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.

Want 25% more sweet cashola without having to lift a finger?

Want 25% more sweet cashola without having to lift a finger?

If you’re a first home buyer living in Victoria, you’re in for an extra treat.

As a resident in Australia’s most densely populated state, finding affordable housing in the current market is tough.  Housing prices have gone through the roof of late, and it’s leaving many frustrated homebuyers without hope.

But just when you thought all was grim, in steps Big Dan with another hefty handout.  This time, he’s chipping in with a massive 25% of your deposit if you can throw a manageable 5% in the pot.

The catch is, you’re essentially handing over 25% ownership to the state government.  But you do have the option to either buy them out or pay them back when you sell.

What’s more, it’s cyclical.  Even though there’s only so much money to go around, once a homeowner pays back their share, it goes back into the Victorian Homebuyer fund to help someone else.

That’s a pretty good incentive, particularly when the median Melbourne house price is just under $900k.  But you still have to meet certain criteria.

To be eligible, you must:

  • Be at least 18
  • Have no existing interest in real estate
  • Purchase a property no more than $950,000 (Melbourne & Geelong) and $600,000 in the rest of the state
  • Earn a gross $125,000 or less per annum (individual) or no more than $200,000 (joint applicants)

The state treasurer says the fund is not exclusively for first homebuyers.  It’s also available for those who have owned a home in the past.

And it couldn’t be timelier – just as APRA tightens the lending rules.

That’s great news for those struggling to get into the market.  In a time when affordability seems like a thing of the past, this is a welcome relief.

Of course, if you’re looking for other ways to get into the market, we’ve got a strategy too.  Come and have a chat with one of our friendly team.  You still won’t have to lift a thing.

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.

The cost of owning a home has increased by 130 per cent!

The cost of owning a home has increased by 130 per cent!

Over the last two generations, the cost of owning a home has risen significantly, with Gen X bearing the brunt of debt.  And those in this unfortunate 41 – 56 year old age bracket make up a hefty chunk of homeowners in today’s market.

With interest rates low, things aren’t quite so bad.  But if they start to rise again, Gen X will struggle big time to service their mortgage repayments.  It’s in stark contrast to the Baby Boomers, who could buy in cheap and pay off a home loan without the added financial stress.  That’s why most of them are sitting pretty, having been able to retire in style.

Of course, no family wants to be left on the street, but if rates rise and wages don’t, the situation looks grim.  “The great Australian dream” no longer offers must repose.

A recent ABC report compares the older generations: X, Boomers and Silent.

 

  • Gen X (born 1965-1980)

Are paying an average of $1,425 per month in 2021 (based on the current median VIC mortgage of $400k).

  • Baby Boomers (born 1946-1964)

The Boomers would only be paying an equivalent of $910 per month by today’s figures.

  • Silent Generation (born 1928-1945)

And these guys would be looking at an even more manageable $440 per month!

 

That’s a massive $1000 p/m income loss for poor Gen X – purely due to circumstance.  And it’s money that could be far better spent on other living expenses.

Alongside these stats, it seems that wages have been stagnant over the past decade.  In comparison, income rose notably higher than inflation for those thriving generations before.

And then if you throw Millennials and Gen Zeds into the mix, you have a younger population barely able to even cough up a deposit.

Surely there has to be an easier way to save and buy without sacrificing lifestyle.  But if the government won’t budge on tax incentives, what do you do?

Easy!  You get in touch with us to find out about our property syndication model.  It can help you:

  1. get into the market sooner
  2. pay off your mortgage faster, and
  3. comfortably retire.

It just goes to show that buying a home doesn’t have to cost you your everything.