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Most Australians indicate their biggest life goal is a financial one

Most Australians indicate their biggest life goal is a financial one, but many admit failing to plan is a roadblock.

Popular dreams and aspirations

Interestingly, nearly half of all Australians recently surveyed said they dreamed about the future every few weeks, with people’s major life goals including things such as:

  1. Full financial freedom and independence – 59%
  2. Having the lifestyle of their choice – 58%
  3. Being able to pursue interests and hobbies – 50%
  4. Having more free time to spend with loved ones – 43%
  5. Having a family – 19%.

Let Strategic Investor Group remove the roadblock and help you reach your dreams and aspirations.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

How much is it costing you for being loyal to your Bank?

What’s your bank loyalty worth? The better part of $5 billion a year. Well that, of course, is what it’s worth to the banks – what it’s theoretically costing existing customers who don’t shop around.

What it quantifies for the first time is how much more banks are prepared to discount interest rates for new customers, compared with what they charge their existing, loyal customers.

The RBA’s analysis of the securitisation numbers clearly shows how keen the banks are to attract new mortgages. The average outstanding loan is itself at a substantial discount to the advertised rates, but new loans – those taken out over the past three months – are more than 30 points cheaper again.

The bottom line is that, on average, we end up paying about as much as the RBA wants us to pay for money. To make up the average though, people on higher incomes with bigger loans who shop around pay substantially less than trusting, loyal customers

While investor loans are more expensive than those for owner-occupiers, the discount offered for new business remains attractive.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

What are the Best Performing Property Markets over the past decade?

Sydney and Melbourne regions have experienced the strongest value growth over the past decade while the other capital cities have generally seen comparatively moderate value increases.

When analysing the regions with the greatest value increases, the top 10 regions nationally are all located in either Sydney or Melbourne. This highlights how much stronger value growth has been in Sydney and Melbourne relative to other capital cities over the past decade.

The top 5 list for each state and territory shows a significant slant towards capital city regions rather than regional housing markets.

Overall the data highlights the strength of value growth in Sydney and Melbourne over recent years. Furthermore, it details just how moderate growth has generally been outside of these two cities.

Strategic Investor Group is unashamedly Sydney centric and dedicated to assisting you find value for money.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Ask for a better interest rate on your mortgage

Almost half of all borrowers fail to ask for a better interest rate on their mortgage.

Of almost 1300 homeowners with a mortgage that were surveyed last month, 9 per cent didn’t know they could ask for a discount, while a further 36 per cent simply did not bother to ask.

For a lot of people, it’s a very daunting conversation to have, as there’s that chance of rejection. But if you don’t ask, you won’t get it, so it’s worth asking as you could save tens of thousands of dollars.

It costs banks a lot more to lose you as a customer, than to give you a discount.

It’s time to let Strategic Investor Group have the hard conversation with the Banks and source you the best possible deal.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

RBA finds property owners ‘more financially secure’ than renters

While the first step on the property ladder can be a bit of a stretch, those who make it are, on average, better placed.

Young Australians who bit the bullet and bought their first homes since the financial crisis – in the face of galloping prices – are more financially secure than previous generations and show fewer signs of being vulnerable to a downturn, the Reserve Bank of Australia has found.

In a potentially controversial study into what it describes as the “bittersweet” reality of home ownership, the Reserve Bank concludes that while saving a deposit “is a stretch” in today’s market, for those who make the step, they are better placed to pay off their loans than prior to the crisis.

The findings challenge the oft-heard warnings that recent first-home buyers are taking on more debt than they can afford, and will be left badly exposed in a downturn.

Households that manage the transition from renting to ownership – which the RBA says is becoming more difficult – end up “more financially secure than earlier cohorts” of first-home buyers.

“The underlying desire to become a first-home buyer has not changed since the financial crisis. However, people’s ability to, or comfort with doing so, has been affected.”

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Stable Economic Conditions Continue

Growth in housing debt has been outpacing the slow growth in household income for some time. To address the medium-term risks associated with high and rising household indebtedness, APRA has introduced a number of supervisory measures. Credit standards have been tightened in a way that has reduced the risk profile of borrowers.

The low level of interest rates is continuing to support the Australian economy. Taking account of the available information, the Reserve Bank Board judged that holding the stance of monetary policy unchanged at their most recent meeting would be consistent with sustainable growth in the economy and achieving their inflation target over time.

Regulatory changes have significantly changed how Banks assess your ability to service which in turn will impact your overall borrowing power. Should you have intentions to enter the property market sound professional advice is a must. We are here to help.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Comprehensive Credit Reporting System

Treasurer Scott Morrison recently announced plans to mandate a system known as “Comprehensive Credit Reporting” from the middle of next year, and the new requirements will apply to the Commonwealth Bank, ANZ Bank, Westpac and National Australia Bank.

“This will be a game-changer for both consumers and lenders, and will lead to greater competition in lending and naturally provide better access to finance for Australian households and small businesses,”

“If you have a good credit history – you’re paying down your mortgage, you haven’t missed a payment on your car loan and your credit cards are under control – you will be able to demand a better deal on your interest rates, or shop around, armed with your data.”

As well as sharpening competition, comprehensive credit reporting could result in a move towards risk-based pricing, whereby lower-risk customers pay a lower interest rate.

Don’t delay in assessing your individual circumstances to ensure you can take advantage of the impending changes.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Growth of the Housing Stock

Reserve Bank Board Members observed that residential construction appeared to have plateaued, with dwelling investment largely unchanged in the June quarter. The pipeline of work already approved or underway was expected to continue supporting dwelling investment around current levels over the subsequent year or so; the peak of apartment completions was expected to occur during this period. At the current level of dwelling investment, the growth of the housing stock was expected to outstrip that of the population, as it had done in the preceding few years.

Financial market pricing continued to indicate that the cash rate was expected to remain unchanged during the remainder of 2017, although expectations of a rate rise in 2018 had increased and a 25 basis point rise was fully priced in for the second half of 2018.

Don’t delay reviewing your own financial circumstances, ensuring you take full advantage of current favourable economic conditions.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Freshen Up Your Money Habits

We’re deep in the midst of spring, a season known for welcome warmer temperatures, new life and new beginnings, so it makes sense that now is a good time to freshen up your money habits.

By paying closer attention to your finances you might tighten your budget and make your money work harder for you.

Don’t put off reviewing your financial position. Your actions today will help influence your financial tomorrow.

When it comes to your money there is no ‘set and forget’.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Why are interest rates rising despite what the RBA does?

The global economy is looking better than it did a year ago. The turning point was around the end of last year. While it doesn’t seem to have picked up further recently, neither is this expansion a flash in the pan. That is positive news for the Australian economy.

When banks overseas raise their rates, lenders here suddenly face higher wholesale costs which are then passed on to customers.

This is one reason why Australian lenders have this year increased rates independently of the RBA’s strategy of keeping rates on hold.

As a nation, we are borrowing far more than we are saving so banks need to get funds to make up for the shortfall.

About a third of the major banks’ funding comes from the wholesale markets, almost all of it from overseas from countries like the US.

Although it is unlikely interest rates will rise in the short term, it is prudent to review your personal situation, to ensure you are protected should circumstances change.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group