Loan Market Home Finance

Ballarat house prices are higher than ever, with the June quarter peaking at a record median price.

The Real Estate Institute of Victoria has revealed that the median house price across the Ballarat region is now $270,000.

During the March quarter this year, the average was $258,000.

Ballarat mortgage broker Kerren Goodwin said she had received a large number of enquiries from borrowers looking to buy in the area.

“It’s particularly popular for couples with young families,” she said.

“I’m receiving plenty of enquiries from people wanting an official home loan pre-approval, coming up to the traditionally popular buying period in September.”

Median prices have increased by $70,000 since June 2005, and averages have increased by $35,000 over the past year.

Source: thecourier.com.au, Loan Market

The Reserve Bank of New Zealand may decide to hold interest rates when it meets this Thursday.

While the central bank has made it clear it will gradually remove policy stimulus, recent data suggests that inflation and GDP growth are weaker than expected.

Mortgage approvals in the week ending July 16 were down 20.1 per cent on-year.

However, economists aren’t completely ruling out a rise, due to Asian and Australian economies both being strong.

Loan Market Group New Zealand CEO David Hart said that mortgage holders concerned about the possibility of rising interest rates should speak to a professional broker.

“The best method of dealing with mortgage stress is prevention, and a good mortgage broker is well-placed to assist in formulating an appropriate strategy based on a person’s individual needs,” he said.

Last month the RBNZ increased the official cash rate by 25 basis points.

Source: Banking Day, Loan Market

The number of people borrowing more than $500,000 to purchase property rose by an average of 13 per cent nationwide over the past 12 months, says leading mortgage broker Loan Market.

Loan Market Chief Operating Officer Dean Rushton said the increase occurred in all mainland state capitals with Melbourne having the biggest rise of 21 per cent.

Mr Rushton said analysis provided for Loan Market by property information service PriceFinder found residential real estate price increases only partially contributed to the significant shift in home loan size.

“A higher proportion of first home buyer activity during 2009 due to the boosted Government First Home Owner Grant and a more subdued top end market were factors which resulted in pushing people into higher home price and loan brackets,” he said.

“The Melbourne housing market experienced the biggest shift with a 21 per cent increase in people taking loans of more than $500,000 over the 12 months to July, 2010.”

Mr Rushton said the Brisbane region had an 18 per cent increase in home loans of more than $500,000.

He said in Sydney there was a 16 per cent rise while there was only a seven per cent shift in Adelaide and four per cent in Perth.

“Sydney has the lowest percentage of loans below $500,000 at 28 per cent while Adelaide has the highest at 66 per cent and appears to be one of Australia’s most affordable cities to buy a home,” he said.

“In Brisbane, 47 per cent of loans are below $500,000 compared to 65 per cent a year ago while in Perth its 50 per cent and Melbourne 31 per cent.

“In Melbourne in July, 2009, 52 per cent of loans were below $500,000 so the change there reflects the strength of the property market in metropolitan Melbourne since early last year.”

Mr Rushton said the six increases in official interest rates by the Reserve Bank of Australia between October, 2009, and May this year were mostly absorbed by the market.

“During the research period the cash rate dropped to a near 50-year of 3.0 per cent so it took some time before the RBA’s increases started to subdue activity,” he said.

“However the central bank should carefully consider the impact future rate rises may have on those who have increased their borrowings over the past 12 months.”

In the 12 months to March 2010, unit purchases really took off in Mermaid Beach, said Loan Market Mermaid Beach mortgage broker, Ross Corby.

“The number of units sold in the area was well over double that of freestanding houses,” said Ross, referring to both his own experiences finding home loans and a personalised report.

“It’s a good indication of how affordable units are in the Mermaid Beach area, in a relative sense.”

Ross works with property purchases to assist them with their home loan or investment loan requirements, and said that if you are considering buying a unit in Mermaid Beach, or anywhere on the Gold Coast, that there are a few conditions you need to keep in mind.

“Some lenders will limit the amount of money you can borrow if the unit is quite small – usually for those under 50 square metres,” said Ross.

“And if you are looking at a large apartment block, a mortgage broker can be a huge asset when looking for the loan as you may need to shop around a bit to find the right lender.”

Ross has been living and working on the Gold Coast for the past 15 years and has extensive experience as a mortgage broker and in a number of other roles within the home loan industry.

He specialises in assisting clients purchasing real estate with their finance needs, including home loans and investment loans.

Financial services firm Morgan Stanley has reported that the big four banks will lose $700 million in profits unless they raise their interest rates above the official cash rate.

Morgan Stanley analyst Richard Wiles estimates that banks will be forced to increase their interest rates by up to 0.15 of a percentage point above the RBA.

The sentiment is similar to a statement released last week by Loan Market’s Chief Operating Officer Dean Rushton, who believes the banks may raise rates soon after the August 21 election.

“They have clearly flagged that they are considering lifting their rates against the trend and out of cycle because their cost of funds is increasing due to the ongoing European debt crisis and the roll-over of cheaper funding,” he said.

Mortgage holders considering refinancing their home loan should speak to a professional mortgage broker to find out all of their options.

Source: theadviser.com.au, Loan Market

Loan Market Tweed Heads mortgage broker, Jeff Preston, has seen a lot of auctions and one thing he has noticed is that those bidders who have their finances ready before the big day are much more confident.

“Anyone at an auction who has their home loan ready to go is going to be in a better position than someone who hasn’t asked the question,” said Jeff.

“It’s pretty simple, if you go talk to someone about your home loan first, you’re going to have a pretty good idea of how much you can borrow – and therefore how much you can bid.”

According to Jeff, a home loan pre-approval is the ideal way to find out what your bidding limit is, and also to get confirmation of where you stand with your bank or lender.

“A home loan pre-approval is like a full loan approval assessment, except that you haven’t got a property for them to value yet,” said Jeff.

“But the lender has gone through the serviceability part, which means they already know how much you can borrow, as long as the property is suitable.

“Knowing that gives you such a good headstart on someone without any idea, and it’s great if the auction falls over and it gets to the negotiation stage, and also if the vendor is accepting offers prior to auction, because you can go in and really negotiate from a position of strength.”

A recent poll conducted by mortgage industry publication, The Adviser, found that debt consolidation was the top reason borrowers were refinancing their mortgages.

Debt consolidation is traditionally one of three main reasons for refinancing, the other two being to get a better interest rate, and to access equity.

The primary benefit of debt consolidation is a lower monthly debt repayment, assisting borrowers to improve cashflow and get in control of their debts.

It works by combining all of your debts into your home loan, which is generally the debt with the lowest interest rate, and spreading shorter term debts like credit card balances out over a longer term.

It’s important to realise that while debt consolidation may lower your monthly repayments, unless you make additional repayments as the loan progresses, the overall interest charges on your debts are likely to be much higher.

You should also realise that debt consolidation is not a ‘fix’ for the cause of out-of-control debt – it is simply one method to help borrowers regain control. Working with a good financial planner can help you to address your underlying financial issues.

Source: The Adviser, Loan Market

Successive interest rate hikes by the Reserve Bank in the first half of 2010 has prevented the usual recovery in post-Christmas mortgage arrears, according to a new report.

The Stanard & Poor’s Mortgage Performance Index revealed that home loans in arrears (more than 30 days) were at or above 1.44 per cent over the past four months – an increase that is historically high.

S&P’s credit analyst Vera Chaplin, said this was against the usual trend, as arrears usually decline after the festive season spending abates.

Ms Chaplin said the data indicates borrowers are finding it difficult to recover from the financial crisis.

“(They) haven’t adjusted their spending to the higher rate environment,” she said.

Loan Market Chief Operating Officer Dean Rushton said the RBA was likely to keep rates on hold when its board next meets on August 3 unless there was an alarming increase in next week’s official inflation figures.

“The major lenders could also hold off on any rate increases until after the federal poll,” he said.

“But borrowers should be prepared for rates to rise in the final quarter of 2010 because of the wholesale funding issue.”

Source: brokernews.com.au, Loan Market

Property prices in Manly reflect how strong the market is on the Northern Beaches, with the median house price sitting at more than $1 million and until prices at over $600,000.

Loan Market Manly mortgage broker, Andrew Watson, said that such strength in the market has its pros and cons.

“If you are an existing property owner in the Manly area, strong property prices can only benefit you as the equity in your property increases,” said Andrew.

“Such a result can open up opportunities for you to invest in property using your equity.”

For those looking to purchase property in the area, smart home loan or investment loan choices can make a difference to your options, according to Andrew.

“Knowing and understanding your home loan options, especially when it comes to the deposit you require and the types of loans available to you, is crucial,” said Andrew.

“I can help you to understand how you may be able to buy property in the Manly area, even if you are self-employed.”

And with extensive experience in commercial loans under his belt as well, Andrew may be able to offer you a different path to property ownership, through commercial property investment.

“Many investors, particularly first-time investors, think solely in terms of residential property, but a good commercial property investment can be just as solid an option,” he said.

Source: Loan Market, Manly Daily

New Zealanders are already feeling the pinch of rising interest rates, with 36 per cent of households saying they’ll need to resort to credit cards in order to pay for upcoming bills, according to a new survey.

Dun & Bradstreet’s Consumer Credit Expectations Survey also revealed that less than 10 per cent of respondents intended to apply for a new home loan, personal loan, credit card or credit card limit increase over the next 3 months.

Dun & Bradstreet New Zealand’s general manager John Scott said the results should not just be attributed to people finding it difficult to make ends meet.

“It appears that consumer conservatism has fallen by the wayside and a return to a credit fuelled lifestyle is on the horizon,” he said.

Auckland mortgage broker Guy Parkes said anyone experiencing mortgage stress may be eligible for a hardship variation with their lender.

“Talk to your mortgage broker or financial planner to find out what options are available to you,” he said.

“Different lenders have different policies and it’s important to find the right option for your individual circumstances.”

Source: stuff.co.nz, Loan Market New Zealand