Archive for April, 2009
PUBLIC AUCTIONS ARE NOT WHAT THEY ONCE WERE WITH VENDORS OPTING FOR PRIVATE SALES IN RECORD NUMBERS…
An investigation of sale activity in Melbourne for the first three months of the year shows that the number of homes listed for auction was down 53%. But private sales have surged, increasing by 26%.
Historically in Melbourne there has been a 70:30 split between private sales and auctions. Based on the above research the split is now 85:15.
Anecdotal evidence suggests this is also happening in other capital cities.
Buying at private sale needs careful and detailed investigation and excellent negotiating skills. Buyers must now research, locate, evaluate, negotiate. This can be time consuming.
Negotiating one on one with vendors agents can also be stressful if you want to avoid paying too much for a property. There can also be a hidden market which you need to tap into. Some of the best buys can be found in this category.
If you want some tips on how to go about this process contact our Acquisition Team on 02 9449 2333 or at loans@planassist.com.au
It is a complex marketplace out there and you need to approach a purchase with a more strategic outlook. There can also be a hidden market you need to tap into to – who is thinking of selling and who is amenable to selling. It is estimated that only 70% of what’s available are visible in newspapers and the internet.
We can help you move in the right direction!!
BUYING A PROPERTY IS LOOKING VERY ATTRACTIVE. RECORD RENTS, FLAT HOUSE PRICES, INTEREST RATES AT 45-YEAR LOWS MEANS MANY ARE CONTEMPLATING THEIR NEXT PURCHASE…
So, should you join the rush?
Before you consider moving forward you need to think how secure you are in your job. Unemployment is forecast to rise beyond 7% as the economic conditions bite. However, if you fell relatively secure, the next step is to determine how much you should borrow.
Remember rates are at record lows so you shouldn’t base you loan size just on today’s rate; you also need to perform a repayment stress test. Could you afford it if rates went up 1% – 2%. We have recently seen how rates can fall – at some point they will reverse.
As a rule of thumb for each percentage point increase you’ll have to find an extra $65 a month for every $100,000 you borrow.
Next, you will need to work out what your borrowings and deposit and any equity you can contribute will allow you to purchase. Remember you will need to pay stamp duty and legal costs, etc. This can run to another 5% on top.
After you establish your price range it is a matter of researching the property market, locating suitable properties, evaluating each alternative and negotiating a fair purchase price.
Provided your job is secure, you borrow an amount you can afford, don’t pay over the odds and can hold a property for at least the average property cycle.
But be sure you tick all those boxes.
If you are looking to join the stampede, but don’t have the time or skill for all the necessary steps we can help you out. We can provide an integrated service for each step. Contact us direct on 02 9449 2333 or at loans@planassist.com.au to find out more.
THE RESERVE BANK AGAIN DROPPED ITS BENCHMARK INTEREST RATES, AFTER PAUSING IN MARCH, AS IT BATTLES THE GLOBAL SLOWDOWN…
The central bank cut the key rate by 25 basis points (0.25%) to 3%, the lowest level since March 1960. The RBA has now chopped 425 basis points since last September.
The banks have only passed on at best a 10 basis points (0.10%) cut to their customers. Lenders claim the rising cost of funds on international markets prevents them from passing on the full RBA cut.
In Australia the major banks borrow 40% to 60% of the funds they lend to customers from the market. Much of these funds need to be found on the international market.
As a result of the toxic debt created in USA mortgage funding vehicles and the resulting shock waves, which spread around the globe, investors have been cautious in advancing funds to the mortgage sector at all.
Limited funds and a constantly rising price as investors look to cover any perceived risk are contemporary characteristics of international markets.
This obviously drives cost of funds up.
Australian banks are better off than most as they are able to ‘borrow’ the Federal Governments AAA rating (via the deposit guarantee) to source funds. However, we are very dependent on these funds. Our low savings ratio means we don’t generate anywhere near enough funds to cover the level of borrowing we need to grow our economy.
The consensus is the RBA rate will bottom out at 2.5% in the third quarter of this year. The banks have flagged they will not be in a position to pass on all of this due to continued pressure on international funding markets.
It would appear that variable rates are close to as low as they will go, although they are expected to remain historically low for some extended period.
If you wish to plan your interest rate strategy going forward please, or you will be looking for new loans in the short to medium term please contact out mortgage team on 02 9449 2333, or at loans@planassist.com.au Loans require more planning than in the past and the process is much more pedantic. We may need to put a strategic plan in place well before you borrow.