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29/06/2023

23/06/2023

Buffers and rates shrank borrowing capacity ‘significantly’: Domain

Dreams of owning a property may have been dashed due to high rates and serviceability buffers squeezing borrowing power, a Domain report says. Forecast Report Financial Year 2023–24 indicated that some borrowers may find it difficult to purchase a property due to the Reserve Bank of Australia (RBA) lifting interest rates by 400 bps since May 2022 and serviceability buffers causing the maximum borrowing capacity to “shrink significantly”.

However, this may lead to increased demand for more affordable housing options. The report suggests that if the RBA cuts interest rates in early 2024, borrowing power may increase, which could drive up housing prices. Reduced borrowing capacity may also make it difficult for borrowers to refinance, especially for those who bought properties near the peak of the market.

On the supply side, total housing supply has decreased in major cities, leading to increased competition among buyers and potentially stabilizing or improving prices. The report predicts a steady recovery in the housing market over the next year, with Sydney, Adelaide, and Perth expected to see positive price gains for houses, while Brisbane, Adelaide, and Hobart may experience growth in unit prices.

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22/06/2023

Australia's winter housing outlook is improving due to rising property prices and stronger market conditions.

Three consecutive months of positive growth in housing values have been observed since February, driven by a significant supply-demand imbalance. Experts caution that if property prices continue their recent upward trend, a new peak in prices may be reached in 2024. The direction of housing markets is influenced by interest rates, and there is uncertainty regarding whether the rate cycle has peaked and if a potential rate cut is on the horizon. Once rates start decreasing, housing markets may experience further momentum.

In interest rate news, the Reserve Bank of Australia (RBA) raised the cash rate by 25 basis points to 4.10% during its June meeting. RBA governor Philip Lowe noted that while inflation in Australia has passed its peak, it remains high at 7% and will take some time to return to the target range. The rate increase aims to instill confidence in achieving the inflation target within a reasonable timeframe. This hike brings the cash rate to an 11-year high. For the average borrower with a $500,000 mortgage before May 2022, monthly payments could now be $1,134 or 49% higher. With the possibility of further rate hikes, it is crucial to review mortgage options.

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25/05/2023

Qld rental reforms could cause investors to ‘walk’: REIQ

A survey conducted by the Real Estate Institute of Queensland (REIQ) has revealed that rental providers in Queensland are considering leaving property investment due to proposed rental reforms by the state government.

The survey, which gathered responses from over 3,300 property investors, found that 81.4% of participants indicated that the recent and future proposed tenancy laws have influenced their decision to sell their properties. Additionally, 62% of respondents stated that they have considered selling their rental properties in the past two years, with 27% attributing the rental law reforms as a primary reason. Concerns raised by investors include property value, safety regulations, unqualified works, damage costs, and insurance implications.

The REIQ warns that further property withdrawals from the rental market could worsen the existing rental crisis in Queensland. The amendments to the Residential Tenancies and Rooming Accommodation Act 2008 limit the frequency of rent increases and apply to both new and existing tenancies as of 1 July 2023. The REIQ urges the state government to show greater respect for property investors and acknowledge their contribution to the economy and housing sector.

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12/05/2023

Major Banks Bankwest and CBA both withdraw from cash rebate campaign.

Bankwest, a lender based in Western Australia, has announced that it will be withdrawing its cashback offer from 31 May 2023. The current offer provides $2,000 to borrowers when they refinance to Bankwest, but this offer will be removed for refinance applications after 31 May.
Bankwest stated that it is removing the cashback offer in response to customer and industry feedback, and in consideration of the current economic environment. While Bankwest will no longer offer cashbacks, it will continue to provide competitive mortgage products to its customers.

This move follows a similar decision by Bankwest's parent company, the Commonwealth Bank of Australia, which also announced it would be withdrawing cashbacks from the market. The removal of cashbacks has been welcomed by members of the mortgage broking industry, who believe that the large dollar value incentives were encouraging borrowers to refinance frequently, sometimes to their disadvantage.

31/03/2023

Great news!

15/03/2023

Could interest rates in Australia fall after the collapse of two US banks?

Tuesday was an extraordinary day for bond market traders as they witnessed extreme price movements — and this matters for millions of Australians because the price movements reflect where interest rates are heading.

Over the past 24 hours, short-term bond prices (IOUs between banks over days and months) in Australian and international debt markets have surged, and yields (interest rates) have plunged.

The yield on two-year US Treasuries fell almost 60 basis points (0.6 percentage points) at one point in overnight trade (Australian time) to just over 4 per cent.

The yield has now dropped a full percentage point since the middle of last week.

Late last week, news dropped that Silicon Valley Bank (SVB) was insolvent.

On Sunday, Signature Bank also shut its doors, unable to supply customers' deposits.

The thinking in financial markets now is that on top of the measures US and British regulators have already set in place, the US Federal Reserve will be forced to pause its current interest rate hiking cycle to ease the pressure on the entire US banking sector.

Will the Reserve Bank end interest rate hikes?

The international money markets are looking further ahead and are pricing in an almost full percentage point cut to US interest rates by the end of the year.

Sentiment on interest rate movements has also shifted in Australia.

Money markets on Tuesday assumed the Reserve Bank will pause its interest rate tightening cycle next month — with a small 7 per cent chance they may cut the cash rate by 0.25 percentage points.

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28/02/2023

The Labor Party caps super tax breaks for accounts with more than $3 million

Treasurer Jim Chalmers will double the tax rates paid by Australians with superannuation account balances worth more than $3 million, in a move he says is about budget sustainability and equity.

Currently, the government charges 15 per cent tax on superannuation fund earnings, but only while you are still working and contributing money into it, known as the accumulation phase.

The increase to a tax rate of 30 per cent will apply to accounts with $3 million or more during the accumulation phase.

Superannuation earnings on funds with a balance of up to $1.7 million are tax-free in the retirement phase, and this will remain unchanged. Amounts above the $1.7 million cap are treated as being in the accumulation phase, and taxed at 15 per cent.

The government's proposal does not change the amount your super is taxed when it is contributed by your employer or by you before tax.

Key points:
>The super tax break changes will not take effect until after the next election
>They will see the tax on earnings increase from 15 to 30 per cent on accounts with more than $3 million
>The treasurer says the decision is about making superannuation more sustainable