Mortgage News

With rising house prices especially for homes at the price scale for a first home buyer and also the added pressure of economic uncertainty younger people are choosing to stay in their current living circumstance with their parents. However it seems more parents then not feel compelled to help out their children with cash hand -outs to help purchase the children’s property.

Unfortunately this seems to in most cases only hurt the kids because they become accustomed to a lifestyle that they cannot afford and in the long term this is only to hurt them financially and possibly give them a bad credit history because they cannot afford the lifestyle their parents helped them establish. To Avoid this situation consulting a finance professional is a good option.

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2010 looks to be a challenging year with household living costs on the rise, it seems gone are the days of buying lunch & they have been replaced with the home packed vegimite sandwiches. Households look like they will be needing to find an extra $76 a week with these costs to affect people Australia wide.

However this cost rise will not only affect what we choose for lunch but also will directly influence home loan rates. Home loan rates are forecasted to rise by one percentage point this year. E.g. On A $300,000 mortgage this will then add another $44 a week to your repayments.

Unfortunately these will not be the only rates to rise with Electricity bills, Private school fees and even CityRail tickets just to name a few to rise.

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At the end of 2009 it was obvious that the reserve banks decision of three consecutive rate rises and the end of the first home buyers would have a major impact on the property market with fewer first home buyers and fewer sellers are able to upgrade to a new property.

Over the past 3 months new mortgages for first home buyers fell by 39% while sales to established home owners were down by 19.1% & investors falling 3%.

With this situation on the rise people purchasing property will feel uneasy tow.

Graham Reibelt from Oasis Home Loans quotes: “As long as banks continue to raise rates above RBA increases non bank lenders will continue to be more attractive to borrowers”

SMH has recently reported that Westpac customers in the Northern Beaches who were angry with the Bank may be inclined to seek other finacnial instituations after its (Westpac’s) oversized rate rise in December last year.

AFG stated that  a large proporation of its business last month was originating from Westpac cusomters switching over from the lender. AFG would not state exactly how many people were refinancing, though the Commonwealth Bank made up a large source of its mortgages from these replacements.