Home improvement borrowing on the rise
Thursday the 30th of July, 2009 8 Comments »
Posted by Iden Money .
Refinancing is on the rise as increasing number of home owners are looking to borrow to renovate their properties. It is said that the amounts of refinancing ranged from $20,000 to $100,000. “It’s the major trend we have noticed in recent months as activity in the residential property market has slowed slightly during the winter” Loan Market Group said. They said “home owners making improvements to their properties now could be looking to sell when the residential real estate market picks up, with spring traditionally a popular time for vendors to put properties up for sale.”
At times when people are reluctant to sell they will often consider renovating to enhance and prepare their properties for the market when it is on the rise again. So far in 2009, the activities in the residential property market have been dominated by the influx of first home buyers taking advantage of the low interest rates and of course the boosted First Home Owners Grant (FHOG).
As inquiries from first home buyers have started to steady or even dip a bit, inquiries from investors are starting to increase. With limited properties available, the rental market is as strong as ever and combined with lower interest rates, investors are eyeing the potential for good return on investment and better cash flows.
Brian Rowe, director of Parramatta based Iden Money said “Many investors were burnt in the sharemarket collapse and are returning to property investment with a view to creating possible long term wealth growth. With low interest rates tipped to rise in the near future and a short supply of properties, there’s no reason why any investor should turn their back on property investment.
With tightening loan approval criteria some people are finding it difficult to enter the property market. The lucky people who have succeeded in purchasing, in view of the Prime Minister’s recent comments that rates may rise by up to 1% by next July, should consider locking in a fixed interest rate. Even with upgrading or renovating, it’s actually a good time to take out a loan, upgrade and think about switching to a fixed rate. Many borrowers currently have a variable rate around 5.8% with a major bank. If the government is right, this could move to 6.8% by mid next year, adding an additional $200 per month to mortgage repayments on a $300,000 loan. The move now to a fixed rate at 5.70% will actually reduce the monthly repayment by $20 and lock it in for two years, a saving of $5280 in two years, when compared to a variable rate at 6.8%..
Iden Money has one of the lowest fixed rates in the market today. With an amazingly low fixed rate of 5.69% for 2 years, for a loan with all of the bells and whistles including 100% offset account, card access, telephone and internet banking, why would you not consider the Prime Minister’s warning and lock into a medium term fixed rate?”
You can learn more about fixed rates by clicking here.
If you have any questions or would like more information, call Iden Money on 1300 334 336 or email info@idenmoney.com.au.
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September 11th, 2009 at 8:30 pm
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October 16th, 2009 at 2:35 am
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April 7th, 2010 at 5:26 pm
I think Greenspan is getting senile, today he said that you can stop asset bubbles by increasing capital requirements. That just increases the cost of credit. The next time you have a real estate bubble, you’ll have the same problem, assuming that banks are still in the business of loaning against real estate. If you want to stop this problem, then eliminate the federal subsidies for real estate development and investment, then require people in that industry to put their own money at risk instead of someone elses. If Greenspan really wants to change the banking system, though, then simply ban 95% and 90% LTV loans. Require a bigger equity cushion. BTW, the “too big to fail” argument is a fallacious one. During the Great Depression, Canada had no bank failures. The reason was that their banks were very large. The banks closed branches, etc., but none of them failed. By contrast, the US was dominated by thousands of very small banks, and we had more than 10,000 of them fail. So there is nothing inherently unsafe about a banking system dominated by large banks. The real problem with large banks is that during good times, they don’t provide enough competition for each other.
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June 3rd, 2010 at 6:55 pm
It sounds like you’re creating problems yourself by trying to solve this issue instead of looking at why their is a problem in the first place