RBA Meeting July 2009: Interest Rates Left Unchanged at 3.00%

www.ratedetective.com.au
At its meeting today, the Reserve Bank of Australia decided to leave the cash rate unchanged at 3.00 per cent.
Press release following the decission looks identical to June press release:

• global economy is stabilising,


• growth in China has strengthened considerably,


• US economy is approaching a turning point,


• but conditions in Europe are still weakening

In Australia monetary policy has been eased significantly by:

• Weaker demand for labour = lower growth in labour costs


• A pick-up in housing credit demand = stronger dwelling activity


• House prices are tending to rise


• Business borrowing has been declining


• Mortgage rates are at very low levels by historical standards


• Business loan rates are below average.

The Board's current view is that the outlook for inflation allows some scope for further easing of monetary policy, if needed and thus the Board will continue to monitor economic and financial conditions.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Property Investors Return to The Market

www.news.com.au

Real Estate group Ray White says investors are returning to the property market after its sales for June rose by 33 per cent from the same month last year.
Australasia's largest real estate company also forecast continue sales growth in the second half of calendar 2009 on the back of improved investor confidence.
Group sales for June rose to $2.411 billion, from $1.8 billion in the corresponding month in 2008.
"Despite months of negative reports on the economic downturn and the global recession, I think investors in Australia are starting to realise it's not the end of the world and they are regaining confidence,'' Ray White Deputy Chariman Sam White said.
"They're also starting to see that property investment has a lower level of risk when you compare it with the volatile sharemarket.
"Despite a small decline in the real estate market since early 2008, it is still actually performing quite well nationwide.''
Ray White's figures show property sales in all states grew in the double digits from a year ago, with New South Wales a stand out with sales growth of more than 40 per cent following a lift in high-end property sales.

Mr White said the combination of low interest rates, softer property prices, a shortage of housing stock and strong rental demand was attracting investors.
"They are returning to the market and should continue to do so over the second half of the year, particularly in fringe areas within commuting distance of the major capital cities,'' he added.
Ray White sales in Queensland grew by 27 per cent in June from a year ago. South Australia and Northern Territory sales were up 25 per cent while Victoria and Western Australia sales were both up 23 per cent.

Fixed vs Variable Choice Gets Tougher

www.smh.com.au

Fixed interest rates continue to edge up as the world economic outlook improves, official interest rates rise in the US and expectations firm of further rate rises in Australia.

The best 3-year rates currently range from 6.70 to 6.99 per cent but the number of rates below 7 per cent is dwindling. This compares with the bank standard variable rate of 7.07 per cent and an overall market-average standard variable rate of 6.80 per cent. The best four and five-year rates start around 7 per cent with quite a few up to 7.20 per cent.

The bulk of one-year rates are currently between 6.6 and 7.0 per cent. The best two-year rates range from 6.69 up to 7 per cent. The fixed rates currently on offer are not nearly as attractive as they have been last year and earlier this year. But if official interest rates move up as many expect over the next 12 months, the best fixed rates locked into now may then look quite good.

The current choice between fixed and variable will depend on a borrower's circumstances but fixing at least part of your loan now below 7 per cent may be a good option for some borrowers. Some of the issues to consider are outlined below.

There is high competition in fixed rates these days which means there is significant variation in the market. It certainly pays to shop around with up to 1 whole percentage point difference at any one time between rates for a given fixed period. Consider bank, non-bank and credit union loans.

Does fixing really suit?

It's important to consider that fixed rate loans won't suit many borrowers. The cheapest home loan is not necessarily the one with the lowest rate, it's the one that allows you to pay it off soonest. The restrictions on extra repayments and early payout attached to fixed rate loans can make them very expensive in the long run. Every extra dollar paid off the loan early on saves $2 in interest by the end.

There is also the cost of switching to consider - charges vary but they can outweigh any savings on the rate.

Above all, remember fixed rates are always a gamble, especially over the longer terms of three to five years. You are committing to an interest rate for a period far beyond anyone's ability to predict rate movements. Trying to pick whether fixed or variable rate borrowers are going to come out ahead over this time period is always a matter of chance. A decision to fix should be considered as insurance against variable rises that might extend repayments beyond the limit of your finances.

So for those who value the certainty of knowing just what their repayments are going to be over the next couple of years, it may well be better to lock in now. Property investors and owner-occupiers on a tight budget, for example. And for those borrowers not in a position to make extra repayments or not likely to pay out their loan during the fixed term, fixed rates can be attractive.

A good alternative for many will be to fix part of your borrowings and keep the rest on a variable rate. But weigh up the costs of switching to this or any fixed arrangement with what you might save in interest.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Searching For Your Dream Home Online? Google Real Estate!

Everyone uses the internet to search for property information, right? Whether you are looking for your next home or investment property, researching suburbs or just want to find out how much your neighbour is trying to sell their house for, the internet is the easiest and most convenient way to do it. It seems this fact has not gone unnoticed at the Google HQ.

This month Google released Google Real Estate Australia and NZ. They now provide current property listings with information collected from many third party websites. You can use Google's powerful search engine to customise your search with specific criteria like number of bedrooms or bathrooms, price and suburb. Using Google's famous 'Maps', they indicate properties for sale or rent with a 'marker'. Clicking on the marker will provide the searcher with some useful information and a link to the agents site to view the property in detail.

The feature also allows independent sellers to list their properties for free, so long as they are shown on a website. “People can upload a feed of all of their properties and they can do that one or more times a day to keep the information up to date,” Google spokesmane Andrew Foster said. “With cities like Perth being so remote from the eastern seaboard, this kind of technology will be an advance for interstate investors who can do their research and go on virtual tours that they might have not seen.”

Check it out right here.

If you enjoyed this post or found it useful, please consider posting a comment or 'Sharing' it using the button on the top left of the page.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Premier Announces Joondalup will be a Tourism Precinct

http://www.joondalup.wa.gov.au/
3/07/2009
The City of Joondalup has welcomed Premier Colin Barnett’s announcement in Parliament on Wednesday (June17) that the Joondalup City Centre will be granted tourism precinct status later this year.
Joondalup Mayor Troy Pickard has welcomed Premier Colin Barnett’s announcement in Parliament on Wednesday (June17) that the Joondalup City Centre will be granted tourism precinct status later this year.
Mayor Pickard said the announcement was a fantastic result for the City of Joondalup after the Council had persistently lobbied the current and former State Government since 2007 for tourism precinct status.
“There will be huge benefits for Joondalup as a result of this tourism precinct designation,” he said.
“A 2007 City survey of businesses in the Joondalup City Centre highlighted overwhelming support for the area becoming a tourism precinct.
“Becoming a tourism precinct will not only allow trading hours similar to those in Fremantle and Perth for our local Joondalup businesses, it will also reinforce Joondalup’s standing as a significant centre within the metropolitan area.
“This will strengthen the Joondalup precinct as a sustainable tourism hub, improving visitor experiences and opportunities, and will bring economic and community benefits like increased employment opportunities and greater choice.
“As a tourism precinct, the City will have significant opportunities to brand and market itself as a quality destination of choice, improving on our many existing attractions like Lakeside Joondalup Shopping City, the multi-award winning Joondalup Resort and Hillarys Marina, the second most visited tourism venue in WA.
“The precinct status will also give local businesses more opportunities to open and our residents, visitors and students the freedom to choose when they want to shop in the Joondalup City Centre.
“It will create a more vibrant and exciting City and will encourage and attract a variety of businesses and visitors to the North West region of Perth.
“The City’s extensive transport networks, accommodation, shopping and some of the best bushland, wetland and coastal natural areas in the metropolitan area, indisputably brand Joondalup as a major WA tourism precinct and it is exciting the Government has decided to officially recognise this.
“Becoming a tourism precinct will greatly complement the large number of events, concerts and festivals held in the Joondalup City Centre and will help assist Joondalup become an even more vibrant and bustling place to visit."

0403 144 822

michael.cormack@aussie.com.au

Mike Cormack

Aussie Joondalup

First home buyers: time to make your move

If you are considering becoming a first home buyer, there has never been a better time. The federal government has recently increased the First Home Owners Grant up to a very helpful $21,000 for eligible purchases. Adding to that large Stamp Duty discounts, interest rates dropping, a reduction is real estate sale prices plus home loan products available exclusively for first home buyers means the time to act must certainly be now.

If you needed any more incentive, the federal government has placed an expiration date of 30 September 2009 on their First Home Owner Grant Boost. This means if you haven't signed a contract to purchase a home or build a new property before the cut-off date, you will only be eligible for a $7,000 grant. To ensure that you are taking advantage of all your entitlements it is recommended to talk to your local Aussie mortgage broker. Apart from helping you determine how much you are entitled to, they can help you compile supporting documentation and complete your applications.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

The First Home Owners Grant in WA. What Am I Eligible For?

As there have been recent changes announced in relation to the First Home Owners Grant (FHOG) it is a timely opportunity to restate the basic requirements of the scheme.

The applicant's for a FHOG must be a natural persons over the age of 18 years, with one of them an Australian citizen or permanent resident. Neither the applicant nor their spouse can have received a FHOG previously or owned a residential property anywhere in Australia.

The current boost to the FHOG has been extended to the 30th September 2009. The FHOG of $14,000 for an established residence and $21,000 for a new residence will continue to that date. Thereafter the respective grants will be reduced to $10,500 for an established residence and $14,000 for new homes until the 31st December 2009. Thereafter the FHOG will revert to $7,000 only for an established or new home.

Several months ago the State Treasurer announced that the Government was considering the imposition of a cap on the value of properties eligible for FHOG, which was stated to be $750,000. The proposed cap has not been implemented but may be reviewed next year.


With respect to Transfer Duty a person eligible for a FHOG will also receive a transfer duty rebate on the purchase. For an established residence there is no duty up to $500,000 and thereafter calculated at the rate of $22.51 per $100 or part thereof so that on a $600,000 purchase it becomes the same duty as any other person pays on a $600,000 property. For vacant land there is no transfer duty payable up to $300,000 and thereafter it is phased in to achieve parity with the standard rate of duty at $400,000. Please note that these limits only relate to transfer duty; a buyer will be eligible for a FHOG for properties in excess of those stamp duty limits.

Disclaimer
The advices in this post are general in nature and further advice should be sought from IRDI Legal in relation to any specific situations you may have.

For further information please contact IRDI Legal on (08) 9443 2544 or visit our website at www.irdi.com.au

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Perth's Hot Suburbs - Where To Find Value

When searching for the most suitable location to purchase your new property, value for money and growth are generally considered - more so if the property is for investment. So what Perth suburbs are currently considered 'under-valued'?

The July issue Australian Property Investor magazine's feature article is '18 Hottest Suburbs Revealed'. Perth features twice in this list by way of Rockingham and Mandurah. Recent infrastructure spending is the main contributor, according to the magazine. The rail and freeway extensions have recently opened, making the region much more accessable and so much more desirable.

A recent feature on realestate.com.au agrees. The below excerpt by Peter Koulizos also puts Rockingham as Perth's number one pick for house price growth and Victoria Park as the leader for units.

Houses – Rockingham
Ongoing expenditure by both the private and public sectors is a sure sign that this suburb will continue to do relatively well as far as property prices are concerned. Add to this the proximity to the sea and good rental prospects from Murdoch University, Challenger TAFE and the hospital nearby, both investors and home buyers will be targeting Rockingham in 2009.
View listings in Rockingham

Units – Victoria Park
Its proximity to the city, Swan River and the increased state government expenditure as part of the Network City strategy are just three reasons Victoria Park will do well in 2009. House prices are quite expensive but median unit prices are only $300,000. This is one of the few locations in Perth where renovating for profit is a very real possibility, due to the many character dwellings in the area.
View listings in Victoria Park

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

What is 'Genuine Savings'? Do I Need It?

Turn the clock back 24 months. The economy was booming, jobs were secure and house prices were growing faster than ever. Banks were lending up to 90%, 100%, even as much as 120% of the property value. The deposit was commonly the First Home Owners Grant or a gift from the parents or even a seperate loan. Then boom-time finished.

Banks started releasing statements like "Due to the increasingly volatile economic climate and rising unemployment levels the Bank is taking further steps to ensure it continues lending responsibly to customers. In particular, we are ensuring customers who are entering into more highly geared borrowings have a demonstrated savings pattern over time."

Instead of lending up to 120%, banks will generally now lend only 90% of the property value. Instead of allowing the deposit to be from almost any source, the lenders need evidence it is 'Genuine Savings'. But what is genuine savings? How do you prove you have it? And when will it be needed?

As a very general rule, when you borrow over 80% of your property's value you will need to have Genuine Savings - and proof of it. The Genuine Savings must normally be at least 5% of the property value. So how do the lenders ensure you have Genuine Savings and haven't just hocked your X-Box at Cash Converters? They generally require 3 months statements as evidence of one or more of the following:

• A demonstrated saving pattern established over a 3-month period
• Gift – must be held in an account for a minimum of 3 months
• Term deposit – must have been held for a minimum of 3 months
• Cash – acceptable only if placed in an account for a minimum of 3 months
• Shares – must have been held for a minimum of 3 months
• Equity in existing property
  However, be aware they probably will not accept the following as Genuine Savings:
• First Home Owners Grant (FHOG)
• Additional borrowed funds i.e. personal loan
• Proposed sale of an asset (other than property) i.e. sale of car

To wrap up, in most cases now when you borrow more than 80% of your property value, you need to show evidence of 5% Genuine Savings. Please bear in mind these are the most common guidelines, however every lender is different and they may be a way for you to buy sooner. Speak to your broker or mortgage professional for information specific to you circumstances.

0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au
Mike Cormack
Aussie Joondalup

Tips to Sell You House For More

If you are thinking of selling your home, or if you already have it on the market, of course you want to get the best price possible and you don't want to see it sitting on the market for longer than necessary. Making some small subtle changes to your property can mean a huge difference in the selling price and time on the market. Read through and see. Please add any other tips or experiences you may have for other readers.

INSIDE PRESENTATION

Ensure your house is clean and tidy
Remove any clutter.
Make sure windows are sparkling clean.
Check that all doors work well and doors don’t jam.
Think about how you arrange your furniture.
Consider obtaining advice of an interior designer.
Rub lavender oil into door jambs to provide a clean smell.
Shower screens, bathrooms and ovens should all be immaculate.

OUTSIDE PRESENTATION

Check gutters and remove any rust spots or debris
Mulch gardens and mow lawns, weed and prune shrubs
Replace any broken fences or missing pailings.
Ensure all gates are working properly
Clean paving to courtyards or pool areas.
Check all pool equipment is in working order.
Pool water should look inviting and well cared for.
Garages and carports should not be cluttered.
Try and store things away neatly.
Water features should be operational and well presented.

INSPECTIONS & HOME OPEN

Buyers will feel more comfortable when they inspect the house if the owner is not home.
Ensure the house is a comfortable temperature.
Brewing coffee creates a pleasant aroma throughout the house.
Open windows and blinds to create natural light.
Fresh flowers always add colour and are a must
Switch on your answering machine, phone ringing can be off putting for potential buyers.
If you are selling, or thinking about selling, with the intention of buying a new home you should speak with a mortgage broker sooner rather than later. Did you know you don't always have to sell your current home before buying the new one? I am a mortgage broker at Aussie Joondalup and am experienced with these loans. Contact me today to see how I could help.
0403 144 822
(08) 9300 0686
michael.cormack@aussie.com.au

Mike Cormack
Aussie Joondalup

Tips on Signing Real Estate Contracts

Before you agree to a contract make sure you understand it. This will prevent any problems and you will get the right home. Generally speaking, the law assumes that if you have signed something, you have read and understood it. Below are a few tips to consider:

• Carefully check that all the figures are correct
• Take your time and don’t be in a rush
• Read all the fine print
• Never sign a blank contract or allow someone to fill in the details later
• If you are unsure of something, ask
• If you are still unclear, get some independent advice
• Ensure that verbal agreements or claims made by the seller/or seller’s agent are written into the contract
• Be very clear about your own inclusion of conditions and requirements
• The agent should sign the contract in your presence
• Have any mistakes or omissions corrected before you sign
• Feel free to ask for an unsigned copy to take away and read in your time when you are not under any pressure
• Make sure you have a copy of the contract

These tips come courtesy of Rodney DeVille at Principle Property. If you are in the Northern suburbs and would like an honest appraisal of your properties potential sale value or if your looking to sell your house with someone who has fresh ideas and has the motivation to get the job done, Rodney's your guy!

0422 579 553
rodney.deville@principleproperty.com.au

Are we on the verge of a property market recovery?

Current data and market trends could certainly be interpreted this way. International Monetary Fund are now expecting higher growth for our economy. Strong exports, a strengthening finance sector and "significant macro policy response" are all contributing to the IMF outlook. Residential homes are selling quicker and for closer to the listed price. Auction clearance rates are trending up, as is overall Consumer Sentiment.

Are you thinking about buying? How long will you wait?

Why You Need to Re-Check Your Pre-Approval Now

Pre-approvals are extremely valuable. They let the bearer know exactly what their lender will lend them. They streamline the process of getting the 'full approval' once a property is found. They can help in negotiating a deal with the Real Estate Agent too. But beware!

Pre-approvals will generally last between 3 - 12 months before expiring. It is important to remember they are not a guarantee of finance. If the lender changes their policy, if your circumstances change or if the property you choose doesn't meet the lenders guidelines, you may receive a decline.

What can you do to help safeguard yourself against these situations?

1. Check with your mortgage broker or bank regularly to see how their policies may have changed, especially right before making an offer on a home.
2. Don't make any dramatic changes to your own circumstances between the time you get your pre-approval and finding your dream house. I have had clients in the past who have quit their jobs, spent their deposit on a new LCD TV etc, taken out large car loans and had a child! Seriously! These sort of things could cause your pre-approval to become invalid. Again, check with your broker or lender if your circumstances change.
3. If you are borrowing money to buy a house always, always, always make the contract "subject to finance". Even if you have been pre-approved, there are too many things that could cause the bank not to approve your loan and you may find yourself in an unpleasant situation.
   
   So if it has been more than a few weeks since you obtained you pre-approval, or if you are about to put an offer on a new home, call your broker.
   
   Mike Cormack

Welcome to Perth's Real Estate & Finance Blog

I am a Mortgage Broker. I need to keep up to date with changes in banks' policies, new loan options for my clients, changes in market conditions, FHOG updates, government announcements and so much more. Its my job to do this. I know where to get this information from and I know what information to trust. If you are not in the industry you may not have access to this information or may not know where to find it.

Not anymore.

I will be cutting through the growing forest of repetitive, dated online information and only posting a concentrated injection of information you need to know. Most importantly, it will be relevant - only current information pertinent to Perth citizens will make the cut.

So stay tuned Perth. Consumer Guides, client anecdotes, up-to-date changes, and local events will all be posted here. Updates will be regular. Stay in the loop and check back regularly.

Mike Cormack