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Major banks refuse to give full rate cut
Wednesday, 05 November 2008
Despite the Reserve Bank’s cash rate cut of 0.75 percent this week, most major banks are choosing not to pass on the full benefit to customers. Citing higher funding costs Westpac and NAB have passed on 0.65 and 0.62 percentage points respectively with ANZ choosing to cut standard variable interest rates by just 0.58, the same reduction that the Commonwealth Bank has adopted. AMP Banking will take up the full 0.75 percentage point reduction on it’s standard variable rate.
Meanwhile new home building remains subdued, with new home building in NSW less than half the number of new homes it was a year ago, the lowest level in the post World War II era. This reduction in supply could put pressure on home prices and rents, which would not be good news for first home buyers, or those renters saving to buy a first home. The building industry hopes that the recently increased first home owner government grant and rate cuts will spur on a recovery in the housing sector.
Home-seekers get that winning feeling
Tuesday, 04 November 2008
Yesterday the Reserve Bank made the announcement many anxious Australians were holding on for and the news was sweet, with interest rates being cut to 5.25%. The rate cut will shave off around $150 from monthly repayments on an average $300,000 mortgage. For home buyers and builders this is good news which will hopefully infuse some optimism in a recently uncertain economic climate. However, it may take a few months for home buyers to act as many may sit back and see what happens until the new year. Despite cautious attitudes, there is certainly reason for renewed positivity for first home buyers since the Reserve Bank cut interest rates.
The Age, 5th November
Housing Prices Weather Financial Storm
Sunday, 02 November 2008
Australian Bureau of Statistics House Price Index results for the September Quarter report house prices have remained relatively flat. According to Housing Industry Association (HIA) Chief Executive – Policy, Mr Chris Lamont, the results are to be expected due to the economic uncertainty but relative to other investments, reflect that housing is doing well. Weeks ago commentators were predicting a far worse outcome to the tune of a 40% fall in house prices so it seems it’s not all doom and gloom, at least according to HIA. The only capital city indexes to rise this quarter were in Hobart and Darwin.
Housing demand in a nosedive
Sunday, 02 November 2008
Interest rates are expected to be cut again tomorrow on Melbourne Cup day by half a percent. Lower interest rates and increased government grants are certainly an extra incentive for first home buyers, however auction clearance rates are pointing to a wait and see approach emerging. There’s no question that since the government increased first home owner grants, inquiry levels for established and new homes has risen. According to Lev Milkovits, head of Melbourne-based house builder AV Jennings, inquiry levels over the last few weeks have soared by almost 90%. The opportunity for a bargain exists if vendors desperate for a sale before Christmas drop their house prices, but there’s speculation that first home buyers will hold off, and wait until the new year to make buying decisions.
Lure of home ownership outweighs the risks
Friday, 31 October 2008
Since the recent doubling of the First Home Owner’s grant for buyers of existing homes and tripling of it for first home buyers of new homes, the possibility of falling house prices is a potential risk for first home buyers keen to take advantage of the generous grants. The risk lies in the potential for property prices to continue to fall, leaving first home buyers in ownership of a property where their mortgage is larger than the value of their home, resulting in a "negative equity" situation. While it could be the right time to buy for some eager first home buyers, it’s also worthwhile considering the risks.
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