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Understand What You Can Borrow

When you’re applying for a loan, it may be tempting just to speak to the financial institution you already bank with. The mortgage market remains highly competitive and it pays to seek alternatives.

Better still, consider using the services of a mortgage broker. A good mortgage broker has access to a panel of lenders and knows their lending application processes.

This will save you time and money and give you the best chance of getting the best possible loan when you need it. They will also be able to advise you on which loan is right for you, given your own personal circumstances.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Big Banks Royal Commission Jitters

Australia’s big four banks continue to manage multiple challenges including falling house prices, a regulatory backlash sparked by the royal commission, and higher funding costs.

A further challenge is that international funding costs have been creeping up in recent months – a trend likely to cost banks hundreds of millions if they are not passed on to customers.

Issues raised by the royal commission will make it much harder for major banks to raise their interest rates independently of the Reserve Bank. At some stage, however, an economic decision will need to be made.

How are you placed should interest rates rise sooner rather than later?

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Getting started in property investment

Some people get overwhelmed when considering a property investment and quit before they even begin. Reality is, property investing is relatively straightforward, especially when you partner with the right professional.

What does success look like to you? Property investors generally invest in property to secure their financial future or to be free to do what they want, when they want it.

Understanding the property market is the key to making the right investment decision.

Strategic Investor Group exists to create your unfair property advantage with advice regarding location, investment strategy, debt structuring and property acquisition.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Investor Mortgage interest rate payments rise despite no hike from the RBA

Australia’s banking and finance system delivers higher profits to only a few and rips off its most loyal customers, a Productivity Commission report has found.

The commission found loyal customers were “ripe for exploitation”, with one in two people still banking with their first bank. Only one in three have considered switching banks in the past two years, accepting interest rates on home loans up to 0.4 per cent higher than new customers.

Banks responded to orders from the Australian Prudential Regulation Authority to curb interest-only mortgages by raising interest rates – not just for new loans – but for all existing investor loans.

Now’s the time to seek professional advice and review your property investment strategy and mortgage interest rate.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

First home buyers on the rise

First home buyers increased their share of housing demand this quarter, hitting the highest level since 2011.

Overall, first home buyers accounted for almost two in five sales in new housing markets and around one in three in established markets.

Most of the first-time buyers were owner-occupiers rather than investors.

It is a trend expected to continue over the year ahead, with first home buyers, owner-occupiers and local investors tipped to increase their share as foreign demand continues to fall.

Now is a great time to obtain market-leading advice on your property investment strategy.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Area X-Ray – Was your last property purchase average?

Strategic Investor Group’s Area X-Ray classifies over 180 suburbs within a target 20km radius of Sydney’s CBD based on 16 key growth criteria. Suburbs are rated A, B or C based on this assessment.

Over the past 12 months, all categories within Area X-Ray have outperformed the broader Sydney market.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Global Monetary Tightening

Australian banks’ “continued reliance” on wholesale funding from overseas institutions may see pressure on local interest rates.

One reason is “global monetary tightening”, especially given the European Central Bank (ECB) is starting to wind back the massive monetary stimulus which it pumped into the European economy since the global financial crisis.

In addition, Fitch expects the US Federal Reserve to lift interest rates four times this year.

America’s official rate is currently sitting in the 1.25-1.5 per cent range, so even one rate hike would mean US rates would be more competitive than Australia’s (currently at 1.5pc).

Stable customer deposits are the Banks preferred funding source.

Should the Banks be unable to raise sufficient deposits they will need to access the more expensive option of global wholesale funds.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Cash Rate Unchanged

As expected the Reserve Bank has maintained official cash rates at the lowest levels ever recorded…

The official cash rate has now remained at 1.50% for twelve months and every indication is that prevailing market conditions will ensure the rate remains at these levels for some time to come.

Whilst the Reserve Bank continues to monitor other key economic indicators such as the Australian Dollar and underlying Inflation, it is hard to see the Reserve using interest rates as a leverage against these factors in the short term.

Many people continue to sit around waiting for things to change, in particular regarding a property purchase. However, the longer you wait, the more likely you are of missing out on today’s opportunities.

It is important to remain informed. At Strategic Investor Group, we are well placed to provide you with sound advice regarding property strategy, debt structuring and property acquisition.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group