Mortgage News

SMH has reported that in the month of February, new home sales slumped sharply due to increasing interest rates and the government’s stimulus packages drying up. The figures show that in January, housing sales increased by 9.5% but then downsized by 5.2% in the following month. The RBA’s 75 base point rise between October and December along with more projected rate rises in the coming months means new home sales shall continue to suffer as it becomes more and more expensive to enter the market or keep current mortgages a float.

Simon Reibelt from Oasis Home Loans Northern Beaches looked at the figures as indicators that the governments tactics to curb inflation and spending would slow house purchases until the normal balance returned. Home owners should always be looking out for better rates or refinances for their mortgages while purchasers should be trying to jump aboard while the rates were still subdued.

Treasurer Wayne Swan has announced that the Government’s $16 Billion Dollar boost to the mortgage securitisation markets has done its job by keeping the cost of funds lower allowing more private investors to join in reports SMH. Mortgage backed bonds are the prime source of funding for smaller lending institutions. March 2010 has been the strongest month since early 2007 for the securities lending market. Some industry members have called for the RBA to actually purchase these bonds from the smaller lenders to ensure liquidity remains in the marketplace. Treasurer Wayne Sawn stated that competition and was re-emerging in the home lending market.

Simon Reibelt from Oasis Home Loans Northern Beaches said that the faster more investors  decided to purchase mortgage backed bonds off smaller lenders the greater the competition would become within our lending market.

SMH has reported that 60% of Investors now conclude that Australia has a housing bubble, that low interest rates, housing shortages and relaxed foreign ownership rules have caused it to spike. A recent survey conducted by SMH showed that 67% of respondents agreed that it was a great time to purchase property. Investors saw this period as the time to expand their portfolios as the housing shortage would yield increased rental incomes across the board.

Simon Reibelt from Oasis Home Loans Northern Beaches stated the Investors looking to re-enter or expand their current portfolio should look at broker the ever expanding range of lenders and mortgage managers to access the best deal suited for their finance needs.

Extract from SMH Business written by Mr CHRIS ZAPPONE. March 23, 2010 – 12:11pm.

“There is a big seduction that’s very powerful in this country of having your own home.” Australians are spending an ever-increasing amount on homes, seduced, to borrow psychologist Elisabeth Wilson-Evered’s term, by the dream of ownership. Indeed, there is sometimes a “sense of failure” if a couple is still renting when they marry or have children, said Professor Wilson-Evered, director of research at Relationship Australia Queensland. The home represents security and comes to embody a family’s very identity, even achievement. Ironically, Australians are engaging in increasingly risky behaviour to gain that security as they face the uncertainty that comes from a combination of the global economic crisis, labour market reforms and a widening gap between rich and poor. “Many Australians will do almost anything to purchase a home,” said Sydney University anthropologist Stephen Juan. “They will often take out loans far beyond their ability to repay them.”

Simon Reibelt from Oasis Home Loans Northern Beaches stated that the article provided some interesting topics that customers may experience when considering the high cost of home ownership.

SMH has reported that Westpac Bank today has advised it is under financial pressure to raise interest rates even higher, though it is fearing potential backlash from both customers and government bodies. Westpac posted at 33% profit last month, and inflicted scrutiny upon itself from the general public for its increased 20 basis point RBA interest rate hike in Dec 2009. The institution has blamed the high cost of funding, sourcing funds from overseas. Though political pressure has been acknowledged as a deterrent leading up to election time, rising rates will not be tolerated.

Simon Reibelt from Oasis Home Loans Northern Beaches said that as long as the cost of funds from overseas sources remain at a high, Banks and other lending financial institutions shall find it harder to keep their costs and therefore rates within overall green guidelines and perceptions.

SMH reports the CBA has stated that the cost of funds for lending shall remain high for at least the next two years. Prior to the Global Financial Crisis, banks were paying about 10 basis points on top of short term lending rates. After the GFC hit the majors, the banks were paying upwards of 180 basis points for the same rate. So for the foreseeable future, funding and the prices of it shall remain high, as demand regathers strength and supply of funds becomes ever more liquid.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that the cost of funding will impact anyone who will be entering or re-entering the market for a while still. Lending institutions shall offset the higher costs through other possible methods such as higher fees and charges and one off yearly fees, customers should always refer to the Comparison Rate for a gauge to the overall expense of that lender.

Forecast analysis reports SMH has revealed, Sydney’s population will grow by about 40% overall in the next few decades, with suburbs in the south-east region doubling, while inner city figures will increase by more than 60%. Projections on the next 30 years show that Sydney’s western suburbs will soak up most of the demand. Planning officials and developers all welcomed the report and stated that it would help start moulding future planning issues and areas for the marked 2036 growth benchmark.

Simon Reibelt from Oasis Home Loans Northern Beaches said that investors could look at the results and start to pickup competitively priced property in the forecast of exceptional returns in the future.

The Reserve Bank of Australia is now noting that rising house prices indicate that Interest Rates are not high enough.  The Board’s reports show that they are now looking at rising house prices as an indicator to the economy’s strength and drawing this relation to setting rates. Bank representatives at the majors see that each time the RBA meet, the chance of a rate rise will be a 50/50 chance until either the growth rates slow or until lending approval figures rise reports SMH.

Simon Reibelt from Oasis Home Loans Northern Beaches said that households should always be prepared in they’re budgeting for their mortgage repayments to increase and predicate that rates will now strongly increase into the near future.

SMH has reported that the RBA is likely to keep Interest Rates on hold when it comes to it’s meeting in April next month meaning good news for home owners. Mortgage and lending figures have spurred the hold for the moment as it has lead to uncertainty and that the Board noted slower lending during the latest period. The board weighed up that new home approvals and developments had raised slightly, though house prices had started to rapidly increase at an alarming rate.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that if the RBA decided to keep rates on hold for one month at a time to ensure its decisions were correct then it would take small steps at a time. It was expected though that the Board would raise the rate a few times over the next year as our economy strengthened.

Another weekend of solid sales and high demand over properties has given more proof to experts that a buoyant and strong real estate market is expected this coming year. Clearance rates were upwards of 84% over the weekend compared to last year relative figures of only around 74%. Report’s state there is a lot of pressure on the market right now, with increasing demand on existing properties and that buyers would be soon forced to either move outwards instead or downgrade their purchases stated the SMH.

Simon Reibelt from Oasis Home Loans Northern Beaches said that the pressure facing the real estate market could result in purchasers placing greater emphasis on their mortgage product search in order to obtain the best possible deal, resulting in non-bank lenders being considered more for business.