Bastard Banks
Yes we have another 0.25% drop in the official interest rate down to 3%. Sounds like a good deal for all of you that are on a variable rate but I doubt if the banks will pass any of it on.
Most of the loans we are writing at present are with the major banks as they are giving the best deals. However I have serious misgivings about the future competitive nature of the finance industry. The CEOs of the 4 major Oz banks must be rubbing their hands with glee as they see a future with only themselves left standing and the government backing them up all the way. Now the latest PR stunt is giving an interest break of 12 months to anyone who has lost a job. It has been standard practice with any fund provider to discuss ways of minimizing stress to borrowers including a repayment moratorium. After the dust has settled I don’t see the major banks being so gracious when they have a monopoly.
House Prices?
Lots of crystal ball gazing is required at the moment on where house prices are heading. Local agents I talk to say its all good and lots of deals are being done. There is one guy out there getting lots of media attention saying more gloom and doom ahead but the wait of opinion is that we are out of “brickamortis”.
“Brickamortis: (noun) Term used when the property market is frozen and no buying or selling because of fear and uncertainty. Originated in the UK where the property market resembles a body on a slab.
In the UK and USA prices have dropped by an average of 20%, while the national average here for 08 has been 3.3%. According to RP data, dwelling prices rose by 1.2% in February. Both home and apartment prices are tracking higher. Dwelling prices are now marginally higher than they were 3 months ago. Over the last 3 months, price increases were recorded in Darwin (+6.1%), Melbourne (+1.9%) and Sydney (+0.5), while prices fell in Perth (-1.0%), Adelaide (-1.3%), Canberra (-1.8%) and Brisbane (-2.2%).
If this is true I predict that this winter will be the best time for buyers. Many agents say that after Easter we go into a property lull and doesn’t pick up again until next spring. From now till next spring may be a good opportunity for buying. Call me if you are interested in hearing more about what is out there!
Crisis? What Crisis?
Since the media is constantly using terms like “Credit Crisis” and “Financial Meltdown” many people assume you cannot get loans for residential property right now. This is not the case although there has been some voluntary tightening of application requirements.
Full Doc: most fund providers have now lowered their LVRs to 90%.
Lo Doc: 80% Lo Doc is still available but a couple of the major banks request to see BAS statements if over 60%.
The main change to Lo Doc is the complete black and white restriction around tarnished credit rating. You will be shown the door without even a look in if you have had any defaults or credit problems – so keep your statements in order.
This tightening of lending policies is a good thing but I also want to clear up the misapprehension that lending practices are lax. They are not and we have a sub prime mortgage rate of only 2% while in the states it is around 20%. We here at BPS have never, and will never, write finance for anyone who has the potential getting them selves into trouble.
Short Snippets
BB #7
Good wake up call for the Bay in getting only 7th place in Tourism Council’s Top 100 holiday destinations. Yamba beat us at #1 and Esperance WA was #2. Yamba is a bit of a surprise but people who have been there how great Esperance is on the Southern coast of WA have often told me. Fur the full list of top 100 towns in Australia go to http://au.news.yahoo.com/a/-/mp/5428626/best-towns-in-australia
Gen Y meets FHOG
First Home Owner Grant is not the only reason for keeping low-end (under $500K) firm. According to Bernard Salt, KPMG Demographer "the big story is that this Global Financial Crisis will force Generation Y into finally growing up, They will learn to take on commitment and the importance of assets. A new market in property will be selling to Gen Y, who will have their own distinct requirements for housing." He gave no indication in the report on what these “distinct requirements” would be but I assume small gardens, smart wired and broadband and close to the mall and a Starbucks. Gen Y is between 1980 and 1990 and may get on the treadmill faster as they apparently like fame and fortune and have never experienced economic uncertainty.
Special offer
Anyone thinking of refinancing you can take advantage of a special offer by one of the major banks. For a short while only they are offering a $600 gift into your loan account and a waiver on the $355 establishment fee. That is combined cash and saving of nearly $1000. So jump in fast and get it done.
Hot Property
My new website is up and running and has a section called Hot Property where I will list places that I think are good options. There is a lot of on the market at the moment but I am finding that a large proportion is very shoddy and overvalued.