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Archive for May, 2010

RBA to hold rates at 4.5%

Posted by Tamara McDowell on May 19, 2010

Minutes from the last Reserve Bank meeting showed that, while the decision to increase the cash rate from 4.25% to 4.5% was pretty much cut and dry, the central bank will keep rates at this level as it evaluates the impact of the six rises in seven months.

“The decision to raise rates followed a material upgrade to the Bank’s economic and inflation forecasts and so reflected the RBA’s desire to head off the inflationary impact of Australia’s commodity boom mark II,” said ANZ economist Katie Dean.

“ The minutes show that at the time of the May policy meeting, the bank regarded the problems in Greece as predominantly European issues that were having little impact on Australia. However, as the contagion has spread the RBA is mindful that Europe’s problems could turn into Australia’s problems.

“Since the May policy meeting we have seen further strong data out of China but also a notable rise in global risk premia from European sovereign debt issues,” Dean said.

“The latter should be more than enough to keep the RBA on the sidelines for now.”

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Using a Mortgage Broker

Posted by Tamara McDowell on May 15, 2010

 Instead of you trailing from lender to lender, making endless phone calls or trawling the internet, a mortgage broker can do it all for you.

 If you choose the go-it-alone route, you might be lucky to compare three or four different products. Mortgage brokers can compare hundreds and help you get the right home loan!

A good mortgage broker will also help you to understand the various deals that are on offer, explaining all the features and details that might make a big difference to your repayments.

And what’s more, your mortgage broker will lodge your application (in many cases electronically, saving time) and follow it through with the lender – so you don’t have to!

Your broker is the single point of contact for you throughout the process.

 Using a mortgage broker can result in substantial savings in time and money for borrowers!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , | 1 Comment »

Borrowing Capacity

Posted by Tamara McDowell on May 14, 2010

Your borrowing capacity is something you need to know before you commence your property search as it tells you how much you can spend on your new home and where you can afford to live. Many borrowers go a step further and pre-approve their loan prior to commencing their property search to confirm how much they can borrow.

Your maximum borrowing capacity will vary from lender to lender because lenders use different methods of assessment and different lending criteria. Your personal circumstances and your income will also play a crucial role on the amount that you will be able to borrow.

How do lenders assess my borrowing capacity?

A lender will typically review all your income sources and expenditure, add a margin, and then calculate your uncommitted monthly income. This is the most important factor to most lenders. The greater it is, the larger your borrowing capacity will be.

Basic criteria used to determine how much you can borrow may include:

  • Loan to Value Ratio
  • Income and types of income, e.g. casual, contract, full-time
  • Other loans
  • Credit card limits
  • Loan terms
  • Number of dependents and their situation
  • Type of Loan
  • Tax rates
  • Rental income
  • General living expenses, and
  • Existing asset position, including the size of your deposit.

They may also look at any property currently or previously owned and the type of property you are looking at (eg. house, apartment).

Tips for increasing your borrowing capacity

You may be able to increase your borrowing capacity by employing one or more of the following measures:

  • Pay off outstanding term debts (eg. personal loans)
  • Pay off and close any credit card, overdraft or line of credit facilities
  • Consider reducing the limit of any facility you maintain
  • Work out and stick to a budget to improve your deposit and savings history

Summary: Your borrowing capacity is an indication of how much you can borrow to purchase property. There are a number of different factors involved in calculating your borrowing capacity

If you would like a guideline assessment of your borrowing capacity, a more detailed assessment of your situation or to find the loan that is in your best interest, you can drop me an email tmcdowell@beyondtomorrowfinance.com.au or give me a call on 0430 722 092….I am happy to help!

Posted in First Home Owners, Investors, Loans, Mortgage Broker Service | Tagged: , , , , , , , | Leave a Comment »

Major banks pass on rate rise

Posted by Tamara McDowell on May 5, 2010

All four of the nation’s biggest banks passed along the rate rise yesterday following the Reserve Bank’s decision to push rates up by 25 basis points.

It’s the RBA’s sixth increase in eight months, bringing the official cash rate to 4.5%.

Treasurer Wayne Swan said it was “unfortunately one of the difficult consequences of an economy recovering better than other advanced economies”.

CBA was the first the react to the RBA’s decision announcing its own change to interest rates within minutes of the announcement. But ANZ, NAB and Westpac were not far behind. The banks also passed on the full rate rise to their high-interest deposits accounts.

The changes will bring Westpac’s variable loan to 7.51%, while ANZ and CBA’s variable home loan sits at 7.41% and 7.36% respectively. NAB’s variable rate product is the lowest at 7.24%.

Repayments will increase by another $48 per month on an average $300,000 mortgage.

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Reserve Bank Lifts Interest Rate

Posted by Tamara McDowell on May 4, 2010

Statement by Glenn Stevens, Governor: Monetary Policy Decision

 At its meeting today, the Board decided to raise the cash rate by 25 basis points to 4.5 per cent, effective 5 May 2010.

The full statement can be viewed at: RBA Media Release

Posted in Interest Rates, Mortgage Broker Service | Tagged: , , , | Leave a Comment »

Yet another rate rise is on the cards

Posted by Tamara McDowell on May 3, 2010

With Australia’s economic indicators continuing to point to strong growth, the Reserve Bank may have little choice but to increase the cash rate by another 25 basis points when it meets tomorrow.

Producer and consumer prices, which indicate inflation, both came in above market expectations in the first quarter of the year. Core prices increased by 3.1% in annual terms – placing them outside the RBA’s 2-3% range.

“While recent RBA commentary has suggested a more gradual monetary adjustment process from this point, we think the risk to inflation is too great and that the RBA will need to raise the cash rate for a third-consecutive month,” ANZ research analyst Andrew Dowman said.

AMP Capital’s chief economist Shane Oliver agrees, saying that the combination of strong inflationary pressure and continued economic growth will put pressure on the central bank to tighten monetary policy.

“The pick-up in the quarterly pace of underlying inflation in the March quarter coming at a time when economic growth has returned to trend, national income is likely to receive a strong boost from higher iron ore and coal prices and house prices are booming is likely to drive the RBA to continue the process of raising interest rates back to longer term average levels,” Oliver said. “As a result we expect another 0.25% hike in the cash rate taking it to 4.5%.”

Posted in Interest Rates, Mortgage Broker Service | Tagged: , , , | Leave a Comment »