It's been a shaky start to the year with the 3 day lockdown but thankfully that was it. However, we have seen a knock on effect, more on this below. New legislation for lending comes into practice (Best Interest Duty), lenders continue to fight for the lowest rate, loan processing times from lenders are still high and we review what we think will be in store for the first quarter of 2021. Find out more below.
Interest Rate Update
Did you think you would ever see your home loan start with a 1? It's hard to think rates used to be as high as 18.5%. Here are some of the market leading rates as of the 28th January 2021.
*Did you know that the average mortgage rate this time 5 years ago was 5.61%.
To find out if you qualify for any of the above rates contact us today.
RBA cash rate
The RBA cash rate has remained the same at 0.1% - The first board meeting and official cash rate announcement for 2021 is scheduled for the 2nd February. If you want to see what was discussed back in December then click HERE
Looking ahead....What do we think the first quarter of 2021 holds in store?
January has flown by and we have seen some big events take place including the 3 day lockdown for the Greater Brisbane areas, American White House being stormed and Donald Trump leaving the presidency. Thankfully though the air seems to have cleared, kids have gone back to school and a wave of optimism is in the air.
We are starting to see more active listings hitting the market which we expect to continue for the first quarter of this year. With a lot of enquiry around freehold houses and family homes, we believe this will be the strongest performing asset class around the city. Apartments are still performing badly and with a lot of finance restrictions still in place for inner city stock, we don't expect to see this change in the near future.
With the introduction of the Best Interest Duty (BID) for mortgage brokers taking effect from the 1st January we are expecting to see processing times take longer than usual for the first couple of months and more paperwork for our clients to complete. More on this below.
Best Interest Duty (BID) legislation has started. How will this affect you?
The best interests duty for mortgage brokers is a statutory obligation for mortgage brokers to act in the best interests of consumers (best interests duty), and to prioritise consumers’ interest when providing credit assistance (conflict priority rule). Although this is something we already practice it still requires additional paperwork and time, causing further pressure on the finance clause and buying experience. Our advice is to make sure you talk with your broker before buying or selling to get a better idea of the time scales and to help put you in a stronger position when putting in an offer.
Although we welcome the changes and believe it will strengthen our industry this legislation does not extend to include the banks directly. This still allows the bank to act in their best interest and potentially supply you a mortgage that may not be suitable, ultimately causing confusion to the market place with conflicting information and education.
Do you know your home loan rate?
A recent study conducted by CoreData found that homeowners and investors main financial goal was to pay down their mortgage quicker than their loan term. However, only 46.5% of Australian homeowners were aware of their current home loan interest rate.... This is quite a worrying statistic that means nearly half of all homeowners are likely to be throwing away their hard earned cash every month without realising it.
If you don't know your home loan interest rate then contact us today for some help and start 2021 off on the right foot. You could be saving yourself hundreds every month.
Covid-19 mortgage holiday approvals coming to an end
Unfortunately, the threat of Covid is still around and as we start to get used to the rules of getting out and about, signing in to our local shops and restaurants, job losses and unemployment are still a big reality. If you've been affected and are struggling with your finances there is help available and we advise you to seek guidance from your bank and/or credit provider as soon as possible for guidance. Contact details for most lenders can be found HERE
If you would like to find out more information on any of the above topics or would like to see how we can help you with your mortgage Contact us.
WARNING: The contents of this communication are not designed to replace credit advice. We have not taken into account your needs, objectives or financial situation. The comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts may result in a different comparison rate. The comparison rate is calculated on a $750,000 secured loan over a 25 year term at 60% LVR.