Cheaper Home Loans

The latest New Home Sales Report by the Housing Industry Association reveals that the number of new homes sold in Australia went up for the third successive month in March. After a 0.6 per cent increase in February, the number of sold new homes went up by 4.3 per cent. Sales of detached houses improved by 5.8 per cent though sales of multi-unit properties went down by a surprising ten percent.

The property market is still a long way to go to be considered at a healthy level, the increase in detached houses sold can be attributed to a steady official cash rate and the floods that affected Queensland.

In the first quarter of 2011, new home sales went up by five per cent. However, the improvement was preceded by weak figures during the last quarter of 2010 while total sales are still nowhere near the long-term average. Sales volumes of unit properties three months to March went up by 5.9 per cent while total new home sales were up by nine per cent in the same quarter as compared to the same quarter last year.

If you are looking to enter the property market, finding the right home loan is just as important as finding the right home loan, speak to an eChoice qualified home loan consultant to find out more.

Recent figures from the Australian Bureau of Statistics show that approved home loans in February fell by 5.6 percent to 45,393. This is much higher than the 1.5 percent drop predicted by economic experts. The February figures are the lowest number of approved home loans since February 2001. In New South Wales, home loans went down by a 14-year low 10.1 percent.

The housing market fell across the board and not just in Queensland wherein massive floods affected the area. The fall of the housing market in Queensland is just a part of why the property market fell in the rest of the country during February, it can be partly attributed to the last official cash rate hike by the Reserve Bank of Australia in November 2010.

It is logical that lower property demands will stem from higher interest rates and housing finance commitments have not improved much to turn the tide. Property market activity is expected to remain slow and the Reserve Bank would not want the property market and consumer spending to boost while the mining industry is surging as well.

The figures are reflective Queensland’s lack of improvement from the floods, the November cash rate hike is also hindering improvements. Queensland is expected to be on the way to recovery during the next few months.

Some of the figures show finance for new property construction went up by one percent while non-refinancing new homes went down by just 3.8 percent. In February, home loans in New South Wales and Victoria went down by 10.1 percent and 4.6 percent respectively. This causes some concern for the RBA for these two states have been steadily performing in 2010.

House prices in Brisbane are predicted to go down by as much as 10 percent in the following years if the nationwide price change remains flat therefore advice is do not sell if you don’t have to. The recent flooding in Queensland may have an adverse effect on the price of Brisbane properties especially those in coastal communities.

It is predicted that there will be a price drop in Brisbane over the next 12 months with low-lying areas the most severely affected. However, these predictions are a drop of 35 percent over a 12-month period.

The flood which affected approximately 15,000 homes, caused property valuers to re-assess the property values in the flood-stricken areas, with a decline of about 10 percent now expected.

While the national median price went up by 0.4 percent during the last quarter of 2010 to bring the price to $475,000, the median price in Brisbane went down by 0.5 percent in the same month to $435,000. Experts predict that Australian property prices will go down in 2011. House prices of properties outside Queensland may also drop due to fears of flooding but these would be isolated cases.

House prices in the major Australian cities are expected to be relatively flat. Meanwhile, the Australian Bureau of Statistics reports that national home prices went up by 5.8 percent in 2010.

There are also risks involved in vacant properties or properties where the lease is terminated. Also, property owners in the flood-stricken areas might find it hard to apply for property insurance. In the near future, the real estate market of Queensland will have its ups and downs with house prices going down but rental demand going up.

Property analysts say that first home buyers and investors will cause house prices to increase by about five percent next year. With residential property prices at a relatively stable level, a tight residential rental market and normal first home ownership levels, the real estate industry will likely experience growth in 2011.

House price growth will get pressure from increasing rental demands and higher income. Housing demand will be low during the first six months of next year though is expected to pick up after that. The slow movement in the market for the first half of 2011 is due to the latest interest rate increase by the Reserve Bank of Australia.

Increased rental fees will provoke investors to put up more residential properties. There are forecasts of an annual house price growth within the five to eight percent range. Investor finance is also a major factor in determining the growth of house prices but succeeding interest rate increases can do damage.

There are three RBA rate hikes predicted for this year, one in April and the last two coming in during the second half of 2011. Meanwhile, the strong Australian dollar can drive many foreign investors especially Asian investors, away from the market. Darwin and Perth will experience strong growth with Melbourne and Sydney expected to post strong to average growth.

First home buyer activity will pick up during the early stages of 2011 but expected to still exhibit signs of caution. The improving economy and increasing wages will push the demand for residential property.

Home loans have posted the best gain in seven months, with the number of home loan borrowers increasing to a seven-month high, more borrowers are also opting to have fixed home loans. In the month of October, there were 49,307 mortgage applications this is a 1.9 percent seasonally-adjusted increase when compared to the numbers in September. This jump is way beyond the 0.3 percent increase that was predicted by economists.

Out of the total number of mortgages taken in October, 6.9 percent are fixed home loans. This figure is close to three percent better than the 4.4 percent fixed home loan proportion in September. The almost seven percent total in October is the biggest proportion of fixed home loans in a month since July 2009.

However, these numbers came in a time before the Reserve Bank of Australia lifted the official cash rate by 25 basis points to 4.75 percent. In reaction to the RBA’s increase on Melbourne Cup Day, the major Australian banks increased their interest rates beyond 25 basis points. After the cash rate increase and the interest rate increases by the big banks, economists predict that the percentage of fixed home loans will increase further.

First time home buyers are not confident in entering the property market, only making up about 15 percent of all the home loans approved in October. This percentage is the smallest number of first time home buyers since July 2004 and it may drop further when the figures for November are released.

However, the RBA did not move the 4.75 percent official cash rate in their board meeting this month and the cash rate will stay put for two more months as the RBA board will not meet until February 2011

In the third quarter of 2010, the building of residence went down by 6.1 percent to a decade- low, while construction also went down by 2.1 percent to $41.4 billion. The reduction in property construction and weaker demand for properties is due to the reduction of the government stimulus and property price growth.

However, there may be light at the end of the tunnel as the overall costs of construction for the third quarter of the year went up by a two-year high of 0.7 percent. Building activity in the private sector is expected to improve due to the rising economy while businesses will revert to the forecast before the global economic meltdown took place.

Yet, companies are still waiting until strong economic recovery takes place. Though the construction of residential properties is still weak, they have been planning aggressively for future projects. These construction projects are worth $42.4 billion which is 5.9 percent lower than the total during the first quarter of the year.

Though property construction has slowed down, the Reserve Bank of Australia is not worried for more projects are expected in the foreseeable future. However, the recent official cash rate increase by the RBA can bring a negative effect on construction and it would be better for the RBA to keep the official cash rate at 4.75 percent.

In an overall perspective, there should be a bright future for property construction as long as construction costs do not increase too much. Construction activity will pick up eventually due to the surging mining industry and steady population growth.

Property investors have been warned that it is necessary to have an independent and professional property inspection before buying a property so that the quality of the property can be checked. Weak properties can destroy the investment portfolios of self-managed super funds.

Without inspecting the property first, property investors will only find out about the structural issues of the property when they are already living in the place or renting it out. For individuals with self-managed super funds, they must seek the assistance of a professional to conduct property inspection to protect their finances.

Structurally weak properties can deplete self-managed mutual funds due to renovation and maintenance projects such as plumbing, faulty wiring, illegal building and termite infections that could potentially exist in a property. If a property is purchased as an investment, the owner would have to make the necessary renovations first before being able to rent it out therefore missing out on crucial rental income for a period of time.

Property owners are borrowing huge amounts to sustain fast property price growth, and recent data shows that only 36.2 percent of Australian households are debt-free up until the third quarter of 2010. This low percentage signifies that more Australians are living beyond their means.

While the household debt-income ratio is growing, the percentage of Australians that own their property outright is also at a five-year low of 37.5 percent. These numbers fuel the claim that Australia is in a property crisis. Escalating property debt is a point of concern that must be solved as soon as possible.

The average financial position of households was also in decline in the third quarter. People losing their jobs would be a frightening prospect at this point as financially many are already tightening their belts.

The Reserve Bank of Australia shows that the household debt-income ratio reached 159 in the second quarter of 2010. Ensuring you have the right home loan at this point and are paying the lowest possible rates on your home loan is particularly important at times like this.

Economists are predicting an increase in the RBA interest rate of 1.25 percent, households will be heavily affected by a surge in mortgage repayment prices. Households might struggle to keep up with higher repayments if they are in a position where they have just enough money to live.

Though the increased debt is a point of concern, a steady labour market makes debt a noteworthy problem but not a worrying one.

Purchase activity in the property market reduced a considerable amount when the first home buyers grant was discontinued though new homes are on the rebound. A recent forecast reveals that there was a 16 percent rise in new properties in New South Wales as well as a country-wide increase in construction of new properties.

Property Investor activity increased despite the scrapping of the First Home Buyer Grant in 2009, though the volume of first home buyers went down by 50 percent in the early part of 2010. This brought a stalemate in property price growth. However, residential property markets, especially the demand for new properties, have bounced back.

The resurgence of new home buyers is vital in the construction of new properties and it is expected that in the next 18 months, property demand will rise gradually. At the end of 2010, they are seeing a first home buyer demand recovery as well as continued improvement in 2011.

National residential property construction is expected to rise with the majority of construction coming in the form of medium or high-density projects in New South Wales. Property construction is NSW is coming from a low standpoint. In 2008-2009, only 23,688 new homes were built and it matches the lowest levels since 1953.

In the present year, property construction increased by an average of 34 percent to 31,750. In the state of Victoria, the level of construction last year was above the projected demand level because of the mild effects that the state incurred in the economic downturn of 2008. Also, most of the property growth in the state is in its regional areas.

Property construction in Victoria went up by 27 percent over the past year to 53,350. This is Victoria’s highest rate of property construction ever. Also, the stable interest rates since May 2010 are likely to stay put until March 2011. However, the standard variable rate may increase to 7.8 percent by the end of next year.

Due to the tight rental market conditions, profit surpassing property prices is most likely. For the next three years, rental growth is expected to be within six to eight percent per annum. At present, the major cities of Sydney, Canberra, Melbourne and Adelaide have vacancy rates of lower than 1.5 percent.

Basic standard variable rates provide flexibility for your home loan repayment. Being totally dependent on the market interest rate, the repayment in a standard variable home loan can either increase or decrease. However, this variability might affect loaners who have properly delegated their budget.

This kind of home loan offers flexibility, low fees and moderate interest rates. This type of deal lets you trade flexibility and low fees for a slightly lower interest rate. Also, your repayments are reduced if the official interest rates depreciate as well.

Other useful standard variable rate features include a direct salary crediting, redraw facility and portability options. However, a number of basic variable loans do not include offset accounts or a split loan facility. Also, the account keeping fees for standard variable loans and its redraw fees are usually higher as compared to other loan types.

There are hundreds of home loan lenders out there offering standard variable packages in different terms. If you would like to compare these, visiting each of these companies’ web pages might take some time. To save you the hassle, Cheap Home Loans has compiled the standard home loan variable rates of the most prominent home loan lenders.

Their rates are shown in table form and it contains all the basic information that you need to know. Shown in the table are the home loan’s product name, interest rate, comparison rate, upfront fees and ongoing fees. The comparison rate is a government-specified rate that considers the interest, fees and charges that you would pay on a $150,000 loan over 25 years

Therefore, you need not surf hundreds of web pages to find the best deal for you. However, you must confirm with a home loan consultant if the price stated here has not changed. A home loan consultant can help you pick the best home loan according to your budget concerns.