Cost of funds just an excuse

A new report has found the banks’ interest expenses have risen by less than the RBA’s rate hikes.

According to the Australian Institute report, the major banks have been profiteering by lifting rates above the RBA’s official moves.

Australia’s majors have consistently claimed that their costs are rising by more than the official rate moves.
But senior research fellow at the Institute David Richardson said the banks’ profits have “unambiguously gone up”.

“There is no doubt that these banks are exploiting their market power to gouge excessive profits from their customers,” he said.

“This year, the big four banks earned pre-tax profit of around $1,300 per annum for every man, woman and child in Australia. The latest round of interest rate rises shows just how insatiable their thirst for profits is.

“Banking in Australia is essentially a rogue market in which a small number of winners take all. There is a clear case for government to take action with a combination of regulation, structural reform and improving competition.”

However, Australian Bankers' Association has strenuously dismissed the report.
The ABA's chief executive Mr Munchenberg said the RBA’s minutes released yesterday confirmed that costs of funds had in fact risen in the last 12 months.

“The RBA minutes recognise that funding costs have been slowly increasing.  This gradual increase has had a cumulative effect over the past year that is significant. That’s why some banks and other lenders have announced increases on standard variable home loan rates by more than the 25 basis points cash rate increase,” he said.

“Banks have been absorbing these higher average funding costs for nearly a year, but there comes a point when these costs do have to be passed on.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of http://www.theadviser.aom.au/

Property of the week December 6th - #10 - LAST ONE FOR 2010...SEE YOU IN 2011

ALTONA - $700,000

DEER PARK - $360,000

WERRIBEE- $475,000

WILLIAMS LANDING- $460,000

 

Tips for switching your home loan

The recent interest rate rises have received a substantial amount of attention in the media and, in Canberra, the focus has shifted to switching.

People angry over the CBA’s move on Melbourne Cup Day to lift their standard variable rate (SVR), and the subsequent lift by all of the other major banks to lift their rates higher than the Reserve Bank, now have people voting with their feet.

Aussie has received a huge jump of enquiries from homeowners looking to refinance and change lenders. But does refinancing always mean you’ll save money?

 Aussie Newtown franchisee Sean Beavis said it will depend on an individual case by case basis, as many people may already be on a better rate then the banks’ SVR.

“The most important thing is to make sure there is actually a benefit,” he said.

“Make sure that you clearly add up the cost of switching and that the new interest rate is actually going to provide a saving over and above these costs within a short period of time.”

Mr. Beavis said it was worthwhile consulting a broker, who can search hundreds of loans in a short period of time to ascertain whether a homeowner is on the right loan for their circumstances.

“There is little point spending $1,000 to switch loans just to save $400 per year in interest,” he said. “Many borrowers often don’t realise what a given difference in interest rate means in “dollar terms” – sometimes it’s not much.”

“It costs nothing to do that research though and many people may be pleasantly surprised at what they discover.”

Sean’s five tips for switching:

1. Shop around (or get a mortgage broker to do the legwork)
2. Work out the costs of switching
3. Compare interest rates, fees and features
4. Ask yourself if the benefits of switching are worth the costs
5. Get a broker to do all of the above!

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of http://www.aussie.com.au/.

Property of the week November 22th - #9

TARNEIT - $355,000

ALTONA MEADOWS - $420,000

HOPPERS CROSSING - $360,000


CAROLINE SPRINGS- $330,000

Don’t dance with the Devil…Refinance and save!

Unlike many complacent homeowners, Jason Billsborough and Simone Grounds have refinanced their loan twice since 2006, saving money and cutting the length of their mortgage along the way.

The Brisbane couple originally took out their mortgage with the Commonwealth Bank because it offered a competitive rate and allowed them to use a family guarantor to take the first steps on the property ladder, buying a three bedroom home in Annerley, Queensland.

They decided to look elsewhere after becoming unhappy with the interest rates and fees charged by CBA and they called Aussie Chapel Hill franchisee Tom Mewing, who refinanced them with AMP.

“You don’t have to put up with the antics of banks or continue to dance with the devil,” Mr Billsborough said. “We saved around $500 initially but were still saving around $250 at the end compared to our initial Commonwealth Bank arrangement.”

Pre-empting the Reserve Bank’s moves on Melbourne Cup Day, when they lifted the official cash rate 0.25 per cent to 4.75 per cent, the couple decided a few weeks ago that it was time to have a free Home Loan Health Check with Aussie and Tom Mewing.

“I managed to find them a great deal with Bankwest, saving them $385 a month on repayments and $280 a month on their consolidated debts, which equals a combined $665 a month savings,” Mr Mewing said.

“You have to vote with your feet if you’re not happy because it does work,” Mr Billsborough said.

Mr Mewing said he has had a great deal of interest from new and old clients following the RBA move, and the CBA inflicting almost double the pain with its decision to lift 0.45 per cent.

“We’ve been extremely busy in the week since the rate rise, there is a lot of anger out there,” he said.

“Regardless, it’s always prudent to keep an eye on your financial needs to ensure your getting the most of out of your mortgage.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of http://www.aussie.com.au/.

Property of the week November 8th - #8

WYNDHAM VALE - $350,000

MELTON - $280,000


SUNSHINE NORTH - $380,000

WEST FOOTSCRAY - $470,000

Strategy will be pivotal in next 30 years

As the property market ticks over into a phase of low growth now is the prime time to become a more targeted investor, according to Gavin Hegney of Hegney Property Group.

In a boom market everyone moves at the same speed, said Hegney, but now we’re in a three to five-year stage of low to steady growth where some will move ahead but others won’t.

This is the stage where strategy is pivotal, said Hegney.

Understanding where people are moving to over the next 30 years is the single greatest knowledge investors can arm themselves with, he said.

“If you can answer the question ‘where are people going to live?’ then you’re set.”

The Australian Bureau of Statistics (ABS) Mobility Survey is one of many reports investors should become friendly with, said Hegney.

In houses, moving for a better location will become the more prominent feature than the bigger house, he said. “Many will choose to stay in a good location and renovate the home without having to move.”

Hegney said if looking at apartment buyer movements, the trend is nothing new with 60 per cent of apartment dwellers moving from apartments within two years and 30 per cent moving in 12 months, according to the ABS Mobility Survey. “This suggests that two-thirds of buyers are getting it wrong.”

Learning from these mistakes, trying to work out what people want to live in and changing a property to suit that is the best way to ensure a long-term asset and capital growth, he said.

Hegney said it’s also about jumping ahead of the migration trends and assessing which areas will best suit the inevitable trend of densification across the cities.

“Which areas will make greatest use out of existing infrastructure? If the past 30 years was about suburbanisation then the next 30 years is about the consolidation of cities,” he said.

“So investigate those areas that can do it well and will become more desirable as a result. It’s about picking the Paddingtons of the next 30 years.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.apimagazine.com.au.

Property of the week November 1st - #7

CAROLINE SPRINGS - $525,000


TARNEIT - $390,000


POINT COOK - $510,000

 

WEST FOOTSCRAY - $450,000

 

Money for nothing - How the Federal Government will pay you to buy your first home!

Saving for your first home can be incredibly difficult, especially when you're young and maybe on a low wage, or perhaps still studying.

But, there is a helping hand out there – one that is relatively unknown to the majority of people trying to save to buy their first home.

As part of the Labor's 2007 election pledge, that following year while in Government, it introduced the First Home Saver Account to help Australians get into their own home faster.

In a nutshell, the Government will pay you 17 per cent on the first $5500 (which is indexed) of individual contributions made each year – that's $935 per year – for free! You can also save up to an account cap of $80,000.

There is a catch: First Home Saver Account holders must have their funds in the account for at least four years. After this time, they will be able to withdraw the funds tax-free in order to buy a house. You're also still eligible for the First Home Owner's Grant, and if you're buying as a couple – you can both have a First Home Saver Account.

Aussie Kippa-ring franchisee Kerrie Slinger said this scheme is fantastic for young people looking to buy their own home in the next few years.

"If you're already trying to save, it makes sense to open one of these accounts to access the interest the government will pay," she said.

"It really is money for nothing, and if you read the fine print – you don't have to have the funds in the account for four full years.

"The accounts run on the financial year, so if you deposit money on June 30 – it is considered that you've had your funds deposited for a "year".

"The same goes when you withdraw – if you withdraw on July 1 it is considered a full year, so you can cut that four years down to three."

To open an account, you must be between the ages of 18 and 65 and have not previously purchased or built a first home.

Banks, building societies and credit unions will be able to offer deposit accounts and superannuation providers, life insurers and friendly societies will be able to offer investment-linked accounts.

For more information on First Home Saver Accounts, go to http://www.firsthomesaver.com.au/ or http://www.homesaver.treasury.gov.au/content/default.asp.

To calculate how much you could save go to http://www.firsthomesaver.com.au/calculator/.

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.

Property of the week October 25th - #6

CAROLINE SPRINGS - $500,000


WERRIBEE - $455,000

ALTONA NORTH - $490,000

WYNDHAM VALE - $330,000 FHO PRICE

Borrowers urged not to get carried away amongst relaxed LVR offers

Banks are beginning to relax their lending criteria (not quite as much as the heady days of easy credit pre Global Financial Crisis), which is good for borrowers trying to crack the housing market.

Over the last three years, banks made it harder for people to borrow money as the availability of credit was scarce, and it was more expensive for the banks to access. This meant the banks had to cherry-pick the best customers as the amount of money they had to lend out was reduced.

In the last few weeks, however, there has been some attention around a number of lenders lifting their loan-to-value-ratio (LVRs) to levels not seen since pre-GFC days.

Westpac raised its LVR for new customers from 87 per cent to 92 per cent, reversing the cut it made back in January; while ANZ also recently raised the maximum LVRs from 95 per cent to 97 per cent for existing customers, and from 90 per cent to 92 per cent for new borrowers. While Commonwealth Bank has left its LVRs unchanged, at 97 per cent.

University of Western Sydney economic professor Steve Keen told News Ltd: “Banks need to keep on lending but, with house prices rising, they have to lend more – Westpac customers will now be able to borrow almost double what they could before.”

“Little changes in LVRs have a massive impact on what you can borrow. If you need a deposit of 13 per cent and have $50,000 saved up, that cash will enable you to spend $384,000 on a property.

However, Aussie founder and executive chairman John Symond said while housing affordability continues to worsen, it was still advisable to save as much as possible towards a deposit.

“While many lenders are relaxing their lending criteria in order to attract more borrowers, it is still better to try and save as big a deposit as you can in order to avoid getting into trouble down the track,” he said.

“High LVRs can equal thousands of dollars in Lender’s Mortgage Insurance (LMI), which you don’t to have to pay if you can avoid it.

“Having a high LVR also gives you less room to move, particularly if interest rates go up and if housing values dip you may end up owing more than your house is worth.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.

Property of the week October 18th - #5

ALTONA NORTH - $450,000

WYNDHAM VALE - $340,000

CAROLINE SPRINGS - $450,000

NEWPORT - $520,000

Why sharing a bedroom is good for kids and their parents?

Sharing a room with a sibling can be a joy and a nightmare at the same time. Playing together, chatting long into the night and knowing there was someone close in case monsters came out of the cupboard, can provide some of the best childhood memories.

On the flipside, some of the best arguments and fist-fights can start between the closest of siblings when they are expected to live in close proximity. Squabbles over clothes, decorating, ownership of toys and all manner of disagreements are likely to occur.

But with a property shortage here in Australia, and many families choosing to live close to the city, space is tight and children often have to share a bedroom.

There are many benefits for sharing a room, mostly because it teaches children to share, compromise and respect each other's feelings – as well as making use of available space, and possibly cutting down the cost of furniture!

Sharing a room can also help siblings develop important life skills. Room-sharing siblings must stand up to each other to protect their interests, yet must also learn how to negotiate and compromise so that everyone in the room has his or her needs met.

Siblings that have already learned how to live in close quarters with someone will find it easier down the line to share a room with a room-mate, a flattie or a partner.

Most experts agree that sharing a room with a sibling is generally a positive thing, and if they are of the same sex they can probably spend their entire young lives in the same room.

For siblings of mixed sex, it is easy for them to share when they are young. However, as they grow older, the need for privacy (especially around puberty) means they will need to have their own room.

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.

Property of the week October 11th - #4

ALTONA MEADOWS - $750,000

NEWPORT - $750,000

MAIDSTONE - $680,000

 

CAROLINE SPRINGS - $430,000

Top tips for auction season

Auctions can be scary, but according to buyer’s agent Amanda Segers from amandaonmyside.com.au, for the most part they are a good, clean way to do business.
She has some top tips for vendors and buyers when it comes to auctions:

For vendors:

• You have several weeks to find your buyer, advertise strongly and widely – don’t choose a cheap agent, but the one that has sold the most property around you and knows how to attract the right buyers.
• Spend some money sprucing your property up, eg having professionally cleaned if necessary. A simple paint and updating of floor coverings makes a huge difference.
• Ensure there is zero clutter, remove anything that you would hate somebody to steal from you.
• Choose a time of day that presents your home in its “best light” for open homes.
• Ensure there is nothing that will stop potential buyers from buying, eg. Damp (you can cut vents six months prior to dry the home), unit blocks behind (plant a row of tall trees or put up privacy screens or a sail) etc. If you have plenty of time, consider getting a DA for a granny flat/home office in the back yard, it will add value to your home.

For buyers:

• Have your finances in place prior to setting out on your search, they can take weeks to organise.
• Pre-plan your Saturday schedule of inspections, spend time calling the agents prior to confirm each property is in your price range (and still available) so you don’t waste time.
• Once you find the right property ensure the agent knows of your interest so that they don’t sell it without including you.
• Discuss the price expectations with the agent (and even other local agents who may know the property) and then generally add about 10 per cent if it is going to auction (note that this depends on market conditions, the property etc. a number of properties have recently sold below what the agent was quoting prior to auction).
• Ensure you do your homework on price and give yourself an auction limit – you will be more relaxed and wont to be making hasty decisions whilst the whole auction crowd is staring at you.
• If you are keen on a house but are not sure on price than the best rule is to make sure you are present at auction, you do not want to read in the Sunday paper that it sold below the price you would have been happy to pay!

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.

Property of the week October 4th - #3

YARRAVILLE - $480,000

 

WEST FOOTSCRAY - $250,000

POINT COOK - $440,000

DEER PARK - $300,000

 

As market normalises, first home buyers get prime positioning

First home buyers who missed the opportunity to enter the property market in 2009 are in the prime position to make their first purchase, particularly in the new home sector, as the first home buyer market returns to more “normal” conditions in 2010.

Aussie founder and executive chairman John Symond said the Reserve Bank’s recent decision to hold interest rates stable following its February meeting, and subsequent comments from Governor Glenn Stevens point to rates being kept at relatively low levels for some time.

“The RBA’s move to not lift rates in February is hugely significant and is great news for Australian homeowners,” Symond said. “It has given confidence to Australian consumers that interest rates won’t skyrocket.”

Symond said now was the best time for first time buyers (FHBs) to enter the market as last year the first home buyer sector was out of control, as the boost to the FHB grant spurred overly eager buyers to pay more than market value for their first property purchase.

“In many metropolitan areas, prices for properties in the first home buyer range were inflated due to increased demand,” Symond said. “Over-excited first home buyers were paying up to $50,000 more for a property just to get their $14,000 grant.”

“There were stories coming out of the property market of queues of people lining up for open houses and real estate agents not even allowing prospective buyers to view homes unless they had proof they had their finances approved. This was a crazy situation and one which can only lead to inflated prices.”
Figures from the Australian Bureau of Statistics show the heat has come out of the FHB market with the percentage of FHBs as a percentage of owner occupied purchasers dropped from 28.5 per cent in May to 22.1 per cent in November.

According to RPData, median home prices fell slightly in December by 0.3 per cent as the seasonal impact of the summer slowdown combined with rising interest rates and fading first time buyers finished off a bumper year for property growth with national values up 11.5 per cent annually.

Symond said Australians looking to buy their first home were now well positioned to enter the market, and are still entitled to the standard $7000 grant, but other incentives are available and may vary from state to state.

“For those worried they may have missed the boat with the bonus grant, I believe they are now the ones in the best position to negotiate a good price on their first home,” he said. “If I was a first home buyer I would have waited until the bonus grant had ended, because now is the smart time to buy.”

Symond said new homes are where the real bargains are as builders are still offering special deals and incentives – as are state governments – to entice buyers to build their own home.

“As there is a shortage of new homes, builders and state governments are falling over themselves to get new buyers into that market,” he said. “There are many fantastic initiatives on offer, but I caution potential homebuilders to do extensive homework when entering into a contract to build a house. “
“You need to know exactly what is included in the costs, such as floorcoverings or landscaping, as you don’t want to be up for any extra expenses when the house is finished.”

Symond said purchasers of established homes also need to carry out a number of tasks before they commit to their first property including: extensive research and due diligence on any property they are interested in purchasing; and, ensure they have a realistic budget and have factored in whether they can cover their mortgage following future interest rate rises.

He said there can be traps for young people jumping into the market without the discipline of saving and having a financial buffer to cover their mortgages if their circumstances change, such as starting a family and losing an income.

Symond said the best thing a potential FHB should do is to see a mortgage broker in order to assess their finances and find the right loan for them.

“Buying your first property is one of the most exciting, and at times scary, things a person can do,” he said. “It’s imperative they enter the world of home ownership on the front foot, with the right lender and the right loan for their circumstances.”

If you enjoyed this post or found it useful, please consider posting a comment.
Ajay Krishnan
Aussie Home Loans
0434 145 733
ajay.krishnan@aussie.com.au
Artice courtesy of www.aussie.com.au.

Property of the week September 27

SUNSHINE - $600,000

CAROLINE SPRINGS - $400,000

POINT COOK - $398,000

 

BRAYBROOK - AUCTION

Five tips for buying at auction

Opinion is divided as to whether auctions are a good or a bad method for selling property. Some people love being face to face with their competition and the open and transparent sale process.  Others dislike the fast pace and the pressure that produces sale prices based on emotion rather than logic.  There are pitfalls that exist for buyers, vendors, agents and auctioneers undertaking this stressful and exciting experience.

The following tips can help those wanting to buy property at auction to avoid a few headaches:

1. Know what you’re buying.  If possible, inspect the property early and work out an appropriate value.  A valuation or property report from myrpdata can be a useful at this stage.  If they haven’t already been done, undertake pest and building inspections to keep you from being potentially locked into a property full of nasty surprises.  Attend a few other auctions to get a feel for the process and learn to recognise common auctioneer and buyer tricks.
2. Prepare in advance.  Have an upper limit on what you’re prepared to pay and be ready to stick to it.  Try to make your upper limit a non-round number, as it’s common for auctions to finish in between two price milestones.  If you need to have special revisions made to the contract, sort these out with the agents before the auction as you’ll face hefty penalties if you find yourself unable to complete a sale.
3. Be cool.  Don’t bid before you have to.  Keep you emotions under control and treat the auction as business to make the clear decisions needed to come out on top.
4. Take control.  Bid when you choose, not necessarily when prompted by agents or the auctioneer, whose job it is to convince you to spend money.  Offer bids of a higher or lower value to what’s on offer and make the room work for you.
5. Don’t panic if your final bid is passed in.  In this case, you still have the first right of negotiation, so it's worth trying to get into this position even if it looks like the property won't sell under the hammer.

If you enjoyed this post or found it useful, please consider posting a comment.

Ajay Krishnan
Aussie Home Loans
0434 145 733

ajay.krishnan@aussie.com.au

Artice courtesy of RP DATA

Property of the week September 20

YARRAVILLE

 

FOOTSCRAY

WERRIBEE 

POINT COOK