Australian Mortgage and Loan Information

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.

Have we seen the last of the RBA interest rate rise’s for 2010? I hope so. Yes, homes are more expensive, but I now think wage’s will adjust.

Australian’s that I come in contact with seem to have overcome their addiction to retail therapy.

If you are working in retail, you may find you will be doing more hours and being asked by your boss to do some unusual promotion.

From the media releases › 2010 › Statement by Glenn Stevens, RBA Governor: Monetary Policy Decision:

“With the risk of serious economic contraction in Australia having passed some time ago, the Board has been adjusting the cash rate towards levels that would be consistent with interest rates to borrowers being close to the average experience over the past decade or more. The Board expects that, as a result of today’s decision, rates for most borrowers will be around average levels. This represents a significant adjustment from the very expansionary settings reached a year ago.

The Board will continue to assess prospects for demand and inflation, and set monetary policy as needed to achieve an average inflation rate of 2–3 per cent over time.”]

The message is mixed, but my gut feeling is the board think the economy is in a boom/bust wave. The RBA understands that “Mining” is not a sustainable industry. It produces very few real jobs and uses massive amounts of public sponsored infrastructure. When the ore runs out or a new product replaces the old “made from iron”, the mining executives will probably go back to banking and the workers on the dole. Property price’s will adjust and a new cycle will start.

As home buyer’s and a property investor’s we can only deal with our own micro economies. We have to talk to our mortgage brokers and bankers and get the best deal we can for our circumstances.

Oh! And please check your loan statements for errors. I recently got charged twice for a line fee on one of my loans. It took three weeks to get it refunded. Interest rate increases are a prime time for lenders to make errors.

Reputable Mortgage Broker.

Mortgage Watchdog Software.

Please watch the video, if you have not seen it, you will be shocked!!

I highly recommend this software. Go to the website and check it out for yourself and try it for free.

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Mortgage Watchdog.com.au

Thanks for coming to my blog.

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.

Big Bank Rip-Off Exposed

The bad news of the day is that the RBA has increased its cash benchmark
rate by 25 basis points (to 4.25%).

The RBA has been spooked by real-estate data indicating an Australia wide increase in property prices.

Making it hard to borrow or hard to repay is one way to curb home owner or prospective home buyer enthusiasm.

So what can we do? Already Australia’s biggest home lender the Commonwealth Bank, has announced that it will increase its variable rate by the .25% starting this Friday. The rest of bailed out banks will no doubt follow suit in the days ahead.

Try and pay off all your loans and credit cards as quickly as possible. Chop up your card if you can, or at least take some time to understand how a debt consolidation loan may help. Sell your second car, car pool or take the bus. Switch to Naked DSL instead of a land telephone line. Search for a cheaper power supplier or embrace solar energy. Put in a water tank. Grow a veggie garden. Start jogging instead of going out. (You can meet some really interesting people jogging on the beach.) Brew your own beer. Get the idea? I think we are headed for a big recession, but the RBA thinks it has some divine providence after it flukes the idea of dropping of interest rates in 2008 and 2009.

Better to be ready, and who knows, luxury items and big TV’s may be cheaper next year.

Foot note: When rates go up banks make mistakes. Check your Home loan statements

At the moment whether or not to fix your home loan is the one million dollar question. New data suggests rapid rate increase’s for the next few years.

Commonwealth Bank Economist Savanth Sebastian points to the possibility of continued growth in the Australian property sector. Although this fly’s in the face of my personal opinion, what he has to say makes perfect sense.

Whilst paying tribute to the Rudd government and Reserve Bank’s aggressive fiscal and monetary policy for insulating Australia from the global financial crisis, he points to Australia’s fastest population growth in 40 years being a key reason for the buoyant property sector.

“In simple terms, more people translates to
increased spending and demand for homes, and as a result,
increased momentum for our economy”.

He also states: “Over the past two years an additional 77,300 people have called Australia home” and that: “The new data indicates why the demand for homes continues to soar and the supply of homes isn’t keeping up, ensuring that overall house prices remain robust.”

My opinion is that the RBA may ramp up their rate increase program on the back of this data. Fixed rates are generally a full 2% higher than standard variable at the moment so the Banks already factored in a substantial rise.

If you are already on a tight budget, you may well be advised to enquire with your lender regards your options. I for one will not be fixing, but do your sums.

Historical Home Loan Rates.

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.

Australian Bureau of Statistics, population data for the 12 months ending June 2009 shows that, Australia’s population has posted its highest 12 month gain in 40 years. Our population exploded by approximately 443,000 or 2.1% to 21,875,000. Even though we are down on the new baby count, the fact that we are living longer has helped this figure along as has the approximately 286,000 new migrants.

I interpret this data to mean that our residential property market will bounce back strongly over the medium to long term particularly in the beachside and leafy established suburbs.

My mail is a good percentage of the migrants are reasonably well healed folk looking for a little sunshine and a little less militant religious fervor.

Consider taking on a little debt and get yourself a piece of this good earth is my tip. I will not be surprised if values doubled in these areas over the next 5 to 10 years, because of demand.

Find a decent mortgage broker you can make a professional conection with. Even consider an equity finance mortgage. Remember, if the property value doubles, you will be sitting pretty.

I also recomend you take some insurance on your income and look to diversify your income.  A hobby can sometimes be a great way to supplement your family income.

Pay off your mortgage using the internet and your home pc.