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28/08/2023

What to know before refinancing your investment property loan
If you’re currently not happy with your interest rate it could be worth refinancing and getting a better deal.

If you’re currently not happy with your interest rate it could be worth refinancing and getting a better deal.

However, refinancing an investment property loan is a little bit different from refinancing an owner-occupier loan. Here are five things you should know before securing a better deal.

1. The cost of refinancing
Even though refinancing to a better rate can save you money down the track, it will initially cost you a bit of money. There are several costs which may be attached to refinancing, such as the application fee, discharge fee, settlement fee, mortgage registration fee, exit fee, and so on.

With that said, interest rates for investor loans are generally a bit higher than rates on owner-occupier loans so refinancing to a lower rate will generally work out to be cost-effective in the long run. You may even be able to recoup most, or all of these costs after a few months of repayments, or within the first few years.

2. Tax deductions
One of the perks of being a property investor is the number of tax deductions you may be able to take advantage of. If you’re refinancing an investment loan, did you know that you might be able to claim a tax deduction for the borrowing costs and exit fees? There are some cases where this can apply which is why it's recommended to speak with your tax adviser first.

3. Your loan to value ratio (LVR)
When you’re refinancing, the higher your loan to value ratio (LVR) the lower your equity, and the higher the risk you represent to the lender. If you have a high LVR, the lender may charge you a higher interest rate to offset this risk. Investment loans generally have stricter LVR requirements and many lenders won’t even allow you to refinance unless your LVR is at least 75% or below.

4. Credit rating
Your credit score plays a big role in determining what interest rate you’ll pay on your loan - the higher your credit rating is, the less risky you are in the eyes of the lender. For investors, having a good credit score is especially important as there are tougher lending restrictions on investment loans.

Refinancing represents an application for credit, which will appear on your credit report and can influence your credit score. If you refinance too often, lenders may be wary about allowing you to refinance.

5. Proof of income
When refinancing a mortgage, investors are scrutinised more than owner-occupiers. Investors need to provide more documentation of proof of income, including tax returns and salary slips, rental income received from the property, and so on. In cases where the property has been vacant for some time, or where rental income has been intermittent, some lenders may not consider the rent to be part of your income at all.

16/08/2023

How do cash rate increases impact your investment loan?

Investment home loans are a popular way for people to invest in property, providing an opportunity to earn income through rental yields and capital growth.

Promoted by loans.com.au

Investment home loans are a popular way for people to invest in property, providing an opportunity to earn income through rental yields and capital growth. However, like all financial products, investment home loans are influenced by various factors, including the cash rate set by the Reserve Bank of Australia (RBA). In this article, we will explore how cash rate increases can impact your investment home loan.

The cash rate is the interest rate that banks use to borrow or lend money from the Reserve Bank of Australia. When the RBA increases the cash rate, banks and other lenders will generally increase their interest rates on loans, including investment home loans. This means that if you have an investment home loan, your repayments will increase, reducing your cash flow and potentially impacting your ability to maintain your investment property.

A cash rate increase can also impact the value of your investment property. When interest rates increase, the cost of borrowing money becomes more expensive, which can lead to a decrease in demand for property. This can result in lower property prices and potentially impact your rental income, as fewer people may be willing to pay high rental rates for a property.

Investors with variable interest rate loans will be the most impacted by cash rate increases. As the name suggests, the interest rate on these loans can change depending on market conditions, including the cash rate set by the RBA. If the cash rate increases, the interest rate on your variable interest rate loan is likely to also increase, which can have a significant impact on your repayments.

If you have a fixed-rate investment home loan, you will generally be shielded from immediate interest rate increases. Fixed-rate loans have a set interest rate for a period, typically ranging from one to five years, providing certainty and stability in repayments during that period. However, once the fixed-rate period ends, the interest rate on your loan will switch to a variable rate, which can be influenced by the cash rate.

There are a few strategies you can use to mitigate the impact of cash rate increases on your investment home loan. One option is to negotiate a lower interest rate with your lender. By doing so, you may be able to reduce your monthly repayments and make your investment property more affordable.

Another option is to consider refinancing your investment home loan. Refinancing involves replacing your current loan with a new one from a different lender, potentially with a lower interest rate or better loan features. This can help you reduce your repayments and make your investment property more affordable.

The importance of loan calculators when the RBA increases rates
When the RBA increases the cash rate, it can be helpful to use a loan calculator to determine how the increase will impact your mortgage repayments. A loan calculator can help you estimate the impact of different interest rates on your mortgage and allow you to plan for potential changes in your repayments.

If you are ready to refinance your investment loan with loans.com.au, call us to chat with a friendly lending specialist, chat with us online or check out our competitive low-interest investment home loans.

14/08/2023

Findings of short-term rental report "entirely unsurprising"

A new report has concluded Queensland's rental crisis was not caused by holiday homes, which the state's peak real estate body says reiterates what they already knew.

A lack of housing supply, not short-term letting, is to blame for Queensland's rental crisis according to the findings of a new report.

The Queensland state government commissioned the University of Queensland to assess the impacts of short term rentals like Airbnb and Stayz on the state's tight rental market after the Brisbane City Council announced it would be cracking down on short-term rental owners by hiking rates.

The report concluded that short-term rentals have a limited impact on rental affordability, and that dwelling stocks were a significant contributor to explaining rental price increases.

Deputy Premier Steven Miles said the review revealed that short-term rentals are most prevalent in high tourism coastal areas and have limited impact on wider rental affordability.

“The review found no clear alignment between the suburbs with the highest rent increases and the percentage of dwellings devoted to short-term rental. Instead, dwelling stocks emerged as the significant contributor to explaining rental prices," Mr Miles said.

Real Estate Institute of Queensland (REIQ) CEO Antonia Mercorella said the findings of the report are "entirely unsurprising".

"How many different times do we need to end up coming to the same conclusion that insufficient rental supply is the root of the issue before it hits home?” Ms Mercorella said.

“This report cements the fact there is no correlation between the prevalence of short-term rentals and nearby long-term rental affordability, and our hope is that it can finally stop distracting government from where their real focus needs to be - addressing supply.”

Read more: Is it ethical to invest in Airbnb's during a rental crisis?

The report found that there were 19,773 active short-term rentals in Queensland in the first quarter of 2023. Of those, 11,193 were used on a permanent basis, with two-thirds of these rentals within the state's south-east.

The report said the Queensland Government would now consider implementing a short-term rental registration system.

“A registration system could serve as a tool to support local governments in monitoring short term rental activity and could provide invaluable insights into its impact on our housing market over time, to inform evidence-based regulation," Mr Miles said.

Ms Mercorella said the short-term rental register contradicts the report's acknowledgement of the limited impact of short-term rentals on the market.

“The proposed short-term rental register smacks of using any excuse for the government to collect data on property investors for the purposes of ultimately penalising them through greater regulation and higher rates,” Ms Mercorella said.

“This crisis wasn’t caused by people investing in Queensland property or having holiday homes in our state.

“Planning pitfalls and various obstacles have been holding back our state’s housing supply and pathways to home ownership – and this is absolutely where the government’s focus needs to be to get to the crux of this issue.”

21/05/2023

NAB forecast a cash-rate peak of "at least" 4.1%

However, the RBA might wait until August to make another hike to fully cover the set of economic data for the second quarter of the year.

Economists at NAB are expecting the cash rate to reach a peak of "at least" 4.1%, which it would likely hit by July.

After taking a pause in April, the Reserve Bank of Australia (RBA) increased the cash rate for the 11th time since the uptrend started in May 2022.

According to NAB Group, there are strong indicators that the central bank still has fuel to drive the cash rate up to hit at least 4.1%, which was in line with the February forecast.

However, there’s a possibility of the RBA choosing to hold off on further moves until August to fully assess the impacts of the previous rate hikes on inflation and wages. By then, the RBA will already have an updated consumer price index for the second quarter of the year.

Still, the 4.1% peak in the cash rate is based on the following:

Inflation remaining well above target in the near term.
Economy maintaining resilience
Tight labour market supporting a pickup in wage growth
NAB Group chief economist Alan Oster said inflation is a key consideration, given that the recent communications released by the central bank indicating expectations for inflation to return to the 2% to 3% target only by June 2025.

“Achieving further progress towards the target in 2024 and 2025 will depend on the services side where the outlook for wages growth, inflation expectations and the resilience of demand will be increasingly important,” he said.

With regards to the economy, Mr Oster said strong population growth and rebounding services consumption remained supportive despite the pressures from higher interest rates and inflation.

“This resilience has also been reflected in the strength of labour demand which has seen strong employment growth, and the unemployment rate hover at very low levels since mid 2022,” he said.

“This is supporting incomes with hourly wage growth already running at over 3% in 2022 and set to strengthen this year, with additional wage pressure likely to come from ongoing tightness in the labour market as well as the next minimum and award wage increase.”

With all things considered, Mr Oster said the impact of higher rates on household budgets and the wider economy would lead to a slowdown in the second half of 2023 and into 2024, with the annual GDP growth hitting 1% as unemployment rate rise.

“We continue to expect the cash rate to return to a more neutral rate as this slowdown takes hold,” he said.

“Our view is that neutral should involve a small positive real rate — that could be a cash rate of around 3% in nominal terms and we expect to see the RBA cutting to around this level from mid-2024.”

Article by Your Investment Property Magazine

06/04/2023

RBA takes a breather, holds cash rate
After 10 consecutive months of increases, the RBA has held the cash rate at 3.60% in April.

The Reserve Bank of Australia hold the cash rate at 3.60% for the month of April, inline with the predictions of a pause by CommBank and Westpac.

Here are the highlights of the statement by the RBA Governor Philip Lowe:

Reason for holding the cash rate:

The RBA recognises that the monetary policy operates with a lag and that the full effect of the rate hikes has yet to be felt.
The pause in the rate hike will provide additional time to assess the impact of the increase in interest rates to date and the economic outlook.
Inflation:

While global inflation remains very high, the monthly CPI indicator suggests that inflation has already peaked in Australia.
Goods price inflation is expected to moderate over the months ahead due to global developments and softer demand in Australia.
Meanwhile, rents are increasing at the fastest rate in some years, with vacancy rates low in many parts of the country.
The central forecast is for inflation to decline this year and next to around 3% in mid-2025.
Economy:

The Australian economic growth has slowed — growth in the next couple of years is expected to be below trend.
The combination of higher interest rates, cost-of-living pressures, and a decline in housing prices is leading to a substantial slowing in household spending.
While some households have significant savings buffers, others are experiencing a “painful squeeze” on their finances.
Labour:

Unemployment rate is at a near 50-year low, while underemployment remains low.
Firms are facing difficulties hiring workers.
Wages growth is continuing to increase in response to the tight labour market and higher inflation.
Wages growth is still consistent with the inflation target.
Outlook

The Board maintains its priority to achieve inflation of around 2%-3% while keeping the economy on an even keel.
Some further tightening may well be needed to ensure that the goal is achieved.
The Board will be keeping close attention to developments in the global economy, trends in household spending and the outlook for inflation and the labour market in assessing when and how much further interest rates need to increase.
CreditorWatch chief economist Anneke Thompson said the RBA was faced with a set of data that gave it no clear indication of which way to move.

“On the one hand, businesses are still reporting very strong conditions and the labour market is still very tight; On the other hand, retail spending has flatlined since September and inflation is falling, though still high and well out of the target range,” she said.

Ms Thompson believes the economy seems to be at an inflection point and the only question that remains is how hard it will likely fall.

“It is highly likely that monetary policy is now in restrictive territory. That is, the economy cannot grow with the cash rate as it stands,” she said.

“This is, of course, intentional, and now the question is how long the RBA needs to keep the cash rate in restrictive territory before they can release the brakes, so to speak, and allow less restrictive credit conditions.”

For Ms Thompson, this month’s pause will buy the RBA more time to assess data before “inflicting any more pain” on Australian borrowers.

“The Australian economy is particularly sensitive to interest rate rises, more so than the US or Europe, due to the volume of borrowers on or soon moving to variable interest rates. This relatively unique factor is probably the main one allowing our central bank to pause, where others are still tightening,” she said.

Article by Your Investment Property

22/03/2023

NMDData Property Research for 2023

Continuous interest rate rises, and inflationary pressures coupled with Utility and petrol price hikes have bitten hard and buyers’ attention has been diverted to a wait and see strategy which has led to a slow start in 2023. Analysts predict the downward trend will gain momentum this year and negative consumer sentiment will be heightened as further interest rate hikes and Inflationary pressures continue in 2023.
Slow population growth and slowing home loan approval rates will hamper the recovery of the Construction and Real Estate Industries.

Housing Finance Approval Rates

In January 2023 in seasonally adjusted terms, the value of new loan commitments:
• for total housing fell 5.3% to $22.1b, after a fall of 4.3% in December. It was 35.0% lower compared to a year ago.
• for owner-occupier housing fell 4.9% to $14.7b and was 35.1% lower compared to a year ago
• for investor housing fell 6.0% to $7.4b and was 34.8% lower compared to a year ago
• for construction finance fell 2.5%, In trend terms, it was flat i.e., remaining at the same level as the previous month.
• for the purchase of property fell 0.7%, after a fall of 6.6% in December. In trend terms, it fell 1.5%.
(information provided by ABS- Australian Bureau of Statistics) (Feb, Mar also trending downward)

The 2008 GFC showed us that construction transferred to the renovation markets Australia wide. Homeowners reluctant to sell, directed their spending interests in improving their existing homes rather than sell.
Australia’s previous Renovation Boom was in response to the Federal Government Tax Concessions, Home builder programs and handouts from the Covid 19 Pandemic in 2021/2022. Retailers and suppliers recorded record growth in sales. A REPEAT is inevitable; the forthcoming recession will lengthen the period of spend on Home Improvements.

Homeowners and investors spent as a collective 9.2 Billion dollars on renovations in Jan – Dec 2019, 9.7 Billion Dollars in 2020, 11.9 Billion Dollars in 2021 and a record 13.1 Billion Dollars in 2022. 4 Year Total: 43.9 Billion (Information provided by the Master builders Association of Australia)

During the pandemic 1.2 million investors/homeowners chose to refinance at a 2 year fixed rate which are now due to mature from April 2023 into 2024. These investors /home owners are now seeking to refinance.

The timing couldn’t be more perfect to buy! And NMDData is the advertising platform pathway to view the Best Valued and Highest Yielding PROPERTIES Australia wide. www.nmddata.com.au
Article buy NMDData

nmddata.com.au is an online real estate website that exclusively lists mortgagee foreclosure, deceas

19/03/2023

Vendors take a loss as properties sell for below expected prices
Tasmania recorded the biggest share of sales below price expectations.

The ongoing slowdown in the housing market is affecting the eventual prices properties get sold.

A new study by property software platform Openn found that only around a third of residential properties are sold for a price within 10% of a model price estimate in February.

Of all states, Tasmania had the highest share of sales below price expectations at 70% while South Australia recorded the biggest share of properties sold above expectations at 17%.

According to Openn, the share of sales falling for a price within 10% of estimate should be at 45% under normal market conditions. Any results below indicate a disconnect between buyer demand and seller expectations.

Openn managing director Peter Gibbons said agents and property sellers face challenges in estimating the current market due to uncertainties.

"Unfortunately, many of the free estimate tools used by agents and sellers to help set prices are not keeping pace with market conditions and buyer demand,” he said.

“In these circumstances, digital sales processes that allow buyers to compete transparently until true market value is achieved can be really powerful.”

12/03/2023

Investors retreat as rate hikes impact financing options

Current conditions seem to be presenting an opportunity for would-be investors to enter the market.

Investors seemed to have retreated last year as rate hikes dampen financing options across mortgage borrowers.

Figures from the Australian Bureau of Statistics that the number of new investment loan commitments has dropped nearly 28% since December 2021.

Propell managing director Michael Pell said the volume of new investors has fallen off a cliff because of the rising interest rate environment, which prevented many from accessing finance at a time when the rental markets are critically undersupplied.

“Analysis of latest official lending data also found that the number of new investor loans had been steadily increasing from the low point in May 2020 until about June last year, which is when the current investment downturn began.”

Investors accounted for around 33.6% of new mortgage lending across Australia over the month of December, down from the decade average of 34.6%.

The steep decline in investor activity would likely push rents higher over the coming months.

Figures from CoreLogic show that the annual growth in Australian rent values was 10.2% in the 12 months to December, which was a new record high.

“There is no question that the rental market is very tough for renters, which is why we need more investors purchasing property to help alleviate the current critical undersupply of rental properties,” Mr Pell said.

Mr Pell said the softer sales market conditions and the surging rents would mean an ideal timing for would-be property investors to enter the market.

“In fact, it is those prospective investors, who perhaps already own a home, who are the best placed to take advantage of the current market dynamics, while also being unlikely to face the lending headwinds that existing investors may be experiencing at present,” he said.

“With less buyer activity more generally, first or second time investors with budgets in the $600,000 to $800,000 price bracket are currently well placed to secure properties with capital growth potential as well as solid yields, especially across Southeast Queensland, and in strategic locations in New South Wales and Victoria.” Article by Your Investment Property.

14/02/2023

It’s a Buyers Market
It looks certain that the market will remain a “buyers market” during 2023 which means that buyers who are cashed up and have their finances in order will be in the driving seat during negotiations.
Sellers must be realistic about their price expectations and, in particular, with the increased amount of properties listed for sale in the coming year ahead. This should provide plenty of opportunities to buy properties at favourable prices. Hopefully these factors will help to entice prospective buyers back to the market and once again drive activity levels.
Property prices are easing across the country and there will be great bargains to be had in 2023, but knowing where to look for these housing hot spots is still a challenge for both owner occupiers and investors.
For those eager to get into the property market, it appears that after years of seemingly unstoppable housing growth, 2023 could be the year to secure a slice of the Great Australian Dream. Last year the housing market was still one of the strongest in the world with growth tracking at record levels right across the country from both the residential and rural market sectors in the first half of the year. But in 2023 analysts are predicting this will wind back substantially - great for those waiting on the sidelines to buy, less so for those hoping the music would never end.
The last 6 months of 2022 we witnessed an across-the-board property price decrease in all our capital cities, with the number of listings rising and auction clearance rates plummeting. Continuous interest rate rises and inflationary pressures coupled with Utility and petrol price hikes have bitten hard and buyers’ attention was diverted to a wait and see strategy which has led to a slow start in 2023. Analysts predict the downward trend will gain momentum this year and negative consumer sentiment will be been heightened as further interest rate hikes and Inflationary pressures continue in 2023.
Most economists predict property prices will fall nationally for the year ahead by ten to fifteen per cent, with Sydney and Melbourne expected to record the strongest downward trends. But real estate gems can still be found in any economic climate - even when there is a period of low growth forecast.
Potential buyers should seek out areas where the market has performed well in the medium to long term (three to five years), and for properties with high gross rental yields, short sale times and minimal vendor discounting.
The market as described is real – if you have the resources or access to suitable funding now is the time to act! NMDData is the pathway.
Gain the investment Advantage and Join Today: http://www.nmddata.com

21/01/2023

1. Before you even make the first step towards property research, make certain that your finances are in order and that you understand all the terms and conditions, fee’s and charges associated with the loan. Pre approval of your loan will greatly assist you in negotiations when the contract of sale is unconditional to finance. It offers you a better bargaining position Vendors are very wary of subject to finance clauses.
2. Determine your purchasing level and whether it meets your income and growth expectations. If you want a high rental return consider area’s close to Universities, trendy suburbs, hospitals etc where there is a constant supply of renters. Conversely if high capital growth is the target look for area’s with proven records of capital growth and sustainability, Inner city Period Homes will always be a good investment. Every main city in Australia has a circle of heritage properties within a 15km radius which historically have patterns of strong capital growth.

3. We’ve all heard it in a Commercial sense but location, location location is critical. It needs to be in a good location Close to schools, shops, transport and recreational facilities Quiet leafy suburbs, Ocean Views and near Parks and Gardens are the ideal settings.

4. The property needs to have potential to be able to renovate, Open plan living is extremely popular. Must have a neat and clean Kitchen Toilet bathroom and laundry facilities. If you are considering a renovator's delight, be very careful not to overcapitalize on the renovations. A decorated mansion in an industrial location is sure to fail. Prudent research is the key.

5. Research the increase in property prices and rental yield in each suburb or town of interest over the past 3 years ( Corelogic, Residex via internet ). This will give you a good indication of future growth patterns and an idea of cost comparisons of property sold within the area of interest. Local agents can also give you information about rental yields and vacancy rates including the types of properties in demand for rental investment.

6. Consider all the costs associated with the purchase of the specific property in mind. These include such expenses as: Stamp duty, Water & Council rates, Body corporate fee’s, Sinking funds, Legal fee’s, Accountancy fee’s, Real estate property Management Fee’s, building insurance, repairs & maintenance.

7. Remember that when you eventually sell your property investment, its likely that you will incur a liability to pay Capital Gains Tax. This is a complex tax and requires professional advice. Your accountant can assist you in reducing your liability and inform you of the new changes to CGT.This tax is not applicable to the family home.

8. Property investments that are negatively geared provide substantial tax benefits .A negatively geared property is when the income generated from rent is less than the interest incurred on the loan plus all the outgoings, generate a loss. In other words its making less income than the property is costing. This loss however can be offset against your income from other sources such as salary, wages, a business or income you derive from other investments. It's an effective way to reduce your tax bill each year.

9. Many property investors are losing potential tax benefits by failing to take advantage of the tax depreciations potential of their investment. New or near new buildings are depreciatable over a 40 year period at a rate of 2.5%pa. Fittings and fixtures depreciate quicker and can be written off over a 5 year period. Once again professional advice from your accountant is warranted to maximize your claim.

10. Enlist a real estate agent property manager to screen and locate a tenant. This is certainly money well spent, a property manager will prepare the leasing documents, arrange the bond, collect the rent, conduct regular inspections and also arrange for repairs on the property as required. These Fee’s and Charges are fully tax deductible against the rental income.

11. There is a growing interest in the Commercial/Industrial markets across Australia. Capital appreciation in the Commercia/Industrial sector compared to the residential markets are a lot more subdued with a regulated pattern of growth however they typically offer higher NET rental income, yields as high as 6 to 10% are achievable. They also provide longer leasing agreements, outgoing costs are incorporated in the lease, higher depreciation and tax benefits. More stringent research and professional advice from your solicitor and accountant is required before committing to a purchase. Knowledge is the key to this form of property investment.

12. Look for growth corridors. Area’s were the government is spending money on infrastructure Roads, schools public transport. The correlation between new infrastructure and property prices is a proven method and provides steady capital growth.

13. Look outside your state for property investing. It’s a great way to diversify your investment portfolio and keep up with market trends and property cycles throughout the country. Consider the Mining and rental booms in Qld, SA and WA or the Melbourne property market that is experiencing record property prices.

14 Large blocks of land are ideal for subdivisions and redevelopments Cnr blocks are the most desirable as they can provide good street access and are in high demand from builders and developers.

15 Get a building survey and pest control report ( archicentre ) This will help ascertain its condition and future money spent on maintenance. Reports include a 300 point checklist, a cost guide, a list of trades and tips on renovating It will also assist in negotiations with the agent & vendor.
16Talk to neighbours in the area. It’s amazing how much knowledge and information they possess both about the property of interest and the proximity of all the facilities. After all its in their interests. They will sell one day.

17Buy a property that has keen interested buyers. 3 or 4 bidders at an auction automatically determines it's resell potential and capital return.

18 Be very careful buying property off the plan. When the development is still in the planning stages it's very hard to get an idea of the layout, the type of fixtures and finishes, size and the final outlook of your investment. Many buyers get disappointed with the final product. Rental guarantees and the purchase price need to be heavily researched as they tend to over inflate their true value. Banks and financial institutions are very cautious with their lending procedures with these types of investments.

19 Engage a professional buyer's agent that specializes in researching, evaluating and negotiating the purchase of a property on your behalf. These are experts that for a fee will provide you with all the necessary information and advice to make a more secure and calculated purchase. They save you time, money and all the stress that’s associated with finding the right property investment.

20 Despite their sensitive and somewhat controversial nature Mortgagee and deceased estate properties are certainly worth the effort. These properties constitute real value. in todays ever tightening property market and can be purchased below market value. When buying a Mortgagee or deceased estate property careful analysis is required to determine its value. Supply , Demand and Location are factors that need to be carefully considered..

About NMD Data and John Kovacs
NMDDATA is the creator of www.nmddata.com.au , the website that is rapidly becoming the major reference point for mortgagee & deceased estate properties for sale. This website is aimed at making properties more accessible and highly visible to buyers and sellers alike, who recognise true value in today’s property market.

Managing Director John Kovacs has worked in the real estate industry since 1993. He is a former principal of a Noel Jones franchise in Richmond Victoria and has over twenty five years of real estate, advertising and marketing experience.

For further media enquiries and artwork, please contact John Kovacs on
[email protected]