant messenger or telephone, hassel free.

The signs are right for a further drop in the variable home loan rates.

My information is that one of the big four Australian Banks may be about to break ranks and cut their variable home loan interest rate dramatically. With rates already at historical lows, a further drop will provide a welcome lift to first home buyers, those with big borrowings, the economy and the many small business’s in need of a cash flow boost with cheaper credit. Check out what a rate drop will do for you.

I have been trying to embrace the teachings in The Secret dvd my wife gave me for my birthday. When I heard about the possibility of a one of the big four Banks breaking ranks over not passing on the RBA cuts I was chuffed, as one of the things I have been visualising, is a better rate on my home loan. I recently purchased a work book to record the things I want to attract. maybe it is working! I guess I will find out when the news breaks.



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A drop in Australian house and property values is imminent, it is not an if but a when the bubble will burst.

Four years ago the OECD (The Organisation for Economic Co-operation and Development) released a report revealing that: “AUSTRALIA had by far the most overvalued houses in the Western world, with prices 52 per cent higher than justified by rental values.” The report went on the say: “Australia was one of four countries where house prices were most out of line with fundamentals and that a correction of these inflated prices could generate an economic downturn, affecting growth, employment, government budgets and bank lending.”

So now in 2009 four years later we are in the middle of the biggest financial meltdown in the history of the world and our house prices have increased? I know Australia is a great place to live, but it just does not add up. Successive governments have subsidised the property bubble to an extent with first home owner grants and bonus’s, but that makes up a small part of the overall market. Why does our bubble continue to inflate, when will it burst and what will be the fallout for Australian residents and home owners? What will it mean for our major lenders and superannuation funds?

Consolidate your debts as soon as possible, get ready for a some rough property investment weather, but be ready to take advantage of the recovery if you can.

Is this the start of a trend?

Maybe Australia is not as insulated from the world wide property bubble as we would like to think?

A Second consecutive quarterly fall in the Established House Price index may well be the precursor for more dramatic falls in 2009, despite the Federal Governments interest rate cuts and First Home Owner Boosts.

The Australian Bureau of Statistics provides quarterly estimates of changes in housing prices in each of the eight capital cities of Australia.

The information is presented in the form of price indexes and is published quarterly.

The following is an exert from the ABS July to September 2008 quarter paper released 3rd November 2008.

“SEPTEMBER KEY POINTS

ESTABLISHED HOUSE PRICES

Quarterly Changes
Preliminary estimates show the price index for established houses for the weighted average of the eight capital cities decreased 1.8% in the September quarter 2008.

The capital city indexes fell this quarter in Brisbane (-3.3%), Canberra (-2.5%), Melbourne (-1.9%), Sydney (-1.8%), Perth (-1.1%), and Adelaide (-0.1%), and rose in Hobart (+0.7%), and Darwin (+0.1%).

The movement in the preliminary established house price index between March and June quarters 2008 has been revised from an estimated decrease of 0.3% to a decrease of 0.2%.

ANNUAL CHANGES (SEPTEMBER QUARTER 2007 TO SEPTEMBER QUARTER 2008)

Over the year to September quarter 2008, preliminary estimates show that the price index for established houses for the weighted average of the eight capital cities rose 2.8%.

Annually, house prices rose in Adelaide (+9.7%), Melbourne (+8.1%), Darwin (+6.4%), Brisbane (+5.6%), and Hobart (+2.4%), showed no change in Canberra (0.0%), and fell in Perth (-4.1%), and Sydney (-0.4%).

The movement in the preliminary established house price index between June quarters 2007 and 2008 has been revised from an estimated increase of 8.2% to an increase of 8.6%.”

This information is generally hidden away and scantly reported by the popular media. I find it interesting as it contradicts the reports by most media outlets. The information is useful If you are buying an established house.



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In brief, The First Home Owners Grant has been given a boost as follows:

First home buyers who purchase established homes will now receive a grant of $14,000

First home buyers who contract to build a new home or purchase a spec type, newly constructed home will receive a grant of $21,000.

To qualify for a grant you must have never owned or had an interest in a residential property other than a block of vacant land. The same seems to apply if your spouse/domestic partner previously owned a residential property anywhere in Australia. According to the SA government fact sheet, a spouse/domestic partner must be included on your application.

The boost is applicable to contracts signed between October 14 2008 and June 30 2009.

For clarification of your position I suggest you contact a reputable mortgage broker, they will also be able to advise you about which lenders can be used to take advantage of the grant. You may also want to consult the relevant Government Department in your state. I also suggest you get information on the First Home Buyers Deposit Saver Scheme as well.

Property developers and vacant land owners should benefit from these changes the most. So if you have a piece of land that has development potential, get moving. This is why I like investment properties on their own title. The opportunities for wealth creation are always there, even in tough economic times.