X Inc Finance

Sydney property investors look set to make further gains after the city’s already low rental vacancies tighten further in May, a new report has shown.

Recent figures from the Real Estate Institute of NSW (REINSW) reveal that rental vacancies in Sydney are now at around 1 - 1.5%, a situation which offers the promise of good potential rental yields to property investors.

Sydney’s outer suburbs, those 25km or further, have been high on the shopping list of tenants out to get more affordable rent options, according to REINSW.

While first home buyers have dominated the housing market in the first part of 2009 thanks to the First Home Owners Grant Boost, property investors had been sidelined, but that may be about to change.

If you are considering investing in property, one of the ways of maximising the returns on your property investment is obtaining an investment loan package that offers a competitive interest rate and the right set of loan features that will cut down your borrowing costs.

An experienced investment finance mortgage broker can help you assess your investment loan options and help you negotiate a competitive finance structure.

NSW and SA home buyers will soon have the overall cost of purchasing property reduced when new stamp duty changes take effect in the two states.

NSW stamp duty has now been slashed by 50 per cent for newly constructed properties with a property value of up to $600,000.

The stamp duty discount which will run until December 31, 2009, is part of the NSW Government’s Housing Construction Acceleration Plan.  Home buyers may also see the discount extended into 2010 dependant on the results of a review to be conducted towards the end of the year.

In South Australia, stamp duty on all mortgages has been permanently removed from today.

To find out how the NSW and SA stamp duty changes affect you or to get an overall assessment on your home loan costs, talk to your local mortgage broker.

Housing credit increased by 0.5 per cent over May, following an increase of 0.6 per cent over April, the RBA revealed today.

According to RBA figures, housing credit rose by 7.0 per cent over the year to May mostly as a result of owner occupiers.

Propped up by historically low interest rates and the generous first home buyers boost, the owner occupier segment experienced strong growth in lending .

Lending to investors on the other hand, experienced weak growth with an increase of 0.1 per cent for the month and 3.8 per cent.

Source: RBA, Mortgage Business

X Inc panel lender Westpac has taken back-to-back Canstar Cannex First Home Buyer Awards.

CANSTAR CANNEX evaluated 403 loans from115 lenders to determine which lender offered the total home-buying experience.

The process involved a review of printed and web-based educational material, the home loan application process, level of access to a real person to provide that guiding hand and products and features tailored specifically for first home buyers.

CANSTAR CANNEX said Westpac ticked all the boxes with its impressive loan products designed for first home buyers which incorporate discounted application fees.

It also noted that Westpac offers a higher loan-to-value ratio (LVR) to first home buyers which means that first time buyers need less of a home loan deposit.

Westpac trumped competitors in every Australian state and territory, except Canberra (St George) and South Australia (BankSA).

A new consumer guide to reverse mortgages has been launched by the Australian Securities and Investments Commission and Financial Literacy Board.

The guide, `Thinking of using the equity in your home?’ has been designed to assist people who are considering whether an equity release product is right for their individual circumstances.

ASIC chairman Tony D’Aloisio said people often find it difficult to understand reverse mortgage products.

‘One of the big challenges is how to estimate the long-term cost of reverse mortgages and ensure there is enough equity left to fund future needs.’ Mr D’Aloisio said.

‘When someone considers using the equity in their home, it’s a big step involving what is probably their most valuable asset. While equity release products can give you benefits they can also have significant risks’ said Mr D’Aloisio.

Paul Clitheroe chairman of the Australian Government Financial Literacy Board said in a statement at the launch, that a reverse mortgage product was just one of the many options available to homeowners who need additional funds.

A reverse mortgage allows homeowners to use the equity in their home as security to borrow money.

The products are generally only available for homeowners aged 60 or over, you don’t need an income to qualify and you don’t need to repay any money while you live in your home.

To ensure that you understand all the risks and benefits involved in obtaining a reverse mortgage, talk to an accredited reverse mortgages mortgage broker.

Borrowers facing employment hardship will soon have a mortgage reprieve, after Australian retail banks, building societies and credit unions signed up to the government’s mortgage relief plan.

Federal Treasurer Wayne Swan yesterday announced that all members of Abacus and the Australian Bankers Association (ABA) had signed up to the government’s “Principles”, which aims to support borrowers facing employment hardship.

“I congratulate ABACUS, ABA and all of their members for working cooperatively with the government on behalf of their customers,” he said.

“These Principles will ensure that families finding it tough to pay off their mortgage in the face of the global recession are fairly treated by their bank, building society or credit union.”

Borrowers will now be offered options that are typical of mortgage hardship variations such as postponing mortgage repayments for up to 12 months, an extension of their loan contract, interest-only breaks on loan repayments and fee waivers.

“These options won’t be appropriate in every case,” Mr Swan said, with lenders to make assessments on each borrower’s ability to meet new contractual obligations in the long-term.”
Source: Mortgage Business

St George has joined its peers in increasing its fixed loan rates, raising its three year fixed rate loan by 50 basis points.

The three year fixed rate loan product now sits at 6.49 per cent and is on par with NAB, which lifted its three year fixed rate on Monday.

The title of lowest fixed rate mortgage now belongs to ANZ’s three year fixed rate home loan which sits at 6.34 per cent, while CBA’s three year fixed loan is the highest at 6.69 per cent.

Standard variable mortgage rates from the major lenders currently sit at:

• NAB – 5.74 per cent
• CBA - 5.74 per cent
• St George – 5.79 per cent
• Westpac – 5.81 per cent
• ANZ – 5.81 per cent

Your local mortgage broker has up to date information on the latest fixed loan rates, variable mortgage rates and can help you find a loan product that is tailored to your needs. Simply click here to find your local mortgage broker

Source: Mortgage Business

The Commonwealth Bank of Australia will raise its variable home loan rate by 10 basis points to 5.74 per cent.

CBA’s fixed rate home loans will also rise by 0.1 per cent from 5.13 to 5.23 per cent.

Citing the increased costs of long-term funding, Ross McEwan of the bank’s Retail Banking Services says the decision was made reluctantly.

“We fully understand that any increase in interest rates impacts on our customers and for that reason have continued to absorb as much of the additional funding costs for as long as we could,” he said in a statement.

“Unfortunately, we have seen the bank’s wholesale funding costs remain high and continue to increase as previous long-term funding matures and is replaced with new funding at significantly higher cost.

“At the same time, due to intense competition for retail deposits, the cost of deposits compared to the official cash rate is extremely high.”

The rise could signal another round of rate rises by the big banks that are independent of the Reserve Bank of Australia interest rate cuts.

Earlier this week, mortgage broker Loan Market Group predicted borrowers could soon be seeing rate rises in line with the dramatic cuts made since September 2008.

“There’s every possibility the dramatic rate cuts by the RBA of up to one per cent a month we saw late last year and early this year could be reciprocated with similar types of rate rises,” said John Kolenda, executive director to Loan Market Group.

For up to date information on the latest interest rate movements or to find a competitive mortgage product, talk to your local mortgage broker.

Source: The Australian, ABC News, Broker News

First home buyers and investors are continuing to drive borrowing activity, with the latest ABS data showing an upswing in housing finance activity.

The total value of dwelling commitments rose by 3.6 per cent in April to $21.547 billion, seasonally adjusted, with 28 per cent of all owner occupied deals coming from the first home buyer segment.

The average first home buyer mortgage size also fell by $2,500 to $283,400, despite concerns of a property bubble developing as a result of the first home buyers grant.

Investor finance also fared well, with a rise of 8.9 per cent over the month to $5.497 billion, seasonally adjusted.
Source: Mortgage Business

Australian mortgage holders are finding it easier to pay off their mortgages as home loan affordability continues to improve.

The Real Estate Institute of Australia (REIA) and Deposit Power Home Loan Affordability Report reveals that in the March quarter, just over a quarter (28.6 per cent) of the average family income went towards meeting mortgage repayments.

The figure is an improvement from the March quarter last year, where 38 per cent of the average pay packet went towards meeting mortgage repayments.

Improved home loan affordability has also led to an increase in first home buyer activity.

“With continued increases in affordability we have seen the level of first home buyer activity in the market continue to climb,” REIA president David Airey, said.

According to the report, the number of first home buyers in the market has increased by almost 50 per cent compared to one year ago.

There were 44,487 first home buyers in the market in the March quarter compared to 30,373 in the March quarter last year.

Source: Mortgage Business

RAMS Home Loans has been awarded Non-Bank Lender of the Year in Money Magazine’s annual Consumer Finance Awards.

The X Inc panel lender was awarded the title for its consistent performance across all home loan categories including fixed rate, variable interest rate and line of credit home loans.

RAMS also outperformed all other non-bank lenders with its 2-year, 3-year and 5-year fixed rate loans which were highlighted as offering strong product features, low fees and affordable rates.

RAMS Chief Executive, Melos Sulicich said: “We are proud to achieve the highest status as Money magazine’s Non-Bank Lender of the Year - an honour which clearly demonstrates we have maintained our strong position as a valuable alternative to the major banks in the Australian home lending market.”

“This leading industry accolade is recognition of the outstanding local and personalised service delivered by the RAMS team every day.

“Our impressive choice of innovative and flexible home loan products has proven to be an attractive advantage, assisting many thousands of Australians choose a home loan suited to their individual needs,” Mr Sulicich said.

RAMS offers a number of award-winning product options to help first home buyers, self-employed people, investors and those seeking to refinance achieve their dream of home ownership.

The RBA today left interest rates unchanged at 3 per cent in a move that had been tipped by economists and financial markets.

The RBA attributed the decision to mortgage interest rates and market rates remain at historically low levels, the considerable support provided by government stimulus and the strengthening of the global economy.

In a statement after the rates decision, RBA Governor Glenn Stevens said that prospects were improved by better conditions in global financial markets.

Evidence that the global economy was continuing to stabilise and the considerable policy stimulus in most countries that have been helping to contain the global downturn, and should in themselves support an eventual recovery.

“A pick-up in housing credit demand suggests stronger dwelling activity is likely later in the year. Business borrowing, on the other hand, is declining, as companies postpone investment plans and seek to reduce leverage, in an environment of tighter lending standards,” he said.

St George has raised its fixed home loan rate lending weight to claims that the best deals on fixed rate mortgages may have already come and gone.

St George’s two, three, four and five year fixed rates went up by 30 basis points on Wednesday this week.

St George fixed rates now sit at 5.74 per cent for its two year fixed rate home loan, and 5.99 per cent on its three year fixed rate.

The bank attributed the increase in fixed rates to high prices in long-term money markets.

The move comes as members of the mortgage industry continue to differ on the best time to lock in a fixed rate, with some experts saying that variable rate mortgages may be close to bottoming out.

Mortgage Broker Loan Market Group says many homeowners are unaware that fixed rates move differently to variable rates, catching many out when it comes to choosing the right time to fix their home loan.

Mortgage holders considering fixed rates should first talk to an experienced mortgage broker and find out if it is indeed the right time to fix their mortgage.

Australian homeowners are finding it easier to meet their mortgage repayments, with the May results of a Fujitsu Consulting report showing falls in mortgage stress levels.

The monthly Mortgage Stress-O-Meter results showed that the number of households experiencing mortgage stress has fallen by 3.0% over the past month, easing the financial pressure on thousands of homeowners.

The drops in mortgage stress levels have been attributed to record low interest rates and the Federal Government’s stimulus payments.

Martin North, Managing Director, Fujitsu Consulting said the second stimulus payments have made a positive impact on households experiencing mortgage stress.

“Households have used the payments to pay off credit cards and to make mortgage repayments. The ongoing benefit of these payments will continue for a couple more months.”

Homeowners were cautioned to remain wary of the rising unemployment levels and put in place some mortgage management strategies to create a buffer should someone in their household find themselves temporarily out of work.

Mortgage holders looking for a more personalised mortgage management strategy or prospective home buyers who would like an assessment on their mortgage repayment capabilities, should talk to an experienced mortgage broker.

Tasmania has recorded its highest level of property sales in 18 months as the Federal Government’s First Home Owner Grant Boost (FHOG) continues to entice first home buyers to the Tasmania property market.

The state saw the highest number of property sales since November 2007 with close to 1,000 homes sold, the Real Estate Institute of Tasmania (REIT) has revealed.

Some notable movers were Launceston which recorded an increase in sales of up to 23 per cent compared to the previous month and the North West region where sales went up 18.4 per cent.

“A lot of it is to do with first home buyers and the stimulus that is occurring now,” REIT president of the Peter Bushby said.

“Because of the low entry cost it is very possible for first home buyers to get in on the property purchase scenario as opposed to say Sydney where your entry cost is well over $500,000.

“Here you can be buying for probably as low as $150,000-$180, 000,” he said.

Meanwhile Mortgage Broker, Loan Market Group has advised home buyers to prepare for the inevitable rise in interest rates and have a plan in place, such as a combination fixed variable loan or a fixed home loan rate.

Prospective first home buyers are also advised to talk to a reputable mortgage broker about their mortgage repayment capabilities and ensure that they are in a good position to make a property purchase.

Sources: Mortgage Business, Loan Market

First home buyer loan sizes have jumped by $52,000 - or 23 per cent - in the past two years, raising concerns that first time buyers will face problems servicing their loans in the future, The Australian reports today.

A report commissioned by Brandmanagement, a market research firm specializing in the finance sector has drawn on ABS figures to reveal that the average size of loans rose by $11,400 in the three months to February, after rising by $18,100 in the three months to November.

The figures mean that in total, the average first home buyer loan size jumped by $18,100 in the three months to November.

The huge rise in loan sizes has been linked to the increased first home buyers grant that provides $21,000 for a newly built property and $14,000 for an established property.

In an interview with The Australian, luxury Sydney property agent Bill Bridges expressed concerns that if people are stretched beyond their means through incentives, it may lead to a sub-prime mortgage situation such as that seen in America.

However claims that the increased grant has made first-time borrowers vulnerable to the property market have been dismissed by Australia’s leading independent mortgage broker, Loan Market group.

“The grant has provided stability for the residential real estate sector and those people entering the property market are borrowing under a much stricter lending criteria,” Loan Market Group Executive Director John Kolenda said.

The mortgage broker advised First home buyers seeking to enter the property market to get their home finances checked by an experienced mortgage broker to ensure that they are in a good position to borrow for their first home.

Changes in tax benefits for high income-earners and cuts to superannuation concessions in this year’s Federal Budget have made investing in property an even more attractive proposition for property investors, Ray White Surfers Paradise CEO Andrew Bell has said.

In this year’s Federal Budget, the government announced changes to superannuation that would see to a permanent reduction in the concessions on super contributions, and a temporary cut to the government’s co-contribution payment.

Mr Bell said that measures to halve the cap on salary sacrificing into super, meant that there would be a greater tax rate on sums that would ordinarily have gone into a super fund, thereby creating less incentive for investment in superannuation funds.

“I’d expect to see an increase in property investment from people looking to allocate money, that would have normally been contributed as part of a managed super fund, into the traditional bricks and mortar class instead, and use negative gearing as a means to offset tax.

“The long-term price growth of property will make this a more attractive proposition than leaving money at the whim of future federal governments who could change the super laws at any stage.

“Not only will super fund property investments allow for high returns through capital growth, but they will enable funds to be bolstered by rental returns.

“The security of bricks and mortar is becoming more and more attractive, particularly considering sharemarket volatility, the low interest rates, and now significant changes to tax and superannuation policies. Rents are rising, returns are solid, we have a housing shortage in Australia, and we are at — or close to — the bottom of the cycle, making it a very good time to get into the market.”

Property investors may also look into options such as self managed super fund loans that allow superannuation property investment. For information on super fund loans from an accredited SMSF Leveraged Investment Accredited mortgage broker or to find a personalised investment finance package, click here to talk to a mortgage broker.

Borrowers may have a long wait before the RBA delivers further interest rate cuts, as the central bank maintains a watchful eye on early signs of an economic recovery.

Minutes from the May 5 RBA board meeting showed that the choice came down to either easing monetary policy or keeping interest rates on hold “pending further information on how economic and financial conditions were unfolding.”

The RBA decided to leave interest rates unchanged at a 49-year low of 3 per cent.

 In assessing the need for further interest rate cuts, the RBA indicated that they “would continue to monitor the strength and durability of the tentative signs of an improvement in the global and domestic economies.”

Economists said there was doubt as to whether the RBA would cut interest rates further after Governor Glenn Stevens said there were expectations of a return to growth this year.

Getting a home loan without genuine savings will soon become a thing of the past as more lenders move to tighten their lending criteria surrounding high LVR loans.

Bankwest and Homeloans Ltd are just the latest lenders to tighten their credit policy and require borrowers to demonstrate genuine savings.

Effective today, Bankwest will require 5 per cent genuine savings for purchases where the LVR is greater than 85 per cent, while Homeloans Ltd will impose the same requirement tomorrow.

The lenders’ decision to factor in genuine savings requirements is line with a move by the majority of lenders to tighten their lending criteria.

Currently, Westpac and ANZ borrowers must show 5 per cent genuine savings for all home loans where the LVR is over 80 per cent; Commonwealth Bank of Australia borrowers require genuine savings where the LVR exceeds 85 per cent.

Alternative Genuine Savings Options

There are still a number of options for borrowers who find it difficult to meet genuine savings requirements. First home buyers could use the federal goverment’s first home deposit saver scheme to save a larger deposit faster.

Family equity products that allow you to use the equity in a family member’s existing property have also gained popularity in recent times.

To find out what your genuine savings options are or for professional home loan advice, click here to talk to your local mortgage broker.

In a move that has been welcomed by first home buyers and key players of the mortgage industry, the Federal Government last night extended the First Home Owners Grant Boost as part of the federal budget.

The increased grant will now be extended until September 30, after which it will be phased down to $10,500 for existing homes and $14,000 for new homes until the end of the year.

In recent months, the Federal Government had come under pressure from various stakeholders in both the mortgage and real estate industries to extend the first home buyers boost.

The success of the boost was exemplified in yesterday’s housing finance figures from the ABS that showed housing finance rose a further 5 per cent in February, representing a 24 per cent increase in finance approvals in just six months.

First home buyers as a proportion of all buyers also rose to a new high of 27.3 per cent, compared to 26.5 per cent in February and 16.4 per cent in March last year.

The extension of the increased first home buyers grant is expected to help continue to propping up the property market and building construction.

Source: Mortgage Business