
Hi All,
Well that was probably the quickest Winter I have ever known! Spring is here in full force with blossoms, pollen and hayfever!
The last several months have certainly been interesting with many things economic moving after the election and some certainty back in the housing market.
Real estate has seen some growth in the Canberra, Sydney and Melbourne markets probably buoyed by rate cuts and the affordability benchmark. Borrowing money in the last couple of years has been a difficult and lengthy process. The reductions in the cash rate back to a historic low of 1% has meant that borrowing rates were also very low. The recent reduction in the benchmark or servicing rate has also helped with borrowers being able to borrow more. That’s not to say you should though.
We have also seen some lenders bring some of their fixed rates into an unbelievable 2.99% for 2 and 3 years with one in particular going to 2.84% for 3 years fixed. BUT these rates are not for everyone. A question that I come across nearly every day is what is the best rate? It gets asked of me so much I made a little video on it. Click this link if you’d like to see it. JCFB-What is the Best Rate.
Banks right now are really focused on fixed rates, which usually says that they think we could have more rate cuts, and they want to lock away as many clients as possible. If you believe the media, then negative rates are also on the cards. While its possible it is also HIGHLY unlikely. Many of the big economic commentators are hedging for at least 1 more rate cut to come before the end of the year which would make rates starting with a 2, a mainstream reality, most home loans now should at least start with a 3! I think with the RBA holding their line on the cash rate again in September, it shows that they are very cautious about the housing growth figures and not wanting things to spike.
Fixed rates and when to fix has been a gambling story since time immemorial. Traders have always used them to know and guarantee a price. Sometimes you win sometimes you lose. I got caught with fixed rates in 2007. I fixed for 4 years, then the GFC hit and I was paying nearly 10% when the sky fell in.
Fixed rates are a way to guarantee certainty in your repayment, they can work well when used properly. If you look at a fixed rate and are comfortable with the repayment but know you can repay more then do it! The only thing you need to be careful of is not paying more than what that particular products limits are. Most fixed rates have an ability to repay between $5 and $15K extra a year. Every dollar makes a difference to you!
To me the big takeaway from all of this is that there has never been a better time to focus on reducing your home loan debt, as well as all your other debt. Use me to talk to your lenders.
In the last few weeks I have been doing much of this for clients. In the past many lenders wanted to give their sharp carded rates to ‘new to bank’ business forgetting about their loyal existing clients! In the last few weeks I have been able to speak to my client’s lenders and negotiate great rates without the need to refinance. Some lenders have not been so forward thinking though and have lost those clients forever.
There has been quite a bit in the new lately with the liberals introduction of the ‘clients best interests’ bill as well as quite a damming report from ASIC around their shadow shopping of Mortgage Brokers, which may have been a little one eyed.
I always believe that there is work to be done, ways to make things better. No industry is immune and striving to be better and create better outcomes is something that all professions should be focused on!
My seventh year in this business ticked over in July this year. I have spent a lot of time studying in the last 7 years including achieving my qualifications. I spend a lot of time working on educating myself better and to find better solutions for you my clients and the people you refer to me.
I hope this newsletter finds you all well. As always I am thankful for all of your referrals, I couldn’t do this without your support.
I am always here if you want to say 'hi' or get me to look at any scenario’s.
Justin
Comments