Well the Commonwealth Bank started the year by announcing reductions in their interest rate discounts they have been offering on some of their products.

CBA were offering up to 1% p.a. discount off their standard variable rate home loan under their wealth package but have now reduced their maximum discount to 0.80% p.a.

Last week, CBA also announced they reduced the discount margin on their 3 year Special Rate Saver home loan from 0.31% p.a. to 0.21% p.a. which left a rate of 6.59% p.a.

The banks have been saying lately that their cost of funds have increased with the unstable economic conditions overseas, and because of the increased cost they could not guarantee they would be in a position to pass on further rate reductions announced by the Reserve Bank.

It was suggested in the media the banks may need to look at the heavy discounting war they have been engaged in for many months leading up to the end of 2011 so that if the Reserve Bank were to announce further interest rate cuts in 2012, the banks may be in a position to pass on those cuts (in full).

Has the CBA listened? It will be interesting to see what action the Commonwealth Bank take when the next interest rate reduction is announced (which could be as early as next month). In addition, what action the other banks take.

I am hearing from a number of real estate agents that there has been an increase in activity by prospective buyers at weekend properties open for inspection.

With a continued volatile share market, I think we will see people opting out of shares and investing more in the property market.

With property prices at levels not seen since the early to mid 2000′s, value for money is the key. Prospective buyers can see good gains are likely as and when the property market improves. With two recent rate reductions last year, first home buyers and investors see conditions right to make a move.

With further rate reductions being suggested, this will lead to an increase in affordability and more sales.

A lot of wealth has been stripped from our Superanuation Funds due to the volitile share market and I am hearing of retirees having to return to the workforce  just to make ends meet. I think we will see more workers opting into a Self Managed Super Fund (SMSF) and purchase property through their SMSF to take advantage of the current property prices and tax advantages that are available. Due to the strict governance of SMSF’s, anyone thinking of managing their own fund need to obtain legal and financial advice from qualified practitioners that a SMSF will be a good stratergy for their future retirement.

Please do not hesitate to contact me should you wish to discuss any of the above.

For me I have experienced an improvement on 2010.

The most noticeable sector was the return of the First Home Buyers and I am now seeing Investors tipping their toes in the water for a look see.

Interest rates had been stable for 12 months then in November and December of this year we received early Xmas presents with the Reserve Bank dropping official interest rates.

November delived the news that the Gold Coast is to host the 2018 Commonwealth Games which will bring a much needed stimulus to our sluggish economy.

We are now hearing with the ongoing European financial woes that there is a good liklihood that interest rates will drop even further in 2012.

That in itself will further improve confidence in our economy.

We do hear that the banks may not be in a position to pass on further interest rate cuts in full when handed down by the Reserve Bank but I don’t think that will have an negative effect.

So long as consumers see interest rates won’t be increasing too soon I believe we will continue to experience an improvement in our property market.

Driving along Hedges Avenue since the weekend I have noticed a number of ‘SOLD’ signs have appeared.

Personally, I have received 4 new purchase contracts since the weekend to arrange finance for the buyers plus another 3 ‘pre-approval’ loan applications in the last week for clients looking to buy in the new year.

All in all, things are looking positive heading into 2012.

With that said, I will be out of the office from COB tomorrow December 22 and returning January 3. I will still be monitoring all files still in progress while away.

I would like to take the opportunity to wish everyone a very Merry Christmas plus a Happy and Prosperous 2012.

Till next year, stay safe.

DR

The market under $1 million is strong due to first home buyer and investor activity but the prestige sector still lags. We need to see unemployment down, retail spending up, a resolution in Europe, improved bonuses and a good consistent quarter on the stock market for the prestige sector to move.

Australian buyers don’t need to see a lot of price growth to regain confidence, they just want to know that home values have stabilised and now’s the time to buy and I think there’s a good chance that will happen in the first half of 2012.

To view John’s Market Review in full click here

Interest rates are on the way down……………..

The Light Rail Project will be completed on time………………

Ron Clarke will be Mayor till he is 90…………….no hang on, getting a little carried away there!!!!!

But what great news for the Gold Coast. This is just what the doctor ordered to help kick start our ailing economy.

Having close ties to the Gold Coast real estate industry, I get out and about most weekends visiting properties ‘Open for Inspection’ with a number of real estate agents.

For the majority of the properties I visit there are few inspections and I see first hand the state of our property market.

Then I talk to our Head Auctioneer who regularly travels to Sydney and Canberra. He says the agents are complaining down south about the state of their property market yet they generally have big numbers to their ‘Open for Inspections’…….to the extent they require a couple of agents on hand to manage the visitor numbers.

Having said that, I know interest rates and the Commonwealth Games announcement had nothing to do with it, but last week I had the busiest week (and it continues to be busy).

Nine new deals lobbed on my desk with further new enquires coming in this week.

Good to see an increase in activity from first home buyers plus buyers returning to the market after exiting at the height of the GFC.

Also seeing activity in the investment market.

As I said, I tend to think it all just a coincidence at this stage after all the encouraging news over the past couple of weeks, but maybe…just maybe……we may start to see a little improvement over the next 6 to 12 months as we hear new projects being announced to cater for the 2018 games.

Competition between the banks for a bigger share of the business is still happening with a couple of lenders announcing cuts to their fixed rates.

3 year fixed rates at 5.99% p.a.

It would appear that for the medium term, banks consider interest rates to remain down.

Receiving some good service from a couple of the banks of late.

Lodged a deal with ANZ a couple of weeks back and had an unconditional back within 24 hours.

Another deal lodged with CBA last week which was just a little complicated having a guarantor plus multiple securities yet the bank was able to provide an unconditional approval within a week.

Yet I hear of Contracts of Sale ‘subject to finance’ needing extention after extention.

There are lenders and ‘there are lenders’.

Before buyers use the services of a broker, they need to ensure the person they engage has the experience to process the deal quickly and efficiently.

There are broking groups out there who sell franchises to interested parties ‘no experience necessary’.

I’ve been in the industry over 35 years and I still learn something new each day.

Till next time…………..HAPPY DAYS!!!!

Lately I have had a couple of instances where I have been left a little bewildered by the service provided by a couple of bank BDM’s who are always looking for broker business yet the actions of that BDM can destroy any prospect of being considered as a potential lender for my clients.

It all comes down to delivering a service.

BDM number 1 made an appointment to meet then rescheduled then didn’t turn up nor phone to advise she couldn’t make it. That happened another two times. That particular BDM is now looking for new employment.

BDM number 2 after a couple of follow up phone calls hasn’t delivered the service promised.

As I say, it has left me a little bewildered.

On a brighter note…………it does pay to maintain contact with former clients no matter how long it has been since assisting them.

I just received a phone call from a former client I arranged finance for 12 years ago. As part of my ongoing client management, I send birthday cards plus 6 monthly letters to update clients with any relevant lender news. I sometimes question myself at what stage after assisting a client do I stop the communication if I don’t receive a new request for assistance.

Well that question has now been answered………..NEVER STOP CONTACT………..

What will be the outcome of the Reserve Bank meeting on Tuesday (Melbourne Cup Day)?

My punt is that we will be given a rate reduction………….will it assist with a turnaround in buyer confidence for the Gold Coast property market? I don’t think so. There are too many other factors which are affecting our market at present.

Just look around. It scares me to see so many shopfront businesses closing their doors in prime highway positions just in and around the Mermaid Beach area. I went to Pacific Fair on the weekend for the first time in a long time. It was quiet. A couple of years ago it would have been bustling with shoppers. Not these days.

Is it going to get better? Yes it will.

How long will it take? Not in the short term. I don’t expect to see a turnaround for a few years. I’m thinking at least 2016.

Have we reached the bottom of the market? I don’t think so but I do believe we are close.

Am I being negative? No, just realistic. We have been through and are still experiencing one of the worst global economic downturns in history.

Do I believe this to be a good property market to buy in? Definitely. Great value for money at the moment.

Is this a good market to be selling? No but everyone has their own circumstances. If you are looking to downsize and sell then buy in the same market, what you loose on the way out hopefully will be compensated in the future.

I would be interested in your thoughts. Please do not hesitate to leave a comment.

If one lender says you can only borrow ‘x’ amount but you need to borrow more, do not dispair, there may be a lender who can assist.

Here are some examples:-

• A single person on $40,000 p.a. with no other debts, the difference in borrowing power just between the 4 major banks is $30,000. That figure is higher when comparing the 30 lenders we have on our panel.
• A couple with a joint income of $125,000 p.a. will find a variance of $70,000 in borrowing power just between the 4 major banks (that figure is $224,000 when comparing all lenders on our panel)
• And again a couple on the same joint income of $125,000 with 3 children and liabilities consisting of 2 credit cards with total limits of $15,000 plus a car loan with a monthly repayment of $500, the borrowing power between the 4 majors has a variance of $103,000 (a $166,000 variance between all the lenders on our panel).

In addition to the variances in borowing power, lenders policies also vary when considering

• Employment
• Savings history
• Lenders Mortgage Insurance
• Definition of Self Employed
• Rental Income
• Income verification

and much more.

In my 30+ years in the finance game I have never seen competition between lenders so fierce. 

• Interest rate discounts
• Application fees
• Rebates to refinance from one lender to another

If you have any queries regarding finance, please do not hesitate to contact me.

Their centre of attention at the moment are fixed rate home loans and more precisely the 3 year fixed rate. It wasn’t too long ago 3 year fixed rates were in the mid 7′s and now we are seeing them as low as 6.39% p.a.

So do you fix, go with variable or maybe a combination?

The fixed rate looks very attractive but surely the banks aren’t offering such low rates in comparison to the variable rate if they aren’t going to make money.

Generally if the banks are reducing their fixed rates they are of the opinion that variable interest rates will be on the way down.

It’s a decision that any borrower needs to consider seriously. I see the variable option is still the most sought loan. I think borrowers see variable rates coming down sooner rather than later.

Away from interest rates, I have been researching lenders for rural lifestyle properties up to 8 hectares plus. It appears the majority of lenders will only consider this style of property (no town water) to a maximum of 70% of purchase price, however I have a lender who will consider lending up to 95% of the purchase price with interest rates from 6.44% p.a.

Yesterday I had a visit from a bank BDM to give me an update on their offerings.

If a borrower is a professional in the medical field, namely doctor, dentist, veterinary surgeon, optometrist etc and looking for finance up to 90% of the purchase price, the bank will waive Lenders Mortgage Insurance if the borrower is able to provide proof of membership to their professional association (e.g. AMA). This can be a substantial saving. This is an offer not widely advertised in the market place.

Lenders these days are unlikely to offer a 30 year loan term to an owner occupier over the age of 55 if they have no other property. They are likely to reduce the loan term to expire at age 75 which may cause the loan not to service for the reduced loan term. I have a lender who will consider a 30 year loan term for applicants up to the age of 60.

Borrowers who are tight on servicing may have better success with one of my panel lenders who will allow income from boarders in an owner occupied property. The lender will consider income from boarders of $100 per week per spare room in the dwelling.

The greatest joy I get from being a mortgage broker is helping young people to purchase their first home. As we all know the days of no deposit home loans are gone however there are options out there that may assist first home buyers.

Such options are:

• Parental security support (no deposit may be required)
• A shared purchase (with friend/s)
• 95% loans with no genuine savings as a deposit

First Home Buyers deserve a chance and are needed to keep our real estate market active.

With competitive interest rate offerings together with additional government assistance for new properties (for a limited time), now is the time for First Home Buyers to seriously consider that property purchase.

It costs nothing to chat so if you have any queries regarding any of the above or any finance matter, I’m just a phone call away.

Cheers

I have been saying for some time now that I do not expect interest rates to go up this year however recent inflation figures suggest we can expect interest rates to move up sooner than later.

The Reserve Bank has left interest rates on hold again this month plus expressesing further concerns regarding rising inflation.

Given banks have been relaxing credit criteria, consumers have shown restraint and demand for credit has not increased.

Even with this latest reprieve, the demand for credit is not expected to change with speculation about future increases being touted.

As much as I dislike media releases warning that an interest rate rise is around the corner, it puts us all on alert to prepare for an added expense. But on the other hand it doesn’t help restore confidence to get consumers spending again.

The global economy is so fragile no one knows what lies ahead. It changes from week to week.

Just as banks are offering bigger interest rate discounts to entice new customers (up to 1% p.a. off the standard variable rate), retailers are also enticing customers with ongoing specials. For those currently cashed up, times have never been so good. Not to mention the strength of the Aussie Dollar.

Consumer group Choice is suggesting borrowers join their group ‘the big bank switch’ in an endeavour to force banks to offer larger discounts for the little guy.

Banks offer interest rate discounts based on the amount borrowed and the percentage of the property borrowed (Loan to Value Ratio – LVR).

The higher the loan amount and the lower the LVR the larger the discount. As much as it is worth a try, I don’t see banks providing higher discounts other than what they currently have on offer.

Banks want new business and are offering a number of incentives to encourage it.

I recently had a client call me who I had arranged finance for a couple of years back to say he sees lenders offering interest rates lower than what he currently pays. By his calculations he could save over $100 p.m. by going elsewhere. I could have run with the idea and arrange a refinance for the client elsewhere and make a good earn but instead I offered to approach their current lender to seek a reduction in their interest rate which would cost them nothing.

The bank concerned agreed to the interest rate reduction based on their current rates on offer for new business, no questions asked.

Banks don’t want to loose business, especially good business.

There is no need to join a group. Just ask the question of your bank what they are prepared to do to retain your business. You may be pleasantly surprised.

If you would like me to do it on your behalf, feel free to contact me and I would be happy to do so at no cost.

A very easy process.

Not every one will get the response they want but it is worth a crack.

As of August 1, Queensland no longer has the stamp duty concessions it enjoyed for so long. July saw a number of buyers taking advantage of the stamp duty concessions before they were abolished. What flow on effect that will have is not known. I would think a number of those vendors last month may sit back and observe the market for a while and see what bargains await to compensate for their reduced sale prices on what their property was previously worth in the good times.

If you wish to discuss any aspects of the above please do not hesitate to contact me.

She sold her investment property plus her shares and invested her funds in Gold and bank deposits.

We were talking about 12 months ago and told me how dissappointed she was that I had not read what she had given me.

She sold at the peak and bought gold at around US$700 an ounce.

The gold price this morning was around US$1,570 an ounce. I heard recently gold is expected to reach US$3,000 an ounce.

Will it reach those heights? It appears to be the shining star in respect to investments.

A client of mine who purchased a property 2009 is seeking to top up his current loan to access funds to renovate an investment property he has. As far I saw all looked fine until the valuation came back this week on his property. The bank valuation which I obtained for a different transaction in January 2011 was $380,000. Since then the client has spent $10,000 renovating the property. I received a bank valutaion again this week on the same property which came in at $330,000.

Surely we have reached the bottom of this residential property decline we have been experiencing over the past 3+ years.

I still believe we will experience a turn around in 2012 and will be revelling in residentail good times again by 2016. Sounds a long time away but trust me it isn’t.

I have noticed increased activity over the past couple of weeks with potential buyers seeking to get their finance in order to take advantage of the low property prices currently on offer.

Banks are still competing for a share of the lending pie offering all sorts of discounted interest rates and the waiver of application fees and ongoing fees.

Fixed rates continue to fall also with 3 year fixed rates being offered by a couple of lenders under 7% p.a. Not that I am a fan of fixed rates, but when I see fixed rates coming down, it usually shows the banks long term view to be that interest rates in general will remain down.

Have a great weekend.