That’s it folks – we hit the worst and things are going to get better now. 

Well, that’s one reasonable interpretation of the economic signals. Another seems to be that we may just stay as we are for a while longer till something spurs a lift.

Having narrowly escaped a technical recession thanks to the economy growing by just 0.4% there seems to be a more buoyant air especially with the banks, that’s if the five year fixed rate is anything to go by.

Most banks have the five year fixed rate at an average of about 7% which seems to be an enormous hike over the cash rate of 3.00%. 

This is giving the banks an unusually high premium on fixed rates and is certainly an indication that they’re not expecting further interest rate cuts and in fact exactly the opposite.

On the other hand Reserve Bank chief, Glen Stevens and some of the bank economists are still making noises about the possibility of interest rates having to be lowered further before they rise again.

One would presume they’re taking the view that if the economy doesn’t move through outside influences pulling it upwards, then it may have to cut interest rates a tad more to keep things moving.

Should that occur it’s obviously not expected to be a long term scenario if the premium on the fixed term rate is anything to go by.

All these reports are causing a great amount of ‘should we or shouldn’t we’ speculation as to whether it’s time to fix loans.

Right now, almost without exception clients are choosing to stick with variable rate loans, possibly believing that fixed rates have not reached levels which would justify a switch.

However, you may well see things differently. In the end it’s up to you to decide on when to fix.

What we can do, however, is take you through all the loan options available to you including looking at whether a fixed rate would suit your circumstances.

In any case, with interest rates this low, it’s wise to reassess your finances so come in for a chat with one of our consultants.

A recent announcement by the Australian Bureau of Statistics that loans to property investors increased by 9% in April, confirms our own experience which clearly indicates that investors are once again showing interest in the Perth property market.

So what has caused this renewed interest? The short answer? Right now we have the extremely unusual situation of affordable property prices and major falls in interest rates. At the same time rental vacancies in the Metro Area are at an extremely low 2.9% and the median weekly rental is steady at a healthy $360/week. More importantly, it’s now possible to achieve rental yields of 6%+ in some areas.

All this has brought into play an additional factor which motivates some investors particularly in today’s uncertain climate. In some cases investors can enjoy the benefits of positive gearing in addition to the advantages of the alternative strategy of negative gearing.

For the serious investor the above circumstances spell out one word – OPPORTUNITY. Some investors are holding back in the hope that property prices will fall further; others believe it’s time to move because there are signs that prices are turning.

Whatever your view, if you’re thinking of investing, now is the time to identify all your options. Give us a call and we’ll help you prepare for your future investment in property.

First home buyers
Only 2 months left in which to claim the increased grant!

You only have until June 30 to take advantage of the Government’s major boost to the First Home Owner Grant.

Although market participants would all prefer it to be extended, there is no indication that the First Home Owner Boost (FHOB) will continue in its present form thereafter. This means you should act now to ensure you can claim the maximum benefit.

Fortunately, as a first home buyer there are a number of other factors that could help make your entry into home ownership that little bit easier. Interest rates are falling and house prices are lower.

First home buyers who sign contracts to purchase a newly built home between 14 October 2008 and 30 June 2009 are now be eligible for a one off payment of $21,000 in terms of the FHOB scheme.

First home buyers who sign contracts to purchase an existing home between 14 October 2008 and 30 June 2009 will be eligible for a one off payment of $14,000.

After a slow start first home buyers are now making a strong impact on the housing market in Australia as they take advantage of the FHOB.

Come in and see us now if you need more information or would like to find out how you can take the first step to owning your own home.

What you should do to get the maximum benefit from falling interest rates.

It only takes a look at what has happened to interest rates in the past few months to get a clear indication of why we are being approached for loans by more and more first homeowners and upgraders.

Of course falling property prices and the First Home Owner Grant are also playing a role but consider what has happened with interest rates. In February the Reserve Bank of Australia reduced the cash rate to 3.25%. As a result variable rates dropped to about 5%.

The net effect? Those with a loan of $350,000 are now paying about $1000/month less then they were before the cycle of interest rate cuts started some six months ago.

That is quite a dramatic effect, isn’t it? If you are planning to buy, this turnaround makes home ownership a lot more affordable.

On the other hand, if you already have a variable loan you should be putting as much additional disposable money as possible into paying off your variable loan. This is a highly effective way of dramatically reducing the term of your loan.

If you are not happy with your current loan arrangements or would like to find out if right now there is something better out there for you, give us a call.