Home Loans, Mortgage Refinance, Bad Credit Home Loans

Investors have returned from summer holidays to grab their largest share of housing loans since at least 1994, according to a survey by a mortgage broker.

Australian Finance Group (AFG), which claims over 10 per cent of the mortgage market, said on Tuesday that 34.1 per cent of all mortgages it arranged nationally in February were for property investors.

That was the highest proportion for investors recorded in the 16-year history of AFG’s survey of its brokers’ activity.

“Investors are now the driving force of the market, encouraged by rising property prices in recent months, and the longer term view that a housing shortfall will continue to underpin future price growth as well as rental yields,” AFG’s general manager of sales and operations Mark Hewitt said in a statement accompanying the data.

The figures showed the total value of loans recorded by AFG remained below year-ago levels, with $2.275 billion of new mortgages in February 2010 compared with $2.674 billion a year before, a fall of 15 per cent.

The number of loans dropped 18 per cent over the same 12 months, to 6,294 from 7,673.

The proportion of loans going to first home buyers in February was 11.3 per cent, the lowest since July 2008, after peaking in march 2009 at 28.1 per cent of the total.

read full story

It was going to take more than a wild hailstorm to dampen buyers’ spirits, with strong demand continuing to outweigh supply.

Despite the Labour Day holiday, which typically has fewer auctions scheduled, agents reported decent crowds gathering at many of the weekend’s 238 auctions.

The results cap off another solid week of property sales in 2010, with the $25-million sale of a Toorak mansion breaking Melbourne’s record house price of $21 million in November.

Fortunately, while most of this weekend’s scheduled auctions took place before Saturday’s hailstorm, JPP Buyer Advocate Catherine Cashmore said for those still taking place ”it presented a good test for the buyers to check if the house had a leaky roof!”

The overall clearance rate was 87 per cent, compared to 75 per cent this weekend last year and just 66 per cent this weekend in 2008.

Meanwhile, the clearance rate for flats and apartments this weekend reached 93 per cent, with 71 out of 76 the properties sold.

A unit at 2/28 Ulupna Road, Ormond had five bidders and sold for $560,000.

Woodards agent Ruth Roberts said they sold the same unit in the same block three months ago for $505,000.

Janet Spencer, director of Buyer Solutions, said the auction of a three-bedroom property at 37 Elm Grove, St Kilda East also had good attendance.

The house was quoted at between $750,000 and $820,000 but sold under the hammer for $990,000 after five to six bidders made over 40 bids.

Noel Jones group chairman Adrian Jones said one of the properties they auctioned at 8 Selwyn Street, Blackburn, was quoted at $500,000 to $550,000 and sold for $625,000.

read full story

AUSTRALIANS have to work almost three times harder to pay off the average family home than they did 50 years ago.

Figures compiled by CommSec for The Sunday Telegraph reveal homebuyers on the average income now have to work for 19,374 hours to buy the average Australian house with the average mortgage.

Based on an eight-hour day and a five-day working week, that equates to about 10 years of work. In reality, it takes much longer to own a home, because wages must pay for all living expenses, not just housing.

In 1960, it took homebuyers just 7500 hours to pay off the average mortgage.

CommSec chief economist Craig James said that half a century ago, average wage-earners took home the equivalent of $1.08 an hour.

They needed to work 25 hours to meet the monthly mortgage repayment of $25, based on an average five per cent interest rate and a mortgage of $4620.

Today, the average worker earning $30.04 an hour spends 70.7 hours – or almost two weeks of the month – at work to cover the monthly mortgage repayment for an average $283,000 loan at a 6.64 per cent interest rate.

The figures show rising costs and growing property prices have largely outstripped wages and young couples today need to work longer and harder to achieve the great Australian dream of owning their homes.

Whereas homes were once affordable on a single wage, families now realistically need two incomes to fund a mortgage. “This is your single biggest purchase,” Mr James said. “This is where people are living.

“We’re building bigger and better homes, so it was always likely we were going to be paying more in terms of the mortgage – and we’re certainly working longer to pay for that.

“We’re working longer, but we’re probably working more flexibly and in jobs that we like.”

read full story

LVR stands for Loan to Value Ratio and is calculated as a percentage of your loan amount over the value of your security property.

If you need to borrow 80% of the purchase price for the purchase of your home or an investment property, then your LVR is deemed to be 80%.

During late 2009 and early 2010, most lenders have dropped the LVRs they are prepared to work with.  In 2008 and earlier, borrowers with a clean credit history and strong employment history were able to borrow up to 106% of their purchase price – ie. LVR of 106%.  Since the world financial crisis such LVRs have dissipated and equally strong borrowers can not borrow more than 90%-95%.

Whereas applicants who are self employed or have some history of bad credit are required to have much larger deposits.  Their LVRs sit a maximum of 80%.

Applicants looking to borrow over 80% need to also cost in to their purchasing expenses, the cost of LMI (Lenders Mortgage Insurance).

Despite the increased volatility of variable mortgages, more households have chosen to ride the roller-coaster of moving interest rates rather than lock into fixed loans.

Fixed rates have slumped to less than 1 per cent of all new loans, according to recent surveys, compared with the traditional level of 10 per cent.

Even with variable interest rates rising borrowers prefer to take their chances that to lock in a “high fixed rate”.  Borrowers are concerned by the high exit fees associated with fixed home loans.  Most people know someone who was caught in a very expensive fixed home loan product last year when variable rates were dropping.

According to lending experts, despite protecting borrowers from further rises, fixed rates are still perceived as too high and too expensive.

“Another key factor to the popularity of variable rate loans is the lower exit fee, such as $600 to $700 compared to potentially several thousand dollars for a fixed-rate mortgage.”

When a home Loan exit fees are low, borrowers feel more comfort in knowing that they can always seek out and refinance to a cheaper product down the track.

Can I consolidate my loans if I am not a home owner?  Each and every day one of our applicants poses this question.

The answer is a resounding YES!   But it is important to assess if such consolidation will make any difference to your financial position.  Finance Brokers are prohibited by legislation from recommending refinance which is not cost effective for their client.  Consequently one needs to consider the purpose behind such consolidation.

Assuming an applicant would like to consolidate their loans in order to pay less, this will only occur if the new loan is cheaper than their existing loans.  However is the applicant is not able to offer any security for their loan, they are effectively looking to replace several unsecured loans with one unsecured loan.  Such an exercise rarely saves any money, and can be a waste of time.

If you have a number of high interest credit cards, then an unsecured loan may be cheaper than the credit card rate and therefore a refinance of such cards into a personal loan may be a good idea.

For applicants in this position who have a clean credit history we frequently recommend consolidating into a low rate credit card, as some cards offer 0% for up to 12 months and some a very low rate such as 3% for the life of the debts rolled over.  In many cases this would be the cheapest method for debt consolidation.

Loan consolidation into a mortgage can be very cost effective, however you do not need to be a home owner in order to benefit from loan consolidation

Most Australian capital cities have demonstrated strong  auction clearances in recent weeks.

There were 469 properties listed for auction in Sydney on the weekend, with 75 per cent selling on the day. Those results were significantly better than last week, when 73 per cent of 348 properties sold. On the same weekend last year 62 per cent of 365 properties sold at auction in Sydney.

In Melbourne, the auction season seems to be well under away for another year with 959 residential properties listed for auction and 77 per cent selling on the day. Last week there was 725 properties put up for auction with 80 per cent selling. On the same weekend last year, there were 594 properties put up for auction with 69 per cent selling on the day.

There were 45 auctions in Adelaide with 76 per cent selling. In Brisbane there was 65 auctions with 48 per cent selling on the day.

SOME of Melbourne’s hottest suburbs have seen average house prices skyrocket by more than $500,000 in a year.

Undoubtedly much of the increase is an adjustment to the price after the property price decreases experienced in late 2008 and early 2009.

Home owners in country town Ouyen and trendy St Kilda were the biggest movers, with median house prices increasing by more than 50 per cent in the 12 months to last September.

And home owners in Armadale saw their average prices increase by about $510,000 in one year.

Median house prices across Melbourne rose 3.7 per cent in the September quarter last year.

Figures released by the Valuer-General show the median house price in metropolitan Melbourne increased from $405,000 to $420,000.

The average price for units in Victoria increased 5.1 per cent to $362,500, after a 7.8 per cent rise in the previous quarter.

The median price of a unit in Victoria was greater than the median house price, which also increased by 3.3 per cent from $335,000 to $360,000 in the September quarter.

Such property price movements has been a contributing factor to RBA increasing the interest rates earlier this week.

Property buyers are being urged to purchased ASAP in 2010 to avoid missing out on purchasing their dream property at a price they can afford.

This year property prices are expected to peak in all states – therefore the sooner you buy the more you save.

Don’t put off that purchase
When looking to purchase a property, you should really look at the property lifecycle to determine the best time to invest. If you wait until the end of 2010, you could face exorbitant costs and limited supply.

The next downturn in the market may not occur for another couple of years.

Choosing your dream home.

Be logical and review the six major groups of investment fundamentals:

1. Location Counts: Does it have schools? Shops? Day care? Car parking? Major shopping area? Cafes? Sporting facilities?

2. Proximity to Transport: How do people get to work in that area? How far is it to bus stations or train stations?

3. Area Demographics: Look at the potential demand of the property by matching the household demographics to the property

4. How Rentable is the Property: Review the logical layout of the home, does it have good sized bedroom? Are there usable living spaces inside and outside, other features such as storage?    Even if you are buying for yourself, it is important to consider whether you could rent the property out should you need to do so.

5. Growth Potential: Is there an ability to increase the value of the property through renovation or development? Check the surrounding properties cannot become high density blocks of units.

6. Price Point: Stay within the 2nd and 3rd quartile of prices in the suburb for price and rent.  Do not purchase the best house in the street.

Keep in mind the following:

1. Take Emotion out of the purchase decision: Avoid buying with the heart and forgetting the head.

2. Look for Value for money not a bargain: Avoid buying that ‘bargain’ property – there are usually major negatives that will stifle growth. If it sounds too good to be true, it usually is.

3. There is no perfect property: Don’t miss good opportunities because you are waiting for the ‘perfect’ house. Every house will have trade-offs and compromises.

Good Luck!!!

NAB has raised its interest rate on home loans by 25 basis points, matching the Reserve Bank’s (RBA) rate rise.

NAB’s standard variable home loan rate will rise by 0.25 percentage points to 6.74 per cent on Friday, March 5.

The bank’s rate will be the lowest among Australia’s big four banks, Melbourne-based NAB said.

The announcement came after the RBA raised the cash rate by 25 basis points to four per cent on Tuesday, its highest level in a year.

Commonwealth Bank and ANZ announced similar rate increases yesterday, as did Westpac this morning.

CBA’s standard variable loan rate will rise to 6.86 per cent on March 5, ANZ’s will increase to 6.91 per cent and Westpac’s to 7.01 per cent.