The Flash - Lightning Fast Home Loans newsletter

 
 

Servicing Melbourne, the Mornington Peninsula and wider Victoria

 
 


Roller coaster ride - or a flat seas ahead?

In this edition I have looked at the interest rate debate and the First Home Buyers scheme and hope to clarify a few misunderstandings that we are hearing in the media.

I hope you enjoy this edition of The Flash!

Regards,
Adrian Williams

LFHL logo House jigsaw puzzle

July 2009
Issue 05

 
     
 

Lightning Fast Home Loans - 500 Victoria Parade, East Melbourne 3002
Tel: (03) 9417 4918   Fax: (03) 9417 4921

 
     
  top curve  
 

Another RBA Interest Rate Cut ….. What Now?RBA building

Given last April’s 0.25% decrease in the official cash rate by the Reserve Bank has led to various ‘expert’ comments that range from it being the last cut in rates in the cycle to it being a cautious approach by the RBA prior to further rate reductions later in the year, it is clear that the future is now unclear and thus borrowers probably do need to take stock of their current situation. One positive aspect of the debate is the general acceptance that there is no imminent upswing in the interest rate pipeline, so the current relatively low variable rates will remain for a while.

A major discussion point that has arisen since the RBA announcement has been the decision of the major banks to not pass this rate cut on in full (or at all in some cases) to their customers, citing continuing high costs of funding as their justification. However there have been some conflicting reports about this also, and it may well be that the banks are using the opportunity to reinstate better margins on their lending that were once available before the emergence of the non-bank sector as strong competition over the past 10 years. Whatever the circumstances, we have to work within the realities of the market at this point and, at Lightning Fast Home Loans, we are intent on offering you the very best advice possible, while always respecting your ultimate right to determine any decision taken.  So, despite not having the proverbial crystal ball and this not being able to give any guarantees, we feel the following comments are worthy of consideration:

  • While our advice over the past 12 months has been for clients to be very careful about entering into any fixed rate loan agreement, it may be time to review your situation and see what is available either with your current lender or another – if a particularly suitable deal is available and suits your circumstances. Essentially, we feel that short term stability of variable rates necessitates that any fixed rate option being considered now should provide at least a 3 year period where benefits can be obtained.
  • Many lenders are continuing to tighten their credit policy parameters, with many reducing their maximum lending ratios to 90% of the security offered. If you think you might need to use more than a 90% loan to finance (or refinance) a property, then it would be worth investigating this soon, before any more options ‘dry up’.
  • Most lenders are including the requirement for borrowers to have evidence of “genuine savings” of up to 5% of their intended purchase price. What constitutes genuine savings varies among lenders, but it would be good to have 5% in a bank account in your own name for 3 months at the time of any application. If, for instance – as many of our First Home Buyer clients do – you are relying on a ‘family gift’ to meet some of the costs of a proposed purchase, it would be advisable to actually get these funds into an account in the borrower’s name/s 3 months in advance of any application so as to meet the genuine savings requirements. If you need information about other ways to meet the genuine savings condition, please call us at Lightning Fast Home Loans, as we would be pleased to provide further advice.
  • Where possible, consider using one of the non-major bank lenders for your borrowing requirements; while we still offer an extensive range of lenders including all the majors) on our panel, it is becoming abundantly clear that the increased focus on only the major banks is starting to result in a number of adverse outcomes associated with diminished competition. While we shall always provide a range of options to clients that include the majors, with a commitment to ensuring you do get the best option available, we believe that the more competition in the market that exists, the better off all customers will be in the future.


 
  bottom curve  
     
 

First Home Buyers’ bonus increases … for some!

First homeThe first home buyers’ bonus, paid by the Victorian State Government as part of the overall FHOG assistance has more than doubled to $11,000 for Victorians buying a new home, but buyers of existing homes have lost out slightly.
As of July 1 the bonus for existing homes decreased by $1,000 to $2,000.

For newly constructed homes the bonus rose from $5,000 to $11,000, while regional new home buyers will now receive an added $4,500, up from $3,000. The bonus is in addition to the $7,000 federal government First Home Owners Grant.

That federal grant was boosted by $7,000 last year on existing homes and by $14,000 for new homes, but this ‘Boost’ is due to halve on September 30 this year and expire completely on December 31st 2009.

The obvious impact of these announcements for First Home Buyer incentives is to reward those who can act before September 30th in particular, especially those who build or buy a brand new home as they will receive $32,000 in total funding in the Melbourne metropolitan region and up to $36,500 in Regional Victoria.

SRO table, which sets out the different amounts that first home buyers in Victoria may be eligible for, is shown below.

Contract Date

Conditions

First Home Owner Grant (FHOG)

New First Home Owner Boost

First Home Bonus

First Home Owner
Regional Bonus

Total

From 1 January 2010 to 30 June 2010
Note: This information has been taken from the Premier's announcement on 6/5/2009 and the 2009-2010 Federal Budget. This information is subject to legislative approval.

Established homes only

$7,000*

$0.00

$2,000‡

$0.00

$9,000

Newly constructed homes in Metropolitan Victoria only

$7,000*

$0.00

$11,000‡

$0.00

$18,000

Newly constructed homes in Regional Victoria only

$7,000*

$0.00

$11,000‡

$4,500‡

$22,500

From 1 October 2009 to 31 December 2009
Note: This information has been taken from the Premier's announcement on 6/5/2009 and the 2009-2010 Federal Budget. This information is subject to legislative approval.

Established homes only

$7,000

$3,500

$2,000‡

$0.00

$12,500

Newly constructed homes in Metropolitan Victoria only

$7,000

$7,000

$11,000‡

$0.00

$25,000

Newly constructed homes in Regional Victoria only

$7,000

$7,000

$11,000‡

$4,500‡

$29,500

From 1 July 2009 to 30 September 2009
Note: This information has been taken from the Premier's announcement on 6/5/2009 and the 2009-2010 Federal Budget. This information is subject to legislative approval.

Established homes only

$7,000

$7,000

$2,000‡

$0.00

$16,000

Newly constructed homes in Metropolitan Victoria only

$7,000

$14,000

$11,000‡

$0.00

$32,000

Newly constructed homes in Regional Victoria only

$7,000

$14,000

$11,000‡

$4,500‡

$36,500

From 14 October 2008 to 30 June 2009

Established homes only

$7,000

$7,000

$3,000#

$0.00

$17,000

Newly constructed homes in Metropolitan Victoria only

$7,000

$14,000

$5,000#

$0.00

$26,000

Newly constructed homes in Regional Victoria only

$7,000

$14,000

$5,000#

$3,000#

$29,000

From 6 May 2008 to 13 October 2008

Established homes only

$7,000

$0.00

$3,000#

$0.00

$10,000

New homes in Metropolitan Victoria only

$7,000

$0.00

$5,000#

$0.00

$12,000

New homes in Regional Victoria only

$7,000

$0.00

$5,000#

$3,000#

$15,000

From 1 January 2007
to 5 May 2008

Established homes only

$7,000

$0.00

$3,000#

$0.00

$10,000

New homes only

$7,000

$0.00

$5,000#

$0.00

$12,000

From 1 January 2006 to 31 December 2006

Established and New homes

$7,000

$0.00

$3,000#

$0.00

$10,000

From 1 May 2004 to 31 December 2005

Established and New homes

$7,000

$0.00

$5,000#

$0.00

$12,000

* Additional Condition for FHOG: To be eligible to receive the FHOG, for contracts entered into between 1 January 2010 and 30 June 2010, the value of the property must not exceed $600,000

Additional Conditions for Bonus and Regional Bonus:
# For contracts entered into up to 30 June 2009, the value of the property must not exceed $500,000.

‡ For contracts entered into between 1 July 2009 to 30 June 2010, the value of the property must not exceed $600,000.

The information provided in the above table is to be used as a guide only.

At Lightning Fast Home Loans, we are happy to provide advice and assistance to maximise the benefit obtainable, so please ring 03 9417 4918 to discuss your circumstances.

 
     
  Upper curve  
 

This newsletter and some other aricles are also on my web site

www.lightningfasthomeloans.com.au

 
Upper curve

 

You have received this document as a client of Lightning Fast Home Loans and we trust this information will be of use to you.
However, should you no longer wish to receive this publication or other e-mails from us you can of course unsubscribe and we will remove you from our mailing list. Either e-mail us at admin@lightningfasthomeloans.com.au or ring 03 9417 4918.
This document is issued by Lighting Fast Home Loans (ABN 95 865 117 889).
The information contained herein is about our services and contains general information that is not intended as financial advice. It does not take into account specific needs, so you should consider their personal position, objectives and requirements before taking any action.