Mortgage News

Australian loan aggregator AFG say that a dramatic slump in mortgage sales in January may cause the RBA to rise rates in February.  AFG felt that this would be a crippling blow to the country’s fast-shrinking property markets.

In the past four months, mortgage sales have fallen steadily as first home buyers have exited the market, and upgraders have reacted to three rate rises in quick succession by freezing further borrowing.

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A report by Australian Property Managers presented by SMH this morning has found the the most expensive Sydney suburbs have lead the growth charge, with the average median house price rising 12.1% the biggest jump since 2003. Such growth has added  further support that the Australian property market has come out from under the shadows of the Global Financial Crisis. A strong job market and bounce back on the share market has helped investors to come back into the marketplace.

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An international survey polled recently has found that Sydney, coming in highest amongst Australia’s other major cities are among the least affordable places to live in the World. SMH has presented the report carried out by the Demographia International Housing Affordability Survey in which 272 markets in six countries were analysed. Sydney outranked other majors such as London and New York. Overall, Australia ranked the least affordable country to live in, with median house prices needing 50% of average incomes. Simon Reibelt from Oasis Home Loans Northern Beaches commented that even though the survey showed how expensive Sydney and the wider country was, it was a combination of extended factors that the survey did not take into account that pushed the affordability down. Sydney is one of the most revered cities in the World, and home owners and potential home owners should consider this when considering the high prices to enter the market. With this, property returns should stay increasingly high.

Image courtesy of The Sydney Morning Herald.

SMH has presented a report complied by Westpac that predicts only 3% of people expect housing prices will fall this year. This is in comparison to surveys carried out same time last year, which resulted in expectations that a third of all homes would drop . 84% of people expect housing prices will increase this year, with sales and auction volumes returning to effectively what they were back in 2007 before the downturn.

Simon Reibelt from Oasis Home Loans Northern Beaches said that these results showed that people had renewed confidence in the housing sector and that this would transition into more sales. With more momentum in sales would come even further growth and confidence.

A report complied by Resimark has indicated that Australian housing prices are not as expensive as first indicated or assumed. The Adviser has confirmed the news from Rismark that RBA’s figures reflect this as Australia has internationally low mortgage default and arrears. Rismark’s data indicates that at the end of 2003 after the last property boom, housing prices were approximately 4.2 times that of average disposable income. Their (Rismark’s) most recent report shows that in December 2008 the figures respectively were 3.7 times,  and rose to 4.1 x by the end of the 3rd quarter in 2009.

Oasis Home Loans Northern Beaches saw these figures as an indication for people who were considering entering the housing market as a positive result, as the pricing of homes has not disproportionally increased compared to incomes.

Westpac have introduced a tighter loan to value ratio which will mean new customers will need to save another $12,000 to qualify for an average home loan.

Westpac surprised the whole mortgage industry this week by announcing that it has raised its standard variable rate by 45 basis points to 6.76% which is now almost double the amount of the reserve banks increase. Now Australias second largest home lender will require a larger deposit from first-time borrowers, thus tightening its LVR from 90% to 87%

This will mean a larger deposit will be needed when borrowing money. However with other options available to the public choices are also found with brokers. Oasis Home Loans are one company that have competitive rates within the finance industry.

Broker News has reported that Westpac Bank has discounted 0.20% off selected customer mortgages in what appears to be a response to the negative press surrounding its large interest rate rise over the RBA. Westpac denies that this action was taken to subdue customer backlash. The Bank stated that it was simply normal customer relationship activities. Simon Reibelt from Oasis Home Loans Northern Beaches saw this response by Westpac as positive, as ongoing customer relationships and relationship building as one to keep existing customers and to generate ongoing new business. Northern Beaches mortgage holders who are Westpac customers may have received this additional discount.

Long gone are the days of the Australian dream of owning your own home now with such great advantages for renting.

People are now chaging their views on how they perceive renting and the dreaded “rental cycle.” With so many advantages to renting people are now embracing the concept of not owning their own house. Renting opens up everything for living situations and connivence. Examples include: You can afford to live where you want to, you do not need to spend so much money to buy a house on the beach when you can rent one. You do not need a bank to rent a house, thus no debt. also, you have the connivence to move when you like, if you have a neighbour you dislike you simply can move away. You also are stress free when each month you wonder if the reserve bank is going to raise the official interest rate. You do however can get your rent put up on you, however this can only happen 2 times a year.

So with renting on the rise its now a great opportunity for investors to take full advantage. Finance professionals such as Oasis Home Loans are able to help you pick your areas using information available to them from RP Data.

An increasing inflation rate is likely to cause the Reserve Bank to increase interest rates next month when the board meets in February SMH has reported. In 2008, the Global Financial Crisis caused a sharp downturn in the economy and it is considered by many to have bottomed out by the end of 2009. Now with the economy to be on the mend, the reflected increase in inflation figures is eventuating in interest rate hikes. Brokerage Oasis Home Loans Northern Beaches said anyone looking at entering the property market as an investor or new home owner should consider these increases as they most likely only head up.

SMH has reported that inflation has risen another o.3 per cent in December equalling November’s 0.3 per cent rise. This news has added to speculation of the Reserve Banks rate hike in its next meeting in February. Supply and demand levels, lower than expected unemployment figures and a stronger demand for staff have all pointed towards a 25 base point increase bringing the interest rate to 4%.

Simon Reibelt from Oasis Home Loans Northern Beaches indicated that these rate increases were bringing the market back into a more neutral balance and that home owners and prospective home owners should make sure they have enough of a serviceability buffer to account for the rises.