Resources: Market Update

ALMOST 30,000 FIRST HOME OWNER GRANTS APPLICATIONS.

Posted  25/02/09

The Housing Minister Tanya Plibersek revealed today that between mid October and the end of January, 29,489 first home buyers have taken advantage of the Rudd government grant.

There were 12,000 applications in January this year alone as first home buyers make a rush before the grant expires on the 30^th June 2009.  NSW seems to be the big beneficiary presently with the majority of the applicants for the grant coming from this state. 

CBA NEW DEPOSIT RULE.

Posted 23/02/09

Should first home buyers want to secure a CBA home loan they will now need to have at least 3 per cent of the purchase price in savings.

With anticipated rate hikes and the expected inflationary impact in the years ahead, the move is in response to industry concerns that first home buyers could purchase a home with a 5-10% deposit courtesy of the grant without any contribution of their own.

Ross McEwan, CBA group executive retail banking services, said "Customers who have skin in the game in terms of their own funds are more committed to continue their repayments".

SIMPLE WAYS TO SAVE ON YOUR MORTGAGE.

Posted 19/02/09

1.   Refinance and negotiate a better rate.

2.   To prevent paying addtional interest, pay all home loan fees and charges in advance and don't add them onto your mortgage.

3.   Pay fortnightly instead of monthly.

4.   Shop around. If your lender hasn't passsed on the majority of the 4% rate cuts, many have.

5.   Ignore the honeymoon period.  Pay the post honeymoon rate by making extra contributions.

6.   Make extra contributions.  As little as a one off $2000 payment can save you thousands off the life of the loan.

7.  Use an offset account where you can.


FIRST HOME BUYERS BEST AFFORDABILITY IN FIVE YEARS.

Posted 17/02/09

The recent release of The Housing Industry Association (HIA) and Commonwealth Bank First Home Buyer Affordability index has improved by 39.2 per cent in the December quarter. 

Households would now need an annual income of around $70,000 to buy a modest home which makes affordability at levels not seen since the March quarter of 2003.

Average home loan repayments fell to $2,056 a month by the end of the December, a fall of 26% from $2,796 the previous quarter.

In December first home buyers comprised 25.4 per cent of new mortgages, the highest market share since December 2001.

Mr Lamont the HIA Chief Executive said "Cuts with interest rates and the first home owners' grant have made a large impact."

FIRST-TIME HOME BUYERS FLOODING THE HOUSING MARKET.

Posted 14/02/09

First time buyers are taking advantage of low mortgage rates and the federal government's increased grants. 

December data suggests that first-time home buyers made up 25.4 per cent of home loans that were granted in December.  This draws comparisons to the height of the last major housing boom in December 2001.

With the Reserve Bank of Australia (RBA) cutting its official cash rate by 4% since September (a 45 year low) and the banks passing the majority of this on to consumers, figures suggest property is on the improve.

In December more than 52,000 owner-occupier home loans were taken out; this is the third consecutive monthly increase.


REDUCED EQUITY FEE OFFERS SAVINGS.

Posted 13/02/09

With the recently announced changes to Lenders Mortgage Insurance (LMI) and Loan to Value Ratio (LVR) policies by a number of lenders there are solutions that bridge the gap left by these changes.

Rather than paying a mortgage insurance premium, ING Direct offer a Reduced Equity Fee of $399 to customers that are borrowing up to 85% LVR. Savings may also be available for loans with LVR's above 85% up to 90% LVR. Here are some examples;

Scenario One

• Loan Amount $300,000 @ LVR 85%
• Reduced Equity Fee of $399 and No Mortgage Insurance premium

(Estimated LMI premium would have been - $2,475 potential saving of approximately $2,000)

Scenario Two

• Loan Amount $750,000 @ LVR 85%
• Reduced Equity Fee of $399 and No Mortgage Insurance premium

 (Estimated LMI premium would have been - $10,065 potential saving of approximately $9,500)

Terms and conditions apply.

Other lenders who have access to the Reduced Equity Fee include Homeloans Ltd and Home Loan Centre Australia.

ANALYSTS SAY FIXED RATE LOANS ARE BECOMING A GOOD IDEA AGAIN.

Posted 11/02/09

With interest rates tipped to hit record lows by mid-year, fixed rates may well be seen as a possible insurance policy against surprise rate rises later in the year.

Fixed-rate home loans market share is at record lows and as such some lenders are offering cheaper rates to entice borrowers away from the lowest standard variable home loan rates since the 1960s.

In November Australian Bureau of Statistics data shows that only 2.5 per cent of new borrowers chose a fixed-rate home loan, set for two years or longer.  Compare this in the months between March and August of last year where more than 43,000 unlucky borrowers locked into fixed rate home loans.

As the cash rate drops further fixed-rate borrowing is starting to look like a good option again.

WHEN THE NEW RATES TAKE EFFECT.

Posted 11/02/09

• RAMS Home Loans - 1% drop  Effective from February 9th 2009
• Westpac Bank - 1% drop  Effective from February 9th 2009
• AMP Banking - 1% drop  Effective from February 13th (New), February 15th (Existing)
• ANZ - 1% drop  Effective from February 13th 2009
• CBA - 1% drop  Effective from February 13th 2009
• Homeside - 1% drop  Effective from February 13th 2009
• NAB - 1% drop  Effective from February 13th 2009
• St George - 1% drop  Effective from February 13th 2009
• ING - 1% drop  Effective from February 16th 2009
• BankWest - 1% drop  Effective from February 20th 2009
• Suncorp - Metway - 1% drop  Effective from February 23rd 2009

 Rates quoted may vary slightly on different products with this lender.  Percentage drop is based on standard variable.


RATE CUT TO ASSIST 09 HOUSE PRICES.

Posted 05/02/09

Australia's critical housing undersupply combined with strong demand and historic low rates should see the Australian property market through a testing year ahead.

Figures released by RP Data last week confirmed national housing values fell by 1.1 per cent in the December quarter and 2.6 per cent in 2008.

Rismark CEO Christopher Joye added "With futures markets pricing in a sub-three per cent cash rate by the middle of 2009, home loans rates should fall below five per cent, presenting the most attractive borrowing costs in recorded history. In fact home loan rates in Australia have not been less than six per cent since way back in 1970."

AUSTRALIA'S MAJOR BANKS PASS ON RATE CUTS.

Posted 05/02/09

With the reserve dropping interest rates by a full 1 per cent the major banks have wasted no time in passing this on to consumers.

Westpac was the first to move dropping its standard variable home loan to 5.91 per cent.

The Commonwealth, ANZ and National bank all followed suit by dropping their rates for their home loan customers.

ANZ's standard variable reduces to 5.91% however the National and Commonwealth's standard variable falls to 5.74%, the lowest among the big four.

RESERVE BANK CUT RATES BY ANOTHER 1%.

Posted 05/02/09

The RBA has decided to further reduce the cash rate by a 100 basis points to 3.25 per cent, a 45-year low, after its first board meeting of the year on Tuesday.

This will be effective as of the 4th of February.

Here is a small piece from the transcript of the statement released today.

Economic conditions in Australia have also been affected, though less than in other advanced economies. Australia's financial system remains in a strong condition and large interest rate reductions over recent months have been passed through in substantial measure to end borrowers. Nonetheless, the combination of last year's financial turmoil, a severe global downturn and substantial falls in commodity prices has had a significant dampening effect on confidence, and therefore on prospects for growth in demand. Inflation has begun to moderate and, given recent developments, it is likely to continue to decline.

In these circumstances, the Board judged that a further sizable reduction in the cash rate was appropriate, to give further support to demand. In making its decision, the Board took into account the package of measures announced by the Government earlier today. The combination of expansionary monetary and fiscal policies now in place will help to cushion the Australian economy from the contractionary forces coming from abroad.