Alan Stott

Listen to "THE BANKS" Theme Tune....The Great Song Of Indifference!

I've got some established and really nice clients suffering hardship due to a combination of low pay and the ease of securing easy credit from the Bank Monsters and as a consequence, run away credit card debt.

My clients asked for help and got none! Mum and dad at the moment both have terrible flu, and don't know how they can keep pace with the growing debt due to interest compounding. They've got three kids and a dog and both of the parents have been put on reduced working hours in their respective jobs.

They rang me for advice when it was too late....Mum said that she was too embarressed to call me while the problem was building, BUT THAT IS EXACTLY WHAT SHE SHOULD HAVE DONE......BEFORE IT BECAME A MASSIVE PROBLEM!

I told her to talk to both banks "Hardship Department" who should help them to firstly control and then pay out their debt....they got the run around and zero help!

Well both "BIG BANKS" , I've found your social attitude in the words of this song by Bob Geldoff.....the lyrics describe you perfectly!

........I don't care if you live or die, couldn't care less if you laugh or cry, I don't mind at all!

........Couldn't care less if you sink or swim, lock me out or let me in, where you've gone or where you've been, I dont mind at all!

........I don't mind if if the govenment falls, implements more futile laws (carbon tax), I don't care if the nation stalls, I don't care at all!

CHECK OUT THE LINK BELOW!

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Rents rise while home values fall by 2.7 per cent in 201130 June 2011

RP Data – Rismark Home Value Index Release

Capital city dwelling values declined by 0.3 per cent (seasonally adjusted - s.a.) in May, and are down 1.2 per cent (s.a.) over last 3 months. Rest of State house values were also weak in May (-0.1 per cent s.a.) and are off -0.9 per cent (s.a.) over last 3 months. Gross rental yields for Aussie apartments are now 5.0 per cent.

Based on more than 110,000 home sales nationally in 2011, the market-leading RP Data-Rismark Home Value Index for Australia’s capital cities declined by -0.3 per cent (s.a.) in the month of May (or by -0.5 per cent in raw terms). Capital city home values have now fallen for the last five consecutive months with by far the worst seasonally-adjusted result coming in the month of January (-1.2 per cent), which accounts for 45 per cent of the 2011 decline.

The softening in Australian home values is delivering a valuation dividend with Australia’s dwelling price-to-disposable income ratio falling to 4.2 times, which is its lowest level since June 2003 according to Rismark’s analysis.

RP Data’s research director, Tim Lawless, added “For property investors, rental yields are also improving with RP Data-Rismark’s Index showing that gross Australian apartment yields have now risen to 5.0% (see chart). The best rental yields can be found in Darwin (5.7 per cent), Canberra (5.4 per cent), Brisbane (5.2 per cent) and Sydney (5.2 per cent). The worst yields are in Melbourne (4.2 per cent), Adelaide (4.6 per cent) and Perth (4.9 per cent).”

Over the three months to May 2011 dwelling values in Australia’s capital cities have retraced by -1.2 per cent on a seasonally-adjusted basis. In raw terms, dwelling values have fallen by -1.3 per cent. The quarterly rate of decline has, however, moderated since the end of March when home values were off by -2.0 per cent care of a flood-affected January.

Over the 12 months to end May, Australian capital city dwelling values are now down -2.3 per cent (seasonally-adjusted). If we just look at the first five months of 2011, Australian home values have stepped back by -2.7 per cent.

Across the capital cities performance has been varied and counter-intuitive to the purported resources boom. Sydney is the only market to have recorded a modest capital gain over the last year (up 1.0 per cent). Homes in Canberra have also held ground (-0.1 per cent over the year). All other capitals have slipped into the red, with some down by significant margins.

According to Tim Lawless, the two weakest results have been Perth, where dwelling values are down -7.5 per cent year-on-year, and Brisbane, which is off by -5.9 per cent over the year.

“After extraordinary capital gains in recent years, Darwin (-3.2 per cent) and Melbourne (-2.9 per cent) have also both experienced small corrections. Interestingly, in the last three months the laggards have again been Perth (-4.2 per cent), Melbourne (-1.8 per cent), and Brisbane (-1.4 per cent)” Mr Lawless said.

RP Data-Rismark’s Rest of State Index captures the 40 per cent of all homes not located in the capital cities. The Rest of State areas have had smaller peak-to-trough swings in value since 2007. Over the three months to end May, Rest of State house values were down -0.9 per cent and -1.4 per cent over last 12 months.

The national median dwelling price in capital cities is $470,000 based on sales over the three months to May. Sydney is the most expensive market, with a median dwelling price of $522,000 followed by Melbourne ($500,000). The cheapest cities continue to be Hobart ($315,000) and Adelaide ($382,500). In the Rest of State markets, the national median dwelling price is a far lower $325,000. Across all Australian regions, the median dwelling price is currently $420,000.

Reflecting on Australia’s patchwork economy, RP Data’s Tim Lawless commented, “Despite what appears to be fairly strong fundamentals, the Perth housing market doesn’t appear to be turning just yet. For a city that is recording rapid population growth, low unemployment and a large private capex boom, house prices have nevertheless been contracting since late 2007 after years of above average capital growth in the pre-GFC period. Today the critical missing piece of the puzzle seems to be buyer demand.”

The trend of premium markets taking the brunt of the market correction has continued, with the top twenty per cent of capital city suburbs ranked by price recording a fall of 3.9 per cent over the 12 months to end May compared with a fall of -0.9 per cent across the cheapest 20 per cent of suburbs and -2.3 per cent within the broad ‘middle’ 60 per cent of the market.

According to Tim Lawless the weakness across equities markets is likely to be an important factor affecting the premium housing market: “The S&P/ASX 200 Index remains almost 35 per cent below its November 2007 peak and the index is down 8 per cent since the start of April. The top end of the market clearly benefitted from the circa 40 per cent rise in share prices following the trough in March 2009. However, the recent share market weakness is affecting premium demand.”

Ben Skilbeck, Rismark’s Joint Managing Director, added, “Demand for Australia’s luxury homes has also been sapped by the surging currency, which has made local housing much more expensive for expats located in Europe, North America and Asian countries with US dollar currency pegs to buy. Financial markets are currently pricing in a decent chance of an interest rate cut over the next 6-9 months. If the RBA does indeed reduce rates, this would provide substantial support to the market. However, our central case remains that rates are heading up, not down, and thus we are not looking for any capital gains in 2011. That said, total returns will be boosted by very solid growth in rents, with gross yields in May now at 5.0% for Aussie apartments. Rental vacancy rates remain very tight, so we expect to see further improvements in rental returns.”

According to Mr Lawless, the soft market conditions reflect a weak level of consumer confidence across the country. “Consumers are well and truly focussed on saving, not spending. Despite the low rate of unemployment and the strength of the resources sector, it is clear that the average Australian is content to pay-down debt and wait for some economic certainty to return. As a consequence, transaction volumes in the real estate market are about 20 per cent below the five year average and listing volumes are about 25 per cent higher than what they were last year.”
Media enquiries contact:

RP Data: Mitch Koper, corporate communications manager

Rismark: Ben Skilbeck, joint managing director Key statistics, tables and graphs available in the PDF http://www.rpdata.com/images/stories/content/pressreleases/rp_data_rismark_home_value_index_jun_30.pdf(332kb).

Sydney in dire need of new housing

 

Friday, 17 June 2011

Matthew Sullivan Ten new suburbs need to be created each year in order to meet the growing housing shortfall across Sydney, leading property group Raine & Horne has claimed. According to the latest ANZ Australian Property Outlook, the average number of housing completions has declined by 25,000 per annum over the last decade. In 1999/2000 there were 51,500 housing completions in Sydney and just 25,500 in 2009/10. “Put another way, this shortfall equates to a failure to build the equivalent of up to 10 new Sydney suburbs per annum,” Raine & Horne chief executive Angus Raine said. On a more positive note, Mr Raine said the housing shortage combined with interest rate stability, increased immigration and low vacancy rates, will keep Sydney real estate front of mind for investors. Mr Raine is urging would be investors to buy sooner rather than later, and to consider quality homes that are handy to amenities such as shopping centres, schools, public transport and motorways. "If you find a quality home that ticks plenty of boxes, then it is a fair bet you’ll have secured a property investment that can potentially generate consistent cash flow and long term capital growth.”

Stuck with a lousy mortgage? Refinancing your loan could save you almost $14,000!

Your Investment Property Editor

14/06/2011 Home loan defaults are climbing across the country, but there is a way to relieve mortgage stress. Refinancing your loan could save you almost $14,000! An increasing number of Australians are falling behind on mortgage payments. Fitch Ratings reveals a 30% increase in arrears during the three months to March. While homeowners received another rate reprieve from the Reserve Bank of Australia in June, there is a way for borrowers to take matters into their own hands and significantly reduce their own mortgage stress. The latest issue of Your Investment Property’s sister title, Your Money Magazine reveals refinancing your mortgage can save you thousands of dollars over the life of your loan - and there’s never been a better time to consider your options. Over the last few months, lenders have been aggressively competing with each other in the home loan market in an effort to boost market share. A Mortgage Industry spokesperson Kristy Sheppard noted, “There are some highly competitive deals on the table for new borrowers just as there are for those looking to refinance. Get out here and get amongst it if you’re looking to enter the market. Take a good look around.” She adds, “Anyone who hasn’t at least explored their options could easily be giving themselves a raw deal by simply going with their everyday lender or ignoring the possibility of switching to a better suited or more affordable home loan.” Is it for you? Refinancing isn’t for every homeowner and there are a couple things you should look at before you consider what else is out there. Step 1: Review your loan – check your rate, fees and other costs              Step 2: Compare up-to-date information on what’s available in the market. Call us and we can provide you with suitable product options. When comparing loans, be sure to look beyond the rate. Other criteria that might be important to you: the comparison rate or AAPR loan flexibility loan support/service loan term Lenders Mortgage Insurance implications extra important features: offset account, redraw facility, professional packages  If your review reveals there is a better deal for you, then it’s time to look at the numbers. The best way to break it down is to make these calculations: How much interest will the new loan save? How much it will cost to get out of your current mortgage? How much it will cost to set up new mortgage? We can calculate the savings for you and provide you with a cost estimate and the best product options to suit your current and future needs. If the interest saved outweighs the costs to get out of your current mortgage and set up a new one, then refinancing could be the next best step. (Loan calculators and tools can be found here http://www.beatthebanks.com.au/calculators

Interest rates on hold for now

Your Property Investor Editor

10/06/2011 The RBA has decided to keep the official cash rate at 4.75% for the sixth month in a row. The decision comes as little surprise to observers who predicted that a sharp 1.2% fall in GDP during the March quarter would influence the RBA’s decision, and RBA governor Glenn Stevens admitted as much in his official interest rate decision statement. “The floods and cyclones over the summer have reduced output in some key sectors. As a result there was a sharp fall in real GDP in the March quarter, despite a solid increase in aggregate demand,” he said. He added that “close to target” inflation levels over the next 12 months were likely, raising hopes that rises will be off the agenda in the near-term, but economists are still tipping an August rate hike. In the meantime, the decision has drawn cautious praise from property industry insiders, with HIA senior economist Andrew Harvey calling it “a rare bit of good news amidst mounting pressure on home affordability and fast-declining activity in the residential building sector." “It just gives a touch of relief to those Australians paying off mortgages and also to those trying to enter the housing market, amidst the less predictable environment households face in the post-GFC era,” he added. The RBA’s next interest rate decision will be made on 5th July.

SECOND CHANCE FOR OLDER BORROWERS

31/05/2011 A decline in housing affordability and increased difficulties saving a deposit has shifted the average age of first home buyers upwards. In the 2010 Mortgage Choice First Home Buyers Survey, 55% of respondents indicated they will be aged 30 years or older when purchasing their first property. But older property virgins face another difficulty when it comes to securing a home loan – age discrimination. In an effort to comply with new responsible lending obligations, lenders have been rejecting middle-aged applicants who lack adequate superannuation savings. As a result, ASIC has stepped in to issue guidance for lenders asking them to loosen their credit policies.  "We are concerned by reports of older borrowers whose employment will reduce, or cease, before the end of the loan term, being refused loans because some lenders are adopting an unnecessarily restrictive approach to meeting the responsible-lending requirements," ASIC commissioner Peter Boxall said in a statement. He added that older borrowers often have a variety of assets other than those from employment which could be used to service a mortgage. Guidelines in the new National Credit Act came into effect 1 January this year. While the law has not changed, ASIC’s revised guidelines addresses lenders affirms older borrowers right to access credit. ASIC has updated RG 209 to include clarification that reasonable enquiries into a borrower's financial situation can reveal other means by which a loan can be serviced, even when there is no continued income stream. It has also provided new guidance on issues which should be considered by lenders when assessing a borrower's ability to repay a loan. Boxall said responsible lending should not keep people from securing housing finance on the basis of age. "The new responsible lending requirements in the National Credit Act are an important protection for consumers, but they should not be an inflexible barrier to credit for any segment of the population, and should not prevent consumers obtaining credit that they can reasonably afford."

Banks maintain market stranglehold

By BN | 01 Nov 2010

The latest statistics from the Australian Prudential Regulatory Authority reveal that the top four banks control more than 80% of the housing loan market.

Westpac, CBA, ANZ and NAB collectively own 83.3% of all owner-occupied housing loans in September – up 0.3% from August.

According to Senator Nick Xenophon, the high concentration reaffirms the importance of a Senate inquiry into the banking system. “The higher the concentration of the big four banks, the higher the fees and charges and more pressure on the consumers,” Xenophon said.

Home loans held by the major banks totalled $563.5bn – the total loan market is $700bn.

However, Smartline personal mortgage adviser Kevin Lee said lending institutions generally classified as non-majors - the likes of ING Direct, CUA, AMP, Citibank, Suncorp, Heritage and Adelaide Bank - are indeed making a comeback into the market, despite the figures.

"Pre-GFC my clients were able to access competitive loan products from around 40% of lenders that were not one of the Big Four banks," he said. "Unfortunately a major effect of the GFC meant that many of these alternate lenders could not get access to a reliable and consistent supply of new money from the wholesale markets."

However, Lee said "we could be currently seeing a return of competitors" without the need for government intervention. "For the second month in a row Smartline advisers across Australia have submitted approximately 30% of our loan applications to our 'non-major' lenders," he said. This compared with a proportion that varied between 5% - 10% during the GFC.

"Competition is back and I think the majors know it. Suddenly they're willing to negotiate interest rate discounts again. It's been a while since CBA and Westpac took that initiative," Lee said.

THE BIG FOUR JOIN THE PARTY!

ANZ and NAB join the party

By Luke Cornish | 07 Apr 2010

ANZ and NAB have fallen in line with Westpac and CBA and lifted the rates on their mortgages by 25 basis points.

NAB continues to have the lowest standard variable rate mortgage at 6.99% and is the only Big 4 bank to have one less than 7%. CBA is next in line with standard variable rate mortgages at 7.11%, followed by ANZ at 7.16% and Westpac with 7.26%.

The move by the Reserve Bank to increase rates 25 basis points is being heralded as a smart decision by economists who believe that getting the cash rate to a neutral setting will save much higher interest rates in the long term.

“This will help to contain growth and moderate inflation risks in an otherwise strong economic environment,” ANZ chief economist Warren Hogan said in an investor note. “Importantly, an early return to neutral monetary policy settings, that is, an level of interest rates neither stimulatory nor restrictive to overall economic activity, will reduce the risk of inflation and a larger increase in rates later.”

REFERER OF THE YEAR FOR 2008.....MICHAEL PATERSON! THANK YOU MICHAEL!

I would like to introduce and acknowledge MICHAEL PATERSON.

Michael is both a freind and a client, and is my most prolific business refererr.

As well as being a Solicitor, Michael Paterson is also a software developer and is actively involved in both the legal and computer industries. He has dual qualification in both disciplines: B.Sc. (Computer Science) LL.B. (Hons.) A.N.U. (1982-1986).

With his knowledge and practical experience in the computer industry, Michael Paterson has developed a niche practice area in computer, technology and intellectual property law. In addition, he regularly presents seminars on computer-related legal issues to various industry and professional bodies and gives guest lectures at Curtin University and Edith Cowan University.

Michael has been referring his clients and his staff members to me ever since I arranged his own personal and investment finance some time ago.

Thanks to Michael, I have quite a number of new clients, and I too have been able to refer my clients to him on a number of occasions when I have known about issues facing my clients and freinds.

Michael has advised and sorted out my clients on issues such as property leases, wills, enduring power of attourneys, property disputes and in establishing the owning entities of businesses and establishing family and unit trusts.

Thank you for the business you refer to me Michael. I appreciate your business and the confidence shown to me in referring your clients, freinds and staff member to me!

......and if you need a good solicitor or good legal advice, please give me a call and I will gladly put you in touch with Michael. 

RBA GOVENOR ANNOUNCES A 1% REDUCTION IN CASH RATE - LOWEST RATE SINCE 5TH DECEMBER, 2001!!!!

STATEMENT BY GLENN STEVENS, GOVERNOR
MONETARY POLICY

At its meeting today, the Board decided to reduce the cash rate by a further 100 basis points, to 4.25 per cent, effective 3 December 2008.

Recent actions by governments and central banks to stabilise their respective financial systems have begun to take effect.  Nonetheless, financial market sentiment remains fragile, as evidence accumulates of weak economic conditions in the major countries and a significant slowing in many emerging countries.  Commodity prices have fallen further.  This, combined with the likelihood of below-trend growth in the global economy, suggests that global inflation will moderate significantly in 2009.

The Australian economy has been more resilient than other advanced economies, but recent data nonetheless indicate that a significant moderation in demand and activity has been occurring. With confidence affected by the financial turbulence and a decline in the terms of trade now under way, more cautious behaviour by both households and businesses is likely to see private demand remain subdued in the near term. With that outlook, and with capacity pressures now easing, it is likely that inflation in Australia will soon start to fall. Global disinflationary forces will assist in this regard, though the depreciation of the exchange rate means that the decline of inflation to the target could take longer than would otherwise have been the case.

Weighing up the international and domestic developments of recent months, the Board judged that a further significant reduction in the cash rate was warranted now, to take monetary policy to an expansionary setting.  As a result of today’s decision, the cash rate will be at its previous cyclical low point.  Given trends in money market yields, most lending rates should fall significantly and will also reach below-average levels.

There has now been a major easing in monetary policy over the past few months.  Together with the spending measures announced by the Government, and a large fall in the Australian dollar exchange rate, significant policy stimulus will be supporting demand over the year ahead.  The Board will continue to monitor developments and make adjustments as needed to promote sustainable growth consistent with achieving the 2–3 per cent inflation target over time.

TO FIND OUT WHAT THIS MEANS TO YOU, GIVE ME A CALL ON 08 9240 1990