Update: Australian Housing Affordability

Iden Money presents excerpts from the REIA Deposit Power Housing Affordability report for the September quarter 2010.

(This article is an update on the original article on Housing Affordability and looks at housing affordability on a national basis for September 2010 quarter. Click here to see the original article.)

The year to September 2010 recorded the largest annual decline in housing affordability since the beginning of the decade, with the proportion of income required to meet loan repayments increasing 5.8 percentage points to 34.8% over the year.

Over the September quarter, housing affordability decreased 0.2 percentage points nationally. Despite the decline, some states and territories experienced a moderate improvement in affordability over the quarter, with the exception of the Australian Capital Territory, Queensland and Victoria where declines were evident.

During the quarter, the Reserve Bank of Australia’s (RBA) cash rate remained on hold at 4.5%. Whilst the average quarterly standard variable rate remained unchanged during the quarter, average quarterly fixed rates declined moderately, albeit enough to record the largest quarterly decrease observed during the year.

The Australian Capital Territory recorded a decline in housing affordability, but it remained the most affordable state or territory to own a home, with the proportion of income required to meet loan repayments increasing 0.8 percentage points to 18.8%; 16.0 percentage points below the national average. Read More »

Iden Money launches Xmas Special

On 1st December Iden Money and Property launched a low, low interest rate special on its Balanced Variable home loan.

Iden Director Brian Rowe said this offer would last until 31st January and was offered with a variable rate of just 6.87%, no application fee. The loan would also be offered as a combination loan with a low 2 year fixed rate of just 7.27%.

He said that this was a quality offer which included an offset account and discounted fixed rates between 1 and 5 years. Borrowers considering refinancing their existing loans would benefit greatly by obtaining their approval prior to the end of January.

Click here to visit our Specials page to see this offer.

RBA defends banks

The Reserve Bank of Australia has defended the move by Australia’s banks to increase interest rates beyond the .25% increase announced by the RBA on Melbourne Cup Day. Nearly all lenders have increased their variable rates between .25% and .45% with the Commonwealth Bank rising by .45%, closely followed by NAB at .43%.

Reserve Bank deputy governor Ric Battellino said banks are not increasing their profit margins on the back of rate rises. He told members at a Perth business lunch yesterday that bank margins have not changed in the past six years – remaining in the range of 2.25% and 2.5%. Read More »

Exit fees not a big issue – Brian Rowe

Iden Money Director Brian Rowe said today that he didn’t consider exit fees to be a major issue for borrowers provided the borrower carefully weighed up the advantages and disadvantages of loan products prior to settling on one.

Most lenders continue to have exit fees, some larger than others. Under the new ASIC guidelines the fees are not outlawed but must be justified.

It has been widely reported that non banks have higher exit fees than many of the banks however in most cases this is a symptom of the system in which non banks work. Exit fees charged by non banks are mostly put in place to cover the fee paid to the broker who wrote the loan, if the loan discharges in the first 4 years. Often, this fee reduces as time goes by and the lender has earnt margin income on the loan. Once the loan has run for a pre determined period the fee is no longer charged. This may not be the case with banks, who may charge a non reducing, pre-set exit fee out to 5 years. Read More »

Be careful what you wish for on exit fees

It looks so obvious. And easy. Abolish, reduce or limit so-called ‘exit fees’. What you pay to terminate your mortgage early. But usually payable, only very early, like in the first four years of a mortgage.

It might appear to get to the heart of the problem. You are unhappy with Bank A putting up its mortgage interest rate; you want to move to Bank B; but that exit charge might wipe out the benefit.

So if there’s only a low exit fee, or better still no exit fee, people will be — literally — free to move.

To, as the prime minister creatively put it, take their money and go elsewhere. Actually with a loan, it’s not your money. Read More »

New Credit Card Scams: Beware

We felt that this would be appropriate for us to share with you all an email that we received recently from a friend. Unlike most of the spam mails and chain letters, we believe that there is some truth behind this story.

Credit card scams, identity thefts are very sensitive issues and many people have suffered. So hopefully this message below can help you be aware of one of those scams.

“New Credit Card Scam”

“This one is pretty slick since they provide YOU with all the information, except the one piece they want. Read More »

Nation’s property hotspots

St George’s National Property Report released on 17 September 2009 has revealed 24 locations across the nation that are likely to provide the strongest value for home buyers.

Suburbs have been chosen based on their location attributes, the value of housing in the area, the level of amenities in the suburb and the demographic mix.

According to St George chief economist Besa Deda, the locations should continue to grow and therefore suit buyers looking to live in a blossoming area and investors seeking capital growth.

In Sydney the best ‘value for money’ suburbs were Granville, Rockdale, Lidcome, Riverwood and Waterloo.

Granville’s 18.5 km distance to the inner city and median house price of $347,500 made it the standout performer in Sydney. Read More »

Should I float on variable or fix my home loan interest rate?

There is a common view from the financial gurus in Australia that variable interest rate rises are inevitable. From financial commentators to bank economists to the Prime Minister, the view is that during 2010 the Reserve Bank will move the cash rate up. How much? We don’t know, but the PM suggested about 1% by July. Also, banks have not discounted raising interest rates independently of RBA decisions.

What does this mean to home loan borrowers? Let’s take a look. Read More »

Iden Money: Home loan specialist in Western Sydney

Iden Money lends in all areas of Australia but specialises in lending in Western Sydney, because that’s where we are based. The following suburbs are close to our base in Parramatta, which means that we know the areas well and it makes it easy for us to call on you to help with your purchase and your home loan application. We can be contacted via our enquiry form on this website or by calling us on 8844 8989 until 9.00pm every night. We promise you the very best of attention.

If you live in the following suburbs and are looking for a Home Loan / Mortgage or Leasing Broker, then contact us to get the best deals. Having served thousands of happy customers, we assure you that we will help get the right loan for you. Read More »

Big banks no longer dominate fixed rate pricing

The other interesting observation that can be made from a review  of the Infochoice data is that the big banks no longer dominate the pricing of fixed rates. For many years it was assumed that the big banks were the natural price leaders in the fixed rate segment because they could use their big treasury operations to get the best swap prices
when they put a fixed rate contract in place. Read More »