Welcome to Mortgage Force News in 2007.
We trust you enjoyed the holiday period and we are looking forward to keeping you up to date with industry trends, product updates and some tips on how you might be able to save a little bit here and there.
Happy reading!
In this issue:
- Good news on inflation continues
- More SMEs turn to brokers
- Rent V's Buy equation
- A tip when submitting an offer
- Your New Years Resolution
Industry News
Good news on Inflation continues
Further good news for the inflation outlook was released this week by TD Securities following on from the ABS data for the December quarter broadcast late last month.
According to the TD Securities-Melbourne Institute Inflation gauge, consumer prices remained steady in January therefore maintaining the 3.1% rise for the 12 months to January 2007.
This follows the recent news from the ABS that the Consumer Price Index (CPI) fell by 0.1% in the December quarter primarily as a result of petrol prices falling 12.4% and of course those bananas.
All this means inflation appears to be under control and interest rates are set to remain steady for some time into the future. Some are even predicting steady rates throughout 2007, but as we all know things can change quickly and we’d be hesitant to support that prediction just yet. Who knows, the next move might be down! – that in itself tells you where we are in the present interest rate cycle – pretty much in the middle.
More SME's turn to brokers
An increasing number of businesses are giving up on banks and turning to commercial brokers as an alternative. The East and partners October business lending report reveals more than a third of micro-businesses - those with turnover between 41 million and 45 million - plan using brokers.
In addition nearly 30% of larger small businesses - generating revenue of 45 million to 420 million - are looking to brokers for standard business finance and to act as their middleman in dealing with banks and other lenders.
The Rent Vs Buy equation
As rent in QLD continue to increase, the rent vs. buy equation for first home buyers is becoming more one sided.
It’s not often you see real estate prices remain flat while rents increase but that appears to be exactly what’s happening in QLD at the moment.
Some of it is probably catch up, as rents have certainly lagged capital growth over the last 5 years but there seems to be more to it than that.
Simply stated there is a shortage of investment properties. This trend began when the government introduced the doomed vendor tax a few years back and has continued as investors have ploughed money in shares and superannuation. In fact super is the big driver at present due to the favourable limits the Federal Government is allowing individuals to place in superannuation prior to June 30 2007. For some, this means it’s beneficial to sell their investment property and place the proceeds into superannuation. Those considering buying an investment property before June 30 also have to weigh up the benefits of placing the proposed equity into superannuation or perhaps salary sacrificing what they might have used for the extra interest payments.
All we know is there's a shortage of investment properties which means rents are increasing rapidly, and so long as the property investors stay away, it means property prices are generally remaining flat.
In terms of the economics, it’s probably the best opportunity first home buyers have had in quite a long time.
So what should people be doing?
If people are renting and have the means to buy – it’s probably a good time to start looking before rents go up even more and house prices begin to rise. Remember the Government still provides the $7,000 First Home Owners Grant and the lenders have some great products specifically designed for first home buyers – these include 100% + loans as well as the increasingly popular family pledge style of loan.
For property investors, make sure your rents are at market prices as they’re on the way up.
And a tip when submitting an offer
What is the best method by which to submit an offer for a Property?
Most people give their offers verbally to the real estate agent. That’s the traditional way but have you considered the following?
· How do you know the correct offer was conveyed to the Vendor?
· How do you know the Vendor actually received your offer?
· How do you know for sure the Vendor knows you’re interested in the property?
These might sound a little pedantic, but it happens, so why not remove the uncertainty and take proactive action.
According to the Department of Fair Trading all offers should be submitted in writing to the Vendor via the Real Estate Agent and a copy of the offer should be forwarded to the Vendors Solicitor. The Department also advises that etiquette dictates any response to an offer in writing should also be responded in writing.
Put yourself in the shoes of the Vendor. Offers received in writing not only provide evidence but due to the formal nature are more inclined to be taken seriously than a verbal offer.
Some savvy buyers, having provided their offer in writing, will also request evidence of any higher bid in writing which tends to clarify the situation.
And a final tip, if you do make an offer in writing for a property, make sure there is a deadline for acceptance E.G Offer valid to 5pm Tuesday 24th February 2007 and request the Vendor to respond to you in writing.
Good luck!
Your New Years resolution
To keep Mortgage Force updated with your personal details especially your email addresses!
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