Australian Mortgage and Loan Information

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.

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.

Our Australian real estate economy as I call it, continues to teeter on the brink of disaster.

I call it the real estate economy, because if you are like me, my house is my most important asset and my life revolves around making it comfortable, maintaining, improving and keeping it. My jobs and money making enterprises are generally a means to this end.

Why are we on the brink of disaster? Banks are ripping off small business and the public alike by not passing on the rate cuts. They are being wasted on bank profits and extremely obscene salaries for bank executives.

Thousands of jobs are disappearing daily as small business is forced to cut back on expenditure. People will be forced to sell their homes because the banks have not passed on the RBA interest rate cuts. Major Bank’s continue to overcharge mortgage holders for their finance, official interest rates are at an all time low of 3%, yet small business pay in excess of 6%. The majority of small business use residential real estate as their surety for their business loans. So as small business’s start to go under as predicted, the Australian banks will have plenty of residential property to sell as they foreclose on mortgages and we know they will flood the market like they did in the late eighties as it seems all the Bank CEO’s have memories similar to fish, they can be caught time and time again on the same hook and maggot. All this on the back of a Government deposit guarantee, that effectively bailed out the banks. The guarantee is indirectly from the very taxpayers they are ripping off.

The remedy?

The Government needs to put a cap on first mortgage loans. A figure of 2% should be plenty. That is, if official cash interest rate cashs are 3%, then the standard variable first mortgage rate would be 5%. If the RBA lower rates by .25% then the maximum rate for this mortgage would come down by a similar rate. The bank’s however, would be given a period of 15 to 20 days to adjust the rate.

Cheaper money for small business will stimulate the Australian economy in general, but the important boost will be to the real estate economy as the cost of keeping and obtaining a home will be more sustainable.

Write to your local MP if you agree with my sentiments. We can as a group achieve change.

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.



The Secret Vision Book is a wonderfully illustrated, easy to use e-Book that will change your thought process from unsuccessful to successful and happy using The Secret DVD philosophy. Did you know that 97% of people who watch the secret DVD or read the books from The Absolute Secret range will fail to apply the principles? Why? Because, they don’t know what to do next. The Secret Vision Book is a working system in which you can record all the things you want to attract into your life.

Check Your Mortgage Documents

Unfortunately, I know someone who is having to sell their home at the behest of a Lender. This is real mortgage stress.

The lender has demanded a loan be repaid or refinanced within 30days. So much for the mortgage holiday deal?

Their problem stems from having a cocktail of home loans on their residential property. One of their loans is a line of credit. Unfortunately they did not read their mortgage documents thoroughly. By not keeping their line of credit mortgage active and under it’s limit, they have trigged the lenders get out clause. If they can’t refinance the line of credit, the other home loan will also have to be refinanced. They had something called an all monies contract.

I have referred them to a mortgage broker who assures me he can help them. However, I think this situation highlights the need to read the fine print of your mortgage documents and get advice if you don’t understand what you read.

In the current economic climate, lenders will be inclined to manage their risks quite harshly. So please get your mortgage doc’s out and get an understanding quickly.

Home Loan Mortgage Offset Account

A few extra dollars a month paid off your mortgage can result in substantial reduction in your overall payments and home loan term. However, if you have a good regular income and can save. Why not consider a home loan with a FULL offset facility. This quick and simple option helps you keep your financial eggs in slightly separated baskets giving you a lot more control over your financials.

How does it work?
A home loan mortgage offset savings account is simply a bank account linked to your loan account. The balance of this account is offset against the amount you owe on your mortgage. With a full offset account, you effectively only pay mortgage interest on the difference. On partial offset accounts, the offset may be only 50%. Check with your lender. Generally the features of this offset account are similar to a statement savings account, meaning you can come and go as you please, however some lenders require you to meet a minimum balance requirement.

Over time, savings in your offset account can help to reduce the loan principal, allowing you to pay off your loan sooner or build substantial equity.

Example: Obama and Michelle have a $500,000 mortgage and $100,000 in their linked 100 per cent offset account. The principal of their $500,000 loan is reduced by the $100,000 in the offset account to $400,000. As a result, interest only accumulates on the $400,000 balance of the loan. Obama and Michelle continue to make their normal repayments on their entire $500,000 principal and interest loan. Over a number of years, both the principal and interest on their loan are repaid faster. At the same time they have a savings account they can use for emergencies or for retirement planning.

If you don’t have this facility, find a lender who will work with you who does offer this feature.

Reputable Mortgage Broker

It is time to take a closer look at your home loan.

Yes it is time to put your loan through its paces and compare it to other home loan contenders. You might find that you can save your self a heap of cash by simply taking out a new mortgage to replace your current mortgage. In any case it is worth having a mortgage check up. I suggest you get two opinions. Choose a reputable mortgage broker and your current Bank as your mortgage doctors. The mortgage broker should give you a fairly unbiased opinion and your Bank should want to keep your business, so it would be in their best interest to give you incentive to stay with them. In either case, it will be wise to ask for their recommendations in writing. Their recommendations should also be in short summary or table form to allow you to make a informed comparison.

Some of the important items to compare are:

Interest rate?
Administration Fees?
Can loan be increased without total refinance?
Can I fix the interest rate on a portion of my loan up to 5 years?
Is there a 100% Interest offset account available for your loan?
Is there a repayment pause facility available?
How is interest calculated?
When is interest debited to your loan?
Can I make extra payments?
Can I redraw some of my loan, and if so what are the conditions?
Have I any Lenders Mortgage Insurance?
Can I change the term of my loan?
What Banking packages are available for me, and how will they help me?

You should make your own list. Be as thorough or as concise as you see fit. Stick to your guns and get a better deal.

A Reputable Mortgage Broker

Basic Variable Home Loan.

Basic Variable Home Loans are generally the most inexpensive home loans available. They are inexpensive as they generally do not have all the bells and whistles that Banks and other Lenders add to their more profitable products. A Basic Variable Home Loan will suit most home buyers. Especially if you are the kind of home buyer who likes to pay their debts off quickly.

A Basic Variable Home Loan will provide you with the absolute essential for Home Ownership. It will provide the money to help you purchase your property. The maximum you can borrow is generally up to 95% of the purchase price of the property subject to a lenders valuation. Some lenders will lend up to 105%.

Your Basic Variable Loan will most possibly be a Principle and Interest Term Loan for a period of 1 to 30 years. Principle and Interest means that your payments will pay off both the interest the Bank or Lender charges for your loan and some of your original loan amount. Some progressive lenders will allow a period of say 10 to 15 years of interest only. Interest only is an important feature.

Most Basic Variable Home Loans also offer you a redraw facility at a certain level, internet and phone banking access, loan increase availability, no early repayment fee, unlimited extra payments and choice of payment frequency.

Another important feature offered by many lenders is a full offset account. This is a very worthwhile feature and can help you pay off your mortgage more quickly.

These Basic Variable Home Loans have a lot to offer no matter what the direction of home loan interest rates. They are worth considering for both refinance or purchase.

Private sector house approvals fell 13.1% in December 2008 according to the Australian Bureau of Statistics.

Why is this good news? Less new dwellings being built, mean tighter supply and a probable increase in value for current stock, well that’s the theory anyway.

The reality is Australian home affordability is out of kilter with wages and incomes.
So instead of home ownership being right of all Australians, it is for now, an elite privilege.

I also see the Government’s tax revenue (It’s major income source) is down 19% for the September 08 quarter, yet it’s expense’s rose across the board. The Governments credit card is close to maxed out. Tax revenue will have to increase, or we may find the government shedding jobs. What will that do for property values?

My research into commercial properties has revealed the market to be dead in the water. Sellers are asking premium price, buyers in the main are adopting a wait and see policy.
Drive around a factory precinct near you, count the deserted properties. My gut feel is for a 50 to 60% drop in values for these properties shortly.

It is time to re-evaluate your banking, you want to cut fees, consolidate your debts, check out better deals, whatever saves you money. Get some loan checking software and use it to check your credit cards, business loans and home loans.