Mortgage News

Most mortgage households are taking the recent interest rate rises in their stride

Australian mortgaged homeowners and home buyers are in the main taking the two home loan interest rate rises that occurred earlier this year in their stride.

Nearly 60 percent of Australians with existing home mortgages said that the higher official interest rates have had little on their weekly budgets and spending habits, according to a survey released this week.

The survey which was used to compile the ING Direct-Melbourne Institute Household Saving and Investment Report, found that Australian homeowners financial position took a turn for the worse during the September quarter.

More Australians said they are now running up debt to make ends meet, and less are able to put aside money for emergencies, savings or investment.

It is feared that these rising debt levels will have an adverse effect on Christmas season Spending and this could be bad news for the retail sector.

Interestingly most people that have surplus income are tending to use this money for debt reduction.

Property investment seems to be a big loser, which is hardly surprising with the triple effect of higher interest rates, higher charges to get into the property market and reduced taxation meaning less tax deductions for property investors. Put these together with a property market moving sideways or down in most markets and most people have changed their thinking of an investment property in recent times.
Those intentions have melted, with just 10.9 per cent intending to invest in property now.

Home loan fall in demand won't affect mortgage interest rates
12th October 2008

A fall in applications and approvals for housing loans in August in Australia was unlikely to have an effect on [reducing] interest rates, economists said today.
Housing finance commitments for home owner-occupied housing fell 1 per cent in August, seasonally adjusted, to 63,217, the Australian Bureau of Statistics said.
Total housing finance by value fell 1.3 per cent in August, seasonally adjusted, to $19.852 billion.

Housing finance by value for owner occupation fell 1.3 per cent, adjusted, to a total of $13.956 billion in home loan lending.

Economists had been looking for a 1 per cent fall in the number of home mortgage housing finance commitments for owner-occupiers.

Macquarie Bank senior economist Brian Redican said the data was in line with the Reserve Bank of Australia's (RBA) interest rate hike to 6.0 per cent in August.
[Home loan interest rates are affected by this interest rate, as banks procure money at this rate and then add a margin to retail mortgage home loans. That margin is less than two percent, and just over one percent for some base interest rate products.]

"It's really not surprising given that the Reserve Bank was raising interest rates in August and that there were some more dire warnings about the housing market there," Mr Redican said.

But this kind of decline after some healthy months won't pose any concerns for policy makers so I don't think it will have any influence on the current policy debate."

Commonwealth Bank senior economist Michael Workman said the modest fall indicated there was still some underlying strength in the housing market.

"If anything, this is still one of those things indicating that the economy still has a fair bit of momentum," Mr Workman said.
"And it's just one of those issues that would easily stack into this view there are no signs of weakness that could delay a rate rise."

Citigroup director and strategist Stephen Halmarick said the RBA would be pleased with the results, with the August rate hike appearing to have softened the market.
"I think the data so far from the August rate hike has shown there is a little bit of reduction in momentum in the household part of the economy, but it's not dramatic," he said.
However, he said new RBA governor Glenn Stevens would likely signal a continuing tightening bias in his speech tonight at the Australian Business Economists' annual forecasting conference.
"But that bias remains a patient one," he said.
He said the RBA would likely watch further developments before making another rate move.
He said Citigroup did not expect rates to rise again this year, although the tightening bias was expected to remain into next year.
 Source: AAP
 

Home loan interest rate rise may be only weeks away
12th October 2006
Mortgage belt homeowners could be just weeks away from the third home mortgage interest rate rise this year, the new Reserve Bank of Australia governor warned homeowners and home buyers last night.


New RBA governor Glenn Stevens, who was the previous deputy to the outgoing governor Ian MacFarlane, warned that home loan mortgage rates could rise next month, if prices and inflationary pressures remained high across the economy.
"You do not need me to tell you that the price data to be released over the next couple of weeks will be important in evaluating the outlook and the balance of risks facing policy," Mr Stevens told an Australian Business economists function in Sydney.

"Rates are more likely to rise than fall."

The next inflation numbers are due on October 25, six days before the RBA is due to set rates for November.
Yet another rate rise would be a hard pill to swallow for homeowners who bought at the top of the market and with little equity built into their home to fall back on.
In a dour assessment of the Australian Mr Stevens, who left rates on hold this month at his initial meeting as the bank's governor, said inflation was critical to the future of interest rates.
He also reinforced his support for Australia's inflation target band of 2 to 3 per cent, which was designed with Treasurer Peter Costello.

Mr Stevens said he was concerned that productivity growth in Australia had become dangerously weak.

He also questioned the rise in tax income, which was not in line with historical economic growth levels.

Mr Stevens said Australia's 3 per cent growth target could be in jeopardy if productivity and output had fallen in unison.

Source: Daily Telegraph

Bad credit lenders worry the Banks.
12th January 2006
Nonconforming lenders are getting more competitive and they have the big banks concerned as they continue to grow the niche markets that they excel in.
Mortgage borrowers that don't fit the bank's guidelines can now get sharp mortgage interest rates from nonconforming without having to meet the bank's normal guidelines in a number of areas including having a credit impairment.
Other reasons for using a nonconforming lender might include a lack of job stability, newly self employed or contractor, income too low, casual employment. These are all no no's as far as tradition lending guidelines are concerned, but can be approved with non-conforming lenders. This represents a breakthrough to borrowers who need a lender who will help them in their moment of need.
With interest rate cuts borrowers can save on mortgage insurance premiums, and save the money required for relocation expenses.
Even people with credit impairment can get the loan they want at an interest premium to compensate the lender for the credit impairment risk. With good repayment history these borrowers will be rewarded with falling interest rates that are comparable with Standard bank variable rates
To apply for a nonconforming home loan online please click here.
To apply off line, please click here and complete and send your request. A Pepper Home loan application form will be sent to you.