‘Are we there yet?’ That seems to be the million dollar question on everyone’s lips. Today we’ll take a look at whether or not the property market is finally starting to stabilise, as well as when we might start seeing some positive changes in the market.
Shhh. Can you hear it?
It’s the sound of optimism breathing its way through the Australian property landscape once more.
Let’s run through what some of the property market’s leading experts and reports have said recently.
CoreLogic says the housing downturn is losing steam as the pace of declining values continued to reduce in May.
With Australia’s average housing affordability the best it has been since 2016, CoreLogic’s Head of Research for Australia, Cameron Kusher predicts “that price falls will settle later this year, followed by modest price growth starting from 2020”.
Consumers think now’s a pretty good time to buy a house, according to the Westpac sentiment survey’s ‘time to buy a dwelling’ index.
“Housing-related sentiment showed a clear response to the lowering in interest rates, although again some of the gains were more muted than seen in past rate cuts,” Westpac senior economist Matthew Hassan said.
Since peaking in October 2017, house prices in capital cities have fallen about 10%. Forecasts had suggested they’d fall as far as 15%, but AMP Capital believes they’ll now only bottom out at 12% later this year.
“The combination of the removal of the threat to property tax concessions, earlier interest rate cuts, financial help for first home buyers and APRA relaxing its 7% interest rate test points to house prices bottoming earlier and higher than we have been expecting,” said Dr Shane Oliver, Head of Investment Strategy and Economics and Chief Economist, AMP Capital.
ANZ’s Home Owners Lead, Kate Gibson, says they’re seeing suburbs and towns in every state where it is more affordable to buy than rent. Here’s the list if you’re interested.
“This shift, combined with record low interest rates, is driving more first home buyers to look at entering the market,” Ms Gibson said.
According to the latest ABS data, the value of lending commitments to households rose 0.6% in April 2019.
“The steep decline in owner-occupier lending commitments seen since late 2017 appears to be slowing,” said ABS Chief Economist, Bruce Hockman.
Sure, the nationwide property market might still be trending down. But optimism seems to be on the way up.
If you’d like to know how this shifting landscape might affect your lending situation, then please get in touch – we’d love to run through it with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 RBA has cut the official cash rate to a new record low of 1.25%. But hang on a sec… Will lenders even pass on the cut in full? Today we’ll look at how you can make the RBA rate cut work for you.
The Reserve Bank has cut interest rates to 1.25% – down from 1.5% – which is the first rate cut in almost three years (since August 2016).
“The Board took this decision to support employment growth and provide greater confidence that inflation will be consistent with the medium-term target,” said RBA Governor Philip Lowe in a statement.
Well, that’s to be determined by the banks. However, the government has urged them to pass on the cuts in full to customers.
Treasurer Josh Frydenberg met with Commonwealth Bank chief executive Matt Comyn the day before the cut was announced after similar meetings with other major bank CEOs.
“I expect all banks to pass on the benefits of sustained reductions in funding costs,” said Mr Frydenberg.
Well, on the back of the RBA decision, you may see a number of lenders advertising interest rate cuts.
What can be hard to determine is if they’re offering to pass on the full cut, a partial cut, or simply re-advertising a rate they’ve been offering for months.
So what to do?
Well, the good news is that we’re following the market closely. We’ll know which lenders are passing the rate cut on to their customers in full, and which lenders aren’t.
So if you see or hear about a rate cut from a lender that you want to know more about, your best bet is to get in touch with us and we can give you a good idea of how it compares to other lenders in the market and/or whether there are other options that are more suited to your situation.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.
Here’s a bit of good news: you may be able to borrow more for your next home loan after the prudential regulator sent a letter to the banks asking them to relax a key lending criteria.
In a letter to lenders, the Australian Prudential Regulation Authority (APRA) has proposed removing its guidance that lenders should assess whether borrowers can afford their repayment obligations using a minimum interest rate of at least 7% (although most ADIs currently use 7.25%).
Instead, APRA has proposed that authorised deposit-taking institutions (ADIs) use an interest rate buffer of 2.5% over the loan’s actual interest rate when assessing a customer’s ability to manage repayments.
CoreLogic research analyst Cameron Kusher has done a pretty good job of breaking down how you’ll be assessed under these proposed changes:
“If someone is looking to borrow at an interest rate 3.9%, the borrower would previously have been assessed on their ability to repay the mortgage at an interest rate of 7.25%,” he said.
“Now they would be assessed on their ability to repay at a lower 6.4% (3.9% + 2.5% buffer).”
Kusher added that the proposed APRA changes seem sensible given the interest rate environment with the expectation that rates will fall from here and remain lower for longer.
“Furthermore, since 2014 it has become much more difficult to get a mortgage, that is partly because of this serviceability assessment,” he said.
APRA chair Wayne Byres said the operating environment for ADIs had evolved since 2014, prompting APRA to review the ongoing appropriateness of the current guidance.
“APRA introduced this guidance as part of a suite of measures designed to reinforce sound residential lending standards at a time of heightened risk,” said Mr Byres.
“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.”
Mr Byres said with interest rates at record lows, and likely to remain at historically low levels for some time, the gap between the 7% floor and actual rates paid had become quite wide in some cases, and “possibly unnecessarily so”.
Mr Byres said the changes are likely to increase the maximum borrowing capacity for a given borrower.
However, he warned banks that the changes are not intended to signify any lessening in the importance that APRA places on the maintenance of sound lending standards.
“The proposed changes will provide ADIs with greater flexibility to set their own serviceability floors, while still maintaining a measure of prudence through the application of an appropriate buffer to reflect the inherent uncertainty in credit assessments,” Mr Byres said.
A four-week consultation will close on 18 June, ahead of APRA releasing a final version of the updated guidance.
CoreLogic’s Kusher said the changes will allow some borrowers who can’t quite access a mortgage currently to get one.
“Overall for the housing market, it will mean more people are able to get a mortgage. These proposed changes in conjunction with the uncertainty of the election now behind will potentially provide additional positives for the housing market,” Kusher said.
In the meantime, if you’d like to find out if these changes might help increase your borrowing capacity, then get in touch. We’d be more than happy to run through your situation with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.
No doubt, like most, you’re suffering from a bit of election fatigue. But stick with us – here’s one last article that explains what you can expect from the 46th parliament of Australia.
With the Coalition securing enough seats to form a majority Morrison government, this week we thought we’d recap a number of key election promises and how they may impact your financials.
Now, we understand that politics can be somewhat of a … polarising issue, especially straight off the back of a hotly contested election campaign.
So we’ve done our best to take the politics completely out of this and just break it down into simple facts on what‘s been promised moving forward.
Perhaps the biggest talking point from this election is not what’s changing, but what’s staying the same.
Labor had entered the election campaign promising to halve the capital gains tax discount for investments entered into after 1 January 2020, and limit negative gearing to new housing.
However, the re-elected Coalition government opposed both these policies, so expect them to remain unchanged.
Labor had also planned to abolish the franking credit refund, which would have had an impact on shareholders and self-funded retirees. However, the Coalition campaigned strongly against Labor’s plan.
This is a bit of a tricky one.
The Coalition’s pledge to cut personal income tax was perhaps its biggest election promise.
Now, the good news is that last year the government passed a $530 tax cut for people earning up to $90,000 this financial year.
The bad news, however, is that it looks unlikely that the government will be able to pass legislation before the end-of-financial-year deadline to provide an extra $550 in tax relief.
That’s because it’s extremely unlikely that federal parliament will return before June 30, as the writs for the election won’t be returned until late June.
That said, the federal government is looking into other options for delivering the tax cuts, such as having the ATO retrospectively amend assessments once legislation has been passed.
It was a policy announcement made late in the election race, but it will be welcomed by many young first home buyers eager to crack the property market.
Up to 10,000 first homebuyers will be given a leg-up into the property market under the First Home Loan Deposit Scheme.
The scheme, which will commence on 1 January 2020, will help eligible first home buyers purchase a house with a deposit as low as 5%, without having to pay Lenders Mortgage Insurance (LMI).
That means many first home buyers could save around $10,000 in LMI under the scheme.
For businesses with a turnover of less than $50 million, the government has promised to further reduce the 27.5% tax rate to 26% in 2020–21 and then to 25% the following financial year.
For unincorporated businesses with a turnover less than $5 million, they have introduced a tax discount of 8% (capped at $1,000), which will further increase to 16%.
The Coalition says this small business tax relief plan should benefit 3.4 million businesses employing over 7 million Australians.
Meanwhile, the government has also extended the Instant Asset Write-Off scheme until 30 June 2020.
The scheme allows small and medium businesses to claim immediate deductions of up to $30,000 for new or second-hand depreciable asset purchases, helping them with their cash flow.
As we’ve outlined above, there are a number of Morrison government policies that may trigger a re-assessment of your finances and tweaks to where money is allocated in your monthly budget.
Perhaps you’ll have a bit extra to pay off your monthly mortgage, small business loan, or to put away for a rainy day.
Whatever the case, if you need our help in any way, you know where to find us. We’d be more than happy to run through your query with you.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 don’t like to dust off the old crystal ball and speculate very often, but there’s been so much noise about whether the RBA will cut the official cash rate this Tuesday that we feel compelled to address it.
30 meetings in a row.
That’s how long the RBA has kept the record low official cash rate at 1.5%. All the way back to August 2016.
So with an uninterrupted streak like that, why are we putting this article out now?
Well, it’s fair to say that speculation has hit overdrive that the RBA will make a cut when it meets on Tuesday. But it’s certainly far from a given.
So today, let’s look at some of the main reasons for a cut to the official cash rate, some of the main reasons against, as well as what a rate cut might mean for your home loan.
Australian Bureau of Statistics data showed inflation was totally static in the March quarter, with the consumer price index at 0.0 per cent, bringing the annualised rate down to 1.3 per cent.
The unexpected reading has financial markets and pundits predicting an increased likelihood that the RBA will cut the cash rate this Tuesday.
Basically, the thinking is that by cutting the cash rate, the RBA could give the economy a good ol’ hit with the defibrillators.
ANZ Bank chief executive Shayne Elliott backed the case for cutting official interest rates to a new record low, saying it would boost economic activity and give “breathing space” to people struggling to make their home loan repayments.
“Maybe it will just give a bit of juice into the economy, and get a bit more employment, and put a bit of money back into people’s pockets,” Elliott says.
That said, some people doubt that an official rate cut would be passed on to mortgage holders, as we’ll touch upon later.
Nationally, we’re amidst the worst annual housing price fall since the GFC.
Over the year, median prices nationally fell by 7.2% in average weighted terms.
The declines in the combined capital cities over this period was even larger at 8.4%.
CoreLogic’s research director Tim Lawless says a rate cut could help give the property market a bit of a boost.
“The prospect for lower interest rates is another factor that could support an improvement in housing market activity later this year,” says Lawless, who also adds that “the worst of the housing market conditions are now behind us.”
Perhaps the biggest reason why we may not see the RBA announce a rate cut this month is because we’re in the middle of a federal election campaign.
“Changing monetary policy during an election risks the central bank being caught up in a political fight,” says the AFR’s senior economics writers in an analysis piece.
“The RBA last raised interest rates during an election in 2007 and John Howard and Peter Costello never forgave then-governor Glenn Stevens. Howard had campaigned on keeping rates low.”
As we all know, Howard lost that election to Kevin Rudd, and the only other time there was an official cash rate change during a federal election was in 2013 – when Rudd lost to Tony Abbott.
So the track record for rate changes during election campaigns is not good for incumbents.
So what would a cut mean for your home loan?
According to an analysis commissioned by the AFR, lenders would keep rates the same, or pass on only half the rate cut. That’s what they did after the last cash rate cut in July 2016, and it’s another reason the RBA might not end up making the cut this month.
If they did, however, and half the cut was passed on, the typical monthly repayment on a $1 million standard variable loan would reduce by just $65, the analysis finds. On the average $400,000 loan, the reduction would be just $26 a month.
So those are the main reasons for and against a cut to the official cash rate.
What’s a little more clear cut, however, is that most economists are predicting that if it doesn’t happen this month, it will most likely happen in the months to follow – and perhaps twice before the year’s end.
If you’d like to know more about what these potential upcoming cash rate cuts could mean for you and your family, please get in touch – we’d love to run you through it.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.
[et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”3.22.3″][et_pb_row admin_label=”row” _builder_version=”3.22.3″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″ _builder_version=”3.0.47″][et_pb_text admin_label=”Text” _builder_version=”3.0.74″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”]
What a rollercoaster month it’s been for the mortgage broking industry and our customers. The good news for the both of us is that our service to you will stay exactly the same moving forward, no matter who wins government come May.
The people have spoken and both the government and opposition have listened.
Both sides of the political spectrum have agreed not to change the mortgage broker remuneration model to a user-pays system moving forward.
That’s great news for consumers, who would have had to fork out thousands of extra dollars each time they took out a loan through a mortgage broker.
It’s also great news for us.
The Royal Commission report didn’t exactly paint our industry in a positive light, which was more than a touch unfair considering that less than 1% of consumer credit complaints to the Financial Ombudsman Service have been about mortgage brokers.
Without getting into the politics and policy details of it all, both the Coalition and Labor have agreed to continue with a commission-based structure.
Now, both parties have different viewpoints on how commissions should work moving forward, but the long and short of it is that both proposed policies will ensure it’ll be business as usual for the both of us moving forward.
So, from the bottom of our hearts we’d like to say thank you.
We’ve been completely overwhelmed by all the messages of support we’ve received, as well as all the emails and petition signatures that were sent to local MPs protesting against the proposed changes.
And it definitely has made a difference!
In fact, it’s the only recommendation from the Royal Commission that both parties have ruled out implementing.
Rest assured that no matter what, our first priority will always be you: our customer.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
[et_pb_section bb_built=”1″][et_pb_row][et_pb_column type=”4_4″][et_pb_text _builder_version=”3.8.1″]
You’ll be pleased to know that as of last Friday (1st November), making a financial complaint in Australia became much easier.
The Australian Financial Complaints Authority (AFCA) will streamline the complaints process by replacing the responsibilities of the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).
David Locke, chief executive of the Australian Financial Complaints Authority, acknowledged that the financial sector has taken a hammering following the Banking Royal Commission and consumer confidence is at an all-time low. He went on to say that the AFCA aims to drive up standards and make it quicker, easier and cheaper for consumers to make complaints.
“Our focus is on being much more proactive to reach out to consumers a lot quicker,” he said.
It also hoped that the AFCA will be able to handle more disputes and reduce the need for litigation which is costly and time-consuming. Significantly, the AFCA is completely independent and operates as nonprofit.
[/et_pb_text][et_pb_text _builder_version=”3.8.1″]
If you are unhappy with a financial service or feel you have been treated unfairly by a bank or other financial institution, you can make a complaint to the AFCA. Some examples of financial products and services include:
Before you make a complaint to the AFCA, it is recommended that you first attempt to resolve the dispute directly with the financial institution. All financial firms (including superannuation funds) are required by law to be a member of the AFCA and rulings made by the AFCA will be legally binding.
Read Before You Complain To Us advice from AFCA
[/et_pb_text][et_pb_text _builder_version=”3.8.1″]
Making a complaint with AFCA is easy. Simply fill in an online form (email and phone options are available) and your complaint will be registered and referred to the relevant financial institution. If the complaint is not resolved directly an AFCA representative will review the case.
Make sure you read all the information on the AFCA complaint page to see what issues can be complained about and those that can’t be considered.
Atelier Wealth offers a range of finance solutions to clients all over Sydney. We aim to educate and inform, working closely with you to help you achieve your financial goals. Talk to us today.
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
Australia, and Sydney, in particular, have always been magnets for foreign investors. Our strong economy, multicultural society, and beautiful natural landscapes, entice many foreigners to buy property. However, some developers and property experts fear that foreign demand may be weakening after both federal and state governments recently tightened rules for foreign buyers.
Recent crackdowns by state governments include:
Business Insider reported earlier this month:
The survey also revealed
While these figures do show a drop in sales to foreign buyers, overseas investors still represent a significant proportion of overall sales.
December CoreLogic data showed that national house values dropped by 0.3% and while the new rules for foreign investors caused only a modest decline in the number of properties sold to overseas buyers, experts believe that they are likely to impact property prices. Dr Shane Oliver, chief economist at AMP Capital, believes the Sydney and Melbourne property boom will continue to deflate.
Our thoughts? As a Sydney Mortgage Broker, we believe that property in this city will always be in high demand. Prices may drop slightly in the coming year but we’ll have to wait and see. Exciting times!
