October News

WELCOME NEWS

We were pleasantly surprised by the Reserve Bank of Australia lowering the official cash rate by 100 basis points from 8 October 2008.  It was the biggest rate cut since May 1992, when the economy was still deep in the "recession we had to have" and unemployment stood at 11per cent.  The last time the official cash rate was at 6% was in August of 2006.

Most lenders were quick to announce cuts to their home loan interest rates in response to the RBA move, although not one has passed on a full percentage point reduction, citing continued difficulty in the global credit markets.

The good news is that in the last fortnight we have seen lenders decrease their interest rates across the board on their home loan products, providing benefit to all borrowers whether seeking standard variable, basic, or fixed rate loans.  Many lender bulletins contained specials with no account keeping fees and no application fees, which is pleasing to see.

Further good news comes as analysts cautiously predict that the global credit crisis may be letting up.  Bank to bank lending rates have eased as the credit markets gradually respond to the series of rescue measures by governments around the world, including a joint U.S. and European plan to buy stakes in private banks to boost their lending.  

FIRST HOME OWNERS BOOST

Haven’t we all heard somebody say “I don’t know how young people can afford to buy a house these days”.  Has the current cost of housing coupled with high interest rates priced Generation Xs and Ys out of the market? 

Relief for first home buyers arrived when the Reserve Bank cut interest rates by a full percent this month and then escalated with the Government announcing the First Home Owners Boost.

First home buyers that sign a contract between 14 October 2008 and 30 June 2009 are eligible for an extra $7,000 on top of the First Home Owners Grant (FHOG) for established homes and an extra $14,000 for newly-constructed homes. 

This means a $14,000 lump sum for buying an existing home or a $21,000 lump sum for a just-built home.  Its great incentive for first home buyers to venture into the property market, especially as the market is considered quiet in many regions.

If you have any questions, or would like us to undertake a comparison for you, please feel free to call 1300 307 771 any time, or use the Quick Application or Contact Us buttons above.  Of course there’s no obligation and our service to you is free.

Andrea Hookham

0412 753 166

Senior Loan Consultant

Leading Home Loans