Lenders have been given the ability

to conduct a more thorough review

of a borrower’s repayment history.

According to today’s

The Australian Financial Review,

the government has announced changes

to the Privacy Act

which will allow lenders to find out

the opening and closing date of an account,

a borrower’s credit repayment history

and credit limits.

The ability to look at a borrower’s

credit repayment history will be made available

following the introduction of the

National Consumer Credit Protection Bill.

Current privacy restrictions stop lenders

from seeking payment history details,

as credit reports can only record

the basic identification details of borrowers,

their credit applications and

any negative events

such as defaults or bankruptcies.

The changes to the Act follow recommendations

made by the

Australian Law Reform Commission last year,

in a report that called for the complexities

of the Privacy Law to be simplified.

The Federal Government has extended the First Home Owners Grant Scheme Boost for six months from 1 July 2009 to 31 December 2009.

The Federal Government’s First Home Owners Grant of $7,000 will continue.

For established homes, customers must enter into the contract no later than 30 September 2009 to receive the $7,000; customers entering into a contract from 1 October 2009 – 31 December will receive a $3,500 boost payment

For new homes, customers must enter into the contract no later than 30 September 2009 to receive the $14,000 and customers entering into a contract from 1 October 2009 – 31 December will receive a $7,000 boost payment.

There are three eligible transactions under the new home scenario: For construction loans where a building contract has been signed building must commence within 26 weeks and the construction must be completed within 18 months.

For off the plan purchases the contract must be signed on or before 30 September 2009 to receive the $14,000 and on or before 31 December 2009 to receive the $7,000. Construction work must be completed on or before 31 March 2011.

Victoria: Changes to the Victorian Home Bonus From 1 July 2009 – 30 June 2010 the Victorian Government funded Home Bonus will reduce from $3,000 to $2,000 for existing homes and will increase from $5,000 to $11,000 for new homes.

Eligible transactions will increase from $500,000 to $600,000.

Changes to the Victorian Regional Home Bonus From 1 July 2009 – 30 June 2010 the Victorian Government funded Regional Home Bonus will increase from $3,000 to $4,500 for eligible customers. 

  Government Fees

VICTORIA

VIC Mortgage Registration fee changes Effective 1 July 2009,

Victorian registration fees will increase:

Registration of Mortgage fee will be $98.00 (previously $95.10)

Registration of Discharge of Mortgage will be $98.00 (previously $95.10)

Registration of Transfer of Mortgage will be $119.40 (previously $115.90) plus $2.46 for every $1,000 of the transaction. The maximum fee is $1,350.

NEW SOUTH WALES

Changes to NSW FHOG Benefits application processing As from 25 May 2009, the NSW OSR requires a minimum of one day before funds are available following submission of the FHOG application.

This is to allow time for ownership checks to be conducted.

In most instances previously, funds were available on the day of submission (although the OSR has never guaranteed funds within 48 hours). 

 NSW Mortgage Registration fee changes Effective 1 July 2009, NSW registration fees will increase:

Registration of Mortgage fee will be $95.00 (previously $92.10)

Registration of Discharge of Mortgage will be $95.00 (previously $92.10)

Registration of Transfer of Mortgage will be $190.00 (previously $184.00).

WESTERN AUSTRALIA

WA Registration fee changes Effective 1 July 2009, these WA registration fees will increase:

Registration of Mortgage fee will be $110.00 (previously $105.00)

Registration of Discharge of Mortgage will be $110.00 (previously $105.00)

Registration of Transfer of Mortgage will be $110.00 (previously $105.00), plus $20 for every $1000 or part thereof over $85,000.

SOUTH AUSTRALIA

Abolition of Mortgage Stamp Duty in South Australia Effective 1 July 2009 mortgage stamp duty in South Australia will no longer exist.

Australian Bureau of Statistics’ latest data reveals a continued increase in housing finance activity, driven by first home buyers and investors.

The total value of dwelling commitments rose by 3.6% in April to $21.547 billion, seasonally adjusted, to be up by 10.7% on the same month last year.

Investor finance rose by 8.9% over the month to $5.497 billion, seasonally adjusted, with First Home Buyers also continuing to rise, to 28% of all owner occupied loan applications.

Concerns in some areas about a property bubble developing at the lower end of the market with houses priced under $400,000 continue, however this month’s figures showed the average first home buyer loan size fell by $2,500 to $283,400.

This first home buyer loan size is $50,000 more than that recorded at the same time last year.

The Federal Government’s First Home Owners Grant Scheme will continue this wave of buying until it is cut back on 1^st October 2009,

Ending speculation, the mortgage industry has been buoyed by the news last night (May 12^th) that an extension of the increased first home owner grant was included in the federal budget.

The increased grant will continue until September 30, after which it will be phased down to $14,000 for new homes and $10,500 for existing homes until the end of the year.

This is good news for brokers for whom first home buyers have provided a strong business flow in the past six months.

ABS housing finance figures showed housing finance rose a further 5% in February, representing a 24 per cent increase in finance approvals in just six months.

First home buyers as a proportion of all buyers also rose to a new high of 27.3%, compared to 26.5% in February and 16.4% in March 2008.

Shane Oliver, AMP chief economist confirmed the extension of the grant was good news for the property market.

“Overall it’s a very pro-housing budget,” he said.

The extension of the grant into the second half of the year should maintain activity but the postponement of the deadline could slow things down he said.

“Some of the first home buyer business may now have been brought forward,” he said.

Lending experts all confirm first home buyers were assisting in propping up the market. One stated:

“If you look at the long term average of first home buyers in the market it’s around 15 to 17 per cent. So we’re running around 10 per cent above system – that would be accounting for a fair bit of the increase in activity,” he said.

Observers confirm the extension of the grant is good news for the market but raises concern over the impact tighter lending policies are having. Minimum personal savings of 5% own funds for example.

The new policies have really only just started to take full effect. These March figures covers loans applied for in January and February when policies were much less stringent. We will see just how these lending policies are impacting the market in a few months.

Should you require guidance about applying for your First Home Loan or the First Home Owners Grant contact William at MacLean Finance 03 9802 0211, who is happy to answer all your questions.

With Interest Rates as low as 4.82%pa as an ongoing variable rate buying your first home now is an excellent idea.

First home buyers in Victoria will receive up to $22,500

in government incentives as of July 1

as part of the state’s budget measures

unveiled this week.

Assuming the federal government’s

first home owner grant

reverts back to $7,000 as of July 1,

the Victorian government will contribute $2,000

 to first home buyers in metro Victoria and

$11,000 if the dwelling is new,

resulting in assistance of $9,000 or $18,000.

Furthermore, regional first home buyers of new homes

will be eligible for an extra $4,500,

taking their total government assistance to $22,500.

The HIA Victorian executive director Gil King said:

“This is a proactive measure that recognises

the value of the residential construction industry

to Victoria’s economic activity and employment.”

“We expect the boost will provide up to 4,000

new jobs for the industry over the next

twelve months and provide opportunities

for apprentices right across the state,”

he said today.

Mr King also called for the federal government and

other state governments to follow suit.

First home buyers have revived the Australian property market.

The danger is that many may soon find the excitement of owning their own place short lived as job losses rise, house prices fall and instances of negative equity grow.

Of course such a view is not shared by many; however there is need for caution.

Australian Finance Group (AFG) the aggregation group for MacLean Finance Pty Ltd settled 7,673 mortgage loans in February 2009, of which 26.1% or 2003 were for first home buyers. (The Australian Bureau of Statistics housing finance data which lags behind by a month, indicates that AFG accounts for a tenth of all mortgages lent in Australia)

Naturally the increased government grants for first home buyers has without doubt provided a stimulus, evidenced in AFG figures with 4,786 first home buyers in the three months to February 2009 –which is more than double the 2,316 for the corresponding period a year before.

Loan to value ratios – LVR, which is the loan expressed as a proportion of the value of a property, were 76.6 per cent and 75.0 per cent for New South Wales and Victoria respectfully, which AFG said were higher than normal due to the impact of first home buyers, who usually have smaller deposits.

AFG’s February average for all mortgages was $349,000, with borrowers selecting the low variable rates, with only 2.5 per cent of new mortgages being fixed, even though Australian banks have already indicated passing on any more Reserve Bank of Australia official rate cuts will be difficult due to currently high funding costs.

The facts show that first home buyers are borrowing more than ever before, spurred on by government grants and falling interest rates, at a time when the global financial system is imploding, which may have further negative impacts on the Australian economy, is another sign to proceed with caution.

The Australian Bureau of Statistics indicates job security continues to slide, with Australian unemployment in January 2009 increasing to 4.6 per cent, up from 4.1 per cent a year earlier.

Reserve Bank governor Glenn Stevens provided some positives in his monetary policy speech last week, saying, ‘The Australian financial system remains strong and the monetary policy transmission process is working to deliver large reductions in interest rates to end borrowers’. This is reinforced with the Australian big 4 Banks now being listed amongst the top 14 Banks in the world.

Stevens also pointed out that, ‘Nonetheless, economic conditions are clearly weak, and given the speed and scale of the global economic deterioration and its effect on confidence, weak conditions are likely to continue in the near term’.

With unemployment rising, weak global economic conditions, and unsustainably low interest rates, Australia suffers the potential problem of enticing the financially inexperienced to load up with future levels of unserviceable debt, which is what landed America and the world’s financial system in this financial mess in the first place.

The answer for Australians is that the Banks continue with their conservative lending policies, – there is only one lender still lending 100% loans and doing so under very strict conditions – others have dropped their LVRs to 90% and 95%.

Credit impaired borrowers have greater difficulty in getting their loans approved compared to 18 months ago, which is a further evidence of the tighter and more conservative lending market currently operating in Australia, and most of the world.

The interest rate used to qualify borrowers is always loaded by the banks at 1.0% or 1.5% above current rates to ensure they can service their debts once rates move back up. A sound move by the Banks!

If you planning on becoming a First Home Buyer and your employment is secure, press ahead with your plans and take advantage of the opportunity to get into your own home. Being King of your own Castle is still a realistic goal for young Australians.

Building approvals throughout Australia

were again weak in October and are

expected to remain so for much of 2009.

Yesterday’s data released by the ABS showed

total building approvals fell 5.4% in October,

and when seasonally adjusted, 26.1% down

on the previous year.

Multi-units fell a sharp 11.1% and  

are now down by 37% on October 2007.

Master Builder’s chief economist Peter Jones

predicted such weak building activity would

follow through into much of the new year.

“Stimulatory effects of the dramatic

loosening of fiscal and monetary policy

will take time to come through and

soft conditions in the housing market

can be expected over much of calendar 2009,”

Peter Jones said.

Melbourne House Prices Still Rise

In An Otherwise Falling Market

Melbourne Home prices increased by 1.07%

in the 3 months to October to a new

$451,661 average price, according to

RP Data-Rismark International.

Tim Lawless, their National Research Director,

said “The facts are that over the past 12 months

Australian property values have declined by

just 0.8%, which is a phenomenal result

when compared to the S&P/ASX 200 Index,

which has reported a decline of 40.5%”

Additionally, the supply of residential housing

is at an all time low, down from 17000 dwellings

a month to 13000 dwellings per month and

continuing to fall, with no foreseeable over supply,

according to the HIA (Housing Industry Association)

for up to 5 years.

These facts predict a strong future for Victorian housing.

Macquarie Bank Rejects NSW Academic’s dire predictions!

University

Some Academics just don’t seem to get it!

Convinced home prices are going to get worse

A NSW University academic’s prediction insists

his research indicates house prices will

collapse by up to 40 percent in addition

to the economy going into depression.

But the sensational headlines it created

have been rebuffed by most commentators

including the Macquarie Bank which insists

such a fall has only a 1% chance of happening.

The Reserve Bank of Australia, (RBA)

Cuts Rates by 1.00%

In line with market expectations,

the property market welcomed the Board’s

announcement today to drop the

basic cash rate from 5.25% to 4.25%.

This drop of 1% had the analysts saying

it is indicative of the way the RBA is

determined to keep Australia out of recession.

More land at lower cost essential

for residential recovery

Meanwhile Developers are having a hard time!

Spiralling land costs and the inadequate

release of new land could inhibit a recovery

in residential dwelling construction,

according to a report from the

Housing Industry Association and RP Data.

Median land prices have increased by

106 per cent in the last six years,

posing a considerable barrier to new home

construction which is desperately needed

to improve dwelling supply according

to the combined groups’ Residential Land

Report released yesterday.

HIA chief economist Harley Dale said

soaring land prices combined with poor

release levels and planning delays

threatened the prospects of a

substantial recovery in home building

activity as well as the anticipated boost

to the wider economy.

“We now have falling interest rates and

a tripling of the First Home Owners Grant

which should provide a boost to new home

building and the wider economy in 2009.

“There is however a real risk that the

perennial problems of inadequate land release

and excessive planning delays prevent

the industry from boosting supply to the

extent required over the next 18 months.

That would come at a cost to the entire

Australian economy,” he said.

Yes that is right, due to the Credit Crunch

restricting the funds Banks have available,

they have now taken aim at the First Home Buyers.

First Home Buyers are facing high borrowing barriers

despite falling interest rates as the credit crisis

breaks loose on the nation’s real economy.

The Commonwealth Bank of Australia,

following ANZ Bank became the latest of the

primary Australian banks to announce

the end of no-deposit home loans last week.

Other mainstream lenders have “very minimal”

appetite for no-deposit lending,

with applications for low-deposit lending being

“looked at more critically than ever before”.

The Australian Banks have welcomed the

Government’s latest Home Loan scheme increases,

where up to $21,000 is now available from

the Australian Government

which is then topped up by the Victorian State Government

by between $3,000 and $8,000 depending on location

and whether it is newly constructed.

The Banks lower interest rates are available on

lending up to 95% of a home’s value.

Above 80%, borrowers need to cover

the cost of mortgage insurance,

which some of the Banks will add to the loan,

while others require the borrower to pay in full.

Practically all of the Banks have reduced their rates

by between 1.7% and 1.8%

following the Australian Reserve Banks

cutting of rates by 2% over the past 3 months.

First-time buyers will generally require

a minimum deposit of 5%.

The maximum loan to value ratio for an owner-occupied

residential property is now 95%  and

90% for investment properties.

While several Major Developers and Home Builders have already recorded

record sales over the last few months,

fuelled by the increased First Home Owners Grant,

this is now showing the trend to what will come in 2009.

Residential construction is forecast to be a key support

for the Australian economy during 2009,

according to leading industry analyst and economic forecaster,

BIS Shrapnel.

The national number of dwelling starts is forecast to rise by 10 per cent next year,

which will be the first calendar year of growth since 2002.
 
BIS Shrapnel believes that if the Federal Government’s recent First Home Owner Boost Scheme

is extended until at least December 31, 2009,

then in addition to there being more substantial momentum

in the recovery in detached house construction,

there would also be an improvement in the funding availability

for apartment development in the second half of 2009,

which would help alleviate the current rental crisis.

BIS Shrapnel senior economist, Jason Anderson,

says there is likely to be a reduced number of affordable apartments

on the market over the next six months.

“Given the current difficulties for developers to get finance

for medium or high density unit/apartment development,

we do not expect them to be in a position to schedule additional construction,

even if they do see increased sales to first home buyers,” he says.

“The First Home Owner Boost Scheme is scheduled to end on June 30, 2009,

and it will be difficult for many projects to resolve

financing issues over the next few months.”