April News

RBA CUTS INTEREST RATES BUT BANKS CAN’T PASS ON

At its meeting on Tuesday 7 April 2009, the Reserve Bank of Australia reduced the official cash rate by a quarter of one percent to 3%.  Instead of celebrating, however, most borrowers will not likely receive much benefit from this cut. 

Most lenders have passed on a 10 basis point reduction, including HomeSide, which is the NAB’s brand of broker-only products.  The NAB has announced that they are unable to pass on any rate reduction to their customers.  Lisa Gray, group executive of personal banking with the NAB, says that “Whilst customer interest rates have been falling, the actual cost of banks providing a mortgage has increased significantly since the credit crisis hit in mid-2007” (www.mortgagebusiness.com.au).

We have seen lenders tightening their credit policies in recent months in response to the high cost of funds, citing that they have been making loans with little to no profit margin.  If they continue to reduce interest rates and therefore operate unprofitably, we would only see further restrictions on the availability of credit.  When will the credit crunch end?  We do not know but we look forward to it.  Until then, borrowing is a little tougher so please feel free to contact us and access the free assistance and advice of our experienced loan consultants.

BORROWING TO BUY INTO A RETIREMENT VILLAGE

Many older Australians look forward to moving into an Over 55’s resort and spending their retirement enjoying the facilities and lifestyle on offer in such a community.  Some residents buy into their Over 55’s resort using funds from the sale of the family home.  Some others sell investments such as shares or managed funds to raise the purchase price.  Unfortunately for this second group, now is not an ideal time to sell on the share market, since the S&P/ASX 200 Index has lost over 45% of its value since its November 2007 high.

We have received a number of enquiries recently about whether it is possible to borrow funds to purchase a home in an Over 55s village, from people who are understandably reluctant to sell share market investments.  Most lenders decline to lend on these deals, since there is the restriction on the title of such a property that only a person over the age of 55 may live in the home.  Many lenders consider this restriction too risky should they ever need to repossess the property. 

We have, however, been able to find a couple of lenders on our panel that will lend on properties in Over 55s villages / retirement resorts.  The borrower is required to have a 40% deposit, but it may be preferable to raising 100% of the purchase price through selling investments on a depressed share market.  If you would like a free, no-obligation chat to find out whether this option may suit you, please contact one of our experienced loan consultants.

FREE FIRST HOME BUYER SEMINAR

LJ Hooker Caloundra are again hosting a free First Home Buyer seminar on Wednesday 29 April 2009 at 6pm at their offices at 125 Bulcock Street, Caloundra.

During this informative hour you will hear from Geoff Lyons of Geoff Lyons Solicitors, who explains the purchase contract and provides valuable information on clauses to look out for.  Kellie Payne from RetireInvest speaks about insurance and how you can protect your family from financial ruin if you or your partner become seriously ill or pass away.  Scott Hull from LJ Hooker offers interesting information on market cycles, buying a new home versus buying an existing home and also provides a snapshot of properties for sale that may suit a first home buyer.  I will be there speaking about the First Home Owners Boost and outlining the procedure from applying for a loan to settlement day.

Refreshments are provided after the seminar and everyone is welcome to attend, even if you are not a First Home Buyer.  It is a great opportunity to chat to all the speakers and ask questions. 

You can RSVP to me or to LJ Hooker direct on 5499 7588 or caloundra@ljh.com.au.

HAVE YOU COVERED WHAT’S IMPORTANT?

I recently read an interesting article by RetireInvest that I wanted to share with you.  You can access this article here http://www.retireinvest.com.au/uploads/assets/3._Have_you_covered_whats_important.pdf

Please call Kellie Payne at RetireInvest Caloundra on 5491 6722 for a free, no-obligation initial one hour appointment.

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