Servicing Melbourne, the Mornington Peninsula and wider Victoria
Welcome to our hot February edition
Interest rates have again dropped so I have included a couple of articles that deal with opportunities and issues arising.
The rate drop and other pressures on house values are good news for some. First home buyers may not get a better time to enter the market so if you have young family who are renting or still at home they may want to read the second article.
Best wishes for the year ahead.
Regards - Adrian Williams
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Feb 2009 Issue 04
Interest rates - another drop
Once again, the RBA have, as widely predicted, lowered the official cash rate this month and the inevitable round of bank announcements concerning the consequent decrease in their respective variable interest rates has begun. While this provides further relief for those with variable interest rate loans and thus is cause for celebration, it does not signal the end of the continuing problem of tight funding availablity for many banks and thus credit policies remain tight. In the past couple of months we have seen the withdrawal of many 100% home loan products, had one of the major banks even reduce maximum lending to 90% and found many banks placing more restrictive assessment measures on loan applicants. We are pleased at Lightning Fast Home Loans to have been able to assist a number of clients recently in obtaining a loan approval that would have been difficult for them to obtain otherwise
It does appear that at least one further decrease in variable rates is nearly certain in the short term and this provides the catalyst for giving thought to what strategy to best employ if you have more disposable income and are now able to afford higher repayments than may be required for your loan. It is a good time to make advance payments and thus reduce interest payable on your home loan. This will also create an opportunity down the track to redraw these “advance funds” for a major purpose, perhaps take a repayment pause (which can be especially helpful if you are having a child, travelling for a period, incur some other one-off large expense etc), or perhaps establish further savings to use as a deposit for an investment property purchase. Whatever your goals may be, we are happy to provide advice and assistance to best position you for the future and invite you to call 9417 4918 or email admin@lightningfasthomeloans.com.au to discuss any of these options.
We are always happy to help in this regard.
First Home Buyers - a great time to consider a home purchase
Why is now a good time to buy for first home buyers?
There are three great reasons to consider taking the plunge into home ownership:
- The First Home Owners Grant (FHOG) ends in July 2009
- Interest rates are now at an historical low
- Housing prices are softening
FHOG to end soon
The First Home Owners Grant (FHOG) ends in July 2009 unless the Federal Government decides to continue the additional benefits in the May budget.
The First Home Owner Grant from the Federal Government was enhanced by the establishment of the First Home Owner Boost Scheme late last year and this currently has a sunset clause of 30 June 2009, so contracts have to be signed before that date to be eligible for the extra funds. More...
Interest rates at a low point
Until the announcement from the RBA on February 3rd the underlying cash rate of 4.25% was the equal lowest found in Australia since before 1960; now with the further reduction of 1% to bring the cash rate down to 3.25%.
We are in new territory as far as the interest rate environment is concerned; this has meant a 4% drop in official rates since September 2008 and had the banks passed on this in full (which unfortunately they have not), the effect would have been to reduce interest payments on a $300,000 loan by $12,000 per year on an interest only basis, or by over $800 per month on a Principal & Interest basis. So right now that $300,000 loan would have a monthly repayment of approximately $1600 (about $375 per week).
If you would like us at Lightning Fast Home Loans to assess your specific circumstances, please call us or email your enquiry.
Housing prices are softening
You may have read or seen reports about the decrease in house prices across the country over the past year and listened to commentaries of predictions of further falls; the reality is of course that these are generalities and not specifically the case in all suburbs and towns, across all price ranges and with all properties, however the likelihood now is that you can secure a bargain for your new home compared to what you might have had to pay not all that long ago.
Will prices decrease further? It is hard to be sure – the current low interest rates and assistance for First Home Buyers as outlined in points 1 & 2 above, along with anticipated tax relief may well start to see improvements in some areas of the market and thus make this the best time to buy.
PRODUCT SNAPSHOT
Two lenders have provided new special deals recently – one will give you a 1.5% discount off the Standard Variable Rate for 12 months then revert to a 0.7% discount while the other offers you a 0.9% discount off the average of the big four banks’ standard variable rates before reverting to a basic home loan rate.
If these offers interest you, please contact us to see if they might be suitable for you.
Have you browsed our web site lately?
We have current articles on How the financial crisis impacts Australian homeowners, Fixed rate mortgages, Self-employed trying to get a loan, and a general article on how to Save Money On Your Home Loan, along with other valuable information. www.lightningfasthomeloans.com.au