Fixed or Variable? Which Way Should I Go?

WITH the major lenders all dropping their fixed rates in the last few weeks, it’s a good time to consider whether locking in a rate is the way to go.

There have been many studies which have shown that over time, it’s better to stick with a variable rate and ride the rollercoaster those rates can sometimes travel on.

Which is exactly what interest rates have done in the last few years here in Australia. In August 2007, the official cash rate set by the Reserve Bank was 6.5 per cent. By December that year it was slashed to 4.25 per cent at the start of the GFC and by the following February it was 3.25 per cent.

With more global uncertainty and unemployment numbers up here locally, the banks dropping their fixed rates, there’s speculation that the RBA will cut the cash rate from 4.75 per cent when they next meet on September 6.

However, Aussie’s Executive Chairman and founder John Symond said while there is a chance variable rates will also drop in the upcoming months, a fixed rate can be useful for homeowners, particularly if they are planning a change in their circumstances.

“Fixed rates are good when you’re planning to start a family, or a work situation is changing as it gives the homeowner some security over the level of the repayments,” he said.

Mr Symond said fixed rate loans have conditions such as the amount of the extra repayments which can be made each year, break costs if the house is sold or the loan is paid out early and a lack of extra features which might be associated with variable loans, such as redraw.

“Personally I believe it’s better to go with a variable rate as you can pay as much as you like off the loan, reducing the term and the level of interest payments,” he said.

“However, if homeowners are concerned about interest rates going up the perhaps splitting the loan into a fixed and variable component may be a good option.

“It’s an each-way bet, which gives some peace of mind over the repayment amount while still allowing them to repay the variable component as fast as they want.”

To discuss how each option could benefit you, call Mike Cormack from Aussie Home Loans Joondalup and claim your free 60 minute consultation on 0403 144822 or visit Aussie Joondalup

Why WA’s Market Must Inevitably Rise

Terry Ryder is the director of hotspotting.com.au and has just released the latest edition of Western Australia Hotspots Report. He had these words to say:
"Key property markets in Western Australia are rising strongly. You’d never know it, because media keeps telling us the Perth market is falling.

But there’s more to WA than Perth. Key regional centres like Geraldton, Port Hedland, Karratha and Albany have strong markets.

The Perth market must inevitably follow suit. It hasn’t happened yet because most of the spending that constitutes the much-touted resources boom is still to come.

The $43 billion Gorgon gas project is Australia’s biggest resources project but the major work hasn’t started. BHP Billiton, Rio Tinto, Woodside Petroleum and others are planning huge expansions, but the big money hasn’t yet been spent.

When miners start digging holes and raising structures, businesses (mostly based in Perth) will expand, with major impacts for commercial, industrial and residential property in the state capital."

Christmas Present Or January Sales? When Is The Best Time To Buy Property?

There are just under eight weeks to go until Christmas – even less time until the frivolity of the holiday season is upon us. It’s a lively time of hectic personal, social and business commitments, followed by a period of relative down-time. So what if you’re in the market for a new home – should you buy before Christmas or put it off until next year?

Whether it’s gift-giving, taking a holiday or entertainment expenses, the festive period can put a strain on the budget. According to Credit and Charge Card Statistics reported monthly by the Reserve Bank, Australians owe more than $44.9 billion in credit card debt, and our credit card purchases in December are at least 15 per cent higher than the average monthly purchases throughout the rest of the year. With many economists predicting more than one interest rate rise in the next few months, house-hunters need to plan their finances very carefully.

But while it’s an expensive time of year, there’s also opportunity to snap up a pre-Christmas property bargain.

“It is a really good time for purchasers to be picking up a good buy, pre-Christmas,” says Georgi Coward, Real Estate Agent with Cunninghams Property. Coward explains that in December, homes on the market are those leftover from spring, which may not have been priced appropriately. “Vendors realise at this stage that it hasn’t sold and that they’ll now be waiting an extra, longer time.”

“A lot of buyers disappear as well, so there are just the really keen ones that are out there,” says Coward. “They’re often the ones that will pick up a bargain, as vendors are more negotiable, and there’s a little bit more desperation to sell, move on and enjoy Christmas.”

As for property values, there are indications that prices will only go up from here. “Overall we’re finding that buyers are very confident about the direction of the market and most agree that 2010 will see between five to ten per cent price growth across the board,” says John McGrath, CEO of McGrath Estate Agents. “Serious buyers have been looking to get set in the market for the last three months.”

McGrath says that interest rate rises will have an impact on anticipated price growth “only if we see a two per cent hike in the next nine months, which is unlikely.” He says, “Most buyers have factored in another one per cent in their thinking and are happy to buy with that in mind.”

But buying next year has its benefits too. “January can be a good time to be buying with leftover stock that hasn’t sold prior to Christmas,” says Coward. Holding off also gives you a little more financial breathing space over the holiday season, and the chance to pounce on the fresh New Year stock as it comes onto the market – while other buyers are taking holidays.

“There’s an opportunity that you can jump on it before anybody else, and before it hits the papers,” says Coward. “But you may end up paying a premium to take it off the market.”

If your home is, or will be on the market before you buy, these considerations apply to you as a vendor as well, not to mention the need to time both your transactions optimally. So, whether ‘tis the season for a sale or not, ultimately depends on your circumstances and needs. And your Christmas wish list.

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 Home Loans 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

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