If you like keeping up to date with what’s happening with property, finance, cars and the economy, you won’t want to miss this newsletter. Here are four big stories:

– Govt plans RBA cash rate reform.

– HomeBuilder deadline extended.

– Cars to become more efficient.

– Inflation continues falling

But first, our regular clockwork property updates!

There has been a whole lot going on – (and I won’t even go into my kids, school camps, cross country, and of course the onset of a chilly start to winter – I wish there was a ‘green’ log fire option).

Lender’s Carrots

A slightly unusual carrot – a survey from our friends at Banjo Loans. Banjo did a survey of small to medium businesses (SMEs) and came up with some interesting data and observations. Whilst particularly relevant for brokers and accountants, it also has some insights into how business owners are viewing the next year or so. Click the link below to obtain access to this report.

Your copy of Banjo Loans’ SME report

Client Story

An unusual one…..

A financial planner had a 70-year-old couple as clients. They had their funds tied up in a property investment fund and they needed cash to enable settlement for their retirement home. There are loan products for the ‘over 65’s’ such as reverse mortgages but in this case, these products could not be used.

However, there was a product which came to the rescue. It is basically an equity release product and is normally used for those who need cash prior to settlement from the sale of their home (i.e. asset rich cash poor). The beauty of this product is there is no repayments or interest payments to be made until settlement.

After discussions with the lender we ‘manufactured’ a solution for our clients using this product – resulting in a happy couple and a happy financial planner!

If you have an interesting loan scenario and require an innovative solution, reach out, and let’s chat.

Interesting Loan Scenarios – reach out!

 

Our survey results are in!

Our question was:

If you were to sell a property, would you use a vendor advocate?

Some observations:

– I suspect a lot of people have heard about Buyer Advocates and Investment Property Advisors but the purpose and use of Vendor Advocates is not as well known.

– Vendor Advocates help you choose the right real estate agent (REA) to sell your property. They are often remunerated via a commission split with the real estate agent selected.

– Their job is to make sure your selected REA does all the things they should be doing when selling your property. I am not sure about you, but when I have sold a property, I have basically let the sales agent do what they do and all I have done is get weekly reports and updates. I try to be useful but to be realistic, my knowledge is much less than the agent’s knowledge so I am often of not much value.

– A good Vendor Advocate can do a number of things: Apart from making sure you are selecting the right agent to sell your property, they earn their keep (and their reputation) by adding value to your sale and making sure your agent goes the full nine yards when selling your property.

– A good Vendors Advocate is well-versed in the real estate sales process so they know what questions to ask on your behalf and they know what is going on in the market from their regular discussions with agents in your area.

– But, like any service provider you always want a good one! I have a number of Vendor Advocates who I have spoken to and they want to make sure they are seen as adding value for their clients. After all, referrals from their happy clients is often their best form of marketing.

Find out more about Vendor Advocates

Regional Property Report Updates

For investors, this is a bonanza offering for those regions around Australia you are not familiar with. The level of detail and research is ‘second to none’ so delve into them before making your next property investment decision.

And, if you don’t have a property investment advisor, do yourself a HUGE favour and make sure you use one. I have quite a few seasoned professionals who can assist you (including the authors of the Regional Property Reports referred to above), so I can certainly put you in contact with someone who can make your next buying decision a better one.

And remember, your BIGGEST cost of your next property purchase is the opportunity cost of choosing the wrong property. A 2% to 3% inferior annual return adds up to big $$$ over 5 to 10 years.

You can access over 30 Regional Property Market analyses. Many of these Reports have over 50 pages of detailed information including whether to consider to Buy, Hold or Sell.

The regions cover all capital cities plus regional cities across Australia.

The last 3 months updated Reports:

Click here for access to our Regional Reports

Government plans to reform how RBA sets cash rate

Treasurer Jim Chalmers has accepted all 51 recommendations put forward by a federal government-commissioned review of the Reserve Bank of Australia (RBA).

As part of the proposed changes, legislation will be introduced by Dr. Chalmers to establish two separate boards—one for overseeing monetary policy, including the setting of the cash rate, and another for managing the Reserve Bank’s internal governance.

Furthermore, the RBA will be granted a new mandate that emphasizes the pursuit of “economic prosperity and welfare of the people of Australia now and in the future” as its overarching purpose, rather than treating it as a distinct objective solely for monetary policy.

Treasurer Chalmers emphasized the importance of having the most effective central bank and monetary policy framework to address current and future economic challenges.

He noted the positive reputation and high-quality staff of the RBA, acknowledging its past contributions to Australia’s economic outcomes. However, the review identified various opportunities for strengthening the country’s monetary policy framework over the last three decades.

HomeBuilder documentation extended to 2025

Under a new initiative from the federal government, applicants for the HomeBuilder incentive have been granted a two-year extension.

Initially, the deadline for applications was on 14 April 2021, with a subsequent deadline of 30 April 2023 for submitting supporting documentation. However, this deadline has now been further extended to 30 June 2025, but its applicability depends on the acceptance of this change by individual states or territories.

The purpose of this extension is to provide support to individuals who made financial commitments with the expectation of receiving the HomeBuilder grant but faced challenges due to supply constraints and delays in the construction industry.

“I thank states and territories for their feedback on the Government’s proposed extension and the updated data they have provided on outstanding, existing HomeBuilder applications,” Minister for Housing Julie Collins said.

Car manufacturers told to lift their game on fuel efficiency

In an effort to enhance fuel efficiency, the federal government has initiated the process by releasing a consultation paper and inviting public input.

Fuel efficiency standards necessitate that global vehicle manufacturers, as well as their local suppliers, progressively enhance the average fuel efficiency of new cars.

Minister for Transport Catherine King and Minister for Climate Change and Energy Chris Bowen noted that Australia is among the few developed nations that do not currently have fuel efficiency standards in place. Consequently, there is no obligation for global vehicle manufacturers to introduce their most advanced fuel-saving technologies to the Australian market, including high-efficiency internal combustion engine technology, hybrids, and electric vehicles (EVs).

“With a fuel efficiency standard in place, Australians can expect to continue to access the same types of vehicles they do currently, from hatches to 4-wheel drives, utes to vans and everything in between. But they will also get the choice of more efficient petrol and diesel engines, more hybrids, plug-in hybrids and battery EV options available for sale.”

Once the consultation period is over, the government will develop a model for a fuel efficiency standard and then introduce legislation to parliament.

Get in touch if you need a car loan

Inflation falls for third consecutive month

Consumers can find encouragement in the recent trends indicating a decline in inflation, suggesting that it may have reached its peak last year.

According to the Australian Bureau of Statistics, inflation reached a high of 8.4% in December. However, it subsequently decreased to 7.4% in January, further declining to 6.8% in February, and reaching 6.3% in March.

It is important to note that the mentioned inflation reading represents an average, implying that not every product or product category experienced a price increase of 6.3%.

Inflation ranged from 0.8% for transport to 9.5% for housing, while prices also rose 3.2% for clothing & footwear, 6.6% for insurance & financial services and 8.1% for food & non-alcoholic beverages.

The Reserve Bank has forecast that inflation will fall to 4% by the end of this year, 3.25% by the end of next year and 3% by the end of 2025.

Hi,

Next month’s news cycle is likely to be dominated by the upcoming federal budget. In the meantime, here are four important stories making headlines:

– Borrowers in refinancing mood

– ATO targeting property investors

– Property market rebounds

– Banks supporting green consumers.

Read more below.

But first, our regular updates!

This month’s

Lender’s Carrot – equity release loans

There is a novel equity release loan (i.e. cash out) when you are looking to sell but settlement hasn’t yet occurred.

It’s great for that quick pre-sale reno, the deposit for your next purchase, or even a holiday – you name it, you spend it!

All interest and principal is repaid when you settle on the sale of your home so no monthly cash costs. And, you have up to 6 months to settle.

 

Client Story – a business owner needs cash

The client’s business needed a short-term cash facility to urgently purchase stock which it could on-sell during the winter cold and flu season.

An unsecured loan was organised and funding provided within the week. 

To my client I said ‘Rather than focus on the rate, focus on the profit you will forgo if you don’t get the money.  As long as you make money after all costs, it is a good deal.’ (Of course, the more you make the better!).

Find out more!

 

Our survey results are in!

Our question was: For those borrowers who use a broker to get a loan, what is the BEST “other thing” your broker does for you?

Some observations:

– This range of services offered by brokers are not ones which you would anticipate a lender could, or would, offer their clients. 

A broker has a best interest duty to provide solutions for their clients which are not only of great value for the client but which are presented in a way which shows objectivity and transparency. 

Compared to a broker, however, a lender has a much lower level of compliance in terms of best interests duty. 

– So it is not surprising that brokers’ clients receive services which create enormous value and which lenders will not and cannot offer. 

This shows the strength of the broker channel and may well explain why over 70% of loan clients use a broker.

– The regular negotiation of rates is a key area of value for clients. 

As readers of my Blogs will know, I am fond of quoting the ACCC’s 2020 report on the mortgage industry which showed that the longer a loan was held by a client, the greater the difference between ‘best rates’ and the rate being paid; with the difference costing a client thousands of dollars a year.  See the graph below.

 

Regional Property Report Updates

You can access over 30 Regional Property Market analyses.  Many of these Reports have over 50 pages of detailed information including whether to consider to Buy, Hold or Sell.

The regions cover all capital cities plus regional cities across Australia.

The last 3 months updated Reports:

Click here for access to our Regional Reports!

 

Product Highlight

Suburb Comparison Report

The good folk at Pricefinder, the research house behind Domain.com.au (and which is used by many real estate agents), has given us access to use their Suburb Comparison Report.

The 15 year historical growth trends for up to 5 suburbs can be compared in a series of neat graphs.

This is great for when you are looking at suburbs which might have underperformed and you want to take advantage of any arbitrage in value. Or, just to have a sticky beak 😉

Of course, we go one step further!  For each suburb you choose, we also give you Pricefinder’s Suburb Flyover Report; a more detailed analysis for each suburb you have selected.

Click here for your Suburb Comparison Report!

 

Hordes of borrowers switching to lower-rate loans

According to the latest data from the Australian Bureau of Statistics (ABS), the 10 biggest months in refinancing history have been the 10 most recent ones.

This streak began in May 2022, when $17.1 billion of home loans were refinanced, and has persisted through February 2023, which is the most recent month for which data is available.

Borrowers set a new record in February by refinancing $19.9 billion. ABS spokesperson Dane Mead attributes this record to the Reserve Bank of Australia’s (RBA) series of cash rate increases. He notes that borrowers continued to switch lenders for lower interest rates as the RBA’s cash rate rose.

Since the RBA began increasing the cash rate in May 2022, it is not unexpected that a large number of people have refinanced their loans.

Currently, lenders are fiercely competing for business and offering attractive deals to refinancers such as rate discounts and cashback incentives.

Contact me today if you’d like to see how much you could save by refinancing.

Want to refinance? Let’s talk!

 

ATO chasing property investors for $1.3bn in missing taxes

According to The Guardian, to ensure that property investors are accurately filing their tax returns, the Australian Taxation Office (ATO) will require banks to provide data on 1.7 million property investors.

The ATO estimates that $1.3 billion in missing taxes could be collected through this effort.

All of the big four banks and 13 other financial institutions will be required to provide the requested information using formal information gathering powers.

The most common tax errors made by property investors include:

– misclassifying improvements as repairs instead of capital works,

– incorrectly apportioning mortgage interest costs after refinancing for private purposes, and

– failing to apportion expenses for private use of the property.

The ATO can use advanced data-matching technology to compare property investors’ financial transactions with what they report on their tax returns. 

The vast majority of property investors want to do the right thing, but taxes are complicated so mistakes can occur. To avoid mistakes, property investors are advised to seek professional tax advice. 

That’s why I recommend you get professional tax advice.

If you need a good accountant, feel free to contact me for a recommendation.

 

Why the property market has staged a rebound

After experiencing a decline in property prices across the country for about a year, there are signs that certain markets may have hit their lowest point.

In March, Australia’s median property price rose by 0.6%, marking the first monthly increase in 11 months, according to CoreLogic.

This was largely driven by median price growth in the four largest capital cities in Australia.

– Sydney – up 1.4% month-on-month.

– Melbourne – up 0.6%.

– Perth – up 0.5%.

– Brisbane – up 0.1%.

At the same time, prices declined in the other capitals:

– Adelaide – down 0.1%.

– Darwin – down 0.4%.

– Canberra – down 0.5%.

– Hobart – down 0.9%.

CoreLogic’s research director, Tim Lawless, said the housing turnaround was due to three main factors:

– Low supply of new listings, which were almost 20% below the five-year average in the combined capital cities.

– Increased demand from tenants, who were trying to escape the challenging rental market.

– Increased demand from migrants, with net overseas migration at record levels.

 

Big four banks and other lenders keen to finance ‘green’ purchases

Due to the growing demand for electric vehicles, solar panels, and other sustainable technology, several banks are now providing specialised “green” loans.

These loans typically come with more favourable borrowing terms and lower interest rates than traditional loans, as many lenders are eager to promote the shift towards a cleaner economy.

Depending on the lender, you can use green loans to finance the purchase of:

– Electric vehicles (EVs)

– EV charging stations

– Hybrid vehicles

– Solar panels

– Battery systems

– Solar hot water systems

– Heat pumps

– Energy-efficient appliances

As always, conditions apply, and different lenders have different credit policies.

Reach out if you would like to buy an EV, solar panels or other sustainable technology. I’ll be happy to explain your options and manage the loan application for you.

Reach out if you need a green loan!

Hi,

As summer comes to an end, the property market tends to kick into gear. There’s a lot of real estate news around right now, including these four big stories:

– Building approvals trending down.

– Rents rise as vacancies fall.

– Real estate price update.

– Australia sets a refinancing record.

Read more below.

But first….

Some things you might like to know!

– The results of our new poll are out! Our question was: As a business owner, the main reason I would borrow money is for..

– We have 5 more updates for our regional property reports.  The last 3 months of updates are set out below.

– Our 5 suburb comparison report is great for buyers looking to buy in a specific area when they are not 100% sure which suburb to buy in.  And as we know, property prices and trends can often vary significantly between neighbouring suburbs.  Click the link below to find out what you might not know.

5 suburb comparison report

 

#1 Our survey results are in!

Our question was: As a business owner, the main reason I would borrow money is for..

– A commercial property purchase

– An asset purchase

– Working capital cashflow

– More than one of the above

Some observations:

– Interestingly, most business owners are not seeing much need for cashflow borrowing.  Despite this, there are now a number of lenders who operate in this space and they are finding there is strong demand.  I wonder if there is a disconnect on this type of funding or perhaps it is still a small but growing niche.

– I am not surprised that asset purchases and commercial property purchases are the main reasons for borrowing.  Large, lumpy capital requirements are always a good reason to borrow; the logic being that the cost of funds is offset by either capital growth and rental savings (commercial property) or profit generation (asset purchase) – the exception to the latter being a new Porche for the Business Owner 😂

– Although the survey was unable to untangle the ‘multi-purpose’ loan requirements, I am guessing that, in the absence of any other data, this would reflect the proportion of loans in the other 3 categories.

– Unlike home loans where brokers complete over 70% of the loan transactions, in the business space, only 25% of loans are written by brokers.  So for borrowers and brokers, there are a lot of opportunities to ‘do better’.  For borrowers, they may not necessarily be getting the best and most suitable product for their business and for brokers who have the skills to understand business operations and business structures, there are lots of opportunities for growth.

– If you have a business or you know of someone who has a business, we would love to assist them getting the most suitable deal for them and their business.  We are currently organising funding for a commercial property refinance, a large working capital loan as well as a couple of construction builds in the commercial and residential space.  Please make time to have a chat by clicking the link below.

Book a time for a chat!

 

#2 Updates to our Property Market Reports.

These Reports are a great resource for those looking to buy in a new region or just to get a feel for what is happening in that region. Each Report also includes a suggested recommendation to Buy / Hold / Sell.

Updated Regional Property Reports

Here are the last 3 months’ updates of these detailed regional reports (including the property clock: Buy / Hold / Sell).

There are 30+ regions analysed and they are updated regularly.

Get your Free Property & Regional Reports!

 

The number of new homes that will be built in the coming years appears to be falling, judging by the latest data from the Australian Bureau of Statistics.

Fewer building approvals were issued in 2022 than 2021, for both houses and other dwellings (which are mainly apartments, but also include townhouses, semi-detached houses and row or terrace houses):

– Approvals to build houses = fell from 145,833 in 2021 to 114,179 in 2022.

– Approvals to build other dwellings = fell from 77,096 in 2021 to 70,062 in 2022.

There’s usually a lag of several months, and sometimes several years, between when an approval is issued and construction begins. And, sometimes, construction never begins at all, because the individual or developer decides not to proceed with the project. However, it’s likely that the reduction in approval numbers in 2022 will translate to a reduction in home building activity in the coming years.

Would you like to build a new home, either to live in or for investment purposes? If so, get in touch and I’ll be happy to explain how construction finance works, and the difference between a construction loan and a regular home loan.

Need a construction loan? Let’s talk!

 

Property investors are enjoying strong growth in rents, thanks to the severe shortage of rental properties.

Across Australia, just 1.0% of rental properties were vacant in January, according to SQM Research. That was down from 1.6% the year before.

The reduction in rental supply has led to an increase in demand, which in turn has made tenants more willing to pay higher rents.

Asking rents jumped by a remarkable 17.4% in the year to February 12, according to SQM.

Vacancy rates are low and rents are rising in many parts of Australia, which means now might be a good time to buy an investment property.

Reach out if you’d like to discover your borrowing capacity and discuss how you could finance a potential purchase.

Get in touch if you need an investment loan!

 

In the case of the Australian property market, what goes up tends to go down less.

History shows there are periods when prices rise, as occurred from late 2020 to early 2022, and periods when prices decline, as has occurred over the past year or so. But, over the long-term, the increases have tended to far outweigh the decreases.

That’s reflected in new data from PropTrack, which compared property prices in January 2023 with prices just before the pandemic, in January 2020.

Across Australia, prices were 29.4% higher in January 2023 than January 2020.

PropTrack economist Angus Moore said that while recent price falls “are not insignificant”, they are occurring after an extraordinary boom, with 2021 being the third-fastest year of national price growth on record.

“While anyone that bought near the peak in 2022 has probably seen their home value fall relative to when they bought, most homeowners aren’t in that boat. That’s because the vast majority of Australians bought before that peak,” he said.

Reach out if you want to buy a property!

 

Home owners have been doing an extraordinary amount of refinancing since the Reserve Bank began raising the cash rate in May 2022.

The eight months from May to December included the eight biggest months in refinancing history, according to the latest data from the Australian Bureau of Statistics.

That included $19.4 billion of refinancing in November, the biggest month on record, followed by another $19.1 billion in December, the second-biggest month.

Lenders compete fiercely for business, so they often charge lower interest rates for new customers than existing customers.

That’s why it’s possible to score a significant rate reduction by switching lenders.

Even better, some lenders are offering cashback deals of several thousand dollars to people who refinance.

Refinancing comes with pros and cons, so it’s important to do your research and crunch the numbers before switching lenders.

I can help. Get in touch and I’ll talk you through your options, so you can find out how much you could save by refinancing and whether it’s right for you.

Get refinancing help!