Otis Finance

Rising interest rates have pushed property prices down. Here's what's going to prop them up There’s another factor that, over the long-term, has a surprisingly strong impact on property prices.

Don’t be fooled by the catching headline, the fundamentals of the Perth Property market remain strong as noted in the below article by REIWA

REIWA on LinkedIn: Perth property to plunge 13 per cent What if your property price falls? We remain positive on Perth property overall this year, but conditions differ for every suburb...so if you are worried…

Here's what was happening in Australia the last time interest rates rose this quickly The rapid increase in interest rates feels all too sudden for borrowers, but it's not the first time this has happened. Here's how events played out almost 30 years ago.

Variable vs Fixed Interest Rates is always a topic of conversation

An insightful article from the Prop Track team looking at the uptake of fixed rate mortgages during COVID. Historically fixed rates occupy 10 - 20% of new lending.
With the support of the RBA's Term Funding Facility, this saw fixed rates below 2% the uptake for fixed rate mortgages peaked in July 2021 with 45% of new loans having a fixed rate.
12 months on, as the TFF facility is no longer available, the uptake of fixed rate mortgages has shrunk dramatically to be 5.5%

Higher Interest Rates Sideline Fixed Rate Mortgages - realestate.com.au In 12 months, fixed rate mortgages have gone from 45% of new lending to only 5.5% in July - a remarkable shift in such a short period of time.

Core Logic this week released a report providing an insight into Australian Property Values over the past 30 years.

Some relevant statistics taken from the report include:

- Capital cities have produced an average 5.4% compounding growth rate since July 1992
- Melbourne has the highest growth rate during this period of 5.9%, with Perth recording the lowest at 4.8%

Overall a great insight into property investing and the long term benefits provided historically

www.corelogic.com.au

At its meeting today, the Board decided to increase the cash rate - Reserve Bank of Australia on LinkedIn At its meeting today, the Board decided to increase the cash rate target by 50 basis points to 1.85 per cent. It also increased the interest rate on Exchange...

Who are modern first-home buyers in Australia? It is taking longer and longer for most Aussies to get into their first home. So, who are the first-home buyers able to crack the market now?

Is It Too Late to Unlock Your Equity and Buy an Investment Property? Many Australians are keen to have an investment property, and if you are lucky enough to possess sizeable home equity, it's possible.

With the start of the new financial year upon us, I'm sure you would have heard in the past 'It's a good time to review your banking and finances'

Yes, I'm an advocate for doing this annually - but I want to summarise why now is just as important as ever before.

The last 2 years the landscape has changed, we've seen the property values appreciate, the labour market tighten and now central banks increasing interest rates to combat inflation.

This means that you have likely seen a spike in the value of your property, you've considered or accepted a new role in the same or a different industry or you are concerned about the increase in interest rates.

A finance review is important, to take time and consider the road ahead, forecast what changes you are expecting and protect against unexpected changes or events. It's a time to review your existing position and if required make adjustments to align with the road ahead.

To support you in this, I wanted to put together some things to consider

Future Planning:
- Where do you see yourself in 3 - 5 years
- What do you envisage during this time (starting family, new car, new job, one income, upgrade house, school fees, buy your first home, purchase an investment property, renovate your property, start a business, travel)

Current Position:
- Review of budget, is there any unnecessary expenses that can be adjusted
- Where is my/our surplus cashflow best suited, do I need to make consider rising interest rates
- What is my/our current interest rate, when was the last time this was reviewed with my Broker/ Banker
- Is our insurance coverage adequate for our current and future circumstances (life and income protection, building and contents, health)

Once you have an understanding of what's ahead, this can allow you to plan appropriately. Some of the actions I am seeing as a result of the above include:

- Unlocking equity to purchase an investment property, complete renovations or purchase a new car
- Renegotiating interest rates with current lender or seeking more competitive options
- Restructuring current lending or maximising borrowing capacity for further/future investments
- Adjusting budget to allow additional repayments to mortgage/s
- Utilising support available through FHB grants and schemes to get into the market earlier

I've found the following resources a great support during this process:
- https://mortgage.monster/
- https://moneysmart.gov.au/saving/save-for-a-house-deposit

If you would like guidance to support you through this process, please reach out
[email protected] or 0448 436 703

Thanks :)

Looking to understand the breakup of your suburb, with the 2021 Census Data coming available - check it out below

Do you live in a 'millennial hub' or 'boomer base'? Census maps reveal what's special about your neighbourhood From the remote town leading the nation on housework to the "man-drought" in our wealthiest suburbs, few datasets shine a light on our neighbourhoods quite like the census. See what's happening in yours.

A great flashback and comparison from 1982 to now 🙈

How much more expensive has life gotten since 1982? I compare wages - LinkedIn How much more expensive has life gotten since 1982? I compare wages, the cost of property and groceries then and now. Check out the results of my 40-year...

The Reserve Bank has made the decision to increase the cash rate by 0.5% at todays board meeting.

Commentary provided sees inflation peaking towards the end of the year, returning to an appropriate range of 2 - 3% in 2023

Statement by Philip Lowe, Governor: Monetary Policy Decision | Media Releases At its meeting, the Board decided to increase the cash rate target by 50 basis points to 1.35 per cent.

Looking at the current state of the construction industry, Tristan reviews the data provided by HIA in comparison between 2019 and now, with some positives for those looking to seek trades over the coming months

Thought I would share an update on the industry, on the back of getting - Tristan Kirkham on LinkedIn Thought I would share an update on the industry, on the back of getting asked by a few people recently. These numbers below are the HIA stats from this...

With the first of July fast approaching, here's a quick refresher on the government schemes available for First Home Buyers

- 35,000 places will become available under the First Home Guarantee
- 5,000 places will become available under the Family Home Guarantee
- Pricing caps have been increased in WA with Metro $600,000 and Regional $450,000

To find out more please visit the NHFIC website or reach out to see if this applies to your circumstances

https://www.nhfic.gov.au/what-we-do/support-to-buy-a-home/home-guarantee-scheme-changes-from-1-july/

A snapshot from RBA governor Dr Lowe's speech yesterday, showing the variances and appetite in fixed and variable interest rates.

As the graph indicates, fixed rates started to rise significantly in mid 2021, reducing appetite for this product and returning to pre 2020 levels

Our website is live @ www.otisfinance.com.au

Check out our recent blog posts including our June newsletter

If you'd like to be added to our database, please send through an email to [email protected]

Some great insights from Ben Kingsley around the current interest rate environment and why it's important to act now for your future financial needs - visit from 48 minutes on...

https://thepropertycouch.com.au/ep395-darius-boyd-financial-mental-peace/

The RBA has released a snapshot of the Key Economic Indicators as at the 9th of June, 2022

A snapshot of the cost increase across the building industry between March 21 - 22

- Materials up 45 - 50%

- Labour costs up 35 - 40%

Today the RBA increased the official cash rate to 0.85% an increase of 0.5% for the month of June.

The decision based on inflationary pressure is forecasted to continue through to next year, before stabilising within the 2 - 3% bandwidth.

To understand how this will impact home owners, feel free to drop us an email at [email protected]

Reserve Bank of Australia on LinkedIn: Statement by Philip Lowe, Governor: Monetary Policy Decision | 33 comments At its meeting today, the Board decided to increase the cash rate target by 50 basis points to 85 basis points. It also increased the interest rate on ... 33 comments on LinkedIn

An update from REIWA as to the current state of the market with growth across Perth at 3.6% YTD, aligning to REIWA President Damien Collins forecast of annual growth of 10% across the city this calendar year

The month of May saw strong performing suburbs such as North Perth 4.7% and Wembley Downs 2.7%, with the recent rise in interest rates not having as significant impact on demand as to that in eastern states

Perth outperforming Sydney and Melbourne for price growth in 2022 Find out how the Perth property market performed in May. See which Perth suburbs recorded the biggest increase in median house and median rent price.

APRA Chair Wayne Byres in his speech at the Banking Summit discussed the regulators focus over the coming months, including some of the recent activity surrounding the rising debt to income ratios > 6 times.

The below graph also shows investors returning to the market between July 21 and December 21.

With property prices increasing across the capital and some regional cities over the past 12 months consumers may be able to utilise additional equity to purchase an investment property

Having come from a Banking background and transitioning into the Broking Industry, it's been incredible to understand the available products and solutions for business and consumers that can be tailored to suit your personal circumstances.

I believe this is why market share continues to rise, given the experience, knowledge and genuine care in the industry to support consumers and business to reach their financial goals.

Mortgage and Finance Association of Australia (MFAA) on LinkedIn: Mortgage broker market share breaks records to reach an all-time high Mortgage broker market share breaks records to reach an all-time high. In the March 2022 quarter, mortgage brokers: - facilitated 69.5% percent of all...

A great analysis on the tight rental conditions experienced across the past 2 years, with data provided from both Core Logic and the RBA, showing the impact of changing consumer behaviour for housing which has increased demand

Tim Lawless on LinkedIn: At CoreLogic Australia we have speculated one of the key factors driving | 18 comments At CoreLogic Australia we have speculated one of the key factors driving rents higher has been a trend towards smaller households (along with persistently... 18 comments on LinkedIn

Most major Banks now are utilising comprehensive credit reporting or otherwise known as positive credit reporting.

This is different to previous reporting that viewed credit reports from a historical viewpoint.

The article explores the changes that have come through for positive credit reporting which include:

- Repayment history of accounts such as credit cards, loans, and bills.
- Types of credit accounts opened including Buy Now Pay Later products.
- The name of the lender where you have applied for credit.
- The dates you've applied for, opened, and closed credit accounts.
- The current limits on your credit products.

It's important to understand what your credit report looks like and how this may impact your borrowing ability

What is comprehensive credit reporting? In recent years, we've seen big changes around what information is shared about your credit history thanks to Comprehensive Credit Reporting. It means positive information can now be used alongside negative information in your credit report, helping give lenders a more complete view of your credit h...

The Property Couch provide a relevant and concise update on the current state of the market. With lots of commentary in media outlets surrounding what the future holds for interest rates and property prices, this is a must listen

Episode 390 | Will Interest Rates CRASH the Property Market?! - In this episode we’re not only answering: “Will Interest Rates crash the Property Market?!”, but we’re giving you 7 REASONS why believe it!

The Labour Government has released their plan to support home buyers across the Nation. The article below provides an oversight to the scheme with details on the qualification requirements

Super home loan scheme ditched: Here's Labor's plan Scott Morrison’s Super Home Loan Scheme is off the table after the Coalition lost the federal election. This is what Anthony Albanese has in store.

Core Logic has provided the following summary around the impact of interest rate rises across capital cities in Australia. With 100 basis point increase (or 1%) this would equate to a increase in monthly loan repayments varying between $216 to $486 per month based on the data provided below

As we approach the start of a new financial year, additional places will become available under the government schemes to support First Home Buyers. The table below provided by NHFIC (www.nhfic.gov.au) gives a comparable oversight

The RBA has increased the cash rate for the first time since November 2010. Increasing the official rate from 0.10 to 0.35%