First home buyers wanting to crack into the property market can now use an interactive map to see how much their neighbours spent on average for their first home.
Snoopy snoop! Everyone loves having a bit of a sticky-beak. After all, we’re only human.
And this interactive map, which is being run by the federal government’s NHFIC, allows you to see how much your neighbours spent on average for their first home.
It also shows how much your first-home-buying neighbours generally earn and how much they saved for a deposit.
It then provides a snapshot of the median debt-to-income (DTI) ratio and loan-to-value (LVR) ratio in each local government area across the country, which may seem a little less thrilling, but they’re both very important indicators when applying for finance.
The map is based on statistics from first home buyers who participated in the First Home Loan Deposit Scheme (FHLDS) between 1 January and 30 June 2020.
The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI).
This can save you anywhere between $4,000 and $40,000, depending on the property price and the deposit amount you’ve saved.
There have been two successful runs of the scheme in January and July, when the 10,000 available spots were snatched up within months.
And another 10,000 spots opened up in early November as part of the federal government’s attempts to kick-start the economy following the COVID-19 crisis.
So if you’re keen on nabbing a spot this time around, you’ll want to get in quick!
Check out the interactive map here to see how you compare to your neighbours in your local government area.
If you think you’re in the ballpark of being able to take advantage of the scheme yourself then get in touch with us today.
We can help you run some quick calculations (including your possible DTI and LVR) to see whether you’re ready to keep up with the Joneses and purchase a first home of your own.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
We dream big in Australia. So it’s little surprise that when the Great Australian Dream becomes a reality it means bigger houses than anywhere else in the world, according to a new report.
In 2019/20, the average new house built measured a whopping 236m2, up 2.9% on the year before and the biggest size increase in 11 years.
That’s according to data commissioned by CommSec from the Australian Bureau of Statistics, which shows our houses are now being built bigger than anywhere else in the world.
In fact, we just reclaimed the number one spot from the US, which saw their new house size fall for the fourth consecutive year in 2019 (latest data) to 233m2.
Apartment sizes have grown too, with the average new apartment increasing 6% in the last year to hit a decade high of 137m2.
It’s important to note that new houses aren’t the biggest they’ve ever been.
That time was 11 years ago when the average new free-standing house was about 244m2 – then the biggest in the world by far.
Australia relinquished the number one spot to the US a few years later in 2013.
But despite the average new house size shrinking throughout the majority of the 2010s, new houses are still a whopping 27% bigger than they were 30 years ago.
And last year Australian new-builds jumped up in size as US house sizes dipped – putting us back in number one spot.
“Over the past year there appears to have been a perception that Australian homes had shrunk a little too much,” explains CommSec chief economist Craig James.
There have been numerous shifting trends in terms of house sizes and styles over the past decade, and COVID-19 is sure to throw another element into the mix.
More people could embrace working from home – opting to move away from apartments in, or near, the CBD in preference for larger homes in regional or suburban areas.
Another factor that could increase the size of new homes over the year to come is the federal government’s $25,000 HomeBuilder grant.
The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.
It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to an eligibility criteria.
The $25,000 grant has led to a recent surge in new builds and renos, and will no doubt also assist in helping Aussie families build bigger and better new homes.
So if you’re thinking of fulfilling your own Great Australian Dream in the near future, then get in touch today. We’d love to help you make it become a reality.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Mortgage holders and business operators are being encouraged by the RBA to switch lenders if their bank doesn’t pass on the latest cash rate cut.
The Reserve Bank of Australia (RBA) delivered mortgage holders and business operators a Melbourne Cup Day win by cutting the official cash rate by 15 basis points to a new record low of 0.10%.
Better yet, the RBA board says it’s “not expecting to increase the cash rate for at least three years”.
However, there are concerns that not all the banks will pass the rate cut on to borrowers across all of their products.
For example, within 24 hours of the RBA rate cut, several of the big banks announced cuts to their fixed rates and business rates, but not their variable rates.
RBA Governor Philip Lowe says if the banks don’t lower their standard variable rates, “ask them for a better deal”.
“And if they don’t give it to you, switch to a bank that will,” Governor Lowe adds.
Federal Treasurer Josh Frydenberg is also urging lenders to pass on the RBA rate cut to reduce the cost of borrowing for households and small businesses.
“It’s my expectation that the banks will now look for ways to pass on those rate cuts. Pass it on to small businesses and pass it on to mortgage holders,” he says.
Now, here’s the important part.
It’s all well and good for our nation’s leaders to urge the banks to pass rate cuts on to you, but whether or not your lender will actually do so is another matter altogether.
The good news is, the power is with you – the borrower. And we can help you harness that power.
That’s because the competition amongst lenders is fierce right now, so if your lender won’t budge, there’s a good chance another lender will.
We’re keeping a keen eye on which lenders are passing the rate cut on to their customers, and which lenders aren’t.
So if you’re keen to explore your options during this time of record-low interest rates, get in touch today.
We’d love to help you pay less interest on your mortgage each month.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
If you didn’t back a winner on Melbourne Cup Day then fret not: the Reserve Bank of Australia (RBA) has delivered mortgage holders a win by cutting the official cash rate by 15 basis points to a new record low of 0.10%.
RBA Governor Philip Lowe says the cash rate cut is part of a package of measures to support job creation and economic recovery from the COVID-19 pandemic.
“Given the outlook for both employment and inflation, monetary and fiscal support will be required for some time,” Governor Lowe said in a statement.
As such, Governor Lowe added the low cash rate is likely here to stay until actual inflation is sustainably within the 2 to 3% target range.
“Given the outlook, the board is not expecting to increase the cash rate for at least three years,” Governor Lowe said.
This is the last rate cut the RBA is able to make before venturing into negative territory (which it’s previously indicated it won’t do).
It’s also the sixth RBA rate cut since June 2019, which means if you haven’t had a home loan health check in the past year, there’s a good chance you’re paying more interest than you need to on your home loan each month.
So if you’d like to explore your options – whether that be refinancing with another lender or renegotiating with your current one – then get in touch today.
We’re here and ready to work through your options with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Great news for homeowners and prospective buyers: housing affordability is at its best level in a decade and should continue to improve throughout 2021.
Housing affordability improved in all major Australian cities over the year to September 2020 despite the ongoing global pandemic, according to a new report by investor service Moody’s.
“Owning a house was the most affordable it’s been in a decade in most major capital cities during the last six months,” Moody’s says.
Put simply, improved housing affordability means that households are spending a smaller portion of their monthly income on their mortgage.
Two-income households, for example, needed 23% of monthly income to repay new mortgages in September 2020, down from 25.1% a year earlier.
Better yet, Moody’s predicts that housing affordability will continue to improve moderately over the next 12 months because of low mortgage interest rates and a continuation of the mild dip in housing prices.
Alrighty, so Moody’s measures housing affordability based on three things: median housing sales prices, average discounted variable mortgage interest rates, and average household income.
Let’s start with median housing sales prices.
Australian median housing sales price fell 1.5% over the six months to September 2020, according to Moody’s.
With a number of economists predicting housing values will continue on a mild downward trajectory until about mid-2021 (before going on a two-year surge), that would continue to assist housing affordability over the next year.
Next, interest rates.
At present, the RBA’s official cash rate is at historically low levels, and competition amongst lenders for borrowers is fierce.
That all spells extremely low interest rates for borrowers, which allows for lower monthly mortgage repayments.
And the good news is that most experts expect interest rates to stay low for the next few years while the economy gets itself back on track.
Finally, let’s look at income.
As mentioned earlier, the report found two-income households needed 23% of their monthly income to repay new mortgage loans in September 2020, down from 25.1% a year earlier.
How is this possible during COVID-19?
Well, no doubt a big factor in keeping the nation’s average household income buoyant was the federal government schemes JobKeeper and JobSeeker.
And although household incomes will come under pressure as these support measures come to an end, Moody’s says “this should not outweigh low mortgage interest rates and lower housing prices”.
With all of this positive housing affordability news in mind, is now a good time to buy?
Well, more than a quarter of Australians (26%) believe now is the time to invest in property to safeguard their future, according to the latest ING Bank survey of 2,000 people.
And Tim Lawless, head of research at leading property expert group CoreLogic, agrees:
“For people with confidence in their own financial circumstances and household balance sheets, arguably this is a good time to be considering a home purchase thanks to the low cost of debt and certainty that rates will remain low for at least the next few years.”
There is also a raft of federal and state government incentives you could take advantage of, including the $25,000 HomeBuilder scheme, first home buyer grants and stamp duty exemptions.
So if you’re looking to buy your first home, or add to your existing portfolio, get in touch today.
As mentioned above, competition amongst lenders is fierce, and we’re here to help you use those competitive conditions to your advantage.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Small business owners in need of credit will be buoyed by new data that shows the approval rate for loans has remained strong throughout the coronavirus crisis.
In fact, about 70% of SME business loan applications received by lenders have been approved since early February, according to Australian Banking Association (ABA) statistics.
That’s resulted in more than 128,000 Australian sole traders, small businesses and medium-sized businesses receiving loans, with an average loan size of $320,000.
Breaking it down further, that’s 500 new SME loans a day for more than 250 days.
The ABA data is in line with the latest Sensis Business Index, which shows 26% of businesses that applied for finance over the past three months were knocked back.
The figures have no doubt been assisted by the relaxation of business lending rules, the federal government’s Instant Asset Write-off Scheme (now expanded to “temporary full expensing”), and the Coronavirus SME Loan Guarantee Scheme.
Temporary full expensing allows businesses, both big and small, to immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022.
This can help improve your business’s cash flow by allowing you to reinvest the funds back into your business sooner.
The Coronavirus SME Loan Guarantee Scheme, meanwhile, allows businesses with a turnover of up to $50 million to apply for loans of up to $1 million with participating lenders.
The loans can generally be offered by lenders “more cheaply and more freely” compared to ordinary business loans, as the government will guarantee 50% of the new loans.
While 70% of loans being approved is great news, it’s obviously not quite a done deal when you apply for finance in the current financial landscape.
So, to help avoid being among the unfortunate remaining 30% of businesses, get in touch with us today.
Our job is to act as a conduit between you and the lender, which allows you to focus on your business while we focus on getting you the finance that your business needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Consumer sentiment is surging, confidence in the housing market is booming, and the number of experts tipping a Melbourne Cup Day cash rate cut is increasing. Let’s look at why households and businesses are becoming increasingly optimistic.
Ahh, spring. It’s fair to say we love it around here.
Not only do we usually see an uptick in property market activity (houses always look much nicer in spring), but this year – in particular – we’re seeing consumers more upbeat about what lies ahead.
This can be seen in the latest Westpac-Melbourne Institute Index of Consumer Sentiment survey, which saw consumer sentiment increase by 11.9% to 105.0 in October (up from 93.8 in September).
“This is an extraordinary result,” says Westpac’s chief economist Bill Evans.
“The index has now lifted by 32% over the last two months to the highest level since July 2018.”
One of the biggest takeaways from the latest consumer sentiment survey is that more and more people believe now is a good time to purchase property.
“Confidence in the housing market has boomed,” explains Mr Evans.
“The ‘time to buy a dwelling’ index increased 10.6% to its highest level since September 2019.”
House price expectation sentiments also rose strongly, up 31.5% to 117.3 (from 89.2), with all states registering impressive recoveries.
While leaving the doom and gloom of a COVID winter behind and entering spring sure doesn’t hurt, it’s not the only reason for the uptick in consumer sentiment.
This latest survey came right off the back of the federal government’s October Federal Budget, which allocated a record amount of spending and support measures to businesses and households.
There’s also an increasing “expectation that the Reserve Bank (RBA) board is likely to further cut interest rates at its next meeting on November 3”, says Mr Evans.
In fact, according to financial market pricing, there’s now around a 75% chance that it will happen.
That’s because, while previous communications from the RBA indicated that the “effective lower bound” of its official cash rate was 0.25%, in recent weeks it’s changed its tune, hinting at a willingness to cut it to 0.10% on Melbourne Cup Day.
“Recently, we have detected a change in attitude (from the RBA) indicating more confidence that the plumbing of the financial system can operate effectively at an even lower set of policy rates,” says Mr Evans.
“With that in mind, and the commitment towards full employment and the target for inflation, there seems to be no reason for the board to delay its decision.”
So, how about you? Have things on the financial and property front started to look a little rosier recently?
If so, feel free to get in touch with us today. We’d love to run you through some of the financing options that may available to you in the current financial landscape.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
Thousands of families across the country who had been thinking about a new build, or tackling an overdue renovation project, have rolled up their sleeves and committed to it, according to latest ABS data.
And to be honest, we’re not overly surprised. The federal government’s $25,000 HomeBuilder grant is nothing to sneeze at.
But the Australian Bureau of Statistics’ (ABS) Lending Indicators data makes for very encouraging reading nonetheless.
It shows the total value of new loan commitments for housing rose 12.6% in August to $21.3 billion.
There was also a big increase in people seeking to renovate their homes. ABS building approval data shows the value of alterations and additions to residential buildings (‘renos’) increased by 7% to $784 million in August.
That’s the highest level recorded since April 2016.
But before we get into HomeBuilder, let’s look at the home lending figures in a little more detail.
Of that $21.3 billion in new housing loan approvals we mentioned earlier, $16.3 billion was comprised of owner-occupier home loans, and there was $5 billion worth of investor loans.
That means owner-occupier home loan commitments increased by 13.6% in August, which is the largest month-on-month rise recorded by the ABS, and eclipses the previous record of 10.7% set in July.
The Housing Industry Association (HIA), which is the official peak body of Australia’s home building industry, says that HomeBuilder is to thank for the surge in demand.
They point out that in August the number of loans for the construction of a new dwelling increased by 22.9% to 4,679 – the highest level in over a decade.
“The short-term stimulus from HomeBuilder is emerging in the housing finance data released by the ABS,” says HIA’s Chief Economist, Tim Reardon.
“There has been a substantial improvement in sentiment and confidence in the housing market.”
The federal government scheme aims to assist owner-occupiers (including first home buyers) who want to buy a new home, or begin work on eligible renovations, by providing them with a $25,000 tax-free grant.
It’s available to people building a new home for less than $750,000, or to those who spend between $150,000 and $750,000 renovating an existing home, subject to certain eligibility criteria.
You can find out more about the scheme and eligibility here, but here’s the big catch: applications for the HomeBuilder grant must be received no later than 31 December 2020.
So if you’re interested in applying for the scheme, you’ll want to get in touch with us asap.
Not only can we walk you through how to apply for it before the deadline but, just as importantly, we can assist you when it comes to applying for finance.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
There was one big-ticket initiative in the federal budget that really caught our eye, and that was the turbocharged version of the instant asset write-off scheme. Today we’ll look at how it could improve your business’s cash flow moving forward.
Did you catch the announcement that businesses, both big and small, can now immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022?
Well, that’s any business with a turnover of up to $5 billion (and I don’t know about you, but I don’t rub shoulders with many businesses that size).
Treasurer Josh Frydenberg says the initiative will unlock investment opportunities for businesses by freeing up their cash flow.
“A trucking company will be able to upgrade its fleet, a farmer will be able to purchase a new harvester and a good manufacturing business will be able to expand its production line,” Mr Frydenberg says.
The government is calling the new initiative “temporary full expensing”.
But to put it more simply, it looks like an expanded version of the popular instant asset write-off scheme, which was previously only available for small and medium-sized businesses (SMEs) and for assets up to $150,000.
Now, however, any business with a turnover of up to $5 billion can immediately deduct the full cost of any depreciable asset purchased from 6 October 2020 and first used or installed by 30 June 2022.
The cost of improvements made during this period to existing eligible depreciable assets can also be fully deducted.
There are a few other key details you should be aware of, however, especially when it comes to the purchasing of second-hand assets, including:
– Full expensing also applies to second-hand assets for SMEs (with an aggregated annual turnover of less than $50 million).
– Businesses with aggregated annual turnover between $50 million and $500 million can still deduct the full cost of eligible second-hand assets costing less than $150,000 that are purchased by 31 December 2020 under the existing instant asset write-off scheme.
– SMEs that acquire eligible new or second-hand assets under the $150,000 instant asset write-off by 31 December 2020 will also have an extra six months, until 30 June 2021, to first use or install those assets.
To help explain things further, below is a brief case study provided by the ATO.
Grace owns an agricultural company, Grace’s Grains Pty Ltd, which has an aggregated annual turnover of $20 million for the 2021-22 income year.
Grace’s Grains Pty Ltd purchases a combine harvester for $600,000, exclusive of GST, on 1 July 2021.
Without temporary full expensing, Grace’s Grains Pty Ltd would claim a total tax deduction of around $180,000 for 2021–22, with the remainder of the cost being depreciated over future years.
Under temporary full expensing, however, Grace’s Grains Pty Ltd will instead claim a deduction of $600,000 for the full cost of the combine harvester in 2021–22, approximately $420,000 more than before.
At the 2021–22 tax rate for small and medium companies of 25%, Grace’s Grains Pty Ltd will pay around $105,000 less tax in 2021–22.
This will improve the company’s cash flow and help Grace reinvest and grow her business.
Being able to write-off assets purchased is all well and good, but if you don’t have access to the funds to purchase them, then the scheme won’t be of much use to your business.
So if you’d like help obtaining finance to make the most of temporary full expensing for your business, get in touch with us today.
We can present you with financing options for the scheme that are well suited to your business’s needs now, and into the future.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
The First Home Loan Deposit Scheme is back; bigger, better and more buyer-friendly than before. If you’re a first home buyer who missed out on the first two rounds, then here’s how to make it a case of third time’s a charm!
It’s federal budget week, and this year’s big winners in the world of property and finance are first home buyers, with the federal government announcing a fresh extension to the First Home Loan Deposit scheme (FHLDS).
Today we’ll look at why the third iteration of this super popular scheme might be a better fit for your first home-buying prospects than the previous two versions.
The FHLDS allows eligible first home buyers with only a 5% deposit to purchase a property without paying for lenders mortgage insurance (LMI) – which can save you up to $10,000.
When the scheme was launched in January, and then again in July, the 10,000 available spots filled up within a few months both times.
That means if you’re a first home buyer who’s interested in participating in round three then you’ll want to get the ball rolling on your application sooner rather than later to beat the crowds.
Now, the scheme comes with a small catch this time around: it’s only available for first home buyers who purchase new builds.
But the good news is the scheme is available alongside other state and federal government first home buyer schemes and stamp duty concessions.
That now includes the recently launched $25,000 HomeBuilder grant. And in some states – including Queensland, Tasmania and South Australia – you can reportedly even put that $25,000 grant towards your initial deposit.
When combined with those particular states’ first homeowner grants ($15,000 to $20,000), that’s basically the deposit for your first home right there.
Also, under the latest extension, first home buyers can now purchase more expensive properties, reflecting the fact that new builds are generally more expensive.
Indeed, the caps for properties eligible under the latest iteration of the scheme have been lifted across the country. New caps are below.
Sydney: $950,000 (up from $700,000)
Melbourne: $850,000 (up from $600,000)
Brisbane: $650,000 (up from $475,000)
Perth: $550,000 (up from $400,000)
Adelaide: $550,000 (up from $400,000)
Hobart: $550,000 (up from $400,000)
Canberra: $600,000 (up from $500,000)
Darwin: $550,000 (up from $375,000).
Areas outside capital cities and major regional centres in each state have different price caps, so be sure to check out the full list.
There are other important eligibility details worth checking out too, such as income tests, prior property ownership tests and an owner-occupier requirement.
It’s important to note that round three of the FHLDS began on Tuesday (October 6) – so the race for new openings has already begun.
And while 10,000 spots might sound like a lot, they’ve filled up very quickly in the past.
So if you’re thinking about purchasing your first home soon, give us a call today and we’ll help you get the ball rolling on applying with one of the scheme’s 27 participating lenders.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
