Weekly Wrap - Fri 19th June
Today we’re talking about a couple of things that we’ve been seeing:
- Some changes in the market from the finance world;
- A few things happening on the state borders, which is a little bit exciting, and
- We’ll go through a couple of case studies and a few wins that we've been having as well.
Firstly, on the bank side of things, we're seeing record volumes of loan applications, that haven't been seen for quite some time - 10 plus years - and we’re seeing banks start to struggle a little bit with the volumes, and on the speed to get things done, but it’s great news for the market overall.
It shows real confidence in the market, that people are keen to get back out buying and borrowing again. Really exciting to hear those numbers, but conscious of the pressure that puts on the teams and then the time delays that it can create as well.
The question we get a lot is, is this investors? Is it owner occupiers? Is it refinance? It's a huge mix. Occupiers are playing a huge role, primarily purchasers with a few of the grants that are kicking around, but really spread, with those rates on offer across the board at the moment it's been really good.
We’re eagerly awaiting the borders to open, so let's hope that happens come the start of July. Tourism, hospitality - there's a lot of areas and a lot of industries we'd love to see back up and running and be able to share some time with friends and family. Fingers crossed we will see that happen soon.
A couple of case studies and a few wins: A really interesting story, as we mentioned last week and over previous weeks, there’s a lot of the noise and excitement around grants in particular. We’re starting to see some of that play out and what it actually means for a customer. We've had a really big win this week that we wanted to share.
We love free money! So we're happy to grab any of these grants that we can. This client is based in regional Queensland, and has been wanting to get into a property, probably thinking ke was looking at a 12-month savings plan to be able to build up the deposit he would need. Remember he's got to pay rent at the same time as trying to save. So for this guy, being able to grab these grants accelerates and gets him into a property quicker. If we think about a $475,000 maximum price range, he's not needing to pay any stamp duty, he'll have the ability to look at accessing the low deposit scheme as a first time owner, which saves him anywhere between $10,000 - $12,000 in mortgage insurance - a huge win there as well.
Then we look at grants. For this client to buy some land and build his first home, he's getting $15,000 from the First Home Owners grant in Queensland, which has been around for quite some time. He'll also be able to grab a little extra $5,000 boost, which is available for regional areas of Queensland and the $25,000 HomeBuilders boost so there's $45,000 that he gets to tap into. A little bit extra from himself and he'll be borrowing up to 90% of that value.
When we look at repayments, because interest rates are so low, it’s $390 a week to get his own home for his family, a brand new home. It doesn't get much better than that.
That's where a lot of this excitement and activity is coming from, so many of our clients are thinking that this is something they'll be doing in 6 or 12 months, and to be able to sit down with them and say, "Actually we can bring that timeline forward," is really exciting, and that's why they're jumping on it, getting out there and having a look around.
I remember whining when I only got $7,000 and it was at $21,000 and then it went to $14,00 and then I got $7,000 for my First Home Owners Grant at the time. So there are 45,000 reasons to explore that.
You will regret not taking advantage of that opportunity.
The other thing we're still seeing a lot of is refinancing. There are so many clients who are coming across as a referral from a good friend or a family member and haven't been looking at these. If you've got a rate at the moment, and it's got a 4 in front of it, what does that look and feel like?
We've taken an investment loan of 4.25% pa, $480,000, fixed, principal and interest, to 2.49% pa. That’s a savings of 1.76% pa, just short of $8,500 a year. Over a fixed term of 3 years, that's $25,000 in interest.
It blows our minds that these rates are still out there, and it’s from a bank that this client is loyal to.
I posed the question, what's your loyalty worth? When was the last time you had that conversation? When was the last time your bank rang you to have it with you?
When did you last take the time to shop around? With the ability to now go digital and do all of these things, it really is finance from the comfort of your couch. We make that process a whole lot easier for clients with a half an hour conversation that doesn't cost anything, but is well worth a chat in the current market. If you know of anyone or you can think of anyone that might benefit, tell them to jump on the phone and have a half an hour chat with us. There's no obligation and there's no cost involved.
It's really just wanting people to know what's out there because we have seen two of the prominent players in the market, in the fixed rate space, raise interest rates on fixed rates this week. So we’re really conscious that there's a bit of pressure on the cost of funding. We don't know where that's going to go. There's lots of conversations about rate locking, but again, two of them moving at the speed they did. Emailing at 4:30pm that afternoon or 5pm (close of business) by the time they open again for business the next day, rates have changed.
There’s no ability to make those changes at the speed, no lead in time, no two weeks to think about it.
Times are changing, and we're here to put energy around the good stuff that's happening. So by all means, call us and we look forward to chatting soon.