Australian Mortgage and Loan Information

Bank errors can occur at all stages of your home loan application and administration. Home Loan Bank Errors are costly.

A little bit of homework before you commit to a home loan can save you hundreds of dollars per month on your mortgage payments. Using free home loan calculators like the Commonwealth Banks home loan calculator will help you get a quick understanding of your required budget and provide some evidence in case a bank tries to overcharge.

Playing around with the figures will also let you know the result of future interest rate rises.

There are other free calculators available including personal loan and debt consolidation all worth a look.

Another calculator that can save you money is the Mortgage Watchdog home loan statement checker. You can download a free trial and check your statements for errors very easily.

Continued capital appreciation is almost assured as the shortfall or gap between available housing and that needed continues to grow. This, coupled with the Rudd government leaving capital gains tax concessions alone more than balances the Reserve Bank interest rate rises. If you take a look at historical rates for the last 50 years, we are still in good shape as far as rates go. I do however think that rates need to remain steady to encourage property development.

The following article sums things up:

Mortgage Watchdog.

From NMDDATA.COM.AU

“Housing supply deficit widens

“The fact of that of the national under-supply, half of it is in Sydney, it’s going to take a long time to turn this around. We expect housing shortage to get worse over the next five years and it’s an underpinning factor for price growth, which is going to be pretty strong,” said Braddick.”

Maybe it is time to add to your property investment portfolio. Speak to your mortgage broker and find out your borrowing capacity.

The only way is up it seems.

Unless soaring house prices abate somewhat, expect more rate rises in the very near future.

Reading the recently published RBA board minutes, it seems the RBA has pinned part of the blame for soaring house prices on the state and local governments. The RBA thinks most state governments have lacked the desire to address the fundamental tightness of housing markets. They are not releasing land for development, and most don’t have a long term strategy for future release. More land needs to be released now, developers and investors need to be encouraged.

The very landscape of Australian society will change for the worse if we do not act now. You never know, we may soon have our own “shanty towns” and the edge of the major cities. Population growth among recent immigrants is fantastic and will not be curbed by assimilation to our “old growth” population habits.

The RBA makes a pointed reference about local and state government in the latest minute release.

“Information on the housing market suggested that conditions remained buoyant. Nationwide capital city price growth was running at around 1 per cent per month in early 2010, and auction clearance rates had remained high in March, especially in Melbourne. Members discussed the factors contributing to the recent strong price growth. On the demand side, population growth was strong, households had confidence about future income growth, and mortgage rates were at below-average levels. At the same time, the supply of new housing was not expanding sufficiently, partly because of the land usage policies of local and state governments and also because of the tightness of finance for developers. Members also noted that the current price growth was somewhat at odds with the falls in housing loan approvals over recent months.” (www.rba.gov.au, Minutes of the Monetary Policy Meeting of the Reserve Bank Board Sydney – 6 April 2010)

Maybe it is time to diversify your home loan. Perhaps a mix of fixed rate and variable with a full offset against the fixed rate. Even an offset against both loans would be handy. Make friends with a reputable mortgage broker get the inside information about your home loan provider instead of just the sales speak.

My opinion is that the RBA may have raised rates too quickly, home loan approvals have now fallen for 5 straight months.

Speak to your mortgage broker, find out what your borrowing capacity is. Prepare to take advantage of some bargains as people try to offload homes in the mortgage belts. 2010 may just be the year to start your residential property investment journey.

Owner occupier Home Loan approvals in Australia are down. The Australian Bureau of Statistics reports the number of owner occupied housing loan approvals dropped 4% in February 2010 as compared to January 2010. Loans for the construction of dwellings also decrease 2.8%.

So the RBA puts up interest rates in April?

The message, get ready to cash in on some bargains in a rising property market.

If you have the capacity and are contemplating buying an investment property, start making ridiculous offers on house’s you like. The higher rates go and the nastier the banks become, the tougher it will be for those who are highly committed.

Many will be tempted to sell. Be ready to be ruthless. There will be no place for compassion.

Your rents should reflect rental demand. The government will have some hand out available for those who need to rent, so charge as much as you can.

You need a competent mortgage broker if you are going to get the best mortgage finance deals. Shop around and get your advice in writing.

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.

Rate Hiked Again.

Australian Home Loan Interest Rates Hiked 25 Basis Points

The RBA board has decided in its wisdom to raise official interest rates again. The third time in three months. The reasons are not plain to ordinary small business people or home mortgage holders and in my opinion, way to optimistic. The financial crisis is far from over at street level. Lending is tight and many properties very much overvalued.

The latest rate increase means a person who has a 30 year $300,000 mortgage is now going to pay $150 more per month than they would have before this latest hat-trick of interest rate hikes.

So how can you keep your sanity and reduce the effect of these rude, unnecessary and Christmas Grinch like increases?

Increase Your Loan Term:
Contact your broker or lender and see if you can stretch your payments over a longer period. This will lower your current monthly payments and assist your cash flow. The drawback is unless you can eventually pay more monthly, you will pay more interest to your lender over time.

Switch To A No Frills Loan:
Consider switching your home loan mortgage to a no frills operator like MyRate. You don’t really need a branch network to help manage you home loan, you have the Internet. The rate will be lower the only hassle may be getting your current lender to co-operate quickly.

Consolidate Your Personal Borrowing:
It may be a good time to assess the need for those credit cards. Fold your debt into your home loan and cut up the cards. You may not feel as affluent, but you may just enjoy your life a little more without the financial pressure. If your current lender wont help, get a reputable broker to help you.

Fix Your Rate:
You may think the horse has bolted here, but maybe fixing half your loan will at least give you some certainty moving forward, without getting caught out if rates fall, if the financial crisis/credit squeeze worsens.

Earn So Extra Cash:
Start a home based business in your spare time and use the profits to pay off your mortgage.
A Kiwi named Mark Ling has a few ideas. I am currently trying to copy his methods. An extra $500 per month will come in very handy to thwart the RBA and the Lizard conspiracy.

Or you could sit back, do nothing and see if the predictions about 2012 are correct. If they are the mortgage will not be such a worry.

Reflecting on the fees charged on a clients home loan I thought I would look up the RBA to see if there was any info on how much bank fees had increased over the last decade.

What I found makes interesting reading in light of the massive cuts to local jobs and outsourcing to foreign countries the banks and other financial institutions have proudly touted as the reason we “Australians enjoy the best value for money banking in the world.”

From the Reserve Bank Of Australia, Statistical Tables:

Average home loan fee income per Australian Household.

1997 $302 per household

2008 $1045 per household

That is a 246% increase in 11 years. 22.5% per year!

I guess loans are bigger now, but this is fees, not interest.
If you are getting gouged by high home loan fees consider refinance.

Transaction account fees per Australian Household.

1997 $431 per household

2008 $1792 per household

That is a 315% increase in 11 years. 28.5% per year!

Increase must be for all the convenient services they offer? We are being gouged.

Credit Card Fees per Australian Household.

1997 $135 per household

2008 $332 per household

That is a 146% increase in 11 years. 13% per year!

Competition is keeping these fees under relative control.

Total bank Fees for all Accounts and Loans per Australian Household.

1997 $1160 per household

2008 $4845 per household

That is a 317% increase in 11 years. 29% per year!

So the big four major banks cry poor, do not pass on RBA interest rate cuts, increase home loan rates above RBA increases, continue to send jobs off shore and use 1950′s like lending practices. So much for CPI and the reasons we need high home loan rates. Bank fees are a catalyst, just like fuel costs, for bringing inflationary pressure to bear on home buying Aussie battlers. I say we need more competition in the banking sector.

Please check your loan statements for errors, I recommend you do it every month. If you get your statement six monthly, get access to transactions on-line and check them monthly. Fee income as you can see is a bounty for banks, don’t let them pirate more of your hard earned income than they are entitled too.

The RBA controls interest rates to an extent, and historically rates are not that volatile compared to other developed countries.

I received the following email from my mortgage broker today. Because of my diverse income streams I used lo doc for one of my loans. He is touting for business I am sure, but the letter also drives home the fact that we have a very different lending environment going forward into 2010.

Here’s the letter:

“I am sending you this email to advise you of some SIGNIFICANT changes that have occurred in the Low Doc market over the last few months.

4/ If you want to buy another Investment property”

I personally think we are returning to the nasty old days like in the 70′s, this means less people able to get loans and a stagnant property sector. I hope I am wrong. Take a look at interest rates in the 70′s, they are high, but not that bad. People just could not get a loan and banks were stupidly tough with lending. However the bankers of that day did not enjoy the extreme bonuses of their counterparts today, so I am guessing the rouges of Martin Place and Collins Street will find a way to gain from others misery.

Now, may just be the time to fix some of your loans for a year or two.