Mortgage News

SMH reports that Fujitsu Consulting has indicated that mortgage related stress has hit new highs as interest rates costs have kept increasing with no new developments in the job sector. Considered “high stress households” on the edge of selling has increased by 2% since the last report. Since 2005, the average mortgage amount has risen by a staggering 40%, though over the same time, incomes have not risen that much to compensate. The consumers who entered the mortgage market within the last 18 months were considered the ones most risk, with anyone entering the market quite recently warned to be vigilant as interest rates were expected to rise over the coming year.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that anyone who was experiencing mortgage related stresses should consult their financial expert, be it an accountant or financial planner. Refinancing into a better featured product at a lower rate can help “stressed” households move into a better financial position.

The SMH has stated that the RBA has projected that continuing house shortages quelling from low construction/council approvals in addition to our expanding population and strong economy will further cause an over demand. The only result would be upward pressure cost on homes for sale and rental properties until the population growth either subsided, economic growth steadied or building approvals increased substantially.

Simon Reibelt from Oasis Home Loans Northern Beaches said that the continuing outlook of this trend would result in current home owners to both experience increasing costs due to rate rises but strong property growth value. Anyone looking to enter the market faced increasing rental costs and higher benchmarks to meet to obtain property ownership.

A report compiled by the Australian Bureau of Statistics and Housing Industry Association and presented by SMH has shown that planning delays and council approvals are pushing home prices up, as the shortage of homes cannot keep pace with demand. Statistically, new hone loan approvals raced upwards by 58%, while new home approvals only went up a comparable 40% in the same period ending Dec 2009.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that the final effect  was one where there was an overflow of demand on both “to market” properties, extra people looking to rent and purchase while their current place was being either approved or built.

The Adviser has reported that the softening securitisation market has enabled more Non-Bank lenders to increase their competition against the majors. Better customer service and widening lending parameters are driving growth with these lending institutions, along with factors such as pricing, service and additional special features adding to more market share.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that as our economy nationally and wider moved back into strong growth and customers needs became more direct and varied, the Non-Banks would find more clients to convert.

SMH has reported that the Banks have hit back at the reports and claims that their fees and increasing profits are unjust. They state that it has been justified in shielding the nations economy from the effects of the Global Financial Crisis. On the other side though, organisation Australian Institute claims that the Banks are simply cashing in on exposed customers who are limited in their alternatives. Their reports show that the majors now have a 90% stranglehold over the financial system in Australia, while back in 1983 it was only around 50%. Of the posted combined $35 Billion in profits, $20 Billion was the transactional and payments systems profits.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that if customers were unhappy with their current major lender, then the expanding economy and softening of funding would allow customers took look elsewhere for a more competitive package and better service.

Australian Property Monitors reports shown by SMH that the median house price is closing in on the $600,000 mark, currently at $595,745. Depending on the suburb you choose to purchase in, that will allow you into a unrenovated 2 bedroom apartment in the inner city suburb of Potts Point or a 4 bedroom, top of the line block out at Blacktown. But the same story is no matter where you are looking at today, as long as there is a short supply of property on the market to purchase, prices will simply increase. In the Eastern and Northern suburbs near the beaches the median house price would not purchase a house anymore, but smaller apartment style properties.

Simon Reibelt from Oasis Home Loans Northern Beaches said that the rising median house price would push many people looking at entering the market or upgrading towards outer suburbs or into smaller properties.

SMH has reported that the Banks have all aligned themselves with yesterday’s RBA 0.25% interest rate increase, but strongly warn that the increasing cost of funds may cause them to rise above the boards decisions in the future. Circumstances surrounding Bank profits reflected Tresurer Wayne Swans comments warning banks previously to not raise rates above the RBA. The Banks state the cost of funds leads them to raise rates to cover costs to what they consider justified, but reported quarterly profits reflect a different story.

Simon Reibelt from Oasis Home Loans Northern Beaches advised that customers who were feeling the increasing pressure from rates rises to look outside major banks and lenders for great deals as wholesale funds avenues became stronger.

The RBA today has lifted interest rates another 25 base points to a total of 4%. This comes on top of the three consecutive raises from late 2009 equating to more struggles ahead for mortgage home owners. They are facing on average another $46 per month in repayments. ($300,000 loan over 25 years) The Board’s decision was based upon growing projected  trends in inflation over the coming year. The move will test the some 250,000 First Home Owners who took up the Governments extended incentives plans over last  year. The RBA stated it was in response the strong bounce back economy it saw emerging from the slump of the last few years.

Simon Reibelt from Oasis Home Loans Northern Beaches stated that the interest rate rise would not be the last this year. It is expected that the RBA will target inflation as our economy grows ever stronger. Anyone who was feeling the pressure of rates rises should consider looking at different lenders and possibly refinancing to lower other debts and their current home loan.

(Image and story drawn from SMH Business)

SMH has reported that lending institutes of all kinds have now placed the pressure back on to debt laden clients who are now face increasing interest rates, as funders are looking to reduce bad debts off their books. Financial institutions have now seen a recovering economy and with this has shifted their focus and attention on reducing bad book debts and delinquencies. According tot he report they (lenders) were more than happy to bankrupt clients over relatively smaller debts owed. The Global Financial Crisis slowed the lenders reach to recover bad debts as they had to manage their own debts, and now that the market is looking strong they have learnt lessons themselves and more than happy to apply them.

Simon Reibelt from Oasis Home Loans Northern Beaches said that there were opportunities for home owners with increasing costs and high debts to refinance themselves into a better financial position. There were lenders in the market who are able to payout other debts and issue cash out as part of the refinance.