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Rising interest rates got you feeling a little vulnerable? It might be time to take some control back by refinancing or asking for a rate review. Here’s why we’re seeing refinancing numbers surge across the country. In just two months we’ve seen the Reserve Bank of Australia (RBA) increase the cash rate from a record-low 0.10% to 0.85%, and it hasn’t taken long for most lenders to pass those rate increases on to customers. Unfortunately, the RBA has warned that more rate hikes are on the way, which might have left you feeling at your lender’s mercy. But there are ways you can make yourself feel more in control, including by doing what tens of thousands of mortgage holders around the country did in May: refinancing or asking their current lender for a better rate.

Homeowners are refinancing in droves

According to PEXA’s latest refinancing insights, refinancing increased by more than 20% in May (from April) across each of Australia’s four most populous states. Here’s a quick breakdown: NSW: 10,838 refinances. That’s up 20.8% on April, and up 15.6% year on year. VIC: 11,500 refinances. May up 26.7% on April, and up 23.3% year on year. QLD: 6,699 refinances. May up 21.8% on April, and up 49.6% year on year WA: 3,244 refinances. May up 25% on April, and up 46.1% year on year

So why the big increase in refinancing?

Lenders now, more than ever, need to attract and retain borrowers. So just because rates are going up, doesn’t mean you can’t scope out a better deal – especially if you have a decent amount of equity and a strong track record of meeting your mortgage repayments. If that sounds like you: you’re a good customer. And lenders want good customers. The other big reason for the recent surge in refinancing is that smaller lenders are stealing more and more borrowers away from the major banks with super-competitive rates. In fact, in NSW, Victoria, Queensland and Western Australia combined, the major banks and their subsidiaries had a net loss of more than 5,000 borrowers to non-major lenders in May, according to PEXA. Competition is fierce!

Why work with a broker now?

The amount of loans being written by brokers continues to grow. In fact, brokers are currently writing 70% of all new home loans in the country – the biggest market share ever. And as you know, brokers are loyal to you, not to any particular lender. That means that if we think you can get a better deal elsewhere, we’ll encourage and help you to do so – not hope that you’ll stay put on your current rate. And even if you don’t want to refinance with another lender, there’s always the option of asking your current bank to review your rate (and indicating that you’re prepared to refinance if they don’t come to the table). So if you’d like to find out more about what options are available to you, get in touch with us today – we’d love to help you feel like you have some agency in the period ahead. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

With interest rates on the way back up, there’s no doubt some households around the country are starting to do it a bit tough. Coincidentally, some big changes kick in on July 1 when it comes to recording financial hardship arrangements. In the past, if you were unable to meet your loan repayments, you could enter into a financial hardship arrangement with your lender and it couldn’t be reported in official credit reporting systems. In many cases, the repayment history in your credit report would show a blank month or possibly a missed payment during the hardship arrangement period. Neither of these two approaches told the full story about your credit history and that a financial arrangement had been agreed upon with your lender.

So what’s changed from 1 July 2022?

Ok, so from July 1, the credit reporting system will introduce financial hardship information into credit reports. This means that if you enter into a financial hardship arrangement that reduces your monthly loan repayments, then for the next 12 months your credit report will show: – that you were current and up to date with your payments for that hardship month, provided you made your reduced payments on time; and – a flag alongside your repayment history information for the hardship month, indicating a special payment arrangement was in place. The flag in the credit report will be referred to as ‘financial hardship information’ and can take two forms (A or V) depending on the type of arrangement: A indicates there was an arrangement for the month that temporarily deferred your repayments (which will need to be repaid later or be subject to a further arrangement). V on the other hand means the loan was varied that month to reduce your repayments. The good news is that the financial hardship information flag will only stay on your credit report for 12 months, whereas regular repayment history information stays for 24 months.

So is all this good or bad news?

Well, like most changes in life, it comes with pros and cons. The changes are intended to give you the ability to ‘protect’ your credit report if you experience financial hardship – in no way are they designed to exclude you from applying for credit. However, a financial hardship arrangement flag may prompt prospective lenders to make further inquiries to better understand your situation. If, for example, the hardship arose because of a temporary reduction in your work hours, but you’re now back in stable employment, in most cases it shouldn’t cause any major issues for your loan application – especially if we can provide proof to your prospective lender. Additionally, hardship arrangements can stem from a natural disaster that’s completely outside your control, such as a flood or bushfire, which can be explained to a lender. Importantly, the financial hardship information cannot be used by a credit reporting body to calculate your credit score, whereas regular repayments that are missed outside a hardship arrangement will impact your credit score.

Having trouble meeting your repayments? Get in touch

As you’ve probably noticed, the Reserve Bank of Australia has been aggressively raising the official cash rate in recent months, which means your monthly repayments would most certainly have gone up if you’re on a variable loan rate. And if you’re on a fixed loan rate, you also need to think ahead to what your monthly repayments might be when the fixed-rate period ends and reverts to a variable rate. So if you think more rate rises may soon strain your monthly budget, now is a good time to start putting extra money away into an offset or savings account to build up a buffer. Other options we can help out with are refinancing and debt consolidation, both of which can help reduce your monthly repayments. Whatever your circumstances, we’re here to support you however we can over the period ahead. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

We’ve seen interest rates bounce back up over the past three months, and most economists are predicting more increases to come. If you’re starting to worry about your finances, rest assured there are several steps you can take now to get on the front foot. The days of ultra-low interest rates are officially over (it was nice while it lasted!). And while all the talk of doom and gloom you see in the media about rapidly rising interest rates can be a bit spooky, now’s not the time to panic. Check out this Reserve Bank of Australia (RBA) graph here, for example. It shows interest rates are currently lower (as of July 2022) than they ever were prior to May 2019. So the current cash rate is nothing extraordinary – although it might come as a shock to newer borrowers, as we previously hadn’t had a cash rate hike since November 2010. Still, there’s no denying that some households are starting to feel the squeeze, and if you put yourself in that category, now’s the time to consider implementing one or more of the below measures.

1. Start building up a buffer

There are no two ways about it – interest rates will go up over the next few months. Currently, the RBA cash rate is at 1.35%. Economists from the big four banks are predicting it could increase to anywhere between 2.60% (Commbank) and 3.35% (ANZ) by November. That means it’s important to start planning ahead now, if you can, by building up a buffer. This usually includes putting extra money into an offset account, redraw facility, or savings account – usually a facility that’s attached to your mortgage or easy to access.

2. Reduce expenses

Stan, Netflix, Spotify, Amazon, Audible, Apple TV, Disney, Paramount+, Kayo, Binge … the list goes on. How much do you spend on subscriptions each month? While they helped us get through lockdowns, these subscription services (that you might have forgotten to cancel) could be costing you a lot more than you realise. In fact, the average Australian household spends $55/month on entertainment subscriptions. Next on the hit list: takeaway coffees. Six takeaway coffees a week costs about $27, which is about $120 a month, or $240 per couple. Instead, you can brew your own (barista-quality) coffee at home for $30-$70 a month. Then there’s Uber Eats, Menulog, DoorDash, Deliveroo – sure, takeaway dinner is great every now and then, but if you’re making a habit of it then it’ll really start to add up. And the best part about home-cooked meals is the leftovers for lunch the next day – that’s two meals for the price of one.

3. Shop around

A recent Choice study found Aldi to be the cheapest grocery store. So that’s a start when it comes to your weekly food bill (which is also going up each month thanks to inflation). Failing that, this ING survey found the average Australian family saves $114 a month simply by doing their grocery shopping online (must be because you spend less time in the choccy aisle, and more time buying just the essentials!) But it’s not just your groceries that you can shop around for a lower price on. Car insurance, home insurance, utilities, your phone bill, and your internet bill are other monthly expenses you can usually find a better deal on.

4. Refinance

While we’re on the subject of shopping around, it goes without saying that if you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan. But why refinance now if interest rates will just keep rising anyway? ⁣ Well, let’s say you refinance your variable rate home loan this month from 3.50% down to 3%. ⁣ If the RBA raises the cash rate by 0.50% next month, and your bank follows suit, your interest rate will then be 3.50%. ⁣ ⁣ But if you choose not to refinance (and your bank follows the RBA’s lead) it’ll be 4%. ⁣ This 0.5% gap would remain for all subsequent upcoming interest rate rises – so long as the banks increase their interest rates in lockstep with the RBA.⁣ Another option you can consider is consolidating multiple loans – such as a car or personal loan – into your mortgage to reduce your monthly expenses. Now, it’s important to note that if you do this you’ll pay more in interest on the car and/or personal loan over the lifetime of those loans, but if you need cash flow now, this could be a possible solution. Similarly, you can also consider refinancing to extend the term of your mortgage, which could help reduce your monthly repayments. Once again, you’ll end up paying more interest over the life of your loan with this option, but it can give you more breathing space if you need it.

5. Come and speak to us

Last but not least, if you’re concerned about what’s going on with interest rates, inflation and/or how you’ll meet your home loan repayments, please don’t hesitate to get in touch with us. Everybody’s situation is different. And we understand many of the ideas we’ve listed above might not suit your financial and personal situation. So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Single Australians under 30 snare the lion’s share of spots in the federal government’s 5% deposit first home buyer scheme, according to new data. Here’s how to secure one of the highly coveted 35,000 scheme spots released on July 1. Long gone are the days when you had to scrimp and save for a 20% deposit to buy your first home (that’s so 2019). These days, you can crack the property market with just a 5% deposit and pay no lenders’ mortgage insurance (LMI), thanks to the federal government’s First Home Guarantee (FHG) scheme. NAB – which is one of two major lenders (alongside dozens of non-majors) that provides finance under the scheme – recently released some pretty insightful data on just who is jagging the limited spots each year. The data shows almost two-thirds of people (63%) who purchased a house under the scheme were single buyers – whereas for non-scheme purchases, single buyers only made up 49% of borrowers. Of the single people snapping up First Home Guarantee spots, 59% were female and 41% were male. Government data also shows that the median age of people using the scheme is 25 to 29 years old. “People going at it alone shouldn’t be disadvantaged and we are seeing the scheme help them buy a property,” says NAB Executive Home Ownership, Andy Kerr.

How the scheme helped one homebuyer purchase 4 years sooner

First home buyers who use the scheme fast-track their property purchase by 4 to 4.5 years on average, because they don’t have to save the standard 20% deposit. Better yet, not paying LMI can save you anywhere between $4,000 and $35,000, depending on the property price and your deposit amount. This is exactly what helped car salesman Rihan Nasser purchase his villa unit last August. Initially, Rihan had been crunching the numbers on what he’d need to do to save a 20% deposit, admitting “it would have taken him years”. “The scheme fast-tracked the process by maybe two, three or four years and made it easier to come up with the deposit to buy,” says Rihan. “Once I knew I needed 5%, I knuckled down on the saving. It took me about a year and a half. I would 100% recommend the scheme. It made it so much easier.”

How to get the ball rolling today

Ok, so here’s the catch: places in the First Home Guarantee scheme are generally allocated on a first-come, first-served basis. And don’t let this year’s expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly. So if you’re a first home buyer looking to crack the property market sooner rather than later, get in touch today and we can explain the scheme to you in more detail, check if you’re eligible, and then help you apply through a participating lender. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Seven in 10 homeowners have recently used the equity in their home to renovate, invest in property or shares, or boost their superannuation. Have you thought about how you could take advantage of last year’s property price spike? You might have heard that property prices spiked 23.7% in 2021, yeah? That’s quite the growth spurt! So how do you take advantage of that growth without (or before) selling your home? Well, one way to do so is to cash out equity while property prices are high (which we’ll explain in a little more detail below). According to NAB research, three in 10 mortgage holders have recently done just that and have used the money to give their home a facelift by renovating. Other popular options include using unlocked equity to buy an investment property (16% of homeowners), invest in shares (12%) and boost super balances (8%).

So how does ‘cashing out equity’ work?

It might sound complicated – but we promise it’s not. Let’s say you bought an $800,000 house three years ago that, due to last year’s property price surge, is now worth $1 million. And let’s also say you took out a $600,000 loan for that house, which you’ve managed to pay down to $500,000 (you little beauty!). By refinancing that $500,000 loan into a $700,000 loan (70% of your property’s new market value), you can unlock $200,000 in equity to help fund a deposit for your renovations or to buy an investment property. It’s also worth noting that banks will typically let you borrow up to 80% of a property’s market value. So if you upped the ante and refinanced to an $800,000 loan, you’d be able to unlock $300,000 in equity.

Want to find out more about unlocking the equity in your home?

If it still all sounds a little confusing, don’t stress, we’d be more than happy to sit down with you and help you work out how much equity you can unlock. And if you decide to proceed, the good news is part of the process can include refinancing your home loan. Why’s that good news? Well, just because interest rates are going up, doesn’t mean you can’t scope out a better deal on your mortgage. Competition amongst lenders remains fierce, particularly if you have a decent amount of equity and a strong track record of meeting your mortgage repayments.⁣ So if you’d like to explore your options when it comes to unlocking the equity potential in your home, get in touch today – we’d love to help you crunch the numbers. Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

The Reserve Bank of Australia (RBA) has increased the official cash rate by another 50 basis points to 1.85%. Here’s how to hang in there and keep up with all these monthly cash rate hikes.

Another month, another RBA cash rate hike – that’s four months in a row now!

It’s hard to believe that at the beginning of May the cash rate was just 0.10%. Today, it was increased to 1.85%.

RBA Governor Philip Lowe said in a statement that today’s increase was a further step in the normalisation of monetary conditions in Australia.

“The increase in interest rates over recent months has been required to bring inflation back to target and to create a more sustainable balance of demand and supply in the Australian economy,” said Governor Lowe.

“The (RBA) board expects to take further steps in the process of normalising monetary conditions over the months ahead, but it is not on a pre-set path.”

If you’re having a little trouble hanging in there, below is a condensed version of an article we put out last week to help you alleviate some pressure on the household budget.

1. Build up a buffer

There are no two ways about it – interest rates will only continue to climb in the months ahead.

That means it’s important to start planning ahead now, if you can, by building up a buffer.

This usually includes putting extra money into an offset account, redraw facility, or savings account – usually a facility that’s attached to your mortgage or easy to access.

2. Reduce expenses

Stan, Netflix, Spotify, Amazon, Audible, Apple TV, Disney, Paramount+, Kayo, Binge … how much do you spend on subscriptions each month? And how many can you cut out?

Next on the hit list: takeaway coffees. Six takeaway coffees a week costs you about $120 per month, or $240 per couple.

Instead, you can brew your own (barista-quality) coffee at home for $30-$70 a month.

And if you can, try to cut back on takeaway meals – they can really add up over time and home-cooked meals provide more leftovers for lunch the next day, too.

3. Shop around

A recent Choice study found Aldi to be the cheapest grocery store. Failing that, this ING survey found the average Australian family saves $114 a month simply by doing their grocery shopping online.

And don’t forget to look around for better deals on your car insurance, pet insurance (sorry Rex!), home insurance, utilities, your phone bill, and your internet bill.

4. Refinance

If you haven’t refinanced for a while, there’s a decent chance you could get a better rate on your home loan.

And you may want to get the ball rolling sooner rather than later.

That’s because lenders need to stress test your ability to meet your home loan repayments at an interest rate that’s at least 3% above the loan product rate you’re being offered.

So as interest rates go up, so too will the hurdle you’ll need to clear to pass that test (aka home loan serviceability).

Another option to consider is consolidating multiple loans – such as a car or personal loan – into your mortgage to reduce your monthly expenses.

Similarly, you can also consider refinancing to extend the term of your mortgage, which could help reduce your monthly repayments.

Both these options come with a downside, however, as by extending them you’ll pay more interest on the loan than you would’ve otherwise (ie. car loans are shorter than home loans).

But if you need cash flow now they can be an option to get you out of a jam.

5. Come and speak to us

Last but not least, if you’re concerned about what’s going on with interest rates, inflation and/or how you’ll meet your home loan repayments, please don’t hesitate to get in touch with us.

Everybody’s situation is different. And we understand many of the ideas we’ve listed above might not suit your financial and personal situation.

So if you’re worried about how you’ll meet your repayments in the months ahead, give us a call today. We’d love to sit down with you and help you work out a plan moving forward.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

Thinking about refinancing? As interest rates rise, so do the hurdles you need to clear. Here’s why you might want to look at refinancing soon to avoid potentially missing out.

When was the last time you refinanced?

If the answer is “never”, or you can’t actually remember, there’s a good chance you’re paying a higher interest rate than you could be due to the “loyalty tax”.

You see, the banks don’t think you’re paying attention, and as such, they only offer their lowest rates to new customers in a bid to win them over – as proven by the RBA.

In fact, a recent RateCity analysis found that customers who stay loyal to their bank could be hit with an extra $5,101 in interest over the next three years alone (based on a $500,000 loan taken out with CBA in 2019).

For a $750,000 loan that would be an extra $7,652 in interest, and for a $1 million loan it’s $10,202 extra.

This is a big reason why owner-occupier refinancing across the country rose 9.7% in June to a new record high of $12.7 billion, according to the Australian Bureau of Statistics.

Great. But why is refinancing now so important?

Ok, so when you refinance, your new lender must assess something called your “home loan serviceability”.

Basically, that’s your ability to meet your home loan repayments at an interest rate that’s at least 3% above the rate you’re being offered.

And as you might have seen on the news, the big four banks are tipping the RBA’s official cash rate to increase from 1.85% in August to anywhere between 2.60% (Commbank forecast) and 3.35% (ANZ forecast) by November.

That means as interest rates go up, so too will the hurdle you’ll need to clear for home loan serviceability when refinancing.

All in all, that means the sooner you refinance, the lower the hurdle you’ll need to clear to ensure you’re not stuck with your current rate and lender.

How to explore your refinancing options

This is the easy bit! Simply get in touch today and we’ll help you get the ball rolling.

And even if you don’t want to refinance with another lender, there’s always the option of asking your current lender to review your rate, indicating that you’re prepared to refinance if they don’t come to the table.

After all, loyalty should be a two-way street!

So if you’d like to find out more about what options are available to you, give us a call or flick us an email today – we want to help you through the period ahead as much as we possibly can!

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.