October 2011 Newsletter
Welcome to our October Newsletter.
There have been some interesting articles of late about interest rates by various lenders and how the market has dropped. If you were watching the ‘Renovaters’ – Auction Night it was clearly evident that people are very cautious at the moment despite how many turn up at auctions. This means that there are some opportunities out there.
Basically because there is not much new business out there in the market due to people paying down debt and not borrowing, lenders have decided to see if they can entice you to move. Beware of the quick verbal response by a lender that your loan is approved, because it isn’t. You will still have to supply all the paperwork and get the loan assessed.
If you are thinking about refinancing then talk to your broker because they can help you with the paperwork and tell you about current products and which one suits you best. They are not all the same, regardless of what they say.
By the way, we have a lender with a 6.97% pa variable interest rate home loan with NO Application Fee. If you would like to know more then give me a call on either (02) 8060 0618 or 0410 520 777.
With rents on the rise it might be time to think about buying an investment property? If you are interested in receiving a discount of $30,000 - $50,000 off the property list prices then we have a group with exceptional opportunities to buy premium grade property investments at prices not available to the individual buyer.
They will teach you how to buy property at ‘wholesale’ prices so that you can access high yielding property with proven capital growth outlooks. If you want to know more then give me a call.
Enjoy the read.
Richard.
Banks must resist the urge to relax lending standards in a low credit growth environment, the RBA was warned. 
Fixed rate home loans rose dramatically as a proportion of all mortgage loans written in September, according to Australian Finance Group.
inflation "may have taken a breather" following a spike in the first half of the year, new data indicates.
The abolition of stamp duty is unlikely to happen anytime soon, an economist has stated.
Let’s not avoid the elephant in the room. We all want more my friends! Bigger, better, brighter, faster, longer, higher, greater, smarter… affluenza is not a dirty word and nor should it be. There is opportunity abounding throughout the sweeping plains, ragged ranges and wide brown lands of our island home. When the hard work is done and the money is in the bank, why shouldn’t you look up the hill a little and wonder what the view might be from the top?
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A Sydney real estate group has claimed a 20% spike in first homebuyer enquiries ahead of changes to stamp duty concessions in NSW.
At Residex, we like to look forward with a sense of optimism. It is this and the fact that, more often than not, our predictions are on the money that sets us aside from any other company in the industry.
Home loan competition between the banks has primarily benefited high income earners, it has been claimed.
The International Monetary Fund has called Australia's economic performance "enviable", but warned that the RBA may need to further tighten rates to fight inflation.
Housing affordability problems can be laid at the feet of government, a CEO has claimed.
Unit rental prices are edging upwards, and are now approaching those for houses in most capital cities.
Consumer sentiment has seen a mild up-tick in October, but Westpac says Australians remain pessimistic overall.
Speak to us about getting access to below market value investment property and how you can save on your next purchase.
Source: Australian Broker News
Banks must resist the urge to relax lending standards in a low credit growth environment, the RBA has warned.
In its Financial Stability Review reportm the Central Bank has pointed to slowing demand for household and business credit. The RBA stated that bank lending to households increased 4.9% over the six months to July, down from 7.4% for the six months to January. The Reserve Bank predicted that this trend was "unlikely to change in the near term".
With slower credit growth on the cards for banks, the RBA has urged financial institutions to adapt without lowering lending standards or "imprudently expanding into new products or markets".
Adapting to this environment, the RBA said, would mean lowering profit expectations. The report has warned ADI shareholders to "revise their expectations" regarding profits.
Source: Australian Broker News
Fixed rate home loans rose dramatically as a proportion of all mortgage loans written in September, according to Australian Finance Group.
The AFG Mortgage Index has found that fixed rates accounted for 16.6% of the group's $2,633m worth of loans written during the month of September, up from 9.4% during the month of August.
The group said fixed rates were the most popular they have been since April 2008, when they made up 18.4% of the group's volumes.
AFG general manager of sales and operations Mark Hewitt said September saw very aggressive competition, with lenders cutting their fixed rate offers.
"The combination of more realistic property prices, attractive financing options, and lack of confidence in the share market seems to be coaxing first home buyers and investors back into some markets," Hewitt said.
In fact, the AFG figures showed a return of first home buyers in New South Wales, Western Australia and Queensland during September. The national figure of 15.7% of first home buyers is in line with the long term average, but in NSW first home buyers accounted for 18.9% of the market, while in WA this fugure was 17.4%, and in Queensland first home buyers mad up 15.8% of the market.
Source: Australian Broker News
Inflation "may have taken a breather" following a spike in the first half of the year, new data indicates.
The TD Securities - Melbourne Institute Monthly Inflation Gauge rose 0.1% in September following a 0.1% decline in August. The result brings the Inflation Gauge for the 12 months to September to 2.8%, slightly below the upper limit of the RBA's target band of 2-3%. Trimmer mean inflation also rose by 0.1% to sit at 2.8%.
"Now that we have the full data set for the September quarter, we have finalized our inflation forecasts. We expect headline inflation to rise by 0.3%, to be 3.2% higher than a year ago, while underlying inflation is expected to again rise by 0.6% in the quarter, maintaining the 2.6% annual rate," TD Securities head of Asia-Pacific Research Annette Beacher said.
Beacher commented that price acceleration from the first half of 2011 "may have taken a breather", but said the earlier spike was "a trend worth watching closely for signs of year-end inflation re-acceleration". She predicted the result will see the RBA leave rates on hold for an extended period.
"For the RBA Board meeting ... a pause in inflation pressure and ongoing ructions in financial markets provides ample ammunition to sit tight. Despite wild swings in global financial markets in recent months, RBA Board communiqué has been balanced with a neutral bias throughout, and recent senior RBA staff speeches continue to voice outright optimism. This ongoing brave public face supports our current view of the RBA remaining on hold at 4.75% for quite some time," she commented.
Source: Australian Broker News
The abolition of stamp duty is unlikely to happen anytime soon, an economist has stated.
As the Federal Government's Tax Forum wound up yesterday, Sky News property expert and founder of Destiny Financial Solutions Margaret Lomas called for an end to stamp duties, saying it would stimulate the national economy and increase housing supply. However, RMIT University senior lecturer of economics, finance and marketing Ashton De Silva has toldAustralian Broker News this is unlikely to happen.
“Economically there is justification to scrap stamp duty,” De Silva said. “Politically, I can’t see it happening. Essentially we have a Federal Government that has a majority by one seat. They’re not going to risk doing anything too major. We have the majority of state governments in a similar situation. I think at this point there’s too much risk.”
The HIA, REIA and Master Builders have also called on the Federal Government to abolish stamp duty, saying it would increase housing affordability. De Silva expressed doubt that the removal of stamp duty would actually have a material impact on affordable housing.
"The main reason we have a housing affordability problem is because there is a housing shortage. Reasons commonly cited include a shortage of land, planning controls and industry capacity constraints. Reduction in stamp duty is unlikely to have any effect on these supply side factors. Therefore, I believe the reduction in stamp duty will not significantly reduce the housing affordability problem,” he said.
Source: Australian Broker News
A Sydney real estate group has claimed a 20% spike in first homebuyer enquiries ahead of changes to stamp duty concessions in NSW.
Loan Market COO Dean Rushton predicted last month that the NSW Government's move to limit stamp duty concessions to first homebuyers purchasing a newly-constructed home would lead to a rush of buyers trying to jump into the market before the changes came into effect on 1 January. Now, Raine & Horne Rockdale principal George Kambouroglou has claimed these predictions have come to pass.
Kambouroglou stated that the real estate company has seen first homebuyer enquiries increase by 20% since the announcement of the changes. He said the rush of FHBs has seen the company's Rockdale office sell six apartments to first time buyers.
"Anecdotally it appears many first timers are now rushing to buy a home before they lose access to thousands of dollars in government assistance at the end of 2011," Kambouroglou said.
Rushton forecast last month that first homebuyer activity would continue to rise in NSW as the end of the year approached. He claimed Loan Market had seen a 30% rise in FHB enquiries in NSW alone.
Source: Australian Broker News
Home loan competition between the banks has primarily benefited high income earners, it has been claimed.
Mortgage broker Loan Market has suggested that discounting by major banks has delivered greater benefits to borrowers with assets in excess of $1m than to average wage earners. The company's COO, Dean Rushton, cited a survey of Loan Market brokers which found 48% had seen high net worth clients offered the best deals.
"The current price war between the major banks may have the perception of helping all customers equally, the reality is that the greatest opportunities exist for clients who have a high net worth," Rushton said.
Rushton did concede, however, that high net worth clients presented less risk and higher returns for lenders. He said this afforded wealthier borrowers more opportunities for discounts.
"There is no question that those who borrow more have more room to negotiate on their rates," he said.
While high net worth borrowers were tipped as the biggest beneficiaries of bank competition, 29% of brokers polled said they believed bank discounts favoured investors. Rushton stated that the least likely to see dividends from bank discounting were self-employed borrowers.
"Banks are certainly looking at investors as an attractive borrower with established equity, whereas credit and loan-to-value ratios remain tight for self-employed borrowers," he said.
Source: Australian Broker News
The International Monetary Fund has called Australia's economic performance "enviable", but warned that the RBA may need to further tighten rates to fight inflation.
In an assessment of the Australian economy, the IMF noted Australia's "enviable" performance since the onset of the GFC. It commented that Australia's economic resilience was largely due to government stimulus, a healthy banking system, a flexible exchange rate and good demand for commodities. However, the IMF also pointed out economic risks that could erode GDP growth.
"Key downside risks are that the global recovery stalls or Asian growth falters, impacting demand for commodities. Funding markets could also be disrupted by concerns about sovereign debt in advanced economies," the organisation said.
The group also warned that further cash rate tightening could be required if Australia's economy remains on track. While the RBA Board's recent Statement on Monetary policy left open the possibility of rate cuts, the IMF warned that inflationary pressures could arise from "the unprecedented increase in mining investment".
Source: Australian Broker News
Housing affordability problems can be laid at the feet of government, a CEO has claimed.
Stockland chief executive Matthew Quinn has told a meeting of the Australia-Israel Chamber of Commerce that Australian faces an "affordability crisis," News Ltd has reported. According to the report, Quinn blamed the government for being unresponsive to concerns from the property industry.
"For reasons best known to politicians, this country has an affordability crisis. It's something that we started speaking to government about 10 years ago, but unfortunately it fell on deaf ears," Quinn said.
Quinn argued that property developers were forced to jump through "multiple hoops of fire" at the behest of federal, state and local governments in order to move projects forward. He said these barriers had created supply constraints.
Quinn told the meeting that Stockland had designed a house and land package aimed at first homebuyers to aid affordability, but that local councils balked at approving affordable developments.
"We are the largest residential developer in the country and in roughly half the locations where we operate we are not allowed to build those houses. [Councils] use planning reasons and planning justifications for that when in fact that has nothing to do with it. It's actually fear of other people coming into the neighbourhood in smaller houses that might change the tone, which is absurd and selfish," Quinn remarked.
Source: Australian Broker News
Unit rental prices are edging upwards, and are now approaching those for houses in most capital cities.
The Australian Property Monitors Rental Price Series report has found national median asking rents for houses fell 0.2% for the September quarter, while unit rental prices increased 1.1%. APM senior economist Andrew Wilson commented that unit prices had increased faster than detached house rental prices as "discontented first homebuyers" entered the rental market.
"As a consequence, the median weekly asking rentals for units is now fast approaching that of houses in many capital cities, as the overall demand for units for both lifestyle and affordability reasons continues to be greater than the demand for more expensive and generally outer-suburban houses," Wilson said.
Wilson indicated that stable interest rates were expected to increase buyer activity, taking pressure off the rental market.
Source: Australian Broker News
Consumer sentiment has seen a mild up-tick in October, but Westpac says Australians remain pessimistic overall.
The Westpac - Melbourne Institute Index of Consumer sentiment rose from 96.9 to 97.2 for the month amid what Westpac chief economist Bill Evans called "conflicting signals".
"On the downside, financial markets were again unsettled with sharp falls in both the sharemarket and the Australian Dollar," Evans commented. "On the positive side we saw a marked change in the rhetoric from the Reserve Bank," he added.
Evans pointed to the Statement of Monetary Policy from the RBA's October meeting, stating that the Bank had "adopted an easing bias". He said some recovery in the currency markets toward the end of the survey's cycle may also have contributed to the result.
"Overall, however, the Index remains quite weak. It is 16.9% below its level of a year ago and 6.8% below the average for the first half of 2011. It is consistent with the Australian consumer remaining pessimistic," Evans said.
Evans also pointed to weakness in several of the "time to buy" indexes that form part of the survey. The proportion of consumers tipping that it was a good time to buy a dwelling fell 10.4%, largely reversing the 15.1% rise in last month's index.
Evans reasserted Westpac's view that a rate cut is likely, pegging December as the month the RBA will move.
"That remains our call while noting that the possibility of a move in November is quite real," he said.
Speak to us about getting access to below market value investment property and how you can save on your next purchase
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