Weekly Wrap - Fri 31st July
Loan Market International Awards
We celebrated our Loan Market International Awards last Thursday, virtually of course, and it was so good to see everyone spending time together, and celebrating what has been without doubt one of the toughest years we have ever seen in our industry. Congratulations to all the Loan Market family and especially to Lauren and my whole team.
Home Builders boost Queensland applications forms
Queensland application forms have come through for the Home Builders boost. We encourage you to read about it on the Treasury website, download the Queensland version, and understand a little bit about how it works. The value we, at Market Loan Edge, will try and provide during the week will be a better understanding as the banks start to unpack this a little bit further. The key information is how the banks will let us use it, or at what portion it will be funded. Will it be possible to use it as deposit, or is it going to come a little bit later in the piece, post settlement and at slab stage? Hopefully by the end of the week we will have a clearer understanding.
We are seeing more interest in the investment space
On another topic, we are seeing a real flurry of investors coming back wanting to look at property, which is really exciting. That shows some confidence in the economy, and in the market. Of course with interest rates being so low, it means that they are generally going to be positively geared. So, again another source of income coming in. We've seen a few contracts come through this week, and definitely much more interest in the investment space. We haven't seen this sort of volumes of investors since before COVID.
It's an exciting shift in the market.
We would also like to share a client success-story: a young lady is living at home at the moment, saving $600 a week, doing really well instead of being out there and paying the four or five hundred dollars a week in rent. She was able to move home, has been saving that for a period and was able to get a mortgage with her first home, which is effectively going to be a payment of around $300 a week. And we went through and ran some scaling on what that might look like if we push that out over a 30-year loan term. With rates as low as they are, we modelled continuing to put that additional $300 down, so $600 a week to the mortgage, that she's quite comfortable putting forward. What does that look like?
The modelling literally shaved 20 years off a 30-year home loan! A lot of our work with clients is at interest rates of 2-something, so we’re suggesting many of you may be able to do more than just meet your payments. You may be able to exceed them. Is there $50, $100 extra, in this case the client could double her repayment because she's in a position to, to shave 20 years off a 30-year loan term. That’s about $110,000 in interest, which is just phenomenal.
And that's based at a 3% rate, and then we're going to split that loan, and some is going to be at 2.29%pa and some's going to be at 3% pa. There's just so much happening now, it's really exciting to be able to have those conversations with clients at the moment.
So, if you're sort of thinking about restructuring, not necessarily refinancing, we haven't had rates like this on the table before. We can now look at what does that extra payment look like? The fact that we’ve gone from 4%pa and 5%pa interest rates and we’re now at 2%- something, what does that drop look like and how can we potentially help you reduce those debt levels as quickly as we can during this time?
These are exciting conversations that we get to have during the week, day in and day out, and thought we’d share.