| First or new home buyers
are moving back into the market as rates come off and will settle
to near historic lows. House prices become more affordable from
their previously over inflated prices. So first home buyers are
beginning to see value for money in buying their first house aided
by a revamped Government assistance plan, which is by way of an
increase back to the levels of the former Howard Government's
grants, which is also adding to their optimism of affordability.
The RBA announced today yet another reduction in
the official "Cash" rate by full 1% to match the reduction
last month and brings the rate to a four year low of 4.25%. So
have we been paying too much for a number of years under the RBA's
monetary policy - I wonder?
The future of the Australian financial landscape
will change as a direct result of the global financial meltdown.
US Banks with Lending practices, which started under the Clinton
Administration, that allowed low or no deposit Housing Loans and
which spread to Australia with Banks racing for market share,
will be a thing of the past for the for-seeable future as credit
risk is tightened by Australian Banks and Approved Lending Institutions.
Whilst this will be tough for new entrants into the Housing market,
because they will need to build a deposit base before considering
borrowing, it will have a beneficial effect on the economy by
lifting the nations savings and the flow on to our Banking system
will produce benefits within the industry and also rebuild financial
respectability for an industry which would appear to have lost
it way or at the very least some direction over recent years.
The Reserve Bank of Australia cuts the official
"Cash Rate" by another .75% on top of the 1% drop last
month, achieving a rate of 5.50% and the third reduction during
2008. However the sting in the tail is that despite the rate reduction
buyers looking to move into the property market will need more
deposit than they would have say 18 months ago. The simple fact
is lenders are getting back to basics and measuring potential
borrower's ability to repay any housing loan against their ability
to save a credible deposit. And that deposit is going to be anywhere
between 10% to 20%. So those contemplating a property purchase
or in deed an investment property will need to have cash in the
Bank, so to speak or some very healthy equity in their existing
property.
Despite recent media scare mongering regarding Finance
Brokers and other Intermediaries, Housing Loans Australia said
today, "Our clients are well served on the interest rate
front with over 98% of loan facilities being funded through our
excellent relationships with the major Australian Banks. HLA's
clients enjoy the most advantageous and appropriate interest rate
positioning due to our 40plus years experience within the financial
industry and not being a "Johnny come lately" simply
looking for a fast buck. Experience counts, and our clients appreciate
that very fact".
Finally some good news with the RBA reducing the
"Cash" rate by a full 1% after many months of interest
rate increases and world financial markets in a tailspin. Although
the news was prompted by falling consumer spending and confidence,
which is not only confined to the consumer sector by also starting
to flow on to the Business and Corporate environments. He's hoping
the markets will return to normally sooner rather than later!
Yet another interest rate rise announced today by
the RBA, the second in as many months, when will it end.
Well the circus is in town again, as the RBA tries
to halt the inflation "Dragon" by yet again punishing
Australians for wanting to buy a house of their own. It's bad
enough that the economy remains in "full forward" due
to the Chinese economic boom, oil prices at historic highs flowing
into sky rocketing petrol prices, groceries prices are increasing
weekly without any apparent checks, so the RBA's answer is to
punish home owners with yet another rate rise. Get used to it,
because there seems to be more to come.
The worst kept secret in the country is out, with
the RBA increasing the "Cash" rate by another .025%,
however economists believe the end is insight for this cycle and
the next may well be down.
Interest Rate remained on hold this week when the
Reserve Bank said that economic conditions were starting to stabilize
back to within it's comfort zone, which is good news after 6 previous
increases.
Today the Reserve Bank of Australia again raised
interest rates by .25% in an attempt to retain control of inflation,
which according to the ordinary man and woman in the Street is
already high enough. With Petrol prices at or near to all time
highs as with staple food goods, due to drought across the country,
the consumer is again hit hard by this attempt to slow the "Booming"
economy. Perhaps it's time for a rethink of this mechanism?
As was widely predicted another Interest rate rise
was announced today by the Reserve Bank of Australia, taking the
"Cash" rate to 6.00%. Whilst this will be swiftly passed
onto borrowers now is not the time to panic. Fixing your interest
rate is one way of trying to combat the rising cost, however all
lenders had some time ago lifted long term rates in anticipation
of this latest rise by the RBA. There is no "silver Bullet"
here, it's a simple case of bearing the pain and planning accordingly.
If you have an investment property I would not suggest you now
look to "increasing" the rental at this time, as that
will just drive tenants away. Look at a rent review under advice
from your Agent when due, not before.
Well the interest rate reprieve didn't last all
that long with the Reserve Bank lifting the "Cash Rate"
by another .25% to 5.75%, thereby ensuring that domestic interest
rates will increase by a like amount. So when you're looking for
a housing loan make sure you're talking to the right people and
get as many choices as you can. An accredited member of the Mortgage
Industry Association will be able to guide you through the process
without charging you any fees, as they're paid by the lender you
finally choose and their fees are regulated, so you can then select
the right lender.
Yet another reprieve for the Housing industry as
the RBA this week continued the Status-Quo on interest rates for
the 13th straight month. However with the inflated price of petrol
continuing to dog the Australian consumer and the effects of a
greater number of cyclones around the country, economists are
expecting a move upwards sooner rather than later.
The WA State Government has finally brought it's
Stamp Duty on "Re-Financing" of existing housing loans
into line with other States by allowing an extension of the current
"stamping" (the duty which you paid originally on the
Mortgage Document) for all refinancing under $5Million. This means
you will not now "hit" twice for the same Stamp Duty
as was the case before this new legislation came into being. This
is welcome news for homeowners who are looking to take advantage
of the current low rates and perhaps fix their housing loan under
some very good offers in the marketplace at the moment.
Good news again this month as the RBA keeps a tight
hold on housing loan rates.
Rates remain on hold again and look like staying
that way for the foreseeable future. Or at least until the RBA
can assess the impact the current high oil prices are having on
consumer spending.
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