This is an edited version of a live discussion in which I discuss the US election results, and then I am joined by award winning mortgage broker Chris Bates as we answer some important questions about mortgage applications and underwriting. How do we get the best results, and are all mortgage brokers the same?
Chris is Managing Director at Flint Group https://flintgroup.au
Chris started as a financial Adviser back in 2007 and sold his Financial Advise business in 2020. Chris has grown into one of Australia’s top Mortgage Brokers and is passionate about taking the product providing industry to a trusted advise base profession.
He is known for regularly airing his views on sound property investing on both LinkedIn and popular industry podcasts The Elephant in the Room and Australian Property Podcast.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
https://digitalfinanceanalytics.com/blog/dfa-one-to-one/ for our One to One Service.
The ABS released their monthly lending indicators for September today, and it showed a strong uptick in new mortgage loans, in contrast to poor household spending trends and confidence overall, though as we will see there are questions about this dataset too. Significantly, we also note the ABS is about to terminate its monthly reporting of new loans data, saying the monthly Lending Indicators publication will transition to a quarterly release.
My observation is different because the monitoring of new loans for housing is an essential barometer for the economy, without the monthly data it will be easier for lenders to continue their push to reduce lending standards (something evidently being supported by the opposition party) and so drive home prices even higher.
So credit for home lending, especially investors is booming. Worth recalling here the RBA’s recent warning that falling interest rates could trigger a property price boom that encourages households to take on too much debt.
As you know my surveys highlight some households are under extreme financial pressure, and I will be discussing this in my live show next Tuesday, so official data on household spending, is also an important indicator. So conveniently, the ABS also released household spending data for August today. However, I have issues with these figures too as this data excludes, Rent and other dwelling services, Electricity, gas and other fuels, Communication Services, Education Services and Insurance and other financial services. IN other words, the spending data is partial and incomplete, and excludes more than half of a typical mortgaged or renting household.
So all up, the spending indicators are not really meaningful, yet the ABS will be enhancing the Monthly Household Spending Indicator and ceasing the Retail Trade publication after the June 2025 reference period. On the other hand, the data on lending will be only released four times a year.
This is another example of data not fit for purpose, and I assume the financial pressure the ABS is under. But it does beg the question. What have they got to hide – and who is pulling their strings?
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The RBA held the cash rate again, while the ABS reported strong mortgage refinance, though lower credit growth, and lower building approvals. And Consumer Confidence moved slightly higher, but still in negative territory.
You can join my live show later today as I discuss the latest with Damien Klassen from Nucleus Wealth.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Today’s post is brought to you by Ribbon Property Consultants.
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There has been a spate of changes to lending rules as banks seek to make it easier to refinance and borrow. Question is, is this really in the interests of households?
Today’s post is brought to you by Ribbon Property Consultants.
If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.
Buying property, is both challenging and adversarial. The vendor has a professional on their side.
Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.
Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.
Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.
Lenders are selectively lower the hurdles to make mortgage loans and refinance existing borrowing. According to an AFR article, some are tweaking the serviceability buffers. So we look at the implications, given rates are expected to continue to rise.
http://www.martinnorth.com/
Go to the Walk The World Universe at https://walktheworld.com.au/
Latest data from the RBA showed a surprising fall in new credit for housing. So we look at the numbers and consider the likelihood of a credit squeeze ahead.
I discuss the state of play for interest rates as the RBA meets next week. Mortgage rates are rising, while some deposit rates are rising. But how will this play out ahead?
And importantly, what can households do not to combat rising rates and costs?
Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.
Join us for a live discussion as I explore the intersection of politics and economics with Professor Steve Keen, who is running in the upcoming election as a Senate Candidate for TNL.
We examine the role of the Bank of Mum and Dad, in the light of the latest data. As well as highlighting inter-generational issues, there are pressures on both parents and their kids. And if you do not have “wealthy” parents the chances of getting into the property market is diminished significantly.
Go to the Walk The World Universe at https://walktheworld.com.au/
One of the key questions for country is whether interest rates, which have been rock bottom for a couple of years are set to rise. The RBA was saying not until 2024 but have slowly been changing their tune, and the Fed lifted rates last week, and markets now think 50 basis points hikes are on the cards in the US.
The truth is markets are banking on significant rate rises over the next year or two. The ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve is at 2.675 per cent in August 2023, remembering the official cash rate is currently 0.1%. This would see mortgage rates up by as much as 3%, or close to 5%. That would be a horror for many borrowers.
But then again, we know already banks have been steadily lifting their fixed rate mortgages from ultra low 1.99 to closer to 3%, and the costs of funds as shown by Bond Yields is rising, making banks needing to hike rates to protect margins.
So the tussle between the markets and the bank are going to get interesting. And for the record, I am expecting some rate movements higher later in the year, but not as much as the markets are signalling. Nevertheless households were reminded by Phil Lowe recently they need to plan to hold buffers because rates may well rise, even if such rate hikes wont dampened inflation.
And by the way the third element in all this is employment and wages growth. If inflation continues to burn bright, unemployment may rise alongside, leading to the stagflation scenario. And that would be good for no-one.
Go to the Walk The World Universe at https://walktheworld.com.au/
