House prices tipped to surge 15%, RBA hints at cash rate cut

Strap yourself in: Australian house prices are tipped to experience a mild COVID-19 dip before surging 15% over the following two years, according to some of the nation’s top economists.

And in more good news for homeowners, RBA Deputy Governor Guy Debelle has hinted at further reductions to interest rates, while not going into negative territory.

Both NAB and Westpac economists have been quick to jump on board the rate cut hype train, predicting the RBA could cut the cash rate by 15 basis points to a record low 0.10% as early as October.

But back to that tipped 15% price surge

Westpac’s Chief Economist Bill Evans and Senior Economist Matthew Hassan believe house prices are set to bottom out by June 2021 after a further 2.3% fall – which would mean a total fall of 5% from the peak in April.

But the good news is they’re tipping prices to bounce back hard and fast across the country.

Indeed, the duo expects national dwelling prices to “surge” 15% until mid-2023, or 7.5% per year, led by massive gains of 20% in Brisbane and 18% in Perth.

Sydney (14%), Melbourne (12%) and Adelaide (10%) wouldn’t miss out on the action, either.

If it plays out as predicted, we could see a cumulative increase in national prices of 10% from pre-COVID highs over a three year period.

“This recovery will be supported by sustained low [interest] rates, which are likely to be even lower than current levels,” Mr Evans says.

Such a rebound would also be assisted by ongoing support from regulators, substantially improved affordability, sustained government fiscal support, and a strengthening economic recovery.

Mr Evans adds the recovery would be further aided “once a vaccine becomes available, which we expect in 2021″.

Got your eye on a property?

For those who are confident in their financial circumstances at present, Westpac’s housing market prediction certainly makes it a tempting time to buy, especially if another RBA cash rate cut soon comes to pass.

So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to buy your first home and break into the market, get in touch today.

We’re here to help you find a loan that’s just right for you,  just talk to us ………..

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

More than a quarter of SME businesses knocked back for finance

As if small and medium-sized businesses weren’t already facing an uphill battle this year; now it turns out that more than a quarter were knocked back when they applied for finance in recent months. Here’s how we can help.

The latest Sensis Business Index – which surveyed 1,015 businesses in the first week of August – shows 26% of businesses that applied for finance over the past three months were knocked back.

The figure was worse in the bush with 37% of those applying in regional areas declined, compared to 25% in cities.

Additionally, fewer and fewer businesses are applying for finance.

The percentage of businesses that applied for finance dropped to 13%, down from 16% in March and 17% in December 2019.

How we can help

All of the above figures highlight the importance of having lending professionals like us guiding you through the process.

Here’s what small business lender OnDeck has to say in regards to its recent research on the importance of having a trusted professional to speak to while applying for finance.

“Our survey clearly highlights that SMEs place significant value on the input of a broker in the commercial finance process,” says Robbie Fidler, OnDeck Australia national broker channel manager.

“Brokers can act as a conduit between lenders and SME owners, providing the person-to-person link that is so valued across the SME community.”

Additionally, SME lender Scottish Pacific recently highlighted the important role brokers can play in helping businesses prepare for that September “cliff” you’ve probably heard about.

“When COVID-19 hit and JobKeeper and other initiatives were put in place, September seemed a long way away – it’s only a week away now, and small businesses need to act,” says Scottish Pacific’s General Manager for Victoria, Jane Starkins.

“We are having regular conversations with accountants and brokers who realise their clients need funding in place to pay expenses they have been deferring, including rent, asset finance, PAYG, superannuation and payroll tax.”

Ms Starkins adds that now is an ideal time for business owners to find new funding paths that harness the value of assets already in their business, such as their sales invoices or plant and equipment.

“Business owners are reluctant to extend their borrowings. They are busier than ever trying to navigate the COVID-19 environment, which means accountants and brokers have a crucial role to play in making them aware of other funding solutions,” she says.

Get in touch

If you’re a business owner needing finance solutions to get through the months to come, get in touch.

The sooner we can discuss your options with you, the better placed your business can be to avoid the September cliff and thrive beyond.   Just call us.

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA cuts cash rate to record low 0.25% amid COVID-19 outbreak

The Reserve Bank of Australia (RBA) has cut the cash rate to a record low of 0.25% following an emergency meeting due to the impact the coronavirus is having on the economy.

RBA Governor Philip Lowe said in a statement the move was due to the virus causing “major disruptions to economic activity across the world”.

“This is likely to remain the case for some time yet as efforts continue to contain the virus,” said Governor Lowe.

Governor Lowe added the cash rate cut would help support jobs, incomes and businesses so that when the health crisis recedes, the country will be well placed to recover.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3% target band,” said Governor Lowe.

Hasn’t the RBA already cut the cash rate this month?

That’s right. And ordinarily, the RBA board only meets on the first Tuesday of every month. But as we’re all well aware, these aren’t ordinary times so an emergency RBA Board meeting was called.

The RBA last held its regular meeting on March 3 and cut rates to 0.5% because it believed the coronavirus outbreak was going to hit the economy hard.

Want to know what this rate cut means for your home loan?

It’s worth noting that lenders don’t automatically reduce your monthly repayments when they drop interest rates.

With this being the second RBA cash rate cut this month – and the fifth since June 2019 – if you need some extra financial breathing space each month due to the coronavirus outbreak then please get in touch.

We’re ready to work through your options with you, whether you need to decrease or suspend your monthly repayments, looking to refinance or resize your home.

 

We’re here to help, just ask us.

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

RBA cuts cash rate to record low amid coronavirus concerns

The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.50% as the coronavirus outbreak impacts global financial markets.

RBA Governor Philip Lowe said the coronavirus has clouded the near-term outlook for the global economy and global growth in the first half of 2020 will be lower than earlier expected.

“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Governor Lowe said in a statement.

“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”

The RBA previously cut the official cash rate to 0.75% in October, which was the third interest rate cut in 2019.

Governor Lowe confirmed the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.

“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.

More rate cuts on the way?

AMP Capital’s chief economist Shane Oliver predicted the cut, and he doesn’t believe it will be the only cut in 2020.

“The coronavirus outbreak coming on the back of the bushfires is likely to see the economy go backwards this quarter which in turn is likely to push unemployment up further after the rise to 5.3% seen in January.

“Growth should rebound in the March quarter but given…we are so far from full employment and the inflation target, the RBA is likely to cut the cash rate again in the months ahead,” Oliver said.

Governor Lowe also hinted that more rate cuts could be on the way in coming months, saying the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.

“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.

Want to know what this rate cut means for your home loan?

With this being the fourth RBA cash rate cut since June 2019,  it can get a bit confusing as to just how much of these cuts your lender is passing on to you.

The good news is we’re following the market closely and will keep you informed.

So if you’d like to find out, then please get in touch – we’re here to help !

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First come, first served: first home buyer scheme now open

Applications for the new First Home Loan Deposit Scheme are now open, with 10,000 guarantees available to first home buyers looking to get a leg up into the property market.

Now, with 10,000 spots it might sound like you’ve got plenty of time up your sleeve to take advantage of the new scheme, but consider this: 110,000 Australians bought their first home in 2018.

So if you’re interested in applying for this scheme, you’ll want to put it at the top of your to-do list in 2020 and get in touch with us ASAP.

Back up a little. What’s this new scheme again?

Currently people with a deposit of less than 20% usually have to pay Lenders Mortgage Insurance (LMI).

But under the government scheme, first home buyers with only a 5% deposit could be eligible to purchase a property without  LMI.

Now, it’s important to note that this is not a handout – it’s simply a government guarantee.

But this guarantee can give first home buyers a “leg up”, says the federal government, as it could save you as much as $10,000 in LMI insurance.

Any more details?

The scheme commenced on 1 January 2020.

In order to be eligible first home buyers can’t have earned more than $125,000 in the previous financial year, or $200,000 for couples (and both need to be first home buyers).

More details on eligibility can be found here.

The property price caps

Below are the property price caps for each city and regional centre with a population over 250,000, followed by the price caps for the rest of the state.

– NSW: $700,000 (Sydney, Newcastle/Lake Macquarie, Illawarra) and $450,000 (rest of state)

– VIC: $600,000 (Melbourne and Geelong) and $375,000 (rest of state)

– QLD: $475,000 (Brisbane, Gold Coast, Sunshine Coast) and $400,000 (rest of state)

– WA: $400,000 (Perth) and $300,000 (rest of state)

– SA: $400,000 (Adelaide) and $250,000 (rest of state)

– TAS: $400,000 (Hobart) and $300,000 (rest of state)

– ACT: $500,000

– NT: $375,000

Get the ball rolling

If you’re considering purchasing your first home in 2020 but don’t have a 20% deposit saved up yet – get in touch.

We’d love to run you through this new scheme in more detail and, if you’re eligible, help you apply for finance with one of the scheme’s participating lenders

We have a range of home loans for degree qualified professionals to borrow up to 100% of the purchase price.   Just get in touch,  we’re here to help !

 

 

 

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.