Aussie - Ajay Krishnan

Thursday, March 17, 2011

Rates on hold: John Symond’s view

Property owners breathed a sigh of relief earlier this month when the Reserve Bank left the official cash rate on hold at 4.75 per cent – the level it has been at since November.

Aussie Founder and Executive Chairman John Symond said the RBA is treading a very cautious path as it tries to find a balance between the booming mining sector and the ailing retailers.

“The Reserve Bank is very concerned about the consumer psyche at the moment,” he said. “They are saving more than they have in 20 years, they’re spending less so retail is down.”

Mr Symond said while mining is “going gangbusters”, retail struggles as consumers save their money or take advantage of the strong Aussie dollar to buy offshore.

“If you talk to retail, whether that is the corner store or Gerry Harvey (of Harvey Norman), they’re very concerned that if consumers stop spending for too long, it will then impact the economy,” he said.

“(The RBA) sees spending is way down and short-term that is a good thing, but they have expressed concern that if Australians keep their hands in their pocket that could cause the economy to slow down at a faster rate than what is needed.

Mr Symond said the good news to come out of the RBA’s March Board Meeting is the fact it has signalled that interest rates may stay on hold for some months to come.

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://blog.aussie.com.au/

Property of the week March 17th - #12

DEER PARK - $360,000

CAROLINE SPRINGS - $370,000

SUNSHINE WEST - $350,000

ELSTERNWICK - $440,000

Thursday, February 3, 2011

2011 interest rate predictions

With the 2010 end-of-year festive season well and truly in the rear view mirror, we’ve asked a few industry experts for their real estate market predictions for 2011.

Ross Greenwood, the Nine Network’s Business editor and host of 2GB’s Money News says:

“I really don’t think much will happen in the first half of the year. Perhaps by around May the mumbling will start that the Reserve Bank needs to raise rates again; and there will be evidence that parts of Europe (Germany especially and the UK as well) are starting to pick up.

The US also is showing signs of life, but our dollar should remain strong because of the amount of money the US has had to print for its Quantitative Easing.

The interesting thing to watch will be the banks. By mid-year most of them should be almost over their self-pronounced hump in rising borrowing costs. At this time expect term deposit rates to come off but also for out of cycle rate rises to ease off as well.

Barring a global economic catastrophe (which is hard to pick now, but Spain remains a worry and China must control its growth) 2010 will perhaps be as benign as we have seen.

All things being equal, rates should rise in the second half of 2011 because of the enormous capital investment in our resources sector underway, which will feed into economic growth and potentially inflation.”

AMP’s Chief Economist Shane Oliver says:

“We remain of the view that the RBA won’t start to tighten monetary policy until April next year at the earliest,” Mr Oliver told The Adviser.

According to Mr Oliver, the RBA is no longer under pressure to lift rates.

Inflation is presently under control and other data suggests the Australian economy is not improving too fast.
While dwelling starts fell sharply in the September quarter reflecting the earlier fall in building approvals and skilled vacancies fell in December, consumer sentiment edged up slightly and remains well above long term average levels, and new vehicle sales rose slightly in November, he said.

“While the NAB business survey showed that business confidence fell in November reflecting last month’s rate hike, business conditions actually improved slightly and both remain at levels consistent with reasonable economic growth,” Mr Oliver said.

Aussie’s Executive Chairman and founder John Symond:

Mr Symond believes interest rates will remain on hold until Easter, and possibly even until the middle of 2011.

“The RBA’s decision to lift rates on Melbourne Cup Day was a surprise and the subsequent move by the major banks to lift their rates higher than the 0.25 per cent has really done the some of the hard lifting for the RBA,” he said.

“Had that not happened, we could have seen the RBA increase by another 0.25 per cent in December.”
Mr Symond said he believed the RBA was comfortable with interest rates at the current level as evidenced by the Board’s comments released on December 21.

“Following the Board’s decision in November to lift the cash rate and the subsequent increases in lending rates, and taking into account the level of the exchange rate, monetary policy was judged to be mildly restrictive,” according to the Minutes. “Given the very high level of the terms of trade and the positive outlook for business investment, this policy setting was regarded as appropriate.”

Property of the week February 4th - #11

HOPPERS CROSSING - $325,000

TARNEIT - $319,000

TARNEIT - $345,000

TARNEIT - $325,000

Wednesday, December 8, 2010

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

Thursday, December 2, 2010

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:

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

Tuesday, November 23, 2010

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.”

Wednesday, November 10, 2010

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.”

Wednesday, November 3, 2010

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.

Monday, October 25, 2010

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.

Thursday, October 21, 2010

Property of the week October 18th - #5

ALTONA NORTH - $450,000

WYNDHAM VALE - $340,000

CAROLINE SPRINGS - $450,000

NEWPORT - $520,000

Wednesday, October 20, 2010

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.

Wednesday, October 13, 2010

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.