purchase property Archives

Why property is so important to us

November 11, 2024

Property may well be the biggest investment any of us make. The Australian residential property market stands at $11trn v. Superannuation at $3.9trn and listed stocks at $3.2trn.

This is why the ups-and-downs of the property are a national pastime. As the property market goes up, so does our wealth.

In fact, more than half our wealth (56.3 per cent) is held in housing. So, for many, property is a key investment for their future.

That is why, the current market creates a major opportunity for many who could be just looking to get on the property market or looking to deepen their personal wealth.

The property market has had a pretty-good run over the past years – Sydney dwelling values are 29.2 per cent higher than pre-Covid levels. But it does seem that the market is running out of steam. This week saw many auction clearance rates well below 50 per cent – a sure sign that things are moving in buyers’ favour.

And, with properties talking longer to sell, it looks like this trend is likely to continue.

But look closer and you will see that there are multiple markets; while Sydney, Canberra and Melbourne may well be struggling, Brisbane, Perth and Adelaide are going gangbusters.

So, why are our two biggest markets and what could case them to change? Traditionally Sydney, Melbourne and Canberra are our most expensive markets and there’s little doubt that potential buyers simply cannot borrow enough to purchase properties.

When banks have to assess someone’s borrowing capacity assuming a rate as high as 6.5 per cent (plus a 3 per cent buffer) – only the super-rich can justify some loans.

The good news is that rates are due to come down- it’s just that we don’t know when! NAB is predicting rate cuts from February, though it does not recognise it is unsure how many cuts will occur, nor when.

For many, this may create a window of opportunity – rate cuts are likely to spur the market on to other highs (though I do recognise that there are other factors like the return of Donald Trump and the general malaise of the Melbourne economy).

For many, property is the prime source of their wealth and 2025 could be when opportunity beckons for many if they are prepared to get into the market just as rates start to come down.

Graeme Salt is an award-winning mortgage broker. For a no-obligations consultation on your home loan, please contact him on 02 9922 5055.

Navigating the Waves: Assessing the Impact of the 2024 Australian Income Tax Changes on Property Affordability

February 9, 2024

The year 2024 marks a significant chapter in Australia’s economic landscape, as the nation undergoes key income tax changes that have far-reaching implications for various sectors, including the real estate market. This article aims to explore the impact of the 2024 Australian income tax changes on property affordability, shedding light on how these adjustments may influence prospective homebuyers and the overall housing market.

Changes in Taxation:

In 2024, the Australian government implemented a series of income tax changes aimed at fostering economic growth and creating a fairer tax system. These changes include adjustments to tax brackets, deductions, and other relevant factors that directly impact the disposable income of individuals and families.

Impact on Property Affordability:

Disposable Income and Affordability:

One of the primary factors influencing property affordability is the disposable income of potential homebuyers. With the new tax brackets and adjustments, individuals and families may experience changes in their take-home pay. This shift in disposable income can directly influence the purchasing power of prospective homebuyers, potentially affecting their ability to enter the property market.

Interest Rates and Mortgage Affordability:

Changes in income tax can also have a cascading effect on interest rates set by financial institutions. If the adjustments lead to shifts in the overall economic climate, it may impact interest rates on mortgages. Homebuyers should closely monitor these changes, as fluctuations in interest rates can significantly affect the affordability of property loans.

Regional Disparities:

The impact of income tax changes on property affordability may not be uniform across all regions of Australia. High-demand areas may experience more pronounced effects, while regional markets may be comparatively less affected. Prospective buyers should consider these regional disparities when assessing the affordability of properties in specific locations.

Government Initiatives:

Governments often implement various measures to counterbalance the potential challenges posed by tax changes. First-home buyer grants, stamp duty concessions, and other incentives may be introduced to mitigate the impact on property affordability. It is essential for homebuyers to stay informed about such initiatives to make informed decisions.

Conclusion:

As Australia undergoes significant income tax changes in 2024, the impact on property affordability remains a dynamic and evolving aspect of the real estate landscape. Prospective homebuyers are advised to stay vigilant, keeping a close eye on how these changes may affect their disposable income, interest rates, and overall purchasing power. Additionally, understanding regional variations and government initiatives can empower individuals and families to navigate the evolving landscape of property affordability in the wake of the 2024 Australian income tax adjustments.

If you are interested if finding out your norrowing ability, contact

Assessing the Impact of the 2024 Australian Income Tax Changes on Property Affordabilityyour Origin Finance Broker by calling 1300 30 6767 or filling in the enquiry form on this page.

Australian Property Market Outlook: Sunshine or Storm Clouds in 2024?

February 9, 2024

The Australian property market in 2023 defied expectations, showcasing surprising resilience. But as we step into 2024, experts paint a mixed picture, leaving many wondering: Sunshine or storm clouds ahead?

Moderate Growth or Price Correction?

While some predict continued, albeit modest, growth, others foresee a potential price correction. Leading banks anticipate national price increases of 5-7%. ANZ expects Brisbane and Perth to shine, with gains of 9-10% and 7-8% respectively. However, Westpac warns of a possible 3-5% nationwide dip, with Sydney and Melbourne most vulnerable due to high debt levels.

Key Factors Shaking the Foundations

Several forces are shaping the market’s trajectory:

Interest Rates: Rising interest rates are pinching budgets, dampening affordability and buyer demand. The Reserve Bank’s future actions will be crucial. Some predict rate cuts later in 2024, potentially reviving demand.
Affordability Constraints: With prices exceeding wage growth, affordability is becoming a challenge, especially for first-home buyers. This may further suppress demand.
Supply and Demand: Undersupply, particularly in major cities, could continue to exert upward pressure on prices. However, increased listings are expected as fixed-rate borrowers roll off their terms and affordability constraints force some sellers into the market.

Regional Variations to Consider

The national forecast masks regional disparities. Brisbane, Perth, and Adelaide, with lower debt levels and strong interstate migration, are expected to fare better than Sydney and Melbourne.

Navigating the Uncertainty

For potential buyers and sellers, navigating this uncertain landscape requires careful consideration. Staying informed about economic data, interest rate movements, and local market trends is essential. Seeking professional advice tailored to your individual circumstances can be invaluable.

The Bottom Line:

The Australian property market in 2024 is likely to be a year of transition. While some growth is possible, affordability constraints and rising interest rates pose challenges. Careful planning and expert guidance are crucial for navigating this dynamic market.

For help with working out if a properrty purchase is affordable for you, call 1300 30 6767 to talk to Origin or fill in the enquiry form on this page.

The Bond Market Says Your Home Loan Rates Will Fall

September 5, 2023

Normally if you are going to lock your money away for a period of time you would expect to get a higher return. Same as if you are looking for a fixed rate home loan, the longer the time frame the higher the rates should be as an offset of time and risk. The bond market is the same, long term rates should be much higher than short term rates to take into account the same dynamics.

Currently 1 to 10 year bond rates are below or at the Target Cash rate set by the Reserve Bank of Australia. The cash rate is 4.10% while the 5 year bond rate is 3.875% . Normally it should be between 0.25 and 0.75% above the rate depending on the market outlook and is actually currently 0.225% below the RBA’s target cash rate. Like wise all the medium term rates are below the target cash rate set by the RBA, for example the 1 year rate is 3.97% , 0.013% below it while the difference between 10 Year Bond rate and cash rate has dropped to zero.

This normally means that the market expects to see interest rates drop. A little in the next year and possibly more in 2 to 10 years.

Bond Market Says Home Loan Rates Will Fall

What does this mean for you as a home owner or potential owner? It means that home loan interest rates could possibly have peaked and some relief is on the way. It can also mean increased activity and prices as historically when interest rates fall, property prices increase. This is to some extent why we have seen the increase this year in prices in metro centres as buyer are trying to “get in” before the price rise happens which has been exacerbated also by a lack of supply, especially in new home construction.

If you want to avoid the stampede that happens as rates go down, now may be a good time to think about getting your finances in order and planning your next real estate move, whether it’s your first home , an upgrade or another investment property .

For a free assessment with your Origin Finance broker call 1300 30 67 67 or fill in the enquiry form on this page.

Early Spring Selling Season Sees Dramatic Increase in Available Property to Buy in Sydney and Melbourne, Now is the Time to Get Preapproved for a Loan as Demand is Increasing to Match Activity as People Fear Missing Out on the Next Boom

September 5, 2023

The early spring selling season has gotten off to a strong start in Sydney and Melbourne, with a dramatic increase in available property to buy. This is good news for buyers, who are now spoilt for choice.

There are a number of factors that are driving the increase in available property. One factor is uncertainty about interest rates. As interest rates rise, it becomes more expensive for homeowners to borrow money, so they are more likely to sell their homes. Another factor is the pent up demand from sellers wanting to take advantage of the solid buyer demand to upgrade or down size so they are more likely to list their homes.

The increase in available property is particularly pronounced in Sydney and Melbourne. These two cities have been the most affected by the recent property market downturn. As a result, there are now more homes available for sale in Sydney and Melbourne than at any time in the past few years.

This is good news for buyers, who are now in a stronger position to negotiate a good deal. However, it is important to remember that the property market is still volatile, so it is important to get preapproved for a loan before you start making offers.

Getting preapproved for a loan will give you an idea of how much you can borrow and what your monthly payments will be. This will give you a strong bargaining position when you are making offers on properties.

It is also important to keep an eye on the interest rates. If interest rates continue to rise, it could make it more difficult for buyers to afford to buy a home. Therefore, it is important to act now if you are thinking of buying a property. If rates fall as is anticipated by the bond market, purchasers can borrow more creating more demand.

In addition to the factors mentioned above, there are a few other reasons why now is a good time to get preapproved for a loan:

The lending criteria are still relatively relaxed, so it is easier to get approved for a loan.
There are still a good number of properties available, so you have more choice.
The competition from other buyers is not as intense as it may be later in the year.

If you are considering buying a property in Sydney or Melbourne, I recommend getting preapproved for a loan as soon as possible. This will give you the peace of mind of knowing that you are financially ready to make an offer on a property.

Here are some additional tips for buyers in the early spring selling season:

Be prepared to act quickly. Properties are selling quickly, so you need to be prepared to make an offer as soon as you find a property you like.
Be prepared to negotiate. Sellers are more likely to negotiate if they have multiple offers on their property.
Get preapproved for a loan. This will give you a strong bargaining position and will make the buying process smoother.
Be patient. The property market is still volatile, so it may take some time to find the right property.

By following these tips, you can increase your chances of success in the early spring selling season.

However, there are also some risks to consider.

Interest rates are expected to continue to rise, which could make it more expensive to borrow money.
The property market could slow down further, making it more difficult to sell your home in the future.
There is a risk of overpaying for a property if you buy at the top of the market.

If you are considering buying a property, it is important to weigh the risks and rewards carefully. If you are confident that you can afford the monthly payments and that you are buying a property that you will be happy with for the long term, then now may be a good time to buy.

Ultimately, the decision of whether or not to buy a property is a personal one. There is no right or wrong answer, and the best decision for you will depend on your individual circumstances.

For a free assessment with your Origin Finance broker call 1300 30 67 67 or fill in the enquiry form on this page.

The Benefits of Using a Mortgage Broker for Your Finance

July 29, 2023

Introduction

Buying a home is a big decision, and it’s important to get the right mortgage. A mortgage broker can help you navigate the complex world of home loans and find the best deal for your needs.

In this article, we will discuss the benefits of using a mortgage broker for your finance. We will cover topics such as:

What is a mortgage broker?
What are the benefits of using a mortgage broker?
How to choose a mortgage broker

What is a mortgage broker?

A mortgage broker is a licensed professional who helps people find the best mortgage for their needs. Mortgage brokers have access to a wide range of lenders, so they can shop around for the best interest rate and terms. They can also help you understand the mortgage process and make sure that you are getting the best deal possible.

What are the benefits of using a mortgage broker?

There are many benefits to using a mortgage broker, including:

Access to a wider range of lenders: Mortgage brokers have access to a wider range of lenders than you do as an individual. This means they can shop around for the best deal for you, and they can also compare different types of loans to find the one that best suits your needs.
Expertise: Mortgage brokers are experts in the mortgage market. They know the latest interest rates, lending criteria, and product features. This means they can help you find a loan that is right for you, and they can also explain the terms and conditions in plain English.
Saving time and money: Mortgage brokers can save you time and money by doing the legwork for you. They will shop around for the best deal, and they will also handle all the paperwork. This means you can focus on finding your dream home, and you won’t have to worry about the details of your mortgage.
Advocacy: Mortgage brokers are your advocate. They will work with you to find the best deal, and they will also protect your interests throughout the process. This means you can be confident that you are getting the best possible deal, and you can also be sure that your mortgage is processed smoothly.

How to choose a mortgage broker

When choosing a mortgage broker, there are a few things you should keep in mind:

Get recommendations: Ask your friends, family, or colleagues for recommendations for mortgage brokers. This is a great way to find a broker who you can trust.
Do your research: Once you have a few recommendations, do some research on the different brokers. Read online reviews, and check out their websites.
Interview the brokers: Once you have narrowed down your choices, interview the brokers. This will give you a chance to ask questions and get to know them.
Choose a broker who you feel comfortable with: The most important thing is to choose a broker who you feel comfortable with. You should feel confident that they will represent your interests and help you find the best deal.

Conclusion

Using a mortgage broker can be a great way to save time and money when buying a home. Mortgage brokers have access to a wide range of lenders, and they are experts in the mortgage market. They can help you find the best deal for your needs, and they can also protect your interests throughout the process.

If you are thinking about buying a home, I recommend that you use a mortgage broker. They can help you find the best deal, and they can also save you time and money.

To see your options, fill in the enquiry form or call Origin on 1300 30 6767

How to Get Ready to Apply for a Mortgage in Australia

July 28, 2023

Buying a home is a big decision, and getting a mortgage is a big part of that process. If you’re thinking about buying a home, it’s important to get ready to apply for a mortgage as early as possible. Here are some tips on how to do that:

Get your finances in order. This means having a good understanding of your income and expenses, and making sure that you have a good credit score. You can get your credit score for free from a number of websites, such as MyCreditfile or Equifax.
Start saving for a down payment. The more money you have saved for a down payment, the better your chances of getting approved for a mortgage and getting a lower interest rate. A good rule of thumb is to have a down payment of at least 20% of the purchase price of the home, however you can protentially borrow upto 95% of the purchase price.
Shop around for a mortgage lender. There are many different mortgage lenders out there, so it’s important to shop around and compare rates and terms. You can use a mortgage calculator to help you figure out how much you can afford to borrow and how much your monthly payments will be.
Get pre-approved for a mortgage. Getting pre-approved for a mortgage will give you an idea of how much you can borrow and what your monthly payments will be. This will make it easier to make an offer on a home, and it will also give you peace of mind knowing that you’re approved for a mortgage.

Once you’ve done these things, you’ll be ready to apply for a mortgage. The application process can be a bit daunting, but it’s important to be prepared. Here are some things to keep in mind when you’re applying for a mortgage:

Gather all of your paperwork. The lender will need to see proof of your income, your expenses, and your assets. You’ll also need to provide your credit report.
Be honest about your finances. The lender will be able to see all of your financial information, so it’s important to be honest about your income, your expenses, and your debt.
Be patient. The mortgage application process can take a few weeks or even a few months. Be patient and don’t give up.

If you follow these tips, you’ll be well on your way to getting a mortgage and buying the home of your dreams.

Additional tips:

Get a copy of your credit report from major credit bureaus. This will help you identify any errors or inaccuracies that could be affecting your credit score.
Check your credit report for any late payments or collections. If you see anything that’s incorrect, dispute it with the credit bureau.
Talk to a mortgage broker. A mortgage broker can help you compare rates and terms from different lenders, and they can also help you through the application process.

If you would like to discuss your individual situation, call 1300 30 6767 or fill in the enquiry form on this page

Avoid a Property Disaster – Secure Pre-Approval for Your Peace of Mind

July 24, 2023

Introduction

Are you planning to invest in property or looking to buy your dream home in the near future? If so, getting your finance pre-approved should be at the top of your priority list. Pre-approval offers you the confidence and security of knowing exactly how much you can borrow from the bank. In the current market, where opportunities can arise swiftly, having pre-approval is more crucial than ever. In this article, we’ll explore the importance of pre-approval and how it can save you from potential property-related disasters.

The Power of Pre-Approval

Imagine this scenario: a fantastic investment opportunity or your dream home comes onto the market, but you are not sure how much the bank will lend you. That uncertainty can quickly turn into missed chances and disappointment. However, by arranging pre-approval with a bank, you can avoid such situations and enjoy several advantages:

Confidence in Budgeting: Pre-approval provides you with a clear idea of how much the bank is willing to lend you. This allows you to set a realistic budget and prevents you from overcommitting or missing out on a great opportunity due to hesitation.
Longer Window of Opportunity: Typically lasting for 90 days, pre-approval gives you ample time to search for the right property without worrying about changes in interest rates or borrowing conditions.
Competitive Edge: In a competitive market, sellers are more likely to consider offers from buyers who have pre-approval. It shows that you are a serious buyer with your finances in order, which can give you an edge over others who are not pre-approved.

Examples of Pre-Approval Success

Let’s take a look at some real-life scenarios where pre-approval has been a game-changer:

The Limit Buyer: A single professional with an exemplary credit history is eyeing a property at the upper limit of his borrowing capacity. With pre-approval, he gains the confidence to bid at auctions, knowing precisely how much he can spend.
The Charitable Couple: A young couple working in the For Purpose sector faces unique challenges with their salary packages. Different banks assess tax-free components differently for employees in their industry. Pre-approval ensures they find a bank that will lend them the right amount.
The Forever Home Seekers: A mature-aged couple looking for their forever home need to find a bank that appreciates their financial position and is comfortable lending to older applicants. Pre-approval helps them identify the right bank before making an offer.

Not All Banks Are Equal

It’s essential to note that not all banks have the same lending criteria. Some may not lend to individuals on job probation, for properties like lifestyle farms or small units, or to casual employees. Failing to secure pre-approval and choosing the wrong bank could leave you in a tough spot. But fear not, we’re here to help!

Conclusion

Getting your finance pre-approved is a proactive step toward securing your financial future and avoiding property-related disasters. With pre-approval, you gain the confidence and clarity needed to navigate the real estate market successfully. So, whether you’re an investor looking for profitable opportunities or a homebuyer seeking your forever abode, don’t hesitate to arrange pre-approval. For a chat about your finance and pre-approval options, feel free to contact Graeme at 02 9922 5055. Take control of your property journey and secure your peace of mind today!

Why now may be the time to buy – but be careful.

May 12, 2023

The property market is changing, creating opportunities for some and traps for others.Today I tried playing with Chat GPT and asked it to write my blog on the Sydney property market – and was amazed by the results!

“Now, we all know that Sydney is a fabulous place to live with its vibrant city life, beautiful beaches, and stunning harbour. And, unsurprisingly, the property market is always bustling here. So, what’s happening now?” it said as if Sydney’s streets were paved with gold.

Now, there’s no doubt that Sydney property investors have done well over the years. But a simple request to write about today’s property market produced gushing results.

Over the years, my clients have done well where they have made wise investments rather than just following the latest fad.

But, as we start to see the property market pick-up, many are starting to rush headlong into investments that could well be too good to be true. This week’s Australian ran an article stating “NDIS property promotions underplay the complexity of these increasingly popular investments”.

The article cautioned against gullible investors being blindsided by property spruikers.

And yet, at the same time, many economists are predicting growth in the property market – it’s just a case of choosing widely. This week we arranged finance for a young couple Sydney who have been clients for a few years who were wise-enough to sit out all the speculation that was occurring in the property market of Covid days.

Now they have worked out that, with interest rates almost at a peak, the market may be about to lift-off – so they have taken the plunge.

But I am also hearing other stories of project marketers flogging house-and-land packages to people who are on disability benefits and who hope to have enough income by the time the property settles in 2024. It may work out for them, but there’s a lot of risk.

There’s no doubt we are entering into a Brave New World. But that doesn’t stop us doing our due diligence before we buy.

If you want to talk more about your property and finance needs, please contact me on 02 9922 5055.

By Graeme Salt

Australia enters a two-speed property market

May 5, 2023

By Graeme Salt

For the rest of the year Australia will have a two-speed property market.

For those with strong incomes and healthy savings, Australia is a land of opportunity with a property market starting to rise.

But for others, trapped by high interest rates, there’s limited opportunity. For them – refinancing or buying will be tough.

According to Corelogic housing values look to have bottomed out, with Sydney now 3.0 per cent higher than the recent trough recorded in January according and CBA now predicts prices will jump 5 per cent this year.

If you’re looking to get into the market – this could be your chance.

However, at the same time, up to 880,000 existing homeowners will need to find hundreds, or even thousands, of dollars more each month when their fixed-rate periods expire this year.

According to NAB close to 40 per cent of their existing home loan customers would struggle to meet the lending criteria of a different bank.

Get ready for six months of bad news as households servicing a $550,000 mortgage will suffer an $891 increase in monthly repayments. And someone with a $1 million mortgage would have to fork out an extra $1,620 each month.

As a result, it’s hard to envisage a really buoyant market for some time.

Until interest rates fall, or credit policies ease, house prices are unlikely to rise significantly.

But the long-term prediction for housing remains rosy. With 400, 000 arriving here from overseas this financial year alone, demand for property remains strong.

The bell has been rung for the bottom of the market – where to next?

If you want to talk to me about your lending needs, I can be contacted on 02 9922 5055 or message me here

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