Weekly wrap - Friday 20th November
The rush to Christmas
If you hadn't already heard it from everyone else, we are about 30 days from Christmas.
Which means we need to mention timeframes and deadlines. To give some context: if you signed a contract this weekend, you’re 30 days away from Christmas. We’re very close to the cutoff period of any bank that will actually make a settlement before Christmas. So be really mindful when you sign a contract. Over these next 30 days in particular, what does it look like when you sign a contract with 14 days finance? Don't take the traditional path, which is just taking that number for granted.
Reach out to your broker. Can the banks meet those timelines? We've seen settlements already for 45 days that are going to land on the 28th. That's not going to happen. The good news is: we absolutely have banks that can meet that timeframe, but we also have a lot that may not. The reality is that the world sort of stops for about two weeks.
An interesting update was published in The Australian. It quotes ANZ which had previously given some predictions about how they felt the market would perform through COVID. Their initial indications were that the property market would decrease by around 10%, which was quite a common thread. Now the prediction is actually the opposite: the market is expected to increase by about 9%. Brisbane is expected to increase by 9.5%. Sydney and Melbourne are expected to be in the 8.8% to 9.5%. This illustrates the difficulty of trying to time the perfect moment to buy.
There are two things you can negotiate on when purchasing a property: one is terms, and two is price. At the moment, since there are multiple offers and heat in the market with people trying to get in, having those terms and being able to settle before Christmas is going to be a really attractive offer, but there will only be a number of banks that can do that, so remember to have a chat with your broker.
This week again, we've seen a four-year fixed rate for owner occupied loans at 1.89% pa. Potentially, if you're looking to refinance, you might also be entitled to a $2,000 cash back.
As far as investors are concerned, there's three-year fixed rates at 2.24% pa or 2.39% pa. Most investors have been doing their numbers on 5% pa in the last two years.
We would like to share a client story: they have an investment loan that happens to be split across two banks. Two properties are involved. The clients don't have any debt on their own occupied home, have approached these two major banks a number of times to request a discount on the interest rate, only to be rejected. The rates are sitting at about 4.5% pa variable. Their loans are on packages, so the clients are also paying around $400 a year for the privilege of having a ‘supposed’ discounted interest rate as well. We were able to go to a bank that actually worked off the interest rate based on the security, as opposed to the purpose of the loan. We were able to take that from 4.5% pa to 2.19% pa variable, without ongoing fees, so that we also saved them $700 on the two package fees that weren't doing anything to be fair. And that equates to over $7,000 a year in interest savings for them.
Remember: we're here to help. A lot of people don't even know what their own bank is offering, let alone what other banks in the market are. So reach out to us, we can figure out the best option for you. It's not about refinancing, it's just about making sure that you're getting access to the rates that are currently in the market.