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Home Loans – shop around for the best deal

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Moreton Investor, Property Management, Investment properties, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, Moreton property prices, rental properties, Home Loans, Home loan incentives, Home lenders, fee waiver

Before you decide on which lender will get your home loan business, compare what’s available out there.

Interest rate discounts, cash-back incentives and fee waivers Moreton Investor, Property Management, Investment properties, Real estate Moreton, Mortgage Broker Moreton, Moreton property market, Moreton property prices, rental properties, Home Loans, Home loan incentives, Home lenders, fee waiverare among the multitude of mortgage incentives flooding the market.

Industry experts say the mortgage industry is at its most-competitive level since the global financial crisis and Australians should expect to see many more attractive mortgage deals pop up this year to attract new business.

1300homeloan managing director John Kolenda said he expected increased competition in the mortgage market particularly for those looking to refinance.

“There’s very aggressive pricing and incentives whether they are application fee waivers or rebates, banks and lenders are trying to pick up more market share,” he said.

“It’s definitely the most competitive I’ve seen the market since pre-GFC and it’s likely to continue for the first half of this year.”

Interest rates have remained at historically low levels and the Reserve Bank of Australia has kept the cash rate on hold at 2.5 per cent since August.

Analysis by comparison website Finder found gift cards and cash back offers along with hefty interest rate reductions and fee waivers are among the dozens of incentives on offer.

The site’s spokeswoman, Michelle Hutchison, said this time of year was a quieter for both the property and mortgage markets but the range of attractive deals available had failed to subside.

“To see so many lenders offering incentives particularly for refinancing it’s definitely a good time of year to refinance if you are an existing borrower,” she said.

“There’s definitely more competition to attract new customers and more people are refinancing.”

But she said customers should “think twice” before simply taking up a new mortgage product because of the incentive offered.

“People need to be careful with the incentives because a $250 gift card might not be the best value if the interest rate is higher than what you can get somewhere else,” Ms Hutchison said.

“Make sure the incentive is an added bonus to the deal that you apply for.”

Mortgage Choice spokeswoman Jessica Darnbrough said the new year was the perfect time for home loan customers to review their mortgages.

“I don’t think there could be a better time because we’ve seen the RBA suggest there is still room to move rates down if needed but they are looking pretty steady at the moment,” she said.

“If borrowers are considering renegotiating their loan now is a great time to do so with rates fairly stable and the lenders being very competitive.”

 

Original article published at www.news.com.au  by Sophie Elsworth, News Limited Network 4/1/2014

Finance

APRA Moves to Scrap 7pc Loan Buffer

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APRA Moves to Scrap 7pc Loan Buffer

In a move that is most likely to benefit owner-occupiers and the wider property market, the Australian Prudential Regulation Authority is proposing the 7 per cent serviceability buffer on home loans be removed.

With housing prices continuing to fall sharply in Sydney and Melbourne, APRA’s unwinding of its restrictions is part of a coordinated action by the prudential regulator, central bank and government.

The decision, in the wake of the weekend’s federal election, will provide banks with credit growth and reduce pressure on margins by lessening the need for rate cuts.

This may be more good news for the banks, following their big rise in the markets on Monday, but the news could also have negative implications on Australian household debt levels.

The banking regulator said it was putting its 7 per cent minimum interest rate “floor” under review, because the policy may have reached its use-by date after reviewing its “appropriateness”.

APRA first introduced the serviceability guidance in December 2014 as part of its efforts to reinforce sound residential lending standards in an attempt to temper ballooning house prices and surging housing investor loan growth.

They required the banks to assess all home loans against a floor of 7 per cent or 2 per cent above the rate paid by the borrower, whichever was higher.

Banks have typically added a further 25 basis points to the 7 per cent threshold taking it to 7.25 per cent and a buffer of 2.25 per cent.

If the changes were to go ahead, authorised deposit-taking institutions (ADIs) would “be permitted to review and set their own minimum interest rate floor for use in serviceability assessments”.

“APRA introduced this guidance as part of a suite of measures designed to reinforce sound residential lending standards at a time of heightened risk,” APRA chairman Wayne Byres said.

“Although many of those risk factors remain – high house prices, low interest rates, high household debt, and subdued income growth – two more recent developments have led us to review the appropriateness of the interest rate floor.

“With interest rates at record lows, and likely to remain at historically low levels for some time, the gap between the 7 per cent floor and actual rates paid has become quite wide in some cases – possibly unnecessarily so.

“The changes, while likely to increase the maximum borrowing capacity for a given borrower, are not intended to signify any lessening in the importance that APRA places on the maintenance of sound lending standards.

“Rather, it is simply recognition that the current interest rate environment does not warrant a uniform mandated interest rate floor of 7 per cent across all products.”

The proposed revision comes as financial markets are anticipating the Reserve Bank will lower official interest rates to 1.25 per cent in the coming months.

In an attempt to rebound lending growth, APRA has been quick to support the banking sector, removing its 10 per cent growth cap on investor lending and 30 per cent limit on interest-only lending.

Lowering the floor could also provide some welcome support for the stricken housing market, following a 10 per cent slide in national house prices.

APRA has set a four-week consultation period on the proposals, closing on 18 June, but they are expected to be confirmed.

Source: brisbaneinvestor.com.au

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Aussie hotspots enjoying a sudden property boom

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Aussie hotspots enjoying a sudden property boom

Property prices across the country saw their steepest fall in 15 years in 2018, bringing them back to 2016 levels in what has been a housing downturn like no other.

But it’s not bad news everywhere – while investors shy away from Sydney and Melbourne, there are some hotspots which are enjoying a sudden property market boom, according to news.com.au.

Queensland

The South East and Gold Coast regions are seeing the most buying activity, with Brisbane, Moreton Bay, the Sunshine Coast and Ipswich booming along with the Gold Coast, Tugun and Burleigh Heads.

Tasmania

Unsurprisingly Hobart is the strongest property market, although activity has spread beyond the inner city and into the middle and outer rings, while Launceston has also recorded solid interest.

South Australia

The entire South Australian capital is booming, although most activity is happening in the inner city and Adelaide Hills.

New South Wales

While many investors have deserted Sydney, areas such as Paddington and Winston Hills and the nearby Central Coast are doing well.

Other booming areas are further north in Tweed Heads and Byron Bay.

View from the experts

Daniel Walsh of investment buyer’s agency Your Property Your Wealth, told news.com.au that investment activity has now firmly shifted to Queensland.

“We’re seeing rising demand particularly in the housing sector in southeast Queensland where yields are high and jobs are increasing due to the amount of government expenditure around infrastructure which is attracting families to the Sunshine State,” he said.

“With Brisbane’s population growth at 1.6 per cent and surrounding areas like Moreton Bay at 2.2 per cent, the Sunshine Coast at 2.7 per cent and Ipswich at 3.7 per cent, we are forecasting that Brisbane will be the standout performer over the next three to five years.”

Realestate.com.au chief economist Nerida Conisbee agreed, telling news.com.au Sydney investors especially had started to turn their attention north.

“Interest is strong in the Gold Coast across the board although there’s more action on the south side in places like Tugun and Burleigh Heads,” she said.

She added there was also a notable trend towards Tasmania, Adelaide and pockets of NSW such as Tweed Heads and Byron Bay.

Adelaide has also been flagged as finally booming after recently hitting the highest median house price ever recorded, largely driven by jobs and economic growth off the back of defence contracts, the announcement of the new Australian Space Agency and other investment in the area.

“Inner Adelaide, beachside and the Adelaide Hills tend to have the most activity but there’s also quite a lot of rental demand in low-cost suburbs so we’re expecting to see a bit more investment there in those really cheap suburbs over the next 12 months,” Conisbee said.

“There you can get houses for $250,000 so for an investor, it’s a relatively low cost in terms of outlay and the area is seeing really strong rental demand which means you’re more than likely to get tenants, so for investors it’s a really attractive area,” she said.

Source: brisbaneinvestor.com.au

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Why equity can help you buy again

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Why equity can help you buy again

Unlocking the equity in your home could help you purchase another. Chief executive of property advisory firm Property Mavens used her home’s equity to buy a Preston investment property. Picture: Lawrence Pinder

WE’VE all heard of the benefits of refinancing to get a better deal on your home loan, particularly a more competitive interest rate.

But what if refinancing could also help you buy an investment property?

“Borrowers may be able to refinance their existing home loan to access equity they may have built in their property, in order to buy an investment property,” Mortgage Choice chief executive Susan Mitchell said.

Refinancing with the aim of buying an investment property could allow borrowers to grow their wealth, according to Ms Mitchell, as, generally speaking, property was considered a safe asset class in Australia with decent returns over the long term.

“CoreLogic found that over the 10 years to June 2018, national dwelling values increased by over 40 per cent, a good return on investment,” she said.

But she cautioned there were a number of costs associated with refinancing, so it was important borrowers made an informed decision before jumping in.

Why equity can help you buy again
Leveraging your home’s equity could help you to buy another.

The nuts and bolts

So, how does refinancing using equity work?

The Successful Investor managing director Michael Sloan explained that lenders would typically lend you 80 per cent of the market value of your home, less the debt you still owed against it.

“This is your usable equity as banks hold some back as security,” he said.

“So, say, for example, you have a $500,000 property and a $200,000 loan. Your usable equity will be $200,000,” he said.

As to what value investment property you could buy, Mr Sloan said a simple rule of thumb was to multiply your usable equity by four.

“But remember that one of the risks of property investing is spending too much,” he said.

“You need to buy well below the median house price ($742,000 in Melbourne, according to CoreLogic), in fact you shouldn’t be within $200,000 of it.”

Ms Mitchell said the figure depended on how much a lender determined a borrower could afford to repay.

“Available equity is important but the key factor a lender needs to consider is how much a borrower can afford,” she said.

“If a borrower does not have additional capacity to repay a proposed new loan, they may not be able to borrow, irrespective of how much equity they may hold,” she said.

Why equity can help you buy again
Consulting an independent broker may be helpful for would-be investors.

Where do I sign?

And there’s the rub: having equity in your home is not a guarantee you’ll be able to access it.

“You can have a million dollars of equity but if you don’t satisfy the institution’s lending criteria, they are not going to loan you any money,” Mr Sloan said.

“The bottom line is they will take everything into consideration: for example, how many children you have, as the more you have the less you can borrow, your work situation and how much you spend on everything from your daily coffee to the tyres on your car.”

Lenders have also tightened their assessment procedures as a result of recent regulatory measures, such as The Australian Prudential Regulation Authority (APRA) imposing a 10 per cent benchmark in growth on investment lending last year.

This was introduced in a bid to curb activity in the housing market, Ms Mitchell said.

“These regulatory measures have resulted in lenders increasing their scrutiny of a borrower’s ability to service a loan,” she said.

“When deciding if an applicant can afford a mortgage, a lender will consider a borrower’s available ongoing income and from this allow for existing debt commitments and living expenses,” she said.

“Their decision will also factor in a buffer for potential increases in interest rates.”

But it’s not all doom and gloom. Ms Mitchell advised that borrowers could overcome the increased scrutiny by getting “financially fit”.

“Get out of debt, spend your money wisely and adopt a disciplined savings strategy to show lenders you can service a loan,” she said.

Air Mutual director Damien Lawler advised would-be investors to consult an independent broker who could access a range of lenders, which might have varying assessment procedures.

“Everyone is talking about the banks tightening up – which they are – but there are banks, particularly the smaller, tier-two banks, who are still lending,” he said.

Why equity can help you buy again
Getting the right structure for your loan is essential.

And finally …

Mr Sloan said his No.1 piece of advice for would-be property investors was to play it safe and to have some funds in reserve if things go wrong.

“You should never buy (another) property if you have no extra money available to you after you settle, so you need to have a buffer. And protect what you are building with income protection and life insurance, if you have a partner,” he said.

Source: brisbaneinvestor.com.au

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