Australian Mortgage and Loan Information

Property Investment in Australia is still very much in vogue. There are small fortunes to be made in the suburbs of all major Australian cities and despite the roller-coaster ride many property investors have endured with interest rates, property is far and away Australia’s favorite investment asset. I came across this article regarding the value of land and think the content is of value to all prospective or current property investors.Very enlightening article about land value and property investment.

The article is quite lengthy, but worth reading to the end.

My mortgage broker and I both agree that your should consider property investment a business venture and as such approach it with a pragmatic business like manner. Consider the net result. The net result is where the numbers really need to stack up, taking into account negative gearing and investment property tax.

Also explore the benefits of an interest only investment home loan.

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.

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.

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.

">/0.jpg" alt="YouTube Preview Image" />

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.

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.