Online Real Estate Technology

Is it wise to lock into a fixed-rate home loan or should you continue to keep a keen eye on the market?

Up to 30 per cent of new home loan customers are fixing the interest rate on all or part of their borrowings, a record market share for fixed-rate loans in Australia.

If you’re considering a fixed-rate deal, you need to research all your borrowing options and be aware of the risks.

You shouldn’t blindly accept that the interest rate cycle is at the bottom, either. Many economists and commentators believe the Reserve Bank is engaging in a ”tactical pause” on rate cuts.

”I think it’s too soon to lock in,” says adviser Richard Wakelin, of Wakelin Property Advisory. ”It may not happen next month or the month after, but there is room for another rate cut.”

The RBA held its cash rate at 3 per cent at its March and April meetings. On both occasions the bank said slightly sub-par economic growth gave it the room to cut rates again if necessary.

Read more »

Twitter has began to allow ads to be targeted at users based on the words written in ‘tweets’ and messages forwarded to followers at the popular social network.

Previously, contents of Twitter messages relied on algorithms that pool the interests of users to send them potentially relevant ads in the form of tweets ‘promoted’ at the top of feeds.

Twitter produce manager Nipoon Malhotra said the new feature would allow ‘advertisers to reach users based on the keywords in their recent tweets and the tweets with which users recently engaged.’

Malhotra gave the example of a concert venue being able to target local music lovers with tweets promoting upcoming shows by bands they have raved about in messages at Twitter.

‘Users won’t see any difference in their use of Twitter; we’re not showing ads more frequently in timelines, and users can still dismiss promoted tweets they don’t find relevant,’ Malhotra said in a blog post.

Twitter is expected to earn $US582.8 million ($A563.55 million) globally in ad revenue this year and nearly $US1 billion next year, according to industry tracker eMarketer.

Story source: www.bigpond.com

"Middle Australia" is driving capital city price rises this year, analysts say.

RP Data researcher Cameron Kusher says that suburbs with middle-priced homes across the country are attracting the greatest increases in home values.

"Sixty per cent of these have recorded growth of 1.6 per cent over the year to February 2013," Mr Kusher said.

By contrast, "values have fallen by as much as -0.9 per cent and -0.6 per cent across affordable suburbs and the most expensive suburbs, respectively".

The RP Data-Rismark Home Value Index results for March indicated that capital city home values increased by 1.3 per cent over the month and 2.8 per cent over the quarter.

Read more »

The number of dwelling approvals increased by 3.1 per cent in February, said the Housing Industry Association, the voice of Australia’s residential building industry.

“We have seen indicators of consumer sentiment improve over recent months and we may well be seeing an early sign that this is flowing through to activity on the ground. After two consecutive months where approval numbers slipped back it is pleasing to see a material improvement in February,” said HIA Economist, Geordan Murray.

“A 4.2 per cent increase in approvals for detached houses was the main driver of this result although approvals for multi-unit dwellings also posted a 1.6 per cent increase during February.

Read more »

At its meeting today, the Board decided to leave the cash rate unchanged at 3.0 per cent.

Global growth is forecast to be a little below average for a time, but the downside risks appear to be reduced. While Europe remains in recession, the United States is experiencing a moderate expansion and growth in China has stabilised at a fairly robust pace. Around Asia generally, growth was dampened by the earlier slowing in China and the weakness in Europe, but again there are signs of stabilisation. Commodity prices have declined somewhat recently, but are still at historically high levels.

Internationally, financial conditions are very accommodative. Risk spreads are narrow and funding conditions for financial institutions have improved. Long-term interest rates faced by highly rated sovereigns, including Australia, remain at exceptionally low levels. Borrowing conditions for large corporations are similarly very attractive. Share prices are substantially above their low points. However, the task of putting private and public finances on sustainable paths in several major countries is far from complete. Accordingly, financial markets remain vulnerable to setbacks.

Read more »

Mortgage stress is on the rise as Australians worry about losing their jobs.

The latest Genworth homebuyer confidence index, which tracks the mood of people who own or are thinking of buying a property, found nearly a quarter of those with a home loan had problems meeting repayments.

The result was up from 18 per cent six months ago, and reflects increasing concerns about unemployment and job security, Genworth chief commercial officer Bridget Sakr says.

"There is uncertainty from a local and global perspective," she said.

"Unemployment and underemployment is what is driving that concern."

Ms Sakr said worries about either job losses or reduced hours at work, as well as cost of living pressures, had a bigger impact on borrowers than falling interest rates.

Read more »

Figures from the Australian Taxation Office show property investment in self-managed super funds is growing fast.

”There is now a significant trend towards direct property investment in SMSFs because a lot of baby boomers are wanting to take control of their super,” says Michael Yardney, director of Metropole Property Strategists. ”They’ve lost confidence in the managed-funds industry and the volatility of the sharemarket is fresh in their minds so they want to invest in the security of bricks and mortar.”

Significant tax breaks are the biggest drawcard for SMSF investors. Rental income and capital gains are taxed at 15 per cent and if you hold the property in your SMSF until your super goes into the pension phase, you pay no tax on the rental income or on the capital gains if you sell.

On the downside, you can’t live in the property and neither can any friends or family members. If the property is negatively geared, the tax offset only applies to income earned within the fund, not to your regular income. Borrowed funds cannot be used for major improvements or to substantially change the property. And there are costs involved in setting up and running an SMSF and setting up the bare trust required to purchase property.

It’s also worth noting that under present legislation you can’t refinance a property in an SMSF in order to gain access to equity and buy another property. For this reason, younger investors looking to build their asset base would be better placed outside the SMSF environment.

”While I can see the attraction of buying new, I don’t like buying new because you pay a premium,” Yardney says. ”Instead, look for something which is neat and tidy and is not going to need a lot of work in maintenance and repairs.”

Story by Kate Farrelly  Story source: www.domain.com.au

There is growing confidence among mortgage brokers that banks will soon make small, independent cuts to their standard variable lending rates.

A survey conducted by home loan provider 1300HomeLoan of its broker network found about three quarters were expecting a reduction in retail bank lending rates, even if the central bank keeps the official cash rate steady.

Of these, 51 per cent were expecting small reductions of up to 10 basis points by lenders.

A further 25 per cent of the 214 brokers polled are expecting cuts of up to 25 basis points by retail banks, but 24 per cent do not anticipate an independent move any time soon.

"The banks have no issues at the moment with cost of funds, and as they compete for more business, variable rates could be reduced slightly in the months ahead," 1300HomeLoan managing director John Kolenda said in a statement.

The Reserve Bank of Australia has kept the cash rate at three per cent at its two board meetings this year, but has indicated it has scope ease monetary policy further should the economy require a further boost.

Story source: ninemsn.com.au

The chances of more interest rate cuts have improved after home loan approvals fell in January.

The number home loans approved in January fell 1.5 per cent to 44,383, figures released by the Australian Bureau of Statistics on Wednesday show.

JP Morgan economist Tom Kennedy says it was the fourth consecutive month that approvals fell and was a sign the Reserve Bank of Australia needed to cut the cash rate further.

"That could suggest that consumers are still pretty apprehensive in acquiring new debt even though the RBA has delivered significant easing over the past 18 months," he said.

"I definitely think it supports the bias for the RBA to maintain a dovish tone and for rates to go lower."

The RBA cut the cash rate 1.75 percentage points between November 2011 and December 2012, bringing it to its current level of three per cent.

HSBC Australia chief economist Paul Bloxham said recent interest rate cuts by the central bank were yet to take effect in January.

"Consumer sentiment jumped sharply in February and we know it held onto those gains in March," he said.

"We are yet to see the full effect of monetary policy on housing finance number and we expect to see more in the coming months."

Mr Bloxham said he doesn’t expect the Reserve Bank of Australia to cut the cash rate in 2013 after making four cuts in 2012.

"The soft patch in the economy is probably behind us, we’re going to see growth pick up on the back of the rate cuts that have already been delivered," he said.

Story source: http://www.realestateinvestar.com.au

A Reserve Bank of Australia official says the large surge in employment growth in February will not, by itself, have an impact on the interest rate outlook.

Total employment surged by 71,500 in February – the largest monthly increase since July 2000 and was much higher than the 8,000 increase the market was expecting.

The unemployment rate remained at 5.4 per cent for the third month in row, figures released by the Australian Bureau of Statistics showed on Thursday.

RBA assistant governor (economic) Dr Christopher Kent said the employment data was surprising.

"Our forecast has been for a gradual edging higher in the unemployment rate," he said in a speech to the Australian Institute of Building at the University of Technology, Sydney.

Dr Kent was asked how many months of good jobs figures would mean an end to the interest rate reduction cycle.

"I don’t have an exact number, it’s going to be very hard to predict," he said. "I would personally think we don’t turn things around on the basis of one month’s number, this figure could be a little overstated.

"You don’t put too much on one month’s number, the labour market is very important, it’s not the full story."

The RBA has kept the cash rate steady at three per cent at its two board meetings in 2013 after cutting it four times in 2012.

AAP