BCNW Mar 2023 Report

March report.

Our purpose.

To create a place where we can facilitate our people’s growth.

Our values.

Family.

Our colleagues are our broader family, assist when needed and when in need.

Mutuality. Respect our colleagues and our clients as you would like to be respected.

Realising potential. Unlock your full potential, encourage and support your colleagues.

Embrace change. Strive for excellence; be open minded and willing to embrace change.

Health and energy. Work towards being well balanced within yourself.

From our corporate director

Dean O’Brien

Our team of experienced real estate professionals who provide their clients with exceptional service and achieving the best possible outcomes. O'Brien Real Estate is committed to delivering innovative and effective real estate solutions to their clients and prides themselves on their local market knowledge and expertise.

Preparation is critical when buying and selling property. Here are some ways in which preparation can give you an advantage in the property market: Overall, preparation is crucial when buying or selling property. It can help you make informed decisions, save time and money, and get the best possible price for your property.

1 Understanding the market: Researching the real estate market can help you make informed decisions about the property you want to buy or sell. You can learn about market trends, average property prices, and the availability of properties in the area.

2. Defining your needs and wants: Identifying your needs and wants in a property can help you narrow down your search and make the most of your time. This can also help you avoid making an impulse purchase that you may regret later.

3. Setting a budget: Preparing a budget before you start looking at properties can help you identify properties that are within your price range. This can help you avoid wasting time looking at properties that are out of your budget.

4. Getting pre-approved for a mortgage: If you're buying a property, getting preapproved for a mortgage can give you a competitive edge over other buyers. This can also help you identify how much you can afford to spend on a property.

5. Preparing your property for sale: If you're selling a property, preparing it for sale can help you attract potential buyers and get the best possible price. This can include staging the property, making necessary repairs, and highlighting its best features

We specialize in residential sales and property management, and project marketing. The agency has over 40 offices across the state, and their team of professionals is committed to delivering exceptional customer service and achieving the best possible outcomes for their clients.

In a changing market like now, it is the best time to reach out to one of our local professional to assist you in all your real estate needs.

Regards,

Dean O'Brien

Get more MONEY for more home!

Example scenario: Jake and Jane

Jake and Jane want to find out their maximum borrowing capacity before they start looking for their new home, so they understand their budget.

Jake: Full time salary $80,000 pa

Jane: Part time salary $45,000 pa

1x credit card: $1,000 limit

We can test Jake and Jane’s borrowing capacity with 3 lenders, all assuming a loan to value ratio of 90% including LMI, to show how loan amounts vary by lender:

LENDER A

Max. loan amount: $550,000

• Hard on servicing, great products and very popular with younger borrowers as they are at the forefront of ‘ethical banking’

LENDER B

Max. loan amount: $835,000

• The most generous for servicing, and will offer the maximum loan amount available

LENDER C

Max. loan amount: $650,000

• Broadly considered to be ‘middle of the road’ in terms of servicing capacity

Lender A assigns a higher baseline living expense, a higher minimum repayment to the credit card, and for loans at 90% or above, want to see a minimum of $1,000 per month surplus income. They also have a debt-to-income ratio maximum of 5.

Lender B only wants to see a $1 surplus and has no debt-to-income ratio test.

Like Lender C, other lenders will scatter somewhere in the middle, but it highlights just how much bearing policy and individual lender appetite can be the difference between a “Yes” and “No”.

If you have any customers who indicate they are disappointed with what their bank has told them their maximum borrowing power is, or they tell you they ‘can’t afford’ a certain package, let’s see if we can find them a more generous proposition.

Using a mortgage broker is a smart way to go

$

We provide real choice, looking to find you the right deal.

We work with multiple lenders, not just one – keeping competition alive.

We may negotiate a better outcome.

Let’s keep it simple.

It’s easier.

We start by catching up with you at a time and place that suits you – at home, at work or over a coffee; during the week, at night or over the weekend – we’re flexible. We’ll look at your current loans and financial circumstances and then research and find the right solution for you. We take care of the paperwork, managing the process on your behalf.

It’s fast.

We can get things moving quickly. We’ll work with our lender networks and contacts, looking to secure your finance as fast as possible.

It’s more than just loans

Lenders will ask you to take out insurance on your new property. We can help you arrange cover to keep the approval process moving quickly. We work for you and not the bank. We get to know you personally to understand your unique circumstances. From our experience we know which lenders may have the product that will meet your needs. And we negotiate for what’s right for you, not what’s right for one particular lender.

It’s all about you

Our aim is to save you time and stress, and get things moving as quickly as possible. 03 8555 2017 ©2022 MYNT Financial. All rights reserved. | Wealth and Money Pty Ltd (ACN 638 680 029) trading as MYNT Financial | Australia Credit Licence 389087.

We lease more.

We lease more.

What actually happens when your fixed rate expires?

For many mortgage-holders who fixed their home loan at a low interest rate in the past few years, the imminent expiry of their fixed-rate period will mean their minimum home loan repayments jump overnight.

But while it’s a tough time, experts say that, with planning and a careful assessment of all the options, it mightn’t be as bad as people fear.

“There are lots of things people can do right now, and other things they should be doing as the expiry comes closer,” said Kareene Koh, chief executive of Domain Home Loans.

“Being prepared can always make a huge difference.”

About 880,000 fixed-rate home loans will be due to expire in 2023, with an estimated 40 per cent facing expiry mid-year.

Many of those borrowers fixed their loans when the Reserve Bank of Australia had a record low cash rate of just 0.1 per cent, from November 2020 to April 2022.

The interest rate on their loans — locked for a fixed period of one to 10 years — would have been a few percentage points higher than the cash rate, with some borrowers locking in an interest rate below 2 per cent.

Having fixed their interest rate, their mortgage repayments wouldn’t have changed over that time, despite successive rate hikes by the RBA since May 2022.

What happens when your fixed-rate period ends?

When the fixed-rate period on a home loan ends, that fixed rate will revert to the lender’s variable standard rate.

Variable rates have been steadily rising since last year in line with 10 successive hikes by the RBA to the cash rate target, which is now sitting at 3.6 per cent.

A typical borrower with a variable-rate loan can now expect an interest rate of about 6 per cent.

Borrowers whose fixed-rate loans are expiring this year will see their required minimum repayment amounts rise sharply based on however much their lender’s variable rate is above their low fixed rate.

“This could be a rude shock, unfortunately, as this is often the cohort who bought before, or during, COVID, and they’ve never seen cash rate increases before,” said PRD chief economist Dr Diaswati Mardiasmo.

How to prepare if your fixed rate is expiring

The most important thing people can do now, in advance, is become more informed about their situation.

“A lot of people don’t even know what interest rate their loan is today, let alone what it’s likely to move to,” said Koh. “So you have to gather all your facts and do your research now, as that process takes time.

“You should also start preparing yourself for what is to come. Will you have to dig into your savings and pay some of the principal on the loan so repayments are lower, or will you need to make changes to your lifestyle?

“If you think you’ll have to adjust your lifestyle, that generally takes people three months. So why not start now and see how it feels, and if you struggle, and think they’re changes you’re not willing to make, take decisions about alternatives?”

The above table shows approximate amounts monthly home loan repayments could be when the fixed rate period on a home loan ends and a borrower rolls onto a variable rate. Estimates are based on a 30-year principal and interest loan, fixed for two years at 1.95 per cent in May 2021. Fees and charges are excluded, and this information is intended as a guide only.

*Average fixed rate, May 2021, ABS

**Assumes 400 basis point increase to the cash rate target between May 2022 and May 2023 (NAB and ANZ forecasts, February 2022) passed on in full to borrowers.

^Approximate average loan size for owner-occupier dwellings, ABS.

Those people who took out their mortgages recently on fixed rates, often borrowing to their absolute limit, could find themselves in difficulty and for them it’s vital they start the preparation early, warns independent economist Harley Dale.

“They’ll also have to take into account the forecast of multiple rate rises yet to come from the RBA,” he said. “So if they weren’t ready for the ones that have happened – that the RBA said wouldn’t happen till 2024 – they have to be ready now for more.”

Two months out from the expiry, people should start researching the different rates available in the market, looking at whether to go on another fixed rate or choose a variable one, and talking to a broker about all their options, advises Koh.

“There are a lot of different possibilities available and if any of them can shave … a few thousand dollars off the mortgage, they’d be worth having,” she said. “It’s important to shop around.”

As part of that process, Mardiasmo recommends starting a spreadsheet to lay out all the possibilities, so you can better compare rates, any cashback offers, set-up fees, any exit fees and refinancing options.

“Rates do vary and one bank is now even offering $6000 cashback, while others are offering $2000 or $3000,” she said.

And if people are unwilling to trim costs within their lifestyle or dip into savings, then there are always other options, says Koh. That might be taking in a roommate to share bills, doing more paid work to enhance income or — perhaps the last resort — renting out the property, and moving back in with parents.

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40 offices and growing

The quality of our service stems from the importance we place on the people behind our network.