Wheels in motion: RBA paves the way for early cash rate rise

Mortgage holders are facing a sooner-than-expected cash rate rise after the Reserve Bank of Australia (RBA) revised its outlook due to the economy bouncing back strongly from the Delta outbreak. So just how soon can we expect a rate rise?

As widely predicted, the RBA on Tuesday kept the official cash rate at the record low level of 0.1% for the 12th consecutive month.

But it was the wording in the RBA’s monthly statement that really caught the attention of pundits.

For the first time in a very long time, the key phrase “will not be met before 2024” was not included when referring to scenarios that needed to occur to trigger an official cash rate rise.

And in a later webinar speech, RBA Governor Philip Lowe said it’s now “plausible that a lift in the cash rate could be appropriate in 2023”.

This isn’t completely unexpected

For months, economists from financial institutions around the country have called on the RBA to revise their targets, with some predicting the cash rate rise could happen as early as November 2022, including Commonwealth Bank and AMP.

That’s right – possibly less than a year away.

Now, we understand this will be a nervy period for some mortgage holders, especially the younger ones.

After all, more than one million homeowners have never experienced an official cash rate rise (the last rise was back in November 2010).

So rest assured we’ve got your back – we’re here for you if you have any questions or concerns about what rising interest rates could mean for your mortgage.

So why is the cash rate rise (possibly) being brought forward?

The RBA’s statement sums it all up pretty neatly, but here’s the CliffsNotes version: as vaccination rates increase and restrictions are eased, the Australian economy is expected to recover relatively quickly from the interruption caused by the Delta outbreak.

“The Delta outbreak caused hours worked in Australia to fall sharply, but a bounce-back is now underway,” explains the RBA.

Now, the RBA says it will not increase the cash rate until actual inflation is sustainably within the 2-to-3% target range.

However, inflation has already picked up to 2.1%.

The RBA insists it’s in no rush though, saying it expects any further pick-up in underlying inflation to be gradual.

“This will require the labour market to be tight enough to generate wages growth that is materially higher than it is currently. This is likely to take some time,” the RBA statement says.

“The Board is prepared to be patient, with the central forecast being for underlying inflation to be no higher than 2.5% at the end of 2023 and for only a gradual increase in wages growth.”

What could a sooner than expected cash rate rise mean for you?

Well, the most obvious impact of a cash rate rise is that interest rates will go up, which means your home loan repayments might increase each month.

And that could have a flow-on effect for other parts of the economy, such as housing values, explains CoreLogic’s research director Tim Lawless.

“We are already seeing the rate of house price appreciation ease due to affordability pressures, rising stock levels and, as of November 1st, tighter credit conditions,” says Mr Lawless.

“Once interest rates start to lift, there is a strong chance that housing prices will head in the opposite direction soon after.”

So what can you do about it?

Well, that depends on your current financial situation.

If you’re a prospective first home buyer suffering from FOMO, or someone looking to upgrade over the next two years, don’t be disheartened by increasing property prices: now’s the time to start planning ahead.

Planning ahead involves understanding your borrowing capacity, your property goals, and your current expenditures – this can help you determine what changes you can make before you pull the trigger on a purchase.

On the other hand, if you’re a current mortgage holder, now could be a good time to reassess whether you should lock in a fixed interest rate.

Indeed, many lenders have recently increased the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans to head off the cash rate rise, and this latest statement from the RBA could trigger more rate hikes.

So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.

We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How 1-in-10 first home buyers cracked the market 4 years sooner

Almost 33,000 Australians bought their first home four years sooner thanks to two federal government schemes that give first home buyers a leg up into the property market. Could you, or someone you know, be eligible?

We love a feel-good news story around here.

And hearing that so many first home buyers got a leg up into the property market much sooner than they ever dreamed makes us feel pretty warm and fuzzy.

This week the federal government released figures on the popular First Home Loan Deposit Scheme (FHLDS) and New Home Guarantee (NHG) initiatives.

The data showed that the two initiatives supported 1-in-10 first-time homeowners during the 2020-21 financial year.

And on average, the schemes allowed those first home buyers to bring forward their home purchases by four (FHLDS) to 4.5 years (NHG).

Hold up, what are these first home buyer schemes?

The FHLDS allows eligible first home buyers with only a 5% deposit (rather than the typical 20% deposit) to purchase a property without forking out for lenders mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

The NHG scheme is very similar but is only for new builds – such as house and land purchases or a land purchase with a contract to build.

Another key difference is that the NHG property price caps are higher (see here) to account for the extra expenses associated with building a new home.

So who’s using the schemes?

Mostly younger buyers!

According to the latest stats, 58% of all buyers under the schemes are aged under 30-years-old.

NSW (11,000 residents) and Queensland (9,000 residents) make up nearly two-thirds of the scheme’s recipients.

And it turns out that most first home buyers who secured a spot in one of the schemes used a mortgage broker (56%).

But for the NHG scheme specifically, brokers originated the vast majority of government guarantees (72%).

How to secure a spot

We’ve got good news. And a bit of not-so-good news.

The good news is that for the NHG, only 2,443 of the 10,000 spots had been secured as of October 6 – so there’s still the opportunity for eager first home buyers wanting a new build.

The not-so-good news is that spots in the FHLDS are almost full for the latest round released on July 1.

Figures show that 7,784 of the 10,000 spots have already been secured, and word is that participating lenders have waiting lists for many of the remaining spots.

That said, if you’re a single parent there’s a third, similar scheme called the Family Home Guarantee (FHG), which allows eligible single parents with dependants to build or purchase a home with a deposit of just 2% without paying LMI.

Only 1,023 of 10,000 spots have been secured in the FHG, for which you don’t need to be a first home buyer.

Last but not least, it’s worth noting that the FHLDS is an annual scheme with new spots expected to be available from July 2022 – and previously the federal government made a surprise announcement to release 10,000 additional spots in January.

So if any of the above schemes are of interest to you, get in touch with us today and we can run you through everything you need to know about them so that you’re ready to apply when the time comes.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Seismic shift: two major banks hike fixed interest rates

Are the days of ultra-low fixed interest rates over? It’s looking increasingly so, with two major banks increasing their fixed rates this week. So if you’ve been thinking about fixing your mortgage lately, it could be time to consider doing so.

Do you know how when one tectonic plate shifts, others around it soon follow?

Well, in the past week, the Commonwealth Bank (CBA) and then Westpac hiked the interest rates on their 2-, 3-, 4- and 5-year fixed-rate home loans by 0.1% (for owner-occupiers paying principal and interest).

Meanwhile, ING also lifted its fixed rates on 2- to 5-year terms by 0.05% to 0.2%.

For mortgage-holders, it’s a clear ol’ rumbling sign that the days of super-low fixed interest rates are coming to an end.

So why are banks increasing fixed interest rates?

The Reserve Bank of Australia (RBA) has repeatedly insisted the official cash rate isn’t likely to rise until 2024 at the earliest.

But it seems the banks don’t believe them. The banks think it’ll happen sooner.

CBA, for example, is currently predicting the RBA will increase the official cash rate in May 2023, while Westpac is predicting a rate hike in March 2023 – both well before the RBA’s 2024 timeline.

Given that’s about 18 months away, the major banks are now adjusting the fixed rates on fixed terms of 2-years and longer, in order to head off the expected rise in their funding costs.

“Lenders are scrambling to lift fixed rates before they start to feel the margin squeeze,” explains Canstar finance expert Steve Mickenbecker.

“Borrowers shouldn’t be so complacent as they must expect rises inside two years, and the closer they get to that point, the less attractive the fixed rates alternative will be.

“They may want to consider fixing their interest rate for three years or longer, while the going is still good.”

Variable interest rates cut

Interestingly, a number of the banks – including CBA and ING – simultaneously slashed interest rates on some of their variable-rate home loans this week.

And CBA even cut their 1-year fixed rate by 0.1% (for owner-occupiers paying principal and interest).

So why did they do this when (longer-term) fixed rates are going up?

Well, aggressively competing for customers on variable-rate mortgages (and 1-year fixed) makes sense for lenders when a cash rate hike is predicted to be at least 18 months away.

They can always increase their variable rates when needed, but they can’t do the same for borrowers locked in on longer-term fixed-rate mortgages.

So what’s next?

As mentioned above, when the big banks make a move, it’s not uncommon for other lenders to follow suit – as seen with ING this week.

So if you’ve been on the fence about fixing your rate, it’s definitely worth getting in touch with us sooner rather than later.

We can run you through a number of different options, including fixing your interest rate for two, three, four or five years, or just fixing a part of your mortgage (but not all of it).

If you’d like to know more about this – or any other topics raised in this article – then please get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are you relying on a personal credit card for business expenses?

We’ve all been guilty of the odd credit card mix-up from time to time – it happens! But if you’re consistently relying on a personal credit card to pay your business expenses – like 4-in-10 SME owners – then it’s probably time to explore other funding options.

The past 18 months have been tough for a lot of businesses around the country – I’m sure you don’t need us to remind you of that.

As such, 2-in-3 businesses (66.1%) are trying new funding options to help them build their way out of the pandemic, according to a poll of 1255 small businesses by SME non-bank lender ScotPac.

That’s a rapid rise from the start of 2021 when only 46% were introducing new funding.

The top three reasons SMEs have for seeking new funding sources are to buy plant and equipment (57.5%), improve cash flow (40.6%) and pay down debt (34.3%).

But one worrying stat caught our attention

When asked what new types of funding they had introduced over the past year to keep their business moving, more than half the SMEs (55.4%) said they turned to owner funds, with 42.5% relying on personal credit cards.

You know the old saying “you shouldn’t mix business with pleasure”?

Well, this is one of those times.

It’s very likely there are much more suitable options available for your business that will help you separate your business and personal expenses, and make it easier for you to forecast your cash flow – to name just a couple of good reasons.

“We’d encourage business owners, particularly if they are relying on personal credit cards, to seek professional advice about more sustainable funding options,” says ScotPac CEO Jon Sutton.

Other common (and likely more appropriate) types of new funding that SMEs have turned to over the past year include asset and equipment finance (38%) and government stimulus funds (27.6%).

Demand for invoice finance as a new source of funding has also more than doubled since 2018 to 16.3% – not far behind the percentage of businesses taking out a new overdraft (20%).

Want to explore new funding solutions for your business?

The SME finance space is constantly evolving – and we make it our business to make sure we stay abreast of the new funding options and players that can help your business.

So if you’re in need of finance for your business, but don’t know where to start, get in touch today.

We’d love to run you through the growing number of funding options available for SMEs just like yours.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Bar raised for borrowers: tougher home loan serviceability tests

Some borrowers will soon find it harder to get a mortgage after the banking regulator announced tougher serviceability tests for home loans. So who will they impact most?

The Australian Prudential Regulation Authority (APRA) will increase the minimum interest rate buffer it expects banks to use when assessing the serviceability of home loan applications from 2.5% to 3% from the end of October.

This means that banks will have to test whether new borrowers would still be able to afford their mortgage repayments if home loan interest rates rose to be 3% above their current rate.

APRA estimates the 50 basis points increase in the buffer will reduce maximum borrowing capacity for the typical borrower by around 5%.

“The buffer provides an important contingency for rises in interest rates over the life of the loan, as well as for any unforeseen changes in a borrower’s income or expenses,” APRA Chair Wayne Byres wrote in a letter to the banks.

Why is APRA increasing the buffer?

This move doesn’t come out of the blue. Federal treasurer Josh Frydenberg flagged tougher lending standards a week prior following a meeting with the Council of Financial Regulators.

And it’s due to a combination of factors.

Firstly, interest rates are at record-low levels, and secondly, the cost of the typical Australian home has increased more than 18% over the past year – the fastest annual pace of growth since the late 1980s.

That combination has made financial regulators a little worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.

Mr Byres adds that 22% of loans approved in the June quarter were more than six times the borrowers’ annual income. That’s up from 16% a year prior.

As such, APRA did consider limiting high debt-to-income borrowing but believed it would be more operationally complex to deploy consistently.

“And it may lead to higher interest rates for some borrowers as lenders effectively seek to ration credit to this cohort,” APRA adds, but it doesn’t rule out limiting high debt-to-income borrowing in the future.

Which borrowers are most likely to be impacted?

The increase in the interest rate buffer will apply to all new borrowers.

However, the impact is likely to be greater for investors than owner-occupiers, according to APRA.

“This is because, on average, investors tend to borrow at higher levels of leverage and may have other existing debts (to which the buffer would also be applied),” APRA adds.

“On the other hand, first home buyers tend to be under-represented as a share of borrowers borrowing a high multiple of their income as they tend to be more constrained by the size of their deposit.”

What could this mean for your home loan borrowing hopes?

If you’re worried about how this latest announcement from APRA could impact your upcoming application for a home loan, then get in touch today.

We can apply APRA’s new loan serviceability tests to your personal circumstances to help you determine your borrowing capacity and focus your house hunting.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SME lending options are on the rise, but how do you access them?

While many SME owners worry about their access to finance, a surge of new lenders and products is rapidly expanding the options available. And brokers have an important role to play for businesses, says the Productivity Commission.

Changes to lending markets over the past decade mean there’s now a wide range of business finance options that don’t require property as security, according to a new report by the Productivity Commission.

However, a lack of awareness of these new finance options is one of the biggest hurdles preventing SME owners from accessing them.

This is where a broker with up-to-date market knowledge can play an important role for your business, explains the Productivity Commission.

“SMEs may not be aware of all their lending options and may not feel confident about new options. Brokers can help match them with appropriate lending options,” the Productivity Commission says.

“These options include borrowing against alternative collateral – such as vehicles, machinery and intangible assets (for example, invoices and other expected receipts) – and unsecured lending.”

Why are more SME finance options emerging?

Changes to prudential rules have made lending to SMEs less attractive for the major banks, but at the same time, created opportunities for new and established non-bank lenders, says the Productivity Commission.

This has resulted in a broader range of lending options beyond traditional property-secured loans for SMEs, especially with the emergence of fintechs and more accessible borrower data.

“Combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property,” adds the report.

However, while most SMEs are aware of banks as a source of finance, awareness of the newer options is more limited.

How we can help your business

As brokers, we’re constantly upskilling and learning to make sure we stay abreast of the finance options and players in the SME finance space.

“Brokers are expected to have current market knowledge and participate in ongoing training to stay informed about new lenders and products,” explains the report.

“For example, aggregators and industry associations hold various educational events – including conferences, workshops and webinars – to improve brokers’ understanding of SME lending options.”

And it’s for this reason that the Productivity Commission highlights the key role brokers can play for busy SME owners.

“By connecting borrowers to lenders, brokers can play an important education role, particularly for those SME customers that do not have the time or inclination to undertake detailed market research,” says the report.

So if you’re in need of finance for your SME business, but don’t know where to start, get in touch today.

We’d love to run you through the growing number of finance options available for SMEs like yours.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Is a home loan lending crackdown on the horizon?

The federal treasurer has given the strongest indication yet that a home loan crackdown is coming, stating that “carefully targeted and timely adjustments” may be necessary to avoid troubled waters. So what could a potential lending crackdown look like?

Lending standards and fast-rising property prices have been hot topics of late.

Interest rates are at record-low levels, and the typical Australian home has seen its value increase more than 18% over the past year – the fastest annual pace of growth since the late 1980s.

It’s a recipe that’s making financial regulators a touch worried that some homebuyers are starting to stretch themselves too thin and borrow more debt than they can safely afford.

So federal treasurer Josh Frydenberg recently met with the Council of Financial Regulators – which includes APRA, ASIC, the Australian Treasury and the RBA – to discuss the state of the housing market.

“We must be mindful of the balance between credit and income growth to prevent the build-up of future risks in the financial system,” Mr Frydenberg said in a statement.

“Carefully targeted and timely adjustments are sometimes necessary. There are a range of tools available to APRA to deliver this outcome.”

What could this possible crackdown look like?

Here’s an interesting stat for you: almost 22% of Australians have a mortgage debt that’s more than six times higher than their annual income, according to the latest data from APRA.

That’s up from 16% just one year ago.

The fact APRA mentions that particular stat gives us a pretty good clue as to what one possible lending crackdown measure could be.

“Most analysts expect that this time, APRA will target debt-to-income ratios, probably by limiting the proportion of loans that can be made above six times an applicant’s household income,” explains the ABC.

It’s also worth noting that Mr Frydenberg and APRA are not the only ones to publicly indicate that change could be on the horizon – the RBA expressed similar concerns about the increase in housing prices and housing debt just days ago, too.

“Even though the banks have strong balance sheets and lending standards are being maintained, there is a risk that in this environment, households will become increasingly indebted,” RBA assistant governor Michele Bullock wrote.

“A high level of debt could pose risks to the economy in the event of a shock to household incomes or a sharp decline in housing prices. Whether or not there is need to consider macro-prudential tools to address these risks is something we are continually assessing.”

Want to know how a potential lending crackdown might affect you?

It’s worth reiterating that we still have very limited information available about what financial regulators have in mind for any potential lending crackdowns.

What we can do, however, is help you assess your potential debt-to-income ratio on any property purchase you currently have in mind. And we can also help you determine your borrowing capacity in the current lending landscape.

So if you’d like to find out more, get in touch today. We’d be more than happy to run you through it all in more detail according to your personal circumstances.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Only half of SMEs have recently been able to secure full funding: report

Almost one-in-two SMEs have applied for new funding in the last six months, a new report has found, and of those SMEs only half were successful in obtaining the full amount they were seeking.

If you haven’t already figured it out over the past 18 months, small and medium-sized business owners are a pretty resilient bunch.

You know that classic 90’s Chumbawamba song: “I get knocked down, but I get up again…” Yeah, life as an SME owner can be a little like that at times.

In the latest round of knock-downs, a survey of 1750 SMEs nationwide, conducted by East & Partners and Judo Bank, found that 48.1% of SMEs had applied for new funding in the last six months.

And of those SMEs, only 50.4% were successful in accessing the full amount, 22% were partially successful, and 27.7% were unsuccessful.

What else did the SME funding report find?

It seems the bigger you are, the better your chances of securing funding.

Twice as many businesses in the $1 million to $10 million turnover range were unsuccessful in their application for funding (36.5%), compared with just 15.9% in the $10 million to $50 million turnover category.

And difficulty accessing new funding is especially pronounced if you work in the retail space, with 44.4% of retailers unable to secure new funding compared to a mere 8.6% of builders.

SMEs are primarily borrowing for working capital (91.1%), investment in new plant and equipment (48.1%), and COVID-19 related provisions including bridging finance (45.6%).

One-in-four SMEs also want new funding to hire more staff (25.9%).

How we can help your business

Times are tough for many businesses, there’s no doubt about that.

So if you’re an SME owner in need of funding, get in touch today and we can take the lead on helping you source finance.

The sooner we can discuss your options with you, the better placed your business can be to get through 2021 and thrive beyond.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Top 5 property investor trends for 2021-22

With house prices going gangbusters in the first half of 2021, is it still a good time to buy property? The majority of investors think so, according to the latest annual survey. And investors have their sights set on one city in particular.

The 2021 PIPA Property Investor Sentiment Survey, which gathered insights from 800 property investors across the country in August, found more than 76% of investors believed property prices in their state or territory would increase over the next 12 months.

That’s up strongly from 41% this time last year, when COVID-19 had some investors a touch nervous.

“When we think back to last year, which was a time of much fear and uncertainty, it’s clear that property investors and the market, in general, has weathered that turbulent period better than anyone dared to hope,” said PIPA Chairman Peter Koulizos.

Here are the top five trends the PIPA survey identified.

1. Most investors believe it’s a good time to invest

This year’s survey found that nearly 62% of investors believe that now is a good time to invest in residential property, which is a tad down from 67% in 2020.

PIPA says that dip in confidence may be due to the high property price growth this year as well as significant lockdowns taking place at the time of the survey.

2. The sunshine state looks to be the property hotspot

This year’s survey produced the biggest ever margin when it came to the location investors believe offers the best potential over the next year.

“A staggering 58% believe the sunshine state [Queensland] offers the best property investment prospects over the next year – up from 36% last year,” Mr Koulizos says.

New South Wales came a distant second at 16% (down from 21%), and Victoria was third at 10% (significantly down from 27%).

Brisbane also beat its capital city counterparts, with 54% of investors believing it has the rosiest outlook.

Mr Koulizos says the boost could be to do with Brisbane being named host of the 2032 Olympic Games, and significant upcoming infrastructure spending.

“All of these factors, as well as the affordability of property in southeast Queensland and strong interstate migration, are some of the reasons why investors are so optimistic about market conditions there,” he adds.

3. Regional and coastal markets continue to grow in demand

While investors still believe metropolitan markets offer the best investment prospects at nearly 50% (down from 61% in 2020), regional and coastal markets are closing the gap.

A quarter of property investors now favour regional markets (up from 22%), while 21% of survey respondents have their eye on coastal areas (up strongly from 12% last year).

4. Fewer investors looking to sell

The lingering impacts of the global health emergency – as well as robust price growth over the past year no doubt – mean fewer investors (59%) are looking to sell a property this year compared to last year (71%).

“Part of the reason for the uplift in property prices over the past year has been the continued low levels of supply in most locations around the nation,” Mr Koulizos notes.

“With a decrease in the number of investors indicating they intend to sell over the short-term, it seems unlikely that this boom market cycle is going to change anytime soon.”

5. Almost three-quarters of property investors use a mortgage broker

Just 17% of respondents secured their last investment loan directly via a bank, while 4% used a non-bank lender.

The vast majority (72%) of respondents secured their loan through a broker, a slight increase on last year’s figure of 71%.

And 72% of respondents said they’d use a broker to finance their next investment loan.

It just goes to show that it doesn’t matter how far you are on your property journey – whether you’re a first home buyer, refinancer or savvy property investor – we can help you every step of the way.

So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to crack into the market, get in touch today.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are you too loyal for your own good? The banks think so

The average Australian homeowner is paying more than $37,000 in extra interest over the life of their home loan due to the loyalty tax, and it’s got three-quarters of borrowers feeling “ripped off” and “angry”.

What’s the loyalty tax?

It’s this sneaky lender trick where borrowers with older mortgages are typically charged a higher interest rate than borrowers with new loans, and it was confirmed in a study by the Reserve Bank of Australia (RBA) last year.

You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates going to new customers in a bid to win them over.

For example, RBA June 2021 figures show the average difference in home loan interest rates between new and existing owner-occupier borrowers was 0.46%.

On an average loan size of about $400,000, that 0.46% difference on a 30-year loan means a borrower would pay an additional $37,462 in interest over the life of the loan.

That’s $1,249 per year, per household.

Athena Home Loans research estimates this costs Australian households a total of $9.1 billion per year.

Borrowers feeling ripped off and angry

It should come as no surprise then that 91% of borrowers want new and existing customers to receive the same rate, according to a survey of 1,000 homeowners undertaken by CoreData and commissioned by Athena.

The vast majority of those surveyed say they also feel “ripped off” (82%), “angry” (74%), and “outraged” (72%) at the opaque pricing practice.

“We know transparency is at the heart of trust. There is enormous opportunity for those lenders with clear pricing and a simple value proposition,” says CoreData Global CEO Andrew Inwood.

You don’t need to feel trapped

Now, the ACCC published a report in December 2020 with several recommendations to prevent this unfair practice, but nothing much has come of it since.

Meanwhile, more than half (56%) of those surveyed in the CoreData report say they feel trapped in their current deal, while one-in-three people (36%) asked their lender for a drop in their interest rate but were rejected.

But with competition among lenders quite fierce right now, it’s important to know the power is in your hands.

“Rates are at an all-time low at the moment, so it’s at a crucial time when Australians need the money in their pockets, not the banks,” explains Athena CEO and Co-Founder Nathan Walsh.

Adds the RBA: ​​“Well-informed borrowers have been able to negotiate a larger discount with their existing lender, without the need to refinance their loan.”

There’s no loyalty tax with us

We like to reward loyalty around here. We’ll always have your back.

So, if you haven’t refinanced recently, get in touch today and we’ll work with you to help save you thousands of dollars in interest repayments.

That might involve renegotiating with your current lender, or looking around for another lender who will give you a fairer rate.

Either way, we’ll make sure your lender isn’t taking advantage of your loyalty.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Refinancing figures are on a record-breaking run: here’s why

With interest rates at record low levels, the number of homeowners refinancing skyrocketed to an all-time high in July. Today we’ll run you through why so many people are refinancing, and why you should consider doing so too.

We’re currently seeing more people refinance their home loans than ever before, and the latest ABS figures out this week prove we’re not imagining things.

Refinanced home loans reached an all-time high of $17.2 billion in July, which is a 6% increase on June.

It’s also more than double the value that was refinanced exactly two years prior in July 2019.

So why are homeowners refinancing in record numbers?

For starters, the RBA cash rate is at an all-time low of 0.1% following six rate cuts in three years.

As such, competition amongst lenders is fierce, with many offering record-low home loan rates in a bid to win over as many customers as possible.

In fact, RateCity reports the number of variable rates under 2% on its database has jumped from 28 to 46 in just two months.

Borrowers are also opting to lock in their interest rate too, says the ABS, following reports that lenders have started increasing the rates on 3-5 year fixed-rate loans.

“Borrowers are seeking out lower interest rates, particularly for fixed-rate loans, and cashback deals across a large number of major and non-major lenders,” says ABS head of Finance and Wealth, Katherine Keenan.

COVID-19 is likely increasing the number of homeowners refinancing, too.

With many households and businesses around the country doing it tough right now, one simple way to reduce your monthly mortgage repayments is by refinancing.

How we help you refinance the right way

Now, fixed-rate loans and cashback deals might look super appealing at first glance, but they might not always be the best fit for your situation.

And that’s why it helps to have someone like us in your corner.

We can help you go through the fine print, fees and limitations that might exist within these loan options.

We can also help you determine whether a fixed, variable or split loan is better suited to your needs.

The other thing we’re great at is negotiating with your lender.

Your current lender won’t automatically give you their lowest rate going. You’ve got to ask them for it.

And you’ve also got to make it clear that if they don’t reduce your interest rate, you’re willing to find another lender who will.

This can be both intimidating, not to mention time-consuming and frustrating if they don’t want to play ball.

But lucky for you, we can do the leg-work for you.

So if you haven’t refinanced in the past few years, get in touch with us today and we could help you save thousands of dollars in interest repayments on your mortgage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Are they really OK? Here’s how to check in with them today

Do you know how the people in your world are really doing right now? Chances are you know someone who’s doing it tough, but silently pressing on. As always, we’re here to support you, and for R U OK? Day we’re sharing ways you can help others.

Life’s ups and downs happen to all of us. So chances are you know someone who is struggling right now.

They might not have seen their family for months, their business could be operating under the strains of COVID-19, or they might be having trouble meeting their mortgage repayments.

And here’s the thing: we’re not all blessed with the natural conversation instincts and EQ of someone like Andrew Denton.

So sometimes we put off tough conversations for fear of making the situation worse.

But rather than wait until someone’s visibly distressed or in crisis before offering them support, we wanted to mark R U OK? Day by sharing the charity’s tips for starting the conversation.

1. Pick your moment

Meaningful moments are more likely to take place when we’re spending quality time together.

While this can be difficult to do during a lockdown, below is an example of some everyday situations that may be a good time to ask someone if they’re ok:

– while exercising together
– when spending time together socially or during an activity
– during breaks from work or study
– when connecting or doing activities together online
– while sharing a meal
– while travelling together – even a short trip can be a good time to talk.

2. How to ask ‘R U OK?’

Start the conversation at a time and in a place where you’ll both be comfortable.

Be relaxed and friendly in your approach. And think about how you can ease into the conversation.

If they don’t want to talk, let them know you’ll be there for them when they’re ready, or ask if there’s someone else they’d be more comfortable chatting to.

Examples of how to check in with them include:

– I haven’t seen much of you lately, is everything going ok?
– So, how are you travelling these days?
– You’ve been a bit tired, how are things going?

3. Listen with an open mind

Once they start to open up to you, be prepared to listen. Don’t try to solve their problems right away and have an open mind.

Some other tips include:

– don’t rush them or interrupt. Let them speak in their own time
– encourage them to explain
– show you’ve listened by repeating back what you have heard and asking if you have understood them correctly.

4. How to encourage action

You don’t have to have the answers or be able to offer professional advice but you can help them consider the next steps they can take to manage their situation.

You can get the ball rolling by asking them:

– Where do you think we can go from here?
– What do you need from me? How can I help?
– Have you thought about going to see your GP?

5. Check-in again soon after

Be sure to follow up in a few days to see how they’re doing.

During the conversation, ask them to suggest a time that’s good for them, or simply ask: “Do you mind if I drop by again soon to see how you’re travelling?”

When you check in, ask how they are feeling and if anything has helped since the last time you spoke. If they have not taken any steps yet, be patient and ask if they would like to find some options together.

Understand that it can take time for people to seek help. Stick with them. Your genuine support will mean a lot to them.

Feel free to reach out to us, too

We like to think of ourselves as more than just your broker who you turn to when you need a loan – but also a friend you can turn to in times of need.

So if you’re not feeling OK today, tomorrow, or next month, feel free to give us a call whenever you need. We’re always here to listen and help in any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Nine in 10 FHBs trust brokers to help them buy their first property

Remember that classic TV ad: ‘nine out of 10 dentists recommend using [toothpaste brand]?’ Well, it turns out we’ve earned a similar level of trust when it comes to helping first home buyers sink their teeth into the property market. 

That’s because nine out of 10 first home buyers (FHBs) recently said they trust a mortgage broker to help them buy their first property.

And, unlike dentists, we’re actually allowed to show our faces!

So why do so many first home buyers trust mortgage brokers?

The Genworth First Home Buyer Report 2021 surveyed 2,077 prospective FHBs, and 1,008 recent FHBs – and we’re pretty chuffed with the results.

Here’s what one respondent said:

“Go and see a professional broker in-person early on in the process. That way they know your situation and are able to best guide you through and help you out,” the 32-year-old recent FHB from WA said.

And he wasn’t alone.

Almost nine in 10 FHBs believe mortgage brokers help cut through the complexity in the home buying process.

The report also found a similar proportion of FHBs believe mortgage brokers provide reliable, trusted advice and information.

And finally, close to 90% of respondents said mortgage brokers provide valuable support during the home buying process.

So in a nutshell:

Trusted = tick.
Jargon busters = tick.
Reliable advice and information = tick.
Valuable support = tick.

How we could help you buy your first home

You might have noticed the property market has picked-up over the past 12 months, to say the least.

It’s left a lot of prospective first home buyers frustrated that the suburbs they were once focusing on have moved out of their price range.

While this may be the case for a lot of people, it’s not always the case.

There are a number of federal government schemes available to FHBs, including the First Home Loan Deposit Scheme – which can allow you to buy your first home with a deposit of just 5% without paying for Lenders Mortgage Insurance.

There’s also a range of state and territory government schemes designed to give FHBs a leg up into the property market, including first home buyer grants and stamp duty concessions.

For more information, give us a call today – we’d love to discuss your situation and help you make the leap from renter to first home buyer, and get you smiling as proudly as your dentist does!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

How to ease financial pressure through debt consolidation

With many people around the country doing it tough right now, this week we’ll look at a way you can take some pressure off your monthly finances through debt consolidation.

Here’s a quick experiment.

Go pick up three balls and try to juggle them. Most people, besides those who ran away to join a circus, will likely drop at least one of them within a few tosses.

Now put two of the balls aside and throw the remaining ball up and down (with one or both hands).

Much easier to manage, right?

Well, it’s not too dissimilar to the concept of debt consolidation.

If you have more than one loan – be that a credit card, car loan and/or a personal loan – you can help reduce the stress of juggling multiple debts, payment dates and interest rates by rolling them into one easy-to-manage loan.

There are other benefits, too

One common debt consolidation method is to take out a new personal loan and use the funds to pay off your other existing debts.

Now, if the interest rate on the new personal loan is lower than the rate on your existing debts (for example, a credit card with a 17.99% interest rate) this can help you pay less interest each month – not to mention avoid the nasty late payment fees that come with those kinds of cards.

And by rolling all your debts into one, you can get a clearer timeline of when you can be debt-free.

Debt consolidation can also make it easier for you to manage your household budget, as you only need to factor in repayments for one debt per month instead of many.

Refinancing your home loan for debt consolidation

Another method people use for debt consolidation is rolling it into a refinanced home loan, because mortgages offer comparatively low-interest rates.

So if you’re really struggling with multiple debts right now – such as a car loan or a number of credit cards – consolidating your debts into your home loan will, in most cases, reduce your overall monthly repayments.

However, here’s a big word of warning.

While this option can reduce your monthly repayments now, debt consolidation through your mortgage can turn a short-term debt (like a personal loan) into a much longer-term debt.

As such, unless you aim to make a lot of extra repayments as soon as possible, you could end up paying significantly more interest than you would have otherwise.

One way to address this issue is to create a loan split for the debt consolidation, giving you the ability to pay off all the short term debts within a few years, rather than, for example, over a 25-year home loan period.

So if you’re in need of breathing space now, debt consolidation is an option to consider – especially with mortgage rates so low at present due to the RBA’s official cash rate being at record low levels.

Get in touch today

If you’d like to explore your debt consolidation or refinancing options, then get in touch with us today and we can help you look at ways to take some financial pressure off your shoulders.

It’s also worth noting that lenders are providing mortgage holders impacted by COVID with a range of hardship support measures, including loan deferrals on a month-by-month basis.

Whatever your circumstances, we’re here to support you however we can through these times.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

SME Recovery Loan Scheme revamped to help more businesses

More small and medium-sized businesses struggling to stay afloat due to the economic impacts of COVID will have access to cheaper funding after the federal government expanded the eligibility criteria for the SME Recovery Loan Scheme.

The government is removing requirements for SMEs to have received JobKeeper during the March quarter of 2021, or to have been a flood-affected business, in order to be eligible for the SME Recovery Loan Scheme.

What’s special about the SME Recovery Loan Scheme?

Ok, basically the federal government will guarantee 80% of each loan in the scheme, and because of this, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans.

The first iteration of the scheme kicked off back in March 2020 under a slightly different name – the SME Guarantee Scheme (and back then the government was only guaranteeing 50% of the loan).

Under today’s version of the scheme, SMEs dealing with the economic impacts of COVID with a turnover of less than $250 million will be able to access loans of up to $5 million over a term of up to 10 years.

Other key features of the SME Recovery Loan Scheme include:

– Lenders are allowed to offer borrowers a repayment holiday of up to 24 months.
– Loans can be used for a broad range of business purposes, including to support investment.
– Loans may be used to refinance the pre-existing debt of an eligible borrower, including debts from the SME Guarantee Scheme.
– Loans can be either unsecured or secured (excluding residential property).

Could this scheme help your business?

So far, 74,000 loans totalling around $6.2 billion have been written under the scheme – so it’s already helped a lot of other businesses around the country.

NAB and Westpac, both participating lenders in the scheme, immediately welcomed the changes, with NAB stating “SME Recovery Loans are a good option for businesses who need additional capital at this time”.

It’s important to note, however, that the loans will only be available through participating lenders until 31 December 2021.

So if you’re interested in finding out whether the SME Recovery Loan Scheme could help your business, get in touch today and we can help you apply through one of the participating lenders.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

COVID hardship and grant options that could help you

With the pandemic once again tightening its grip around many parts of Australia, today we’ll run you through hardship and grant options that could be available to you or your business.

Setting all politics aside, it’s safe to say no one wants to be here. Yet here we are – this time with no JobKeeper or the original JobSeeker payment to help keep us afloat.

So what grants, schemes and hardship arrangements are available to small businesses and individuals this time around?

Let’s run through this year’s COVID support options below.

Loan deferrals on home and business loans

Impacted small businesses with loans in good standing are being supported by lenders with repayment deferrals of up to three months.

For home loan holders, lenders are also providing a range of support measures, including loan deferrals on a month-by-month basis.

Since July 8, more than 14,500 home loans have been deferred, while more than 600 business loans have been deferred.

“Support is available to all small businesses and home loan customers significantly impacted by current lockdowns or recovering from recent lockdowns, irrespective of geography or industry,” says Anna Bligh, CEO of the Australian Banking Association.

Business grants and payments

As you’ll see below, each state and territory has their own grants and schemes available for businesses and individuals.

As the situation is constantly evolving, it’s worth double-checking to see if your business is eligible for any other grants or payments not listed below.

NSW: If you’re a business, sole trader or not-for-profit organisation in NSW and you’ve been impacted by the recent COVID-19 restrictions, you may be eligible for a one-off grant of $7,500, $10,500 or $15,000. Apply here by September 13.

Victoria: There are several grants in Victoria for employing and non-employing businesses. The Small Business COVID Hardship Fund provides $10,000 grants for eligible SMEs that have experienced a reduction in turnover of at least 70%. Apply here by September 10. The Business Costs Assistance Program Round Two offers grants of $4800 to eligible businesses in specific industries. Apply here by August 20.

Queensland: Lockdown-impacted businesses in Queensland can apply to receive a grant ranging from $10,000 to $30,000, depending on the size of their annual payroll. Grants of $1,000 are also available for non-employing sole traders. Apply here by November 16.

Western Australia: The Small Business Lockdown Assistance Grant: Round Two provides $3000 cash flow support to small businesses in industry sectors most impacted by the recent circuit-breaker four-day lockdown and interim restrictions. Apply here by August 31.

South Australia: Small and medium-sized businesses forced to close as a result of the state’s lockdown (beginning 20 July 2021) may be eligible for a $3,000 emergency cash grant. Sole traders may be eligible for $1000. Apply here by October 17.

ACT: COVID-19 Business Support Grants will provide up to $10,000 for employing businesses and up to $4,000 for non-employing businesses that experienced a turnover decline of 30% or more as a result of the COVID-19 lockdown health restrictions. Find out more here.

For individuals

The federal government’s COVID-19 Disaster Payment is a lump sum payment to help workers unable to earn income due to a COVID-19 state public health order.

This may involve a lockdown, hotspot or movement restrictions. How much you can get depends on your location and circumstances. It’s available to eligible ACT, NSW, QLD, SA and Victoria residents.

Tenant and landlord support

NSW landlords who reduce rents for tenants hard-hit by the pandemic will be able to access up to $3,000 per tenancy agreement.

For landlords to be eligible, their tenant’s take-home weekly income must have fallen by 25% or more. The tenant also needs to continue to pay at least 25% of the rent payable.

Meanwhile, the Victorian Government has made it a requirement for commercial landlords to provide rent relief that matches their tenants’ fall in turnover in response to coronavirus, where the tenant is eligible for commercial tenancy relief support.

Get in touch today

Last but not least, it’s worth noting that there are refinance or restructure options you can explore in order to reduce your business or home loan repayments each month (without hitting the pause button). These include:

– asking for a better rate or moving to a lender that can provide one;
– extending the length of your loan;
– switching to interest-only payments for a period of time; and
– consolidating debt.

So if your business or household is one of the many doing it tough again, please get in touch today – we’re ready to assist you through 2021 and beyond, in any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

New super laws: a timely reminder to check your life insurance policy

What measures do you have in place to help protect your family home or business? If life insurance through your superannuation account is one of them, then it’s a good time to give it a quick review – especially if you work in a high-risk environment.

We’ve all switched off mentally during those sombre daytime life insurance ads on TV.

But stay with us, because there’s a good reason we’re writing this article today: new superannuation laws have passed parliament and will come into effect on November 1.

And if you have a super account, there’s a better than even chance you have a life insurance policy attached to it that could be impacted – especially if you work in a hazardous or high-risk industry such as construction, truck driving and mining.

What are the new laws?

So, the federal government recently passed the Your Future Your Super legislation.

The measure, which will tie workers to a single super fund from November 1, has been praised for its potential to put an end to people having numerous super accounts that are eaten away by multiple sets of fees.

But concerns have also been raised that workers in hazardous industries, such as construction, truck driving and mining, will be left without suitable life insurance and/or total and permanent disability insurance due to policy exclusions for high-risk occupations.

Now, some super funds that were created for specific industries automatically sign their members up for insurance tailored to their specific professions.

But others don’t.

“Quite often, members only discover they have been paying for a product that is effectively useless when they become disabled and make a claim,” Maurice Blackburn principal Hayriye Uluca explained to Sydney Morning Herald (SMH).

This means if you originally signed up to a fund that is tied to an insurer that uses occupation exclusions, you might end up paying for insurance that’s essentially worthless if you start work in a high-risk industry.

What to do?

The Federal Treasury says it’ll be conducting a review into it all.

But you can quickly and easily conduct your own review to see if you’re properly covered by suitable insurance.

Here’s a straightforward MoneySmart guide on consolidating your super through MyGov. And here’s another guide on things to be mindful of when choosing a super fund.

“The best thing to do is talk to your fund, ask them specifically. Tell them the type of work you do, your occupation and what it involves, and ask them if their policy covers it,” SuperConsumers director Xavier O’Halloran told SMH.

And while you’re at it, don’t forget to review the amount you’re insured for to determine whether your cover is enough to help you – or your loved ones – make loan repayments and protect important assets like your business or family home if need be.

If you’re not sure if your insurance cover is sufficient, call us today and we can put you in touch with a financial planner who can review your situation and provide feedback on your coverage.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

House price growth hits 17-year high, but is it slowing down?

You’d have to go all the way back to the 2004 Athens Olympics to find a time when house price growth was faster than it has recently been. But latest data suggests the golden run has started to slow down.

It’s no secret that house prices have reached record-breaking highs this past year.

In fact, home values grew by 16.1% over the past 12 months – the fastest pace of growth since 2004, according to CoreLogic’s latest Hedonic Home Value Index.

To put that into a little context, the rate of growth over the past year has been so steep that houses in some cities are out-earning some of Australia’s top-paid professionals, including surgeons, anaesthetists and CEOs.

But there are signs that the growth rate is starting to taper.

Signs of a slow down

Australian housing values increased 1.6% in July, a result CoreLogic’s research director Tim Lawless describes as “strong, but losing steam”.

“The monthly growth rate has been trending lower since March this year when the national index rose 2.8%,” Mr Lawless explains.

And in a further sign of a property market slowdown, the value of new housing loan commitments fell 1.6% in June, the first fall in monthly lending figures this year, according to the latest Australian Bureau of Statistics data.

So what’s slowing things down?

With dwelling values rising more in a month than incomes are rising in a year, housing is simply moving out of reach for members of the community, Mr Lawless explains.

Additionally, much of the federal government’s earlier COVID-19 related fiscal support, including JobKeeper and HomeBuilder, have now expired.

“It is likely recent COVID outbreaks and associated lockdowns have contributed to some of the loss of momentum as well, particularly from a transactional perspective in Sydney which is enduring an extended period of restrictions,” CoreLogic’s latest Hedonic Home Value Index report adds.

That said, it should be noted that housing values are continuing to rise substantially faster than average.

Over the past 10 years, the average pace of monthly dwelling value appreciation has been just 0.4%, says CoreLogic.

So what’s ahead?

It’s likely the rate of growth will continue to taper through the second half of 2021 as affordability constraints become more pressing and housing supply gradually lifts, says CoreLogic.

“Other potential headwinds are apparent, including the possibility of tighter credit policies,” adds the CoreLogic report.

On the flip side, demand remains strong and is being aided by record-low mortgage rates and the prospect that interest rates will remain low for an extended period of time.

“A lift in the cash rate is likely to be at least 18 months away,” CoreLogic adds.

“The recent spate of lockdowns is likely to see Australia’s economy once again contract through the September quarter, a factor that is likely to keep rates on hold for a while longer.”

Get in touch

With house prices having just experienced their fastest pace of growth since 2004, it’s as important as ever to purchase your new home with a finance option that’s right for you.

So if you’re a keen homebuyer who wants to explore what options are available to you – including your borrowing capacity – get in touch today. We’d love to run through it with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Cash flow tips for businesses thriving and surviving the pandemic

Australia is a tale of two economies right now, depending on the state or sector your business is based in. Today we’ll run you through three cash flow tips for your business, whether it’s growing or struggling.

Covid-19 has really brought a two-speed economy to the fore in Australia.

For some businesses, the stop-start-stop nature of the pandemic has crippled cash flow and made planning ahead all but impossible.

Meanwhile other businesses, such as those in the digital space, are experiencing fast growth.

Your cash flow strategy this financial year will likely depend on how the pandemic is impacting it.

So below SME lender ScotPac has identified three cash flow management strategies for businesses that are growing, and for those that are struggling.

Three tips for managing growth

1. Find a flexible source of funding: strong cash flow is important for fast-growth businesses, which often have lots of cash tied up with debtors, ScotPac senior executive Craig Michie says.

“It’s important to find a source of funding that grows as your business grows. With invoice finance, as your debtors grow, so does the line of credit you can access,” he says.

“Another consequence of fast growth can be a demand on the business to put in place more capital assets, such as vehicles and equipment. In these situations, asset finance can help a business get the assets they need to support their rapid growth.”

2. Negotiate with suppliers: sometimes businesses can grow too fast for their suppliers to keep up with their demand for product.

If you don’t have the cash flow to pay your supplier for more product up front, you can attempt to renegotiate terms with them, or seek alternative finance options.

“One option for fast-growth businesses to have up their sleeves is to use trade finance. This ensures they can pay suppliers upfront so they can meet their increased demand for product,” Mr Michie says.

3. Cashflow forecasting is vital: cash flow is often described as the “lifeblood” of businesses.

Knowing what cash is likely to be coming in, and what’s likely to be going out, is therefore vital for not only keeping your businesses alive, but ensuring it will thrive.

“It’s not unusual for a small business to spend months winning big new clients, then realise they had not accounted for the cashflow implications of winning new business,” Mr Michie says.

“Putting in place a 13-week rolling cash flow forecast – which really would only take an hour with your accountant to set up, helps fast-growth businesses avoid cash flow issues.”

Three tips for getting through tough conditions

1. Get in touch with funders and the tax office: with a number of recent state lockdowns, and ongoing uncertainty in NSW, many businesses are doing it tough.

Mr Michie says it’s crucial for businesses struggling through adverse trading conditions to talk to their financiers asap.

“Do this early in the piece to get the best outcome. Talk to your funder about whether it’s possible to restructure or to put in place moratoriums,” he says.

He adds that SMEs shouldn’t put off talking to the Australian Tax Office either.

“Too many businesses make the mistake of thinking a problem ignored is a problem solved – getting on the front foot with tax obligations is vital.”

2. Look at your balance sheet: to help secure working capital for your business, Mr Michie suggests looking to the assets on your balance sheet.

“Balance sheet assets can be a hidden resource for many SMEs – your debtor’s ledger, unencumbered plant and equipment and even inventory can be used to bring working capital back into the business.”

3. Again, cash flow forecasting is vital: Mr Michie says that having a running 13-week cashflow forecast lets business owners spot any cashflow gaps on the horizon, with enough time to do something about it.

He suggests that this could include reassessing your cost base, negotiating with creditors to change terms or defer payments, or chasing up aged receivables.

Last but not least, get in touch

If you’d like to discuss how any of the above cash flow tips or finance options could help your business, get in touch today.

The sooner we can run through your options with you, the better placed your business can be in the 2021 financial year and beyond.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

What’s the best day to auction your house?

Drive or walk around your local suburb mid-morning on a Saturday and chances are you’ll pass a few freshly banged up ‘Auction’ signs. But is Saturday actually the best day to auction your home? New data suggests perhaps not.

We all love a good auction story.

You’ve probably got a mate or two whose favourite dinner party story is the time they crushed all their competitors’ hopes and dreams with a final $10,000 sledgehammer bid.

But for every tenacious bidder, there’s usually an equally pleased vendor.

So what day of the week can sellers generally attract the most bidders to their auction?

The day with the most bidders

Auctions held on Tuesdays at 5pm attract the most active bidders – at 5.9 bidders per auction – according to national data collected by Ray White from 23,100 auctions over the past 12 months.

This is significantly higher than the average of 3.2 bidders per auction, which also happens to be the average number of bidders at auctions held on Saturdays at 11am (the most popular auction time).

That said, results do tend to vary in each capital city.

“Looking at all auctions held over the year, Tuesday at 5pm is the best time to sell. However in Adelaide and Melbourne, it may also pay to look at Friday night,” explains Ray White Chief Economist Nerida Conisbee.

“In Sydney, it is Sunday morning and in Brisbane it is Monday night. Perth is the only market where a standard midday Saturday auction would yield the most active bidders.”

The day with the highest clearance rates

A large number of bidders, however, doesn’t always translate to higher clearance rates.

When it comes to clearance rates, it turns out Friday is the day to beat, according to Ray White Group’s national auction day clearance rates.

Friday 1pm boasts the highest clearance rate at 91.2%, while Saturday 8am comes in at a close second with 90.5%.

“Most auctions in Australia are held on Saturdays between 10am and 1pm,” explains Ms Conisbee.

“[However] holding an auction at a time that is less standard can work to your advantage if selling – there is simply less competition from other properties going to auction at these times,” she adds.

Upgrading or downsizing? Get in touch today

If you’re in the process of selling your current home to upgrade, or downsize, to another property, get in touch with us today to discuss your finance options.

Every family is different – just like every home loan is different. Our job is to find the right match for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.