NO ENTRY – WRONG WAY, GO BACK

NO ENTRY – WRONG WAY, GO BACK

Trying to buy a new property as a first homeowner is a bit like trying to sneak into a nightclub underage:  NO ENTRY.

According to Domain’s First Home Buyer Report, an average-earning couple wanting to buy an entry-level house would have to put more than a third of their combined income towards loan repayments.  On that basis, they’d already be stranded in mortgage stress territory before they’d even begun their journey.

Of course, property “experts” are claiming that now has never been a better time for “Firsties “.  Lower prices, firmer wage growth, and higher interest accrual on savings should create the perfect climate.  But the numbers don’t lie.

Sure, it’s now easier to save for the deposit in the short term, but it’s the long-term burden of mortgage repayments that’s the killer. Those cunning interest rates might be all smiles for the gushing savings account, but they’ll soon stab you in the back when it comes time to pay down the loan. And that’s not all.  The ever rising cost of living is already eating into precious household funds. So, even getting the initial upfront payment to the vendor is not as simple as it seems.

The proof is in the pudding. January figures report an 8.1% fall in new owner-occupier first home buyer loans.  It’s the lowest it’s been since 2017, despite a flurry of government grants.

Although it looks like it should be a first homebuyers market over the coming months, CoreLogic researchers say it’s too soon to call.

If you’re finding it tough to get into the market, come and chat to us about an easier and much faster way to grow your wealth.  Our doors are always open to prospective investors and our motivation is to help the average Aussie secure a more prosperous future.

Up there, Cazaly … ?

Up there, Cazaly … ?

Imagine if we were talking about downing a few tinnies while revelling in your team’s grand final win. Because the above name is not only synonymous with shameless AFL promotion, it’s also a nod to South Melbourne’s Roy Cazaly and his famous giant leap formation to take the “mark”. His early 20th-century teammates would shout these words of encouragement each time he flew for the ball.

Unfortunately, words of encouragement are far from where we’re going with this.  When we say “up there”, … we’re referring to the ever-soaring interest rate hikes that are nothing close to scoring a win. It’s safe to say that Australia is facing some major discouragement when it comes to trying to stay financially afloat.

The Reserve Bank has already lifted rates seven times this year, and it’s not looking like letting up any time soon. They’re potentially in the running to double what they’ve already put into play.

 

Of course, in their mind, they are playing to win – and take home the trophy.

 

RBA’s plan to push through further interest rate increases has method to its madness.  It believes the hikes are necessary to fight the “scourge of inflation”. But in the interim, households are already struggling big time with high petrol prices and ballooning grocery bills. Further rate rises are certainly only going to add insult to injury.

The RBA is adamant, however, that it’s a long-game strategy. The bank’s governor, Philip Lowe, reiterates that the consequence of not raising rates would mean –

 

“The evil of inflation would be with us for longer, and the eventual increase in interest rates needed to bring it down would be greater.”

 

The RBA expects inflation to peak at 8 per cent by the end of the year – higher than the Federal Budget forecast of 7.75 per cent. That’s definitely sobering news for the average Aussie battler. But it seems our “coaches” know what they’re doing.  And the final score should reflect the hard work, dedication, and sacrifice currently faced nationwide.

Meanwhile, if you want to make your mark on the property market sooner, call us to find out how we can help.

Stressing out in the inner south

Stressing out in the inner south

It’s no secret that Australia is facing enormous mortgage stress right about now.  And, for some, it’s set to become a whole lot worse over the coming months.

With already 1.8 billion households suffering financially, things won’t exactly look any brighter if the RBA hikes their rates yet again.

It’s forecast that VIC, NSW and QLD homeowners will cop the biggest hit.  With interest rates rising and property values sliding, eastern state residents must surely be shaking in their boots.

And the predictions aren’t directed at low-income regions alone.  Some of the nation’s most affluent neighbourhoods will also be stung.

If interest rates rise again by a mere 1%, it’s expected that another 300,000 households will fall into severe debt overload in the next year.  And if inflation keeps going up while wages stay put, many will be left scrambling to cope.

 

Here’s what it currently looks like in real life.

 

  • $500k loan = monthly repayment increase of $140 = total of $472 per month since May
  • $750K loan = monthly repayment increase of $211 = total of $708 per month since May
  • $1m loan = monthly repayment increase of $281 = total of $994 per month since May

 

A household in mortgage stress is one whose monthly surplus is zero or runs negative – due to home loan repayments.  And judging by the figures above, it’s easy to see how more than half of Australia’s mortgagees might fall prey.

In Melbourne, it’s parts of the inner south that are getting kicked the hardest.

So, where does this leave Aussie homeowners?  Is there any light at the end of the tunnel?

The good news is – yes!  That’s exactly what GSA offers.  We’re all about helping everyday Australians pay off their mortgage sooner.

Come and have a chat with us.  We take the stress out, so you don’t have to.

Plunged into the stress-pool

Plunged into the stress-pool

What?  Wait a minute!  The RBA is doing what, now?

After six straight interest rises, a recent Aussie Home Loans survey has found that almost one in five borrowers are experiencing significant mortgage stress.  So, what is the RBA going to do about it?

They’re hiking their rates up even more!

There’s talk of RBA raising the cash rate as high as 3%, with economists predicting a peak of 3.35%.  The bank recently announced their latest point rise to 2.6%.  That’s a fair leap from the previous 1.85%.

As if full heads of hair around the country weren’t already falling out, this news has got Australian households reaching for the brown paper panic bag.

With only four in ten mortgage holders having budgeted for a 3% or under rate rise, more than half of homeowners nationwide are about to face a total financial meltdown.

Now let’s imagine any one of those borrowers losing their job!

Although some turbulence was expected after years of property supply and demand issues, RBA’s decisions will still hurt a lot of already-struggling families.  And it’s set to announce its next outcome over the coming months, where rates will likely climb once more.

So, how does one cope with all the stress?  It’s up, it’s down.  It’s under, it’s over.  No one quite knows which way is up.  Is there a next move to be made?  Or are we all facing a bit of a financial stalemate?

Homeowners are not getting a chance to catch their breath.  They’re sinking lower and lower into the cesspool of debt when what they really need is a lifeline.

If only there were other options.  A way out.

That’s where GSA comes in.  We’re the sturdy rope of hope for those who feel like they’re about to go under.  We offer game-changing investment strategies to help mortgagees come up for air.  And not only that.  We also help them get ahead of the curve, so their line of vision is always above the horizon.

Get in touch today to ask us more.

How will you get ahead at this rate!

How will you get ahead at this rate!

A predicted “avalanche of rate rises” from the RBA could see you paying an extra $3000 on top of your already stretched budget.

The increase is prescribed to lift Australia’s cash rate and quell the ever-climbing cost of living.  But it all sounds like a bit of a catch 22.

And it’s not just one rise.  It’s expected to be a spate of multiple increments, but experts are hesitant to say exactly when this will occur.  It’s likely to be later in the year and somewhat dependent on what’s going on with events overseas.  To get the ball rolling though, the first increase has already come into play.

 

The crux of it is – the Reserve Bank will always strive to keep inflation between 2-3%.  And this can be a delicate balancing act alongside things like maintaining low unemployment.

 

But the Aussie economy has gone gangbusters, and it’s kind of escalated out of control.  Demand is way higher than supply (for pretty much everything).  That means that all the prices have gone up too.  So, to counter this, the RBA has no choice but to stop people from borrowing and spending.  The economy simply needs to slow down to find an even keel.

 

This strategy may look like it’s going to hurt, but we’ll all be able to breathe easy in the long run.

 

Of course, it won’t do anyone any great favours until then.  Both house hunters and homeowners alike will face the extra burden of having to find more cash. And households, in general, will struggle to keep finances in check.

So, wouldn’t it be nice in times like these to have a passive income stream that operates outside the box?  A way to pay your mortgage and feed your family without looking over your shoulder?

If you’re interested in something like that, give us a call to find out about our unique investment strategy.

Whoa there, Nelly!  Home loans are doing what?

Whoa there, Nelly! Home loans are doing what?

It’s been super easy to secure a home loan over the past 12 months or so.  Meagre interest rates, first homebuyer schemes, and looser lending standards have made mortgage applications a breeze.

But it seems that, once again, all good things must come to an end.

Not only has record home buying pushed property prices to new (and rather unaffordable) heights, it’s also resulted in whopping debts across the country. Mortgage holders will cruelly face the music as they realise what they’ve done.

ABC points out that the total value of monthly home loan approvals jumped by more than two thirds over the past year.  And that’s not even taking into consideration the refinancing of existing loans.

So, the Reserve Bank thought it was high time they stepped in to bring things back into balance.  Meetings between the RBA, the treasurer, and the Council of Financial Regulators are already in play.

The expectation is that APRA will crack down on debt-to-income ratios.  So, applying for a loan any greater than six times your household income does not bode well.  And limitations will be placed on low-deposit home loans to prevent further crippling household debt.

 

You may be thinking – surely booming property prices is fantastic news for homeowners.

 

Well, yes and no.  The simple fact is, the higher the price, the greater the mortgage.  Especially with a lower deposit.  That means there’s still an eye-watering sum to be paid eventually.  Of course, low interest rates and interest-only repayments will help in the short term.  But when rates rise and the principal loan payments kick in, mortgagees are in for a rude financial shock.

So, where does that leave you if you (a) have an existing mortgage or (b) want to enter the market?  You’re either struggling to pay your loan or labouring to find something you can afford.

That’s where we come in.  We created a unique strategy specifically with you in mind.

Come and have a chat with one of our consultants today.  You’ll be back on that financial horse in no time.