"Spike in borrower activity during May: AFG"

Hi Followers

I came across this article that I want to share:

Australia's largest mortgage broker has defied data that suggests borrowers are treading cautiously, to record their biggest month in three years.

Yesterday, Australian Finance Group (AFG) announced it had processed more home loans in May than in any month since March 2009.

The AFG Mortgage Index found the company processed over $3 billion in loans during May.
AFG said it handles around 10 per cent of mortgages settled in Australia.

Leading the country was Western Australia, where home loans processed hit an all time high of $683 million for the month.

AFG’s general manager sales and operations Mark Hewitt said the spike in activity could be largely attributed to the rate cut last month.

“The automatic assumption would be that we’re seeing the effect of the rate cut at the start of May, but that’s only part of the story. We’re probably also seeing more borrowers turn to brokers to help them get the best deal in an increasingly competitive and complex market. In addition, May is generally a stronger month, after the public and school holidays in April,” he said.

“These figures do not conflict with the softening house price data published late last week," he continued.

"Mortgages are processed before sales are confirmed, so our data is more a snapshot of where we are right now. Reduced property prices and interest rates are bringing more people back into the market, but anecdotally, many potential borrowers are still worried by both the offshore news as well as weakening conditions at home.”

This information was gathered from:
http://rebonline.com.au/breaking-news/5139-spike-in-borrower-activity-during-may-afg

DEB BRADY
0405 570 903

"RBA cuts rates"

Hi Followers

Rates cut again!

considering the cash rate was slashed by 50 basis points in the same month. Not only did home values fall further in May, but we also saw consumer sentiment remain fairly steady suggesting the May rate cut has had little effect in stimulating consumer confidence and spending. The rate cut today will provide a further boost to housing affordability, which the RBA has recently suggested is back around levels not seen since 2002.
The Reserve Bank of Australia has cut the official cash rate for the second consecutive month.
The decision came as no surprise to many economists after last night’s share market fiasco.

Australian shares hit a six month low at close of business yesterday, wiping approximately $23 billion from the share market.

The share market drop, teamed with the recent drop in national house prices, forced the Reserve Bank to cut the cash rate 25 basis points to 3.50 per cent, according to RP Data’s national research director Tim Lawless.

“Our latest index data showed capital city home values fell by 1.4 per cent over the month of May which is a factor the Reserve Bank would have been conscious of when deliberating their interest rate setting,” he said.

“Such a significant fall over a single month was unexpected
“The big question now is how much of the rate cut will be passed on by the banks privately and whether this will be enough to provide a shot in the arm for the housing market.”

Angus Raine, CEO of Raine & Horne, said he expected a larger drop today.

“I was anticipating a 0.5 per cent cut, however until we know more about the fallout from the European debt crisis, a 25 basis point cut now, with another 25 points in July, is probably the most sensible course of action,” he said.

“The move by the RBA to cut the official cash rate to 3.5 per cent will provide much needed respite for owner-occupiers as lower interest rates will also help offset the impact of rising energy costs as we face the prospects of a very cold winter,” added Mr Raine.

“Likewise, with share markets around the world down by between 10 per cent and 20 per cent from their 2012 peaks, lower interest rates will help encourage more investors to take the plunge into a real estate asset, especially with vacancy rates across Australia near all-time lows.”

This information was gathered from:
http://rebonline.com.au/breaking-news/5137-rba-cuts-rates

DEB BRADY
0405 570 903

"WA Budget indicates robust growth ahead"

Hi Followers

Came across this great article that I wanted to share:

In the 2012-13 Western Australian Government Budget paper handed down almost two weeks ago, a healthy 6.7 per cent growth in property prices has been estimated for the coming financial year, with sustained increases ahead.

The WA Budget paper’s economic forecasts for 2012-13 reports the established house price index to jump from -2.5 per cent annual growth in 2011-12 to a mighty 6.7 per cent for 2012-13, higher than the consumer price index estimate of 3.5 per cent per annum and the wage price index estimate of 4.5 per cent per annum.

The Budget paper also indicates increasing transaction volumes toward a long-run trend. The paper reports an estimated 17.6 per cent growth for transfer duty in 2012-13.

Beyond 2012-13 transfer duty is estimated to be approximately 9.6 per cent per annum, though the paper states these estimates are still lower than the duty raised in 2006-07 and 2007-08.

Rental growth is looking good for WA landlords, with rental vacancy rates continuing to tighten, decreasing to 2008 levels. The Budget reports Perth’s average weekly rent has increased by eight per cent from last year to $400 per week this year.

More WA landlords are likely to receive higher land valuations in 2013-14, a reflection of the pick-up in the housing market in 2012-13; the Valuer General estimates land tax to return to the long-term average of 10 per cent per annum.

When comparing this 10 per cent increase in land tax growth to the 6.7 per cent increase for the established house price index, what this means is a higher proportion of investors compared to owner-occupiers will return to the market because naturally only investors pay the land tax, said Gavin Hegney of Hegney Property Group.

When combining all the Budget paper indicators including the strong labour market, the housing picture it paints is a very bright one, said Hegney. “We’re clearly ahead of the other states in the cycle.

 We have very strong business investment, a strengthening labour market, a lowering unemployment rate and now we’re seeing upper pressure on wages; all that flows through to house price growth.

“Stepping back from the numbers though, people are gaining confidence again in Perth. It looks like we’re in for some robust growth ahead,” Hegney said.

This information was gathered from:
http://www.apimagazine.com.au/api-online/news/2012/05/wa-budget-indicates-robust-growth-ahead

DEB BRADY
0405 570 903

Thinking of Selling?

Hi Followers

Are you thinking of making a move? Up sizing or down sizing? Call me today for an obligation free market appraisal.

DEB BRADY

0405 570 903