Australia’s property market is bouncing back strongly after the lows of the COVID-led economic downturn, with most metrics rapidly heading towards pre-pandemic levels.
Business intelligence firm CoreLogic reported that during the first week of November, 1,758 homes were auctioned across the capital cities, with a preliminary clearance rate of 73.2%. This compared with 2,412 at 70.6% the same time last year.
The Australian Banking Association reported in November that the number of deferred loans across the country had reduced by 70% from the pandemic peak.
As competition and confidence returns and auctions continue their rise to pre-Covid levels, buyers can give themselves an advantage in this strengthening market with a conditional approval for a home loan.
Conditional approval, available before you even have a property in mind, can give you the confidence of knowing how much you are likely to be able to borrow, something that’s vital if you’re considering bidding at auction.
A conditional approval is when a financial institution formally indicates how much they may be prepared to loan you to buy a property. As with any loan, they need to assess your financial circumstances first.
While they’re not a guarantee you’ll be approved for the loan you ultimately apply for, conditional approval can give you peace of mind when house hunting. You can approach potential purchases with a workable price range and show a potential seller you’re serious.
Going through the process will also give you a realistic picture of what you can afford before you even start looking, helping avoid a lot of stress and disappointment down the track.
Conditional approval and pre-approval are the same. Also known as an “approval in principle” or a “loan commitment letter”, conditional approval is the highest level of pre-approval.
“Unconditional approval” on the other hand, differs from conditional approvals in that it’s for a specific amount for a specific property, so the loan you apply for when you’ve found the property you want.
Conditional approvals can be given without any property in mind.
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The process for conditional approval varies across lenders, so check with your lender what specific definitions, guidelines and timeframes they have. This will ensure you’re prepared and improve your chances.
Some of the areas that may be assessed include:
One leading bank defines conditional home approval as “when a lender reviews your financial situation and creditworthiness to determine your eligibility for a home loan up to a certain limit.”
This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
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Conditional approval is a real advantage, as it indicates you’re on the right track to purchase a home. While it’s not a compulsory step in the home-buying process, it has many benefits.
It gives you a good idea of how much you can afford. This means you can attend open houses with a strong idea of what’s in your ballpark. Rather than looking at property beyond your means, you focus on homes within your budget. It stops you wasting time on unaffordable homes.
Conditional approval also gives you more confidence to put an offer on homes that meet your requirements. And you can do it quickly.
Another benefit is it helps you stand out from the crowd and boosts your negotiating power. Many people who attend home inspections aren’t there to buy. Some are just getting a feel for the market, while others are simply having a “sticky-beak”.
When you arrive at an open with conditional approval, you put yourself in a different league to these people. Agents and vendors view you as a serious buyer and may be more likely to accept your offer.
Getting several conditional approvals in a short time with multiple institutions, however, can make you look financially unstable in the eyes of potential lenders and can have a negative effect on your credit rating.
If you’re looking to buy at auction, getting conditional approval is vital.
Arranging your finance beforehand enables you to bid with confidence. You still need to be aware of market values and stay within these, though. Otherwise, you may find your lender values the property you’re looking to buy at less than you’ve agreed to pay. If this happens, you’ll need to find the shortfall.
And if you place the winning bid, you’ll need to have the required 10 per cent deposit, which the agent will ask for after the hammer falls.
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The processes for conditional approvals vary across lenders. Some can provide them within 48 hours, some will take up to two weeks.
The faster your lender can get the information they need, the faster they can process your application, so having your documents ready is key.
A loan can be denied after conditional approval. As the name suggests, conditional approval means you currently satisfy the requirements for a loan, but there’s no guarantee you’ll ultimately receive the loan, as things change.
Lenders reserve the right to deny an application if your circumstances change and you then fail to meet a requirement. These change might include:
This is why it’s vital you notify your lender about any changes in your employment or financial situation after being conditionally approved.
There are a few steps involved in formalising your home loan once you’ve been conditionally approved. First, the lender will need to verify the information you provided in the pre-approval stage.
They’ll usually need to carry out a property valuation, to ensure your loan doesn’t exceed the value of the property.
The lender will then need to confirm the conditions of the loan with you and whether you’ll need Lenders Mortgage Insurance (LMI).
Unconditional approval means that a lender has taken the time to formally assess all your paperwork, and your signed loan application, and decided to offer you a home loan based on the property you have chosen to buy.
It indicates that your application is not subject to any terms and conditions and the lender has decided that there are no unresolved issues.
If you’ve been given conditional approval for a home loan, unconditional approval can take anywhere from one day to one week, depending on your lender.
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Settlement, which is when ownership of the house formally passes from the seller to the buyer, can range from 30 to 90 days after you’ve signed your contract and paid your deposit.
Generally, a settlement period of less than a month isn’t recommended, as some lenders may not be able to meet that deadline. The settlement date will be written into the contract.
After settlement, the lender will usually draw down the loan – meaning they’ll withdraw the amount paid at settlement from your loan account.
Next, you’ll need to pay transfer duty or stamp duty and then, the property will be transferred to your name and you’ll get the keys!
Applying for conditional approval isn’t that different to applying for a home loan.
It’s a good idea to contact a mortgage broker to help you compare hundreds of loan products and determine which one is best for you. They’ll also be able to guide you through the application process.
Once you’ve picked a lender, it’s time to provide the documentation. Generally, they’ll require evidence of your identity, income, spending and residency status. They’ll also assess your assets and debt you’ve accrued.
Most lenders will also now run a credit check. The lender will then be able to use this information to determine if you’re eligible for conditional approval.
Otherwise known as a valuation, the objective of an appraisal is for the lender to ensure the mortgage isn’t giving the borrower more than the property is worth. It’s rare the appraisal would be higher than the offer, but in this scenario, the buyer may have instant equity in their home.
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Words by Erin Delahunty
If you’re looking at buying a property soon, you may want to consider getting conditional approval, so you can house hunt with greater confidence. eChoice’s expert brokers can help with that process.
Do you enjoy working with people? Do you like helping others to achieve goals? Do you have a head for figures? If you answered ‘yes’ to these three questions, then becoming a mortgage broker may be the occupation for you.
Becoming a mortgage broker enables you to:
So, what exactly does a mortgage broker do?
Well, simply put, a broker is a liaison between a borrower and a lender. To recommend financial products, a mortgage broker must first assess a borrower’s financial situation. Typically, a broker does this by delving into a borrower’s history so they can help to resolve underlying problems and can also recommend loan products that suit the borrower’s circumstances.
There are many reasons why becoming a mortgage broker may suit you. But, with the good comes the bad. So, to help you understand some of the difficulties you may encounter, we’ve described the most commonly found pros and cons of becoming a mortgage broker.
|Flexible work hours.||You’ll need to work hard to get established.|
|Independence allows you to be the boss.||Working with banks can lead to frustration.|
|Continually upgrading your skills will lead to you becoming an industry expert.||There is a great deal of compliance and legislation that you’ll need to know.|
|You’ll constantly be thinking and dealing with figures.||Dealing with significant amounts means you’ll have to be on the ball always.|
|Combining your sales and analytical skills will allow you to be successful.||The skills needed to be a broker sometimes take years to master.|
Becoming a mortgage broker is rewarding, but it takes effort. If you think that you’ll be earning millions in no time at all, then think again. The average salary for a broker hovers around $79,000 annually. Of course, you can earn a great deal more, or even less. As the saying goes, “You get out what you put in.”
So, if you’re looking for an easy ride, then this may not be the occupation for you. However, if you’re willing to work hard, apply yourself to continually upgrade your skills, and want to improve your earning capacity, then becoming a broker could be for you.
There are several tell-tale signs that you may be suited to becoming a mortgage broker. Firstly, you love to help and assist others and you revel at the opportunity to analyse a situation – you methodically examine, dissect and then interpret anything you come across.
Other tell-tale signs becoming a mortgage broker is ideal for you include:
When you become a broker, you can elect to be a PAYG employee or a self-employed sole trader. To decide which is for you consider if you’d prefer the job security of working for a mortgage brokerage or whether you’d like the opportunity to increase your income without restrictions.
Working for a brokerage means you don’t have to worry about managing the upfront and ongoing costs that come with being self-employed. Plus, you’ll typically earn a retainer, which means you don’t have to rely on generating an income yourself.
To get started as a broker you’ll need to:
Want to find out more about becoming a mortgage broker with eChoice? With over 25 lenders on our panel, superior CRM, client retention and opportunity development programs, we are a partner for growth and business building.
Make eChoice your aggregator of choice and maximise your industry potential.
As a broker, relying on repeat and referral business won’t be enough to sustain your business. Why? Well, the quantity and quality of leads will fall short of your requirements. Therefore, to be successful, you’ll need to look at alternatives.
Here’s the deal: getting the balance of leads right can mean the difference between you eating steak for dinner or having crackers. Firstly, having lots of leads doesn’t necessarily mean that you’ll be successful. Some leads won’t equate to a sale, and if you have leads that go nowhere, this can mean that you’re wasting precious time. So, qualifying your customers is a must.
It’s also vital that you get your Unique Value Proposition (UVP) right. For those who don’t know what a UVP is, it tells your customers why you’re the better option over another broker or lender. Typically your UVP includes:
When creating your UVP, it pays to tweak this a little for the type of customer that you’re trying to attract. By tweaking your UVP you cater directly to your client’s needs and they’ll be more inclined to use your service.
Once you’ve qualified your customers and refined your UVP, then it’s time to look at your marketing mix.
If you look at marketing critically, you’ll discover that around 80% of what you’re doing won’t generate any interest. The key to finding marketing that does work is to test out different methods. Some of the best techniques are:
Want to find out more about becoming a mortgage broker with eChoice? With over 25 lenders on our panel, superior CRM, client retention and opportunity development programs, we are a partner for growth and business building.
Make eChoice your aggregator of choice and maximise your industry potential.
When it comes to getting a home loan, you want to find the best deal. But, this does not mean just focusing on the lowest rate. You also need to consider what home loan features you want, the type of interest, and your circumstances. So, does a mortgage broker or bank offer you the better deal? Let’s separate the fables from reality by asking mortgage experts what they really think, so you can decide for yourself.
Most Australians like the safety of a bank because they’ve been around for years and they have greater financial backing than some smaller lenders. But, this doesn’t mean they’ll offer you the best deal. What’s the bottom line? Often banks take brand loyalty for granted and they’ll charge more for their service due to demand.
So, what did the mortgage experts have to say? Well, the hottest banking questions asked to include:
Mortgage brokers, on the other hand, are usually an unknown quantity and must earn your trust. But, they’re able to compare hundreds of loan products to find the right one for you. Plus, they’ll negotiate with a bank on your behalf, so they may be able to shave more off the interest rate your bank initially offered you.
Some of the most frequently asked broker questions according to mortgage experts are:
However, regardless of whether you use a mortgage broker or bank, conducting independent research is ‘a must’. By spending the time to research mortgages, before signing up, you’ll have a better understanding of the market and you’ll instantly recognise a good deal when you find it.
With interest rates the lowest they’ve ever been, it makes sense to pay off your mortgage now, rather than later. Why? Well, you’ll not only potentially save yourself thousands in interest repayments, but you’ll also free-up your money so you can look at investing for the future. So, how can you make your mortgage disappear in record time without busting the bank? Here are some smart tips to get you under way.
If you’re currently paying off your mortgage monthly, then consider switching to fortnightly or weekly. By paying your home loan more often, you’ll make an extra monthly payment as there are thirteen four-week months in a year, not twelve. This strategy reduces your interest, which gets calculated daily on the principal.
There are literally hundreds of home loan products on the market, so the key is finding one that matches your lifestyle and goals. Thus, you’ll need to look at far more than the interest rate when searching for the right home loan. Also, consider features such as an offset account and redraw facility and how these could save you more over the lifetime of your loan.
If you don’t feel that your current lender is looking after you and that you can get a better deal elsewhere, then start looking at your options. Once you or a mortgage broker has researched the market and you’ve found home loans that are more competitive, then arrange an appointment to see your existing lender. If they cannot match these deals, then look at securing one of the other loans that meet your purposes better.
Many people don’t know what a mortgage broker can do for them or what they charge. The good news is a mortgage broker’s service is typically free (they receive a lender commission after loan approval) and they can help you compare the market and find products that match your needs and lifestyle. Plus, a mortgage broker is there with you from the start to the finish of your home loan. Therefore, they negotiate with the lender on your behalf, answer any questions, and they help you to understand the lending process, including settlement.
If you have an interest only loan that attracts a higher interest rate, then consider changing to an interest and principal loan with a lower rate. You may also find a split loan, with a portion fixed and the other portion variable, an easier way to keep your interest down, and pay off your home loan faster.
Sure, the big four have a longstanding reputation, but sometimes smaller lenders are just as reputable with many backed by these larger banks. However, smaller lenders are often more competitive because they want your business, they can offer you a more personalised service, and a greater variety of home loan options – longer loan terms, lower fees, and market rates. Often the bigger banks must adhere to strict guidelines and cannot stray from these, whereas smaller lenders have more flexibility.
This tip is crazy: let’s say your mortgage repayment is $1159 and you can stretch to $1200 per month. So, you decide to pay the extra. Do you know that this extra $41 per month will shave $11,664.52 off the interest you’ll pay on your loan and reduce your term by 1-year 3-months? Paying a little more, a lot, can make a big difference.
An offset account makes your money work twice as hard for you. By placing your pay into a 100% offset that’s linked to your mortgage, then using only what you need, your money will reduce the interest that you pay.
So, how does it work? Well, let’s say you have a $250,000 mortgage and you’ve got $15,000 in your offset account, then you’ll only pay interest on $235,000. Therefore, the more money you have in your offset account (linked to your mortgage) the less interest you’ll pay.
Want to know the best part? If you leave $10,000 in your offset over the course of your loan, and you have an average sized mortgage, then you’ll shave over $22,000 off your home loan and around 18-months off your loan term. So, imagine what would happen to your interest and loan term if you kept even more in the account.
Some people also choose to use a credit card to pay for their expenses and they leave all their salary in their offset account until their credit card payment is due. This method means that their salary reduces their mortgage interest over the duration that the money is in the account.
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With Australian interest rates at the lowest they’ve ever been, it’s only a matter of time before they begin to rise again. This being the case, then it’s time to make it a race to pay off your mortgage before rates rise. This type of challenge gives you a sense of urgency and also an achievement.
We all spend money on unneeded items – coffee, lunches, and a night out with friends once a week. So, by forgoing these luxuries and concentrating your efforts on your mortgage, you’ll be surprised at how much extra you can pay off your loan. For instance, let’s say you buy a $10 lunch and a $5 coffee daily. In a week, this means that you’re spending $75 a week on items you don’t need. So, if you spend an extra $20 when shopping on lunch items and make your lunch, and drink coffee at work, then you’ll be able to pay an extra $55 a week off your mortgage or a whopping $238 a month or $2,860 a year. If you have a $250,000 mortgage this equates to an interest saving of $34,544.87 with 5-years and 9-months shaved off your mortgage.
Always check the small print in your mortgage to make sure that you can pay more off when you like without incurring penalties. Some home loans will have restrictions, so that your lender recoups their costs and makes a profit over the loan term.
If you read the small print in your home loan and discover that you’ll incur fees if you pay more off, then look for the maximum amount you can repay. Some loans will allow you to pay off $10,000 before you incur a fee, others will have lower amounts. You will also find that some loans stipulate a ‘set’ cost per payment made over the required amount. If this is the case, and there is no amount specified, then consider paying off lump sums once a year to clear out your interest.
The best way to keep on top of your mortgage and to save more is to review your mortgage frequently. Consequently, this means checking your interest rate and then comparing this to other mortgages on the market. If you can find a home loan that offers you an interest rate that is 1% or more, lower than your existing rate and it gives you the same, or better features, then it may be time to consider switching lenders. If you’re unsure about how to compare mortgages, then visit a broker. They can compare home loans for you, and their services are typically free.
Overall, being vigilant and working out a plan to pay off your mortgage faster could save your more in the long run. Plus, it also means that while you are making sacrifices now, later you’ll be able to spoil yourself more because you’ll have more residual cash. This strategy is ideal if you’re looking to save for retirement or to set yourself up to buy investment properties in the future. The key is planning and then to stick to it regardless of whatever else may be happening in your life. Chiselling away at your mortgage allows you to be one step ahead financially, and it also gives you an excellent credit rating and history.
Terms and conditions, fees and charges and normal lending criteria applies. This information is a guide only and does not constitute as financial advice.
While the Reserve Bank (RBA) left rates on hold, it’s only a matter of time before rates rise. As RBA Governor Philip Lowe recently said, the next time rates move, it will likely be up. Although, he added it would be sometime before this occurred. So, the message is clear for those already mortgage stressed – consider your financial position now, rather than later.
Economists suggest that Governor Philip Lowe’s statement relied on RBA market data. Plus, they said it is an optimistic economic growth forecast – with the RBA aiming to move inflation towards 3%. Barriers to achieving this growth, at present, include unemployment and the higher valued Australian dollar. Plus, the RBA needs to keep the housing market restrained so that it doesn’t become overinflated.
As it stands, housing market conditions are shifting. Data shows that dwelling investment is currently high, according to the September RBA minutes. However, it has waned considerably in Western Australia and Queensland. Established housing market conditions also indicate that the market is easing, particularly in Sydney. Housing price growth is slowing in Sydney, and to a lesser extent Melbourne.
Housing credit growth across Australia remains steady with slower investor growth noted, but increased owner-occupier growth. Housing lending growth by major banks has also slowed, while smaller lenders saw an increase. Although, APRA measures and interest-only lending changes contributed to this change.
Average lending rates increased slightly in 2017, reflecting higher investor and interest-only rates. RBA members noted that the average interest rate on variable rate loans was 30 basis points below that of outstanding loans.
While home loan costs are lower, it’s important to remember that while the national average mortgage sits around $488,000, in Sydney’s overheated market the average mortgage is $600,000. So, according to the Housing Industry Association (HIA) it now takes two average full-time wages to service an average Sydneysider mortgage. The average monthly mortgage cost is around $4,729, or $57,000 a year for an average priced home.
Plus, research shows that some 600,000 to 800,000 Australians are already ‘at risk’ or stressed by mortgage repayments. So, the thought of interest rates rising becomes a concern. Rate rises are likely to put these people and many more under stress where a household’s income cannot cover their debts, including their mortgage.
Sometime ago, economists suggested that theoretically interest rates should be around 7%. But, the GFC changed the economic climate. The RBA also indicated that they foresee a neutral cash rate at 3.5%. At present, the cash rate is 1.5%. This insight means that lenders will borrow money at a 2% higher rate. Therefore, this cost will be passed-on to their borrower. As such, you can expect to pay at least 2%, maybe more, in home loan interest.
Based on the national average mortgage rate of $489,000, this means that you’ll be paying an extra $815 per month. But, if you reside in Sydney and have an average mortgage of $600,000, then you’ll be paying $1,000 more a month.
Once rates start rising, they won’t sit at the neutral rate. Not unless something goes wrong. So, let’s say the peak in rate rises stops at 5.5%. Then, the national average mortgage holder will be paying $1,630 a month, and the Sydneysider an extra $2,000 a month.
Image courtesy of ABC News – Australian Broadcasting Corporation
The good news though is there is no need to panic. The first rate rise won’t occur until mid-next-year and even then, it won’t be any more than 0.25%. So, it will be a couple of years before even the neutral interest rate is achievable. The only reason this plan will change is if the economy goes full steam ahead and inflation needs controlling. But, given the current position of the world’s economic climate that’s unlikely.
Therefore, if you have a mortgage, then it’s time to think about the future. While you’re enjoying a low interest rate, the reality is this is going to change. Consequently, you need to prepare yourself so you don’t experience mortgage stress. There are several ways to do this. These are as follows:
A mortgage broker can help you assess your existing mortgage, negotiate with the lender on your behalf and could find you a better deal. Good mortgage brokers also offer you a personalised service and a wide selection of lenders to choose from. Plus, they compare home loans for you, so they take the guesswork out of finding a more affordable mortgage.
The benefits of using an eChoice mortgage broker are many:
There is a lot that goes into finding the perfect home loan for your needs – let alone a lender you are likely to be approved by. With the expert advice and guidance of a broker, you are in a better position to be matched with a great loan product and to avoid expensive mistakes. A mortgage broker serves as the essential bridge between your unique financial situation and the home loan that will put you in your dream home.
Why work with a mortgage broker? Here are seven reasons why a good broker can make finding your home loan a better experience for you.
How much are you likely to save with an offset account – is it worth a higher interest rate? Will you qualify for a full doc loan? What would serve your short and long-term financial goals better – a fixed, variable, or split rate loan? A mortgage broker will help you weigh your options and identify the features, interest rate, and fee schedule for your ideal home loan.
You may have a vague idea of how much you can afford, only to sit down with your bank’s loan specialist to discover you may be way off on your estimate. A broker can help you calculate how much you can borrow and take a realistic look at how much you are likely to be able to afford in your monthly or weekly repayments. They won’t just help you be honest about your budget, but they can also tell you what different lenders will determine you can afford based on your current budget and lifestyle.
If you’ve started searching for a home loan, you already know how much research work is involved. An experienced broker can neatly – and quickly – provide you with a clear comparison of loans that are likely to be a good fit for you. This will save you the time spent as well as the headache of finding suitable loan products. They’ll also be on top of all the best deals, rebates, and discounts that you may be able to take advantage of.
This is one of the best perks of working with a mortgage broker. They will take care of all the paperwork, including the legal work, the application, and settlement process. This means you can focus on searching for your perfect home rather than having to worry about all the nuances and obstacles of getting approved.
If you have less than perfect credit, are self-employed, or for any other reason don’t fit into the conventional borrower profile, a mortgage broker will be able to find you the competitive loans that you are likely to qualify for. There are many specialist lenders out there, as well as banks with flexible lending policies. A broker can connect you with the ones who have common sense home loans without the high fees and interest rates that may be attached to some specialised loan products.
You’ll likely want to get your loan pre-approved so you have an idea of how much your chosen lender will let you borrow before you search for the property you want to buy. Your broker can take care of this for you.
Once you go through the process of finding a home loan, applying, getting approved, and being ready to purchase your home, you’ll realise how much having an expert there beside you every step of the way can make a world of difference. With a mortgage broker by your side, you can have all your questions answered and get the expert advice you need to make the best possible decisions for you.
Many things in life are well-suited to a learn-as-you-go approach, where every mistake can be an opportunity to gain more knowledge. This isn’t exactly the best method for applying for a home loan where every mistake can cost you hundreds, if not thousands of dollars. With a mortgage broker, you don’t have to worry about making the wrong move. You’ve got a professional there to help you steer clear of any bumps in the road, making your experience of buying a home as smooth as it should be.
A new finding by Australia’s money laundering watchdog, the Australian Transaction Reports and Analysis Centre (AUSTRAC), claims that there were $1 billion in suspicious transactions between China and Australia in the real estate and property market last year.
The release of these official findings is a wake-up call. With home prices at all-time highs, it has been difficult for many Australians to enter the market. This leaves many to wonder, how much have overseas investors impacted the market?
Whilst before the AUSTRAC report it was already known that Chinese investors were finding a way around foreign investment rules, until now the numbers were largely speculative. This is partially because Australian law only requires financial institutions to report suspicious transactions.
The Financial Action Task Force (FATF), an inter-governmental body operating out of Paris, published a 2015 report on the “large amounts” of cash being laundered from China. At that time, the FATF called out Australia for not including real estate agents, solicitors, and accountants in its suspicious reporting requirements under the country’s anti-money laundering regulations. This has made it difficult to ascertain the true depth of the money laundering.
AUSTRAC found a total of $3.36 billion worth of transactions between 2015 and 2016 in thousands of what are known as “suspect matter reports,” approximately $1 billion of which was poured into the property market. What is driving Chinese investors to flood money into Australia, beyond what they are legally permitted to do?
Andrew Su from the firm, Compass Global Markets, points to speculation that the renminbi will devalue. This is a huge concern for the growing ranks of the newly wealthy in China. He says, “a lot of people believe it will depreciate about 30% over the next few years.” In order to safeguard their wealth, they are finding safe havens for their cash.
Australia, which has looser regulations than other major economies and which has a strong real estate market, has become a logical target.
Foreigners, are allowed to purchase new property in Australia, and China allows its citizens to move as much as $66,000 outside of the country each year. In order to purchase property, individual investors would transfer money by making many smaller payments, often through people they already know in the country or through networks of companies.
The scope of the suspicious transactions and the sheer size of the money coming in from China has become a political issue because house prices have already been rising and in many areas there is a housing crisis. Gladys Berejiklian, the premier of NSW, has called her state’s housing crisis, “the biggest issue people have across the state.”
This puts even more pressure on watchdogs and the Australian government to do something about the problem. The Australian Taxation Office issued 150 penalty notices for breaches of foreign investment rules last year and Treasurer Scott Morrison approved the sale of $78 million worth of properties in Australia that were foreign owned.
The wave of real estate transactions is simply too large to assume that Chinese investment has not impacted the housing crisis at all. Sydney has recently been ranked as the second most unaffordable city to live in – in the world. With the Chinese New Year going on, Australia is expecting an influx of Chinese tourists, about half of which have plans to check out property on their visit, according to a survey by Juwai.com.
Despite these facts, the rising housing and stamp duty costs in Australia are primarily attributed to domestic issues, such as job growth, low interest rates, and urban containment.
While AUSTRAC will continue its work, reporting on suspicious transfers and trying to bring the facts to light, property owners and borrowers should keep an eye on Australian real estate news, especially if in the market for purchasing or refinancing your mortgage. Buying a home is a huge commitment; the more you know about what is going on, the better financial decisions you can make when it comes to choosing your mortgage.
Whether you are buying your first home, refinancing or investing, we will compare your needs against 100’s of home loans from 25+ lenders.
According to CoreLogic research, mortgage brokers secured around $43 billion in new home loans during the March quarter. This figure was an increase on the last quarter of $3.2 billion. The broker market share of new residential mortgages jumped to just below 54%, an increase of almost 2% when compared to figures released in the March quarter. This surge is the highest rate ever recorded.
Mortgage executives suggest that constant changes to lending policy and home loan pricing have increased the appeal of using a broker’s service. As for many borrowers, the home loan market is becoming too complicated for them to manage, understand and negotiate by themselves.
Many borrowers say that they trust a broker to negotiate a better mortgage deal that will save them more. Borrowers tend to seek out brokers as they feel they know and understand the property market, have an ability to identify how lending changes could affect a home loan and can find competitive loans.
Borrowers have greater respect for mortgage brokers and view them as home loan experts. According to industry leaders, brokers tend to have their finger on the pulse of the lending market, especially when it comes to finding the right home loan to meet the needs of the borrower. Many borrowers are very aware of this, and with the majority of them seeking to make sound financial decisions that save them more, they are turning to brokers for help.
There have been a number of online platforms recently introduced to the market where a borrower can broker their loan. These platforms are said to be putting pressure on the market share of brokers. However, it is anticipated that many borrowers will elect to use trusted and experienced advice over the newly introduced do-it-yourself technology.
Industry leaders also say that brokers should not view the introduction of any new technology as a threat, but rather as an opportunity and a challenge. New technology often represents increased value that a forward-thinking broker can utilise to better their own service.
Demand typically drives change, especially when related to technology. Therefore, brokers need to embrace change and use it to enhance their customer experience. If brokers choose not to embrace change, especially in regard to technology, then they may discover that they are left behind.
Industry leaders state that they expect the market share of brokers to increase further over the next 18-months. This estimate is based on the complexity of the lending market continuing to grow, with the market becoming even more competitive. Industry leaders feel that these aspects will help to strengthen a broker’s share of the market if they look to grow with the industry.
Brokers who are seeking to keep up with changes in technology should look to upskill. It is also recommended that they keep their knowledge up-to-date so that they can offer their clients additional value. eChoice, a leading Australian aggregator, gives brokers the opportunity to do this by supplying you with business development tools that increase your capabilities and enable you to maximise your profits. These tools include free marketing services, access to a state-of-the-art online IT platform, compliance and risk education, lead generation programs, and unlimited broker support. eChoice offers existing brokers, new market entrants, and financial planners with a unique, low-cost model, and they aim to empower female brokers. To find out more about how eChoice can assist your business to move forth and make the most of these opportunities, visit eChoice today.
Do you want to know more about becoming a broker or enhancing your existing career? Then it’s time to contact eChoice. We can help you claim your share of the market.