The Flash - Lightning Fast Home Loans newsletter


Servicing Melbourne, the Mornington Peninsula and wider Victoria


Update on the rate changes

Yes, we know it is December but we delayed the publication of this newsletter for a couple of weeks to allow the dust to settle after the recent RBA interest rate announcement and to enable the varying reactions by the banks to filter through.

Even as we go to print, some lenders have yet to confirm their rate increases, so there is more news to come! What we have seen though is the emergence of some intense competition among the major banks, led principally by NAB / Homeside who lifted their rates by only the RBA cash rate increase of 0.25%. At the other end of the scale Westpac created a media storm by raising their variable rates by 0.45%, while other lenders have moved rates by 0.3% to 0.37%.

A good time to review finances

To this end, there is clearly a reason now to review your finances and perhaps consider refinancing – depending on your personal circumstances, it may pay to move; you should be, as we are, mindful of the fact that refinancing may incur significant costs, early exit penalties may apply, your loan structure and situation may not derive sufficient benefit, so a careful appraisal of your position should be taken to determine the best course of action. If you would like us to review your current situation please feel free to call or email Lightning Fast Home Loans to discuss the issue.

Watch the interest rate movements

For your interest, you can follow the interest rate movements over the past year for the lenders on our panel in the Lender Rates 1st December table.

Adrian Williams

LFHL logo House jigsaw puzzle

Nov (Dec) 2009
Issue 07


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

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Gift wrapped house A Christmas message

May I take this opportunity to wish you all the very best for Christmas and the Festive Season. Your support of Lightning Fast Home Loans has been thoroughly appreciated and I am committed to continuing to provide you with the best possible service into the future. As this business is almost entirely reliant on referrals from existing clients, I am grateful for the many of you who have been able to refer family, friends, work colleagues and acquaintances in the past and ask you to continue to do so. Obviously anyone who has not referred people to us would be welome to do so.

Have a Happy New Year – I hope 2010 brings you many great moments, success and happiness in all aspects of your life. Please enjoy whatever break you get to take over the Christmas/New Year period.

Adrian Williams and the team at Lightning Fast Home Loans

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Investors – Time to Act!

Gift wrapped houseWe promised a feature article specifically for property investors in our last newsletter and the relevance of this has become even more evident in recent weeks when many industry ‘experts’ in various forums have highlighted the next 6 months as being ‘ripe’ for a return to investment purchases. Indeed, an increase in activity by investors has been seen over the past couple of months and confirmed by the various statistics published by different organisations.

Rental availability remains very tight, population is increasing rapidly in Melbourne, property prices are likely to be on the rise quite significantly in the short to medium term and thus potential capital gains can be maximised by entering the property investment market now (or increasing your property portfolio).

Some recent articles that might be of interest to you are reprinted below.

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moneyRents set to skyrocket

High demand and low apartment vacancy is expected to push rental rates up sharply for the next two years. BIS Shrapnel's Residential Property Prospect 2009-2012 (30 Nov 09), forecasts an annual rate rise of 5% in the country's major cities. The report indicates the worst city will be Sydney, which will have a vacancy rate of under 1% next year and rents will rise by 7%. Investor demand and the increased number of renters becoming home owners is expected to drive up house prices.

Investor rush imminent

Research carried out by a reputable loan comparison website has confirmed that investors are indeed rushing back into the market. An October study of over 5,000 Australians actively researching finance found that investor enquiries currently account for 12% of the market, "their highest point so far this year".

It also found the number of people enquiring about interest-only loans rose in October, consistent with the increase in investor demand. "Interest-only loans are almost exclusively used by investors, so again this supports our view that investors are returning to the market in large numbers," said the organisation’s CEO. As a result of these findings, it was said investor activity would rise significantly in the coming two months, though the party for first home buyers is now definitely over. "First home buyers are no longer the driving force, and in fact that segment of the market will probably under-perform over the next six to 12 months," he said, attributing this decline to much of first home buyer activity being "brought forward" due to the government boost. The first six months of next year are also expected to be weaker as a result in the first home buyers sector.

Lightning Fast Home Loans Comment: The fact that there will be fewer First Home Buyers in the market for the next 6 months will take some of the heat out of the market price-wise. This means investors should be able to purchase properties at relatively good prices, and certainly not in an artificially inflated market.

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"Investors to turn their attention to the property market"
 Craig James, chief economist at CommSec

Sold signProperty prices surged in the first part of 2009, erasing last year's losses and bucking the global trend. According to the RP Data/Rismark Australian Home Value Index, which covers all dwelling types, prices rose by 2.8 percent in the first four months of 2009, with every mainland capital city except Perth registering gains. Darwin was the top performer, with values up 5.3 percent in the four months to April, while Sydney and Melbourne property snared gains of 3.9 and 4.5 percent respectively.

Economists said a variety of factors were behind the rise. "A combination of generational-low interest rates, tight rental markets, the expanded first homebuyers grant and soggy sharemarkets have caused more buyers and investors to turn their attention to the property market," said Craig James, chief economist at CommSec, adding that the price rise is good news for Australians, the Reserve Bank and the Federal Government. "Modest gains in home prices boost consumer confidence, wealth and spending levels," Mr James said. "If confidence and spending levels lift, this will in turn boost employment and ensure that the flat spot experienced by the economy proves brief."

Sydney remains the nation’s most expensive city for real estate, with an average dwelling value of $522,797, while Perth remains the second most expensive, despite seeing falls of 5.7 percent over the past 12 months. Rismark's international managing director Christopher Joye said values are generally rising across the board. "Our analysis demonstrates that home values are rising in around 80 per cent of all suburbs with only the top 20 per cent of suburbs ranked by price suffering material falls," Mr Joye said.

Tim Lawless, RP Data's national research director, said that fears the government’s increased first home buyer grant, which was extended in the Federal Budget earlier this month, are fuelling an unsustainable debt boom are misplaced. "Home values in Australia's mortgage belts, which are the prime first home buyer markets, were flat or falling between 2004-07 while the inner city and affluent markets enjoyed consistent growth. In 2008-09 we have seen a reversal of these fortunes," he said.

Commsec's Mr James added that while the rise in property values is welcome, it is not necessarily a surprise as demand continues to outstrip supply. "Australia has been called the 'wonder from down under' because our home prices are not falling at 20 per cent annual rates like in the US and UK," he said. "However the situation is far from remarkable. Population is rising at the fastest rate in 40 years, interest rates are super-low and we have a very tight rental market. It is simple demand and supply – demand is outstripping the supply of homes, putting upward pressure on prices."

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Property 'has rarely looked better' Robert Harley
The Australian Weekly Financial Review

Home auctionSigns are building that investment in property is set to bounce back after a year in the doldrums, according to a news story by Robert Harley in The Weekend Australian Financial Review. Quoting prominent experts and organisations, the report said the country's one million or so investors were now re-examining the essentials of property, and discovering they have 'rarely looked better.'

It added that:

  • Rising rents and falling interest rates have boosted returns
  • Values have remained 'remarkably' stable
  • The risk of house price falls is lessening and
  • Decreases in superannuation concessional thresholds will push people on higher taxable incomes towards more deductible investments such as property.

RP Data national research director Tim Lawless reportedly said rental increases of the last two years had provided investors with their best gross rental yields for a long time. BIS Shrapnel managing director Robert Mellor said he expected investors to be back into property markets from late 2009.

The Westpac-Melbourne Institute consumer confidence index found that more than 65% of consumers expected house prices to stabilise or rise in the next month. Australian Property Monitors' Matthew Bell reportedly said there would still be upward pressure on rents because demand is high and vacancies are at historic lows.

The story quoted Macquarie Research as saying housing had always been the sector that led Australian out of recession, with large mortgage rate falls the trigger. This time appeared to be no different, it added.

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Australian house prices to rise by up to 20 per cent

Graph of predicted housing prices in Australia

AUSTRALIAN house prices will rise by nearly 20 per cent over the next three years, buoyed by the "current heat" in the market surrounding first home buyers. That’s the forecast from research house BIS Shrapnel’s Residential Property Prospects report - based on data from the Real Estate Institute.

BIS Shrapnel’s Angie Zigomanis said activity in the lower end of the market - buoyed by the boost to the first home owners grant and low interest rates - were generating “green shoots” of recovery. The report says average house prices in most capital cities will grow by between 11 and 19 per cent over the next three years. In real terms (where prices are adjusted for inflation) the level of percentage growth is about half.

The chart was originally published on 15th June 2009

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House prices jump 3.3%

House prices have recorded their strongest growth since late 2007, rising, on average, by 3.3 percent in the second quarter of this year.

Graph going upHouse prices are now back to levels last seen before the onset of the global financial crisis and are expected to continue rising over the rest of 2009 and into 2010, a survey by Australian Property Monitors (APM) found. The national median house price rose to $484,308 in the June quarter, from $468,694 in the March quarter. Most of the growth was driven by increased house values in Darwin, Hobart, Melbourne and Sydney, APM said.

APM economist Matthew Bell said the market had been consolidating since the first quarter of 2009 and that had now been transformed into strong growth across the country. "The national housing market has experienced its strongest quarterly growth in both house and unit prices since the global financial crisis took hold late in 2007," Mr Bell said in a statement. While the market had been supported by low interest rates, flat prices and a boost to the federal government's first home owner grants, the upper end of the sector had been particularly strong in the June quarter.

For Sydney, Melbourne and Brisbane, median housing prices in the top 50 per cent of suburbs grew by nearly double the rate of those of the bottom 50 per cent in the quarter. "Not surprisingly this has coincided with the stockmarket rebounding by nearly 30 per cent from its March lows and the economic outlook improving," Mr Bell said.

In Australia's two biggest markets, Sydney and Melbourne, house prices rose by 3.7 per cent and 5.8 per cent in the June quarter, respectively. Darwin experienced exceptional growth of 11.2 per cent from the March quarter, while Hobart house prices gained seven per cent. Across the nation, the median apartment or unit price increased by two per cent to $349,093 in the June quarter, from $343,322 in the March quarter. The strongest growth was in Hobart (3.3 per cent) Melbourne (up 2.8 per cent), Sydney (2.6 per cent) and Canberra 2.2 per cent.

Mr Bell said the upswing in the housing market should encourage property investors who had been waiting for interest rates to bottom and the run off of the federal government's boost to the first home owner's grants, expected later this year. "Rising unemployment remains the biggest risk to house prices, but this risk has lessened over the past quarter with forecasts of peak unemployment falling below eight per cent and the economy expected to avoid a technical recession," he said. "With population growing strongly and strong housing finance figures yet to translate into a significant rise in new building starts, all indicators point to house prices continuing to rise in the second half of 2009 and well into 2010."

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This newsletter and some other articles are also on our web site

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