News Room : Archived News
Interest Rates Rise
9th Dec, 2003
The Reserve Bank of Australia raised interest rates another 0.25% this month, following on from November\'s 0.25% rise. The new standard variable home loan rate is 7.07%.
The RBA decision was based on an improving global economy, especially in the US, Japan, China and Europe, and a stronger local economy in terms of consumer spending, business confidence, employment and farm production.
Interest Rates Rise
3rd Dec, 2003
The timing of the decision by the Reserve Bank to lift the cash rate by 0.25% to 5% at November’s board meeting took the market by some surprise. The Reserve Bank for some time has been in a phase of expansionary policy, keeping rates low so that the economy will grow.
The Reserve Bank now believes it is time to tighten this policy, due mainly to the strength of demand for credit, that is, loans.
The move to increase rates, the first in 16 consecutive months, was also a response to an improving global economy, with the US, Japanese and European economies all reporting higher than expected growth. The Australian economy is also strengthening. The consumer price index is in line with expectations. Another factor in the board’s decision was that rising house prices to date will provide more wealth to support household spending.
So the decision is a vote of confidence in the Australian economy and consumers’ willingness to spend.
Mortgage rates rose 0.25% in line with the board decision with the standard variable rate now 6.82%. Interest rates are likely to rise again, but only by fractions of percentage points.
If you would like to enquire about taking out a mortgage, our broker can help. Please email finance@natgroup.net
Building Approvals on the rise again
2nd Dec, 2003
Total building approvals rose by 7.5% in September 2003, and by 12.6% for the year to September 2003, the Housing Industry Association (HIA) reports.
Monthly building approvals rose largely because of a 16.3% jump in approvals for medium density property such as townhouses, apartments and villas.
Approvals for free-standing houses rose 3.6% in the month.
Monthly building approvals in Victoria rose 23.5%. In New South Wales approvals rose 1.8% and in Queensland, 0.6%.
Tasmania, Western Australia and South Australia all experienced falls in building approvals, by 18%, 2.1% and 2.0% respectively.
Buying a home during New Year Holidays
2nd Dec, 2003
With fewer properties on the market because of the seasonal downturn, many buyers are wondering whether now is the time to be out looking for a new home.
The advantage of searching for a home in summer is that there is less demand.
Consequently, a seller who needs to sell will be willing to negotiate with you. And if you’re on holiday, you have more time to carefully consider what’s available.
As always, look for a quality property in a good area offering transport, proximity to a beach, river or park, restaurants and schools. Summer may just be the time you find your dream home!
Remember, you’ll ease your loan application if you watch your credit card spending over Christmas. A new home may require extra cash for expenses such as removalists and insurance.
Home Loan Approvals Rise
27th Nov, 2003
Home loan approvals rose by 4% in September, the ABS has announced. People refinancing a loan accounted for one-third of all approvals, a 7.1% jump. By contrast, first home buyers accounted for 13.3% of approvals. The proportion of people taking out fixed-rate loans increased to 9.7%. The size of the average home loan also increased to $189,000 in September.
Interest Rates Up
7th Nov, 2003
After months of warning about the danger of excess debt, Reserve Bank has finally raised interest rates. It’s really not much, just a quarter of one per cent, basically a warning to say Australia is doing great but behave yourself, don’t get into too much debt otherwise, for your own sake, we’ll have to slow the market down even more.
This decision to increase interest rates was based on the fact that the global economy is recovering well especially after the drought, the war in Iraq and the SARS virus, meaning that it was no longer necessary to keep rates at low levels.
So how does this affect the average person?
Well the average home loan repayment will increase by $27 a month. So even those of us who have a loan and are extended to their maximum, it won’t hurt too much. It should, however, get our attention.
The Reserve Bank last year started to increase the rates to what they defined as “raising rates back to a normal level” from what was a record low of 4.25%.
The 0.5% increase during May and June 2002 was the last increase for while as the Reserve Bank put a hold on further rises because of the effect of the drought, SARS, a slow global economy and the Iraq war.
As much as the governments keep reminding us that interest rates are “historically low”, what is often left out is that debt is historically high. Not to mention that it has never been harder for first home buyers.
I am sure you will all agree that the increase in property prices has more than wiped out the benefit of low interest rates for many buyers. For example instead of paying 10 per cent on loans of $150,000, many borrowers now pay 6.95 per cent on loans of $350,000.
First home buyers and young families wanting to upgrade have been pushed out of the market by investors rushing to get into more property. Also thanks to many TV shows, the renovating craze of early 2003 has seen many people get into those properties that were relatively cheap over 1 year ago. This increase in demand for these renovators made what were affordable properties now also quite expensive, thanks to the golden rule of demand vs supply.
While most economists had speculated that the Reserve would raise rates, most considered this would not happen until at least December or even early next year.
The team at the Reserve Bank are not wanting to make big bucks from the property market and aren’t politicians who double the good news and halve the bad news. The advice of the Reserve Bank is good advice, free from any selfish motives.
And it looks like the rate rises aren’t over yet, with the Reserve Bank hinting during their statement on Wednesday the 5th, that further rate hikes could be possible if inflation began to rise.
Investors who have ignored the warnings won’t be hurt much by this rise. But it should make them think. If not, they’ll feel more than just a warning rise. Interest rates will go up again, prices might fall and thousands of investors will get a real surprise.
Property the choice for retirement savings
7th Nov, 2003
Aussies choose property to grow retirement savings
Currently more than 45% of all new home loans are for investment in property and this trend looks set to continue with the release of survey results showing more than 800,000 Australians intend to invest in property over the next twelve months.
The survey, commissioned by Wizard Home Loans and conducted by A.C Neilsen, found approximately 860,000 people are intending to invest in property in the coming year – well in excess of the 246,000 people who invested in property in 2000.
Of those 860,000 people intending to invest, more than half already own one or more investment properties.
The survey also found the median age for the investors has risen from 39.5 years of age in 2000 to 41.8 years in 2003, while average household income of investors has also risen from $80,800 per annum in 2000 to $92,000.
The survey results indicate a growing number of Australians are looking to property to grow their savings as they head towards retirement.
What to do if your property isnt selling
7th Nov, 2003
You may have heard about the hot property market that’s sweeping across the country and decided it was time to sell your property…. a process you assumed would be quick and easy. Not necessarily so. If your home has been on the market for some time (even in today’s hot market) while properties around you are selling, it might be time to make some changes. Here are a couple of important points to consider…
Price
If your house has been on the market for longer than you anticipated, the first thing you should look at is your asking price. Talk to your real estate agent and ask them what prices similar properties in your area have achieved. Carefully and objectively consider the features of these properties compared to yours and then make adjustments to your asking price accordingly. Remember, you may think a high asking price will help attract buyers but the only thing you may succeed in doing with a high asking price is scaring away genuine buyers.
Repair if necessary
If there are any obvious problems with your property, whether it is a leaking roof, worn guttering, orange carpet, an unfinished bathroom or broken window panes, fix it now.
Review inspections
If your agent has had any open houses or private showings of your property, find out what the buyers thought of your property and what, if anything, was putting them off buying.
Clear clutter
When your house is on the market, you have to try and see it from someone else’s perspective. If you have too many ‘things’ around and too much furniture it’s difficult to see how large a room is and it’s difficult for buyers to mentally place their own furniture in the room, so clear out as many unnecessary items as possible. Pack away personal collections and photos, clean out your wardrobes, clear kitchen bench tops, clean out bathroom cupboards. Remember, less makes it look like there is more room.
Street appeal counts
Look at your home objectively from the street. Ask yourself these questions. Does your home need repainting, what condition is the roof in, are the windows clean, are gutters rust free, can you clearly see the house number, are front garden plants healthy and neatly trimmed, are pathways free from obstructions (including children’s toys) and is your front door welcoming? If you answered no to any of these questions, make whatever changes are necessary until you get a ‘yes’.
Finally, don't give up hope. Barring any major structural problems, when your house is priced right and looks its best, it will sell.
If you home is on the market and isn’t selling, or if you are considering placing your property on the market in the near future, please contact us. We can arrange a thorough inspection of your property (from a buyer’s perspective) and point out any areas which may need repair or extra attention.
Building Approvals on the rise again
7th Nov, 2003
According to the Housing Industry Association (HIA), total building approvals rose by a healthy 7.5% during the month of September 2003, and a massive 12.6% for the year between September 2002 and September 2003.
The rise in monthly approvals was fuelled by a 16.3% rise in the number of approvals for medium density property (townhouses, apartments and villas). Approvals for free standing houses also rose, up 3.6%, but not as significantly as medium density approvals.
Victoria recorded the highest number of building approvals for the month, rising 23.5%.
New South Wales and Queensland also experienced rises in the number of building approvals, up 1.8% and 0.6% respectively.
Tasmania, Western Australia and South Australia all experienced falls in building approvals, falling by 18%, 2.1% and 2.0%.
The overall rise in the number of approvals shows housing activity in Australia is remaining strong despite warnings by the Reserve Bank of Australia and some media of an impending housing ‘bust’.
Refinancing Craze Continues
22nd Oct, 2003
Australia has become a nation that switches lenders, according to the latest ABS statistics. In July 2003, 15,954 home owners moved their loans, worth $2.52 billion, to a new lender. In the year to July, more than 173,000 owner-occupiers changed lenders for loans totalling more than $26 billion.
Others refinanced with their existing lender. Home owners typically refinance for a better deal, to buy an investment property, to consolidate debts or renovate.
Of all home loans, 42% are less than a year old and 77% are less than three years old. Experts say people with home loans between two and four years old may be most at risk of default if the housing market softens. People in the first year of a loan, by contrast, may have lower repayments because of honeymoon rates and have credit or alternative assets to sell to keep up mortgage payments in the short term.
Consumer groups say borrowers are often no better off for changing lenders, once early repayment penalties and stamp duty on the new mortgage are taken into account. They advise borrowers to educate themselves before considering refinancing, as it may cost up to $8,500 to refinance a $250,000 loan.