House prices tipped to surge 15%, RBA hints at cash rate cut

25 Sep 2020 | Interest Rates

Strap yourself in: Australian house prices are tipped to experience a mild COVID-19 dip before surging 15% over the following two years, according to some of the nation’s top economists.

And in more good news for homeowners, RBA Deputy Governor Guy Debelle has hinted at further reductions to interest rates, while not going into negative territory.

Both NAB and Westpac economists have been quick to jump on board the rate cut hype train, predicting the RBA could cut the cash rate by 15 basis points to a record low 0.10% as early as October.

But back to that tipped 15% price surge

Westpac’s Chief Economist Bill Evans and Senior Economist Matthew Hassan believe house prices are set to bottom out by June 2021 after a further 2.3% fall – which would mean a total fall of 5% from the peak in April.

But the good news is they’re tipping prices to bounce back hard and fast across the country.

Indeed, the duo expects national dwelling prices to “surge” 15% until mid-2023, or 7.5% per year, led by massive gains of 20% in Brisbane and 18% in Perth.

Sydney (14%), Melbourne (12%) and Adelaide (10%) wouldn’t miss out on the action, either.

If it plays out as predicted, we could see a cumulative increase in national prices of 10% from pre-COVID highs over a three year period.

“This recovery will be supported by sustained low [interest] rates, which are likely to be even lower than current levels,” Mr Evans says.

Such a rebound would also be assisted by ongoing support from regulators, substantially improved affordability, sustained government fiscal support, and a strengthening economic recovery.

Mr Evans adds the recovery would be further aided “once a vaccine becomes available, which we expect in 2021″.

Got your eye on a property?

For those who are confident in their financial circumstances at present, Westpac’s housing market prediction certainly makes it a tempting time to buy, especially if another RBA cash rate cut soon comes to pass.

JobKeeper 2.0 is about to begin: here’s what you need to know

25 Sep 2020 | Business Finance, News

Like most sequels, JobKeeper 2.0 won’t be as big a blockbuster as the original. But that’s not to say it won’t help many SMEs navigate the difficult times ahead. Today we’ll cover what you need to know about making the transition for your business.

It’s hard to believe that JobKeeper 2.0 is due to begin next week.

But it’s actually been half a year (or 13 fortnightly payments) since the scheme was first launched, over which time around 42% of small businesses have accessed it, according to a MYOB survey.

Today we’ll look at whether your business might be eligible for JobKeeper 2.0, and if not, some other potential options that might be worth considering instead.

28 September 2020, JobKeeper extension 1 starts

The first extension will cover seven JobKeeper fortnights between 28 September 2020 and 3 January 2021.

The rates of the JobKeeper payment in this extension period are:

Tier 1: $1,200 per fortnight (for eligible employees or business partners who worked 80+ hours within a four week designated period)

Tier 2: $750 per fortnight (all other eligible employees and eligible business participants).

To claim JobKeeper payments for this period, you will need to show that your GST turnover has declined in the September 2020 quarter relative to a comparable period (generally the corresponding quarter in 2019).

But here’s the good news just in: if the quarter ending 30 September 2019 is not an appropriate comparison period, you may be able to use the alternative tests, the ATO has just confirmed.

These alternative tests are broadly in line with the original seven alternative test circumstances, and cover businesses that started after the comparison period, had a substantial increase in turnover, had an irregular turnover, or were affected by drought or a natural disaster.

The key difference this time around, however, is that the tests must be applied on the basis that the turnover test period is a quarter (rather than the choice between a month or quarter, which you had for the first version of JobKeeper).

What if my business is no longer eligible for JobKeeper?

If your business is no longer eligible for JobKeeper, please know there may be other financing options available to assist you through the coming period.

One option to explore is the federal government’s Coronavirus SME Guarantee Scheme, which allows lenders to provide eligible SMEs unsecured loans more cheaply and more freely than regular business loans.

Another potential option is something like invoice financing, which brings forward payment of your invoices so you have cash in hand sooner, rather than having to wait for your client/s to cough up the cash.

But to be honest, there’s a whole range of possible routes available, some of which might suit your business, others that won’t.

Is now a good time to buy property? Two-thirds of investors say ‘yes’

18 Sep 2020 | Interest Rates, Investor Loans

The majority of property investors are remaining upbeat despite COVID-19, with 67% believing now is a good time to invest in residential property, according to a new survey.

The 2020 PIPA Property Investor Sentiment Survey gathered insights from nearly 1,100 property investors in August, with the key finding that the majority of property investors remain optimistic about the months ahead.

Indeed, two-thirds of investors who participated in the survey said they believe now is a good time to invest in residential property.

Additionally, 77% of investors said any concerns about potential falling house prices won’t cause them to put their investment plans on hold.

Tim Lawless, head of research at CoreLogic, the nation’s largest provider of property information and analytics, echoed the investors’ positive sentiments earlier this month.

“Through the pandemic to date, housing values nationally have slumped by only 2% and housing activity has trended only about 5% lower than a year ago over the past three months,” Mr Lawless said.

“For people with confidence in their own financial circumstances and household balance sheets, arguably this is a good time to be considering a home purchase thanks to the low cost of debt and certainty that rates will remain low for at least the next few years.”

What are investors likely to do next?

Well, almost half of the investors surveyed by PIPA (44%) said they are looking to purchase a property in the next six to 12 months.

“Plus, about 71% of investors have indicated that the pandemic has made it less likely they will sell a property over the next year, which is another factor that will help to underpin property prices,” added PIPA Chairman Peter Koulizos.

Where are investors looking?

It seems many property investors are beginning to look further afield.

More than 40% of those surveyed intend to buy an investment property in a different state or territory to the one that they currently live in.

Queensland is definitely in the sights of investors, with 36% saying it offers the best investment prospects over the next year, followed by Victoria (27%) and New South Wales (21%).

But it’s not just investment properties that respondents were keen on interstate.

One in six investors (17%) said the pandemic has made them consider moving to another location altogether, with regional areas set to benefit the most due to the improved lifestyle factors they offer and an increasing ability to work from home.

Investors indicated their top locations to migrate were regional NSW (21%), regional Queensland (18%), Brisbane (16%) and regional Victoria (14%).

Coastal locations in particular are on the rise – up to 12% from 8% last year.

Keen to buy?

As mentioned above, for those who are confident in their own financial circumstances, now can certainly prove a tempting time to buy.

So if you’re looking to add to your property portfolio, looking for a change of scene, or keen to buy your first home and break into the market, get in touch today.

We’re here to help you find a loan that’s just right for you.

R U OK?

14 Sep 2020 | Family & Friends, News

We’re here for you, and here’s how you can support others

2020 hasn’t been an easy year for many Aussie households and businesses, which makes today an important one to check in on one another.

COVID-19 and associated lockdowns have placed all sorts of new pressures on families and businesses across the country this year.

In fact, more than 1.5 million Australians are currently suffering from mortgage stress – the equivalent of 40% of households.

With today (September 10) marking R U OK? Day 2020, first and foremost we wanted to touch base, check-in, and see whether you’re doing ok.

If not, please know that we’re genuinely here to help any way we can, including if you simply need someone to listen to you right now.

And if everything is fine and you’re doing a-ok, well, perhaps you know someone in need of a shoulder to lean on and an ear to hear them out.

“There’s more to say after R U OK?”

This year the key R U OK? message is “there’s more to say after R U OK?”

Which is great, because simply asking someone R U OK? without genuine thought, care and time can sometimes risk coming across as a platitude.

Fortunately, the team at R U OK? has compiled a handy list of tipsand more subtle questions you can ask instead, as well as a series of follow-up questions.

The tips include making sure you’re in a good headspace yourself – relaxed, ready to listen, and with ample time to give – while also being in a comfy and private place.

Suggested questions include simply asking “How are you going?”, “What’s been happening?”, or “You seem less chatty than usual. How are you going?”.

R U OK? encourages you not to rush the person, and show that you’ve listened by repeating back what you’ve heard (in your own words), and asking if you’ve understood them properly.

You can then follow-up with questions such as “How would you like me to support you?”, or “What’s something you can do for yourself right now? Something that’s enjoyable or relaxing?”.

And importantly, don’t just ask them on R U OK? DAY.

Set a reminder in your phone or on your calendar to check in again with them in a couple of weeks or, if they’re really struggling, sooner.

Lenders begin contacting borrowers who have deferred loans

11 Sep 2020 | Home Loans

If you’ve deferred your home or business loan then it’s likely your bank will reach out to you in the coming weeks. Here’s what to expect and what options are available to you.

As the initial wave of six-month loan payment deferrals comes to an end, banks have started contacting customers to discuss the next step, which could include further support, assistance or deferral.

Of the more than 900,000 loans which have been deferred during the pandemic, at least 450,000 borrowers will be contacted as they approach the end of their loan deferral in September and October.

That includes 260,000 mortgages and more than 105,000 business loan deferrals to small and medium businesses that will be assessed.

The important thing to know is this: you have options

No one likes to be caught flat-footed. And if you’ve deferred your loan, the last six months have understandably been quite a stressful period.

Rest assured, however, that there are a range of options we can help you consider before the bank phones to see if you can resume your pre-covid loan repayments.

Those options include:

– switching to interest-only repayments for a period of time
– renegotiating your rate with your current lender
– refinancing to another lender
– debt consolidation, or
– a combination of these and other measures.

And if none of the above options are feasible right now you can seek a further four-month deferral with your lender – but at least you’ll know that you’ve fully explored the other potential avenues first.

We’re here for you

If you’d like to explore some of the above options before your lender contacts you then please feel free to get in touch today.

We’re here to help you with your loan any way we can – whether that be deferring, refinancing, or renegotiating.

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