Weekly wrap - Friday 9th October
The banks are lending money again
Treasurer Josh Frydenberg made an announcement recently in relation to responsible lending. One of the major banks sort of fell back on their self-employed policies. They would only lend if you had 20% deposit, they've now moved that goal post. They've changed assessment rates a little bit. So the minimum assessment rates for clients actually comes down a little bit. It's a real shift in policy, a real shift in appetite across a number of the banks.
We often get asked the question: "Oh, are the bank's lending money?" The good news is: they are! We saw two more increases this week on cash-back offers. Banks are definitely keen to lend. You may have walked into a bank last week without being approved, walk into that bank this week and have an approval. Even we struggle to keep up! How overwhelming for a client to know where to go, at what bank, at what time... It's like a needle in a haystack!
But good news is the shift back towards some of the normal lending.
Top five tips for the Budget
Tip 1: First Home Buyers
The First Home Loan Deposit Scheme has opened back up, which is really exciting. Another 10,000 allocations have been released. If a client doesn't have the 20%, instead of paying mortgage insurance, the government will guarantee that effectively. There is a slight change in criteria though as they've moved away from established, so it is now only on brand new properties or new builds. They have also raised the purchase price on the properties, which is really good to see.
That scheme is very popular with first time buyers. This will be our third lot for this calendar year, so there are 30,000 spots in total. It's obviously focused around stimulating the economy, which is why it's focused around the construction and new build area. We’re sure they'll go very quickly again, as the last two lots did.
Tip 2: JobMaker
We obviously are now familiar with JobKeeper and JobSeeker, but we have a new little tune that we can use, which is JobMaker. It’s about supporting small businesses to hire new staff. So they're looking to provide what they called hiring credits. You get $200 a week as a small business to take on a new eligible staff member aged between 16 and 29, and $100 for someone up to 35 years of age. It’s good seeing people getting back into the workforce as we start to rebuild.
Tip 3: Income tax cuts brought forward
It is another siding piece of relief for the average household. For income earners between $48,000-90,000, there's relief of a little over $1,000, and up to $2,500 as a couple. For earnings between $90,000-120,000 there's another $1,000 plus, and also about $2,500 for a couple. And above $120,000, they really sort of broke it down quite well and everyone gets a touch on that, about $2,500. So again, doing every little bit they can to help make sure that money stays in the flow of the economy, which is good.
Tip 4: Super Funds
Traditionally when you start a new job, you'll be set up with a new Super account. That could be an industry Super account, or could just be one that your employer has chosen to use. So what tends to happen is that we end up with multiple Super accounts. The disadvantage to that is that each of those Supers have fees attached to them, and each has insurance policies attached to them, which then deducts from your Super.
The new change which is, to be honest, just common sense, is that when you move jobs, your Super moves with you. We encourage you to jump on the ATO website, find out where your Super accounts are, and look at consolidating them. This will definitely help to keep some of those unnecessary fees down.
Tip 5: Full tax deduction for assets
It is exciting news for self-employed clients to be able to increase that amount to basically unlimited, to be able to write off that tax purchase per year. It had obviously been a real challenge when previously it was only small amounts, and then they had raised it to $150,000, and probably saw quite a surge. Now they sort of lifted that cap, and will allow that to be done in the first year, which is really exciting. We think it's been really popular, which is why the Government are looking to extend it. Furthermore, for a lot of those businesses doing it, it really did help. There's encouragement to grow, whether it’s new vehicles, or putting on new staff, taking on new contracts. It really is a great sign for small businesses.
Hopefully you found this information informative. If you have any questions, by all means, as always reach out. We look forward to catching up next week.