Home Loans, Mortgage Refinance, Bad Credit Home Loans

A new report says the Australian dream of owning a three-bedroom house on a quarter-acre block is a thing of the past and that smaller homes for singletons must be built.

A housing supply report to be released officially next month predicts the number of single-person homes will account for one third of Australia’s housing supply within 20 years.

A few key findings were revealed today at an urban developers’ conference in Sydney.

The report says not enough homes are being built in Australia to cope with population and lifestyle changes.

According to the National Housing Council (NHC), there will be a dramatic rise in the number of homes from 8.5 million to just under 12 million by 2029.

More people will choose to live in the city, with Sydney, Perth, Melbourne and Brisbane the preferred capitals.

NHC chairman Dr Owen Donald says the number of single-person households will almost equal the number of family homes.

“These days the younger people are partnering later and those partnerships are not lasting as long, so there are more single people in the population,” he said.

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AUSTRALIA’S most expensive homes are likely to rise in price by 10-15 per cent this year as wealthy locals and overseas buyers hunt for prestigious addresses in a resilient economy, according to researcher RP Data.

The rebounding share market and increased business confidence is underpinning demand for capital city waterfront and other top-end homes, while prestige holiday homes are yet to catch up, senior researcher Cameron Kusher told The Australian.

“You can’t underestimate how important the share market is for top-end buyers,” he said.

“When they lose half the value of their shares — as they did in 2008 — it’s no surprise the top end of the market is hit.”

On Tuesday, a 1950s beach-front house at Sydney’s affluent Whale Beach sold to a local buyer for $7.375 million just after auction. It is described in its brochure as “liveable”.

Agent Raine and Horne Palm Beach principal Glenn Lee, who sold the property, said the top end of Sydney’s northern beaches market — houses worth more than $5m — had begun to bounce back late last year.

“We sold $56m of property in the last six weeks (of last year),” Mr Lee said. He said prestige home prices in the area had fallen about 20 per cent during the global financial crisis, but had rebounded by about 10 per cent.

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If you are one of many people wondering if mortgage refinance is a good idea in today’s economic climate.  Here is a list of the most common reasons why people would contemplate a refinance:

• home renovation
• debt consolidation  by rolling  unsecured into your home loan
• looking for a cheaper rate,  or more home loan features
• access to extra cash for a purchase
• looking for an offset account with your loan
• You are currently paying a high interest rate – for instance, if you arranged a low-start, rising-rate loan from your homebuilder
• looking to switch from a fixed rate to a variable rate, perhaps because you can accept the risk of higher repayments
• looking to switch from a variable rate to a fixed rate, perhaps because you need the certainty that your repayments will stay the same for the next three years

The Reserve Bank has warned that difficulties in building new homes threaten to drive Australian house prices higher.

RBA assistant governor Phillip Lowe said if the nation’s population growth remained strong, more of the economy would need to be devoted towards housing, presenting challenges both to labour markets and governments.

“If this does not happen, further adjustment in housing prices and rents is likely to occur to balance supply and demand,” he said.

Australian home prices surged 13.6 per cent last year, as a strong economy and robust population growth spurred buyers to push prices higher on limited availability. At the same time bottlenecks in the new home construction have curtailed supply, adding to price pressures.

“With population growth above average, and growth in the housing stock below average, it is not surprising that there has been upward pressure on housing costs as part of the process of balancing supply and demand, with the higher housing costs leading to people economising on housing services,” said Mr Lowe.

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AUSTRALIANS are hitting gyms, golf courses and sports courts in record numbers to sweat off the financial crisis.

Others have invested in boats, bikes, caravans and fishing and camping as lavish holidays and hotels were ditched for down-to-earth pursuits.

The obsession with health flowed on to chemist counters and medical clinics as workers fearful of getting the sack dosed up on medicines to stave off sickness.

Employees putting in extra hours at the office turned to housekeepers and gardeners to keep their homes in order.

And while consumers sacrificed luxuries such as jewellery and eating out, most refused to cut their hairdresser and beauty treatments.

Spending data reveals the Aussie love affair with sport extended beyond the spectator stands last year to the local fitness centre, footy oval and tennis court.

“People stayed home and did not go on major vacations, but they still needed some form of entertainment,” leading economist Craig James said.

“There’s also the Biggest Loser effect of constantly being told we’re getting fatter and not fitter.”

CommSec analysis of Bureau of Statistics figures confirms expenditure on televisions and stereos rose as families cashed in on discounted prices and cocooned at home to ride out the economic crunch.

Despite the obsession with wide-screen TVs, the cinema survived as a popular night out for movie lovers.

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DEMAND for new home loans has fallen by nearly 8 per cent in January 2010.  The climate of  rising interest rates and the end of the Federal Government’s more generous first home buyers grant has greatly impacted on this trend.

In January owner occupiers were approved for  51,056 home loans .  This represents a 7.9 per cent seasonally-adjusted decline on the December 2009 figures , according to Australian Bureau of Statistics data released today.

In fact this is a decline for a 4th month in a row..

Economists had expected home loan commitments to have risen by 2.0 per cent.

The fall follows December’s third consecutive increase in mortgage rates and the end of the Government’s increased grant, which returned to $7000 on January 1.

The proportion of loans granted to first homebuyers slipped to 20.5 per cent compared to 21.0 per cent in December.

A record peak of 28.5 per cent was set last May.

The Reserve Bank of Australia raised the official cash rate for a fourth time to 4.0 per cent last week.  There are predictions that rates could go up by anywhere from 0.5% to 0.75% by the end of the year.

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.

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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.

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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.”

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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).