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Mortgage relief as the Reserve Bank of Australia cuts rates in June
THE Reserve Bank of Australia has cut rates for the second month in a row amid growing fears of a global recession and a bloodbath on the Australian sharemarket yesterday.
The 25 basis points cut takes the central bank’s official rate to 3. 5 per cent. It follows a dismal week of data from the US, Europe and China which has painted a picture of a sharply declining global economy.
It also comes as Australian shares tumbled 2 per cent yesterday, wiping $ 26 billion off the market and tipping the balance in favour of today’s rate cut.
Other proof of a weakening domestic economy this week included monthly inflation figures sinking to zero, a gauge of the health of Australia’s corporate sector slumping more than expected and the ANZ job advertisements survey for May.
Just a week ago economists were divided on whether the RBA would deliver its second consecutive rate cut after lowering the official cash rate by 50 basis points to an official rate of 3.75 per cent in May.
But an AAP survey of 16 economists released today found 14 expected a reduction.
For a homebuyer with a standard $ 300,000 mortgage, the 25 basis points cut, if passed on in full, saves about $ 49 a month.
But borrowers are again at the mercy of the banks which will almost certainly pocket at least some of the discount.
The gap between the central bank’s official interest rate and the big lenders’ rates is the biggest it has been in 18 years. Last month just three out of 120 Australian lenders passed on the full 50 basis points reduction.
The four biggest banks passed on an average of 37 basis points to their variable lending rate and blamed rising funding costs for holding back.
The big banks have held back a quarter of the RBA’s official cuts over the past 12 months.
And borrowers shouldn’t hold their breath waiting for rate relief. Last month it took an average of 12 days for the big banks to pass through the rate cut to home loan customers with the Big Four making a collective $ 133 million profit for the delay.
Consumer groups are urging disgruntled bank customers to pick up the phone and switch banks.
Treasurer Wayne Swan, who briefed Cabinet last night on market volatility, said his predicted Budget surplus gave the Reserve Bank “maximum flexibility” to cut rates, and banks were in a good position to pass on cuts.
Financial regulators have advised the Government the banks are well financed for the next six months and have limited exposure to the economic turmoil in Europe.
Meanwhile, Westpac chief economist Bill Evans yesterday said the Reserve Bank could drop the official cash rate as low as 2.75 per cent by the end of this year. Mr Evans said economic conditions were fragile, necessitating deep rate cuts.
“You can’t ignore what’s going on in the market,” Mr Evans said. “There’s a fair degree of disquiet. Monetary policy is too tight given the shock to confidence and fragility of the economy. Retail has lost its momentum, house prices have edged off, capital spending is quite soft excluding mining.”
Source: news.com.au
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Prevent A Nasty Property Surprise
HOMEBUYERS and real estate investors are being warned to watch out for the hidden traps that may be lurking in their potential purchases.
Leaky showers, cracked ceilings and self-opening doors and among the signs pointing to bigger and more costly “nasty surprises”, the Association of Building Consultants says.
Spokesman Chris Short says understanding a building’s condition and the likelihood of future repairs is vital when assessing a property purchase and managing a mortgage.
“Many homes are tidied up for sale, with the pre-sale spruce ranging from a basic clean through to bogging cracks, repainting, retiling and re-grouting, and even new floor coverings,” Short says.
“The makeover might look good, but it also masks what might be more sinister problems such as termite damage, salt damp, structural issues, unlicensed and dangerous electrical work, and more.
“For example, a leaky shower might seem harmless on the surface but if the leak is allowing water to flow into the soil next to your home, it’s likely to attract termites.”
Short says building inspections can be particularly valuable for investors who will not be living in the property they buy.
“You need to know it well so that you’re clear about urgent maintenance requirements to meet your obligations as a landlord – such as ensuring smoke alarms are hardwired – and the cost of long-term maintenance,” he says.
Property academic and author Peter Koulizos says beginners should always consider a building inspection.
He adds to make sure the report is a written one, rather than a verbal agreement.
“Some of my students have been able to negotiate the contract down by the repair amount or they have just pulled out,” he says.
Koulizos says when entering any property, potential buyers should take in a deep breath.
“If there is a musty smell, it’s a sign of salt damp,” he says.
Another thing to check is the perimeter of the house and make sure there are paths surrounding it.
“You can minimise cracking by keeping the moisture content of the soil fairly constant,” Koulizos says.
“Paths around homes are not just there for decoration.”
HIDING A BIGGER PROBLEM?
* Cracks in ceilings and walls are hallmarks of footings sinking or rising, which causes the walls to flex.
* Other signs are doors out of square in their frames, self-closing and self-opening doors.
* Leaking hot water services, rainwater tanks and airconditioning pipes can create moisture that attracts termites.
* New floor tiles installed over old tiles can trap moisture between the tile layers.
* Cracked tiles and mould at the shower base and plaster bubbling on the wall in the room next to the bathroom are also signs of moisture.
* Any repair work to the building’s paths can provide an entry point for termites.
Source: Association of Building Consultants
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How To Make An Offer In Writing To Buy A Property
Here is an email template you can use to make an offer on a property you are interested in buying.
======EMAIL OFFER TEMPLATE======
To whom it may concern,
I would like to make an offer on _______St ______ for $……………………………..
My preferred settlement time would be ……………… Weeks.
This offer is subject to finance approval, my solicitor reviewing the contract and any Strata reports and or building and pest inspections I may carry out.
======= EMAIL OFFER TEMPLATE======
Best of luck,
Also, just quickly, we are currently running a campaign with our clients the same way we do with professional referrers …
Meaning if you know anyone that has their own home and can do with a loan check up or someone looking to buy, please pass them onto me … We pay $ 300.00 per successful referral… you can refer as many people as you like.. e.g. 5 referrals would be $ 1,500.00… our way of saying thank you …
Click on the link to contact us http://www.thehomeloanadvisory.com.au/contact
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Office Assistant Position Available – Apply Now
Attention … Work With Highly Successful People!
Are you organised driven and fun?
Do you enjoy an office environment?
Do you want a great career?
We are a Mortgage Broking company based in Crows Nest. We assist people by matching them to the right home loan/lender, and facilitating their application to settlement. We are growing very fast and need an Office Assistant/Loan Processor to join our fun office!
Some of your responsibilities will be: PA tasks, loan processing, client satisfaction and general office administration requirements.
To be successful, you will:
* Be a passionate and driven person, really ready for a great career
* Have a passion for helping people
* Be highly organised and have strong time management skills
* Have high attention to detail
* Have medium- high levels of experience with Microsoft Office
* Be friendly and pro active in your customer service approach
Prior PA/Office Assistant and Loan Processing experience is preferable. If this sounds like you, then please call our message bank, listen to the job description and leave us a message. Call us now on 02 8004 0526.
VERY IMPORTANT – PLEASE DO NOT E-MAIL YOUR RESUME! ONLY CALL 02 8004 0526
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Majors Hold Fire On Bumper Rate Cut
Australia’s major banks are unlikely to pass on the full 50 basis point rate cut to borrowers, RateCity chief executive Damian Smith has claimed.
Yesterday, the Reserve Bank cut the cash rate by 50 basis points to 3.75 per cent – the biggest drop since the peak of the Global Financial Crisis and the lowest level since December 2009.
Within hours of yesterday’s announcement The Bank of Queensland confirmed that it would pass on 35 basis points of the rate cut to its borrowers.
However, at close of business yesterday, all of the majors were yet to make announcements around their mortgage rates.
RateCity’s chief executive Damian Smith said he expects the big banks to follow the lead of BoQ and hold back some of the rate reduction.
“This is a very big move from the Reserve Bank and it will help thousands of households, with people on a $ 300,000 mortgage potentially saving around $ 1,000 per year,” he said.
“But it’s unlikely that all lenders will pass on the full 50 basis point rate cut. The signals from the big four banks suggest that they will try to hold on to part of this rate cut: remember that of the 50 basis point cash rate reduction from the RBA since November, the big four banks have only passed on around 40 basis points to variable rate home loan customers.
“Westpac has jumped the gun and announced fixed rate reductions and a variable rate discount before the Reserve Bank meeting today. It gives some cover for Westpac to pass on less than the full cash rate reduction, by pointing to these discounts and fixed rate cuts.”
Earlier this week, Westpac extended the discount on its full doc standard variable between $ 150,000 and $ 250,000 to 0.7 per cent – up from 0.4 per cent.
This decision brings the discount in line with the discount offered to borrowers who take out a loan above $ 250,000.
Source: Jessica Darnbrough, theadviser.com.au
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How Do I Pay Off My Mortgage Sooner?
Pay more, more often.
Want to pay off your mortgage early? Then make bigger mortgage repayments, more frequently. You’ll own your own home sooner and save a bundle on interest.
Act now – you pay most interest up front
Most mortgages are structured so that you pay off most of the interest in the early years. If you are serious about wanting to reduce the interest you pay on your Home Loan, you’ll act now.
Get rid of car loans and credit card debt
You’re generally paying a higher interest rate on small loans (e.g. a car) and your credit cards so it makes sense to eliminate those debts first. So, put a rein on your credit card usage and then tackle your mortgage.
Make sure you’re paying off the right mortgage
When you entered the mortgage market, you might not have been as well informed as you are now. Or the market might not have been as competitive. Stay in close contact with your MFAA member. They can let you know if there is a new home loan product that will save you money over the term of the mortgage.
Flexible mortgages
Most debt-retirement strategies depend on you being able to pay off more of your mortgage sooner. Read the fine print or talk to your MFAA member to see if you have the flexibility you need to reduce your interest charges.
Pay more and pay often
Assuming you have a mortgage that lets you pay extra, you should pay more and pay often. The interest charged on a $ 300,000 home loan at a rate of 7.15% over 30 years with monthly repayments is over $ 420,000. By paying off an additional $ 50 a month, you’ll reduce the interest bill by $ 39,000 and your loan term by 2 years and 4 months. You could look at making repayments weekly or fortnightly rather than monthly. Over 30 years the savings add up. To learn more, talk to us today today.
Information source: MFAA
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Refer a friend and earn $ 300
It’s easy!
Simply email andrew@thehomeloanadvisory.com.au with your friends, family and/or co-workers details (with their permission of course), or Click here to refer now.
We’ll contact your friend and:
• Find the cheapest loan possible (save a ton of money)
• Get the loan sorted quickly (we’ll take care of everything hassle free)
• And, we’ll get it right the first time (no continuous back and forth)Why go to the bank direct? We’ll make sure they’ll get the best deal (by comparing the lenders) and the best part it’s Free to have us take care of everything.
How does that work?
Easy! All the major banks and other leading lenders pay brokers a commission, and since we work for you we are out to impress. This means we’ll negotiate rates, fees etc, everything to make sure you’ll keep coming back to us.
After your friend’s loan goes through we’ll transfer $ 300.00 into your account.
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How To Combat ATM Fee Charges
CONSUMERS who use ATMs not owned by their own banks paid $ 660 million in mostly unnecessary fees last year.
A large chunk of this money could be kept in people’s pockets with some good planning and budgeting.
The fees, known as foreign ATM fees, are those charged by the ATM operator when consumers use an ATM that does not belong to their own bank, or is not in a network arrangement with their bank. The fees usually average $ 2.
The Australian Bankers’ Association says 40 per cent of all ATM transactions in 2011 were done at a foreign ATM.
“It’s no different from going to a shop and buying a coffee – you’re purchasing a service from someone,” says the ABA’s chief executive, Steven Munchenberg. “You are paying for the convenience.”
He says the best way to avoid these fees is planning and to be aware of where your own bank’s ATMs are located.
“You can also get cash out with Eftpos transactions, particularly at the supermarket.”
Munchenberg says for people who may not always have easy access to their own bank’s ATMs – such as those in outer suburban or regional areas, the answer is to avoid making lots of small transactions.
Legislative changes introduced in 2009 meant ATM customers had to be notified of the foreign ATM fee on the machine’s screen before the transaction was completed, and since then transactions at foreign ATMs have fallen.
Many financial institutions now offer free ATM locator applications for smartphones.
Source: news.com.au
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What Is An Equity Line Of Credit?
These loans are a great way to access the equity in your home to use for things like home renovations, investments or other personal purchases. Repayments on a line of credit loan are determined by the interest rate applicable at that time. If you have sufficient equity in your home, you will need to make a separate application for a line of credit loan.
You have the added advantage of being able to make unlimited deposits / repayments as you repayments are not set. You must check the conditions of these loans as they are sometimes more expensive than standard products.
A line of credit is also a popular product with property investors as it gives them instant access for a cash deposit, and the ability to keep their properties separate from each other i.e. not cross secured.
For more information please click the contact tab at the top to request a specialist finance broker to call you.
We start with a review on your current situation, answer any of your questions and explore any opportunities available to save you money and/or invest.
Regards,
Andrew
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What is a mortgage offset account?
What is it?
An offset account is a transaction account that can be linked to your home or investment loan. The credit balance of your transaction account is offset daily against your outstanding loan balance, reducing the interest payable on that loan.
Offset accounts enable you to make the most of your income and other funds to reduce the interest payable on your home loan, thereby reducing your loan term.
How an offset account can work for you
A customer with a $ 150,000 home loan over 30 years would pay approximately $ 167,190 in interest.
If the customer had an offset account linked to the home loan for the entire loan term with a constant balance of $ 10,000 in it, they would pay the loan off in 26 years and 4 months and pay just approximately $ 127,553 in interest.
This represents a saving of three years and eight months and approximately $ 38,636.95 in interest.
Please note: These figures are based on a Standard Variable Rate of 7.36% p.a.
Here at The Home Loan Advisory we not only assist our clients with finding the right loan for their situation, but our post settlement service is second to none. Post settlement we meet with our clients and show them how to correctly set up their banks accounts and how to link them the right way with their loan accounts. We guarantee that we show our clients how to save a minimum of $ 160,700 in interest expenses over the term of the loan *…
Click the consulation button to your right and ask us which lender is offering the best deal! (We have access to all the major banks and many other leading lenders)
How To Find The Best Rate And Save $160,700 In Interest* Off Your Home Loan ... guaranteed!
Home Loan Advisory
