The chances of the Reserve Bank of Australia (RBA) lifting the official cash rate on Tuesday just increased dramatically after figures showed the cost of living jumped 5.1% over the past year – the highest annual increase in more than 20 years.

Economists around the country say the unexpectedly high jump in inflation means a May rate hike is now on the cards when the RBA board meets on Tuesday.

“Expect the RBA to start hiking next week. First hike should be +0.4%,” said AMP chief economist Dr Shane Oliver.

ANZ Bank meanwhile immediately called for the Reserve Bank to raise the cash rate to 0.25%.

“A cash rate target of 0.1% is inappropriate against this backdrop,” said ANZ head of Australian economics David Plank.

So what’s going on?

Cost of living – aka the Consumer Price Index (CPI) – rose 2.1% in the March 2022 quarter and 5.1% annually, according to Australian Bureau of Statistics (ABS) data released on Wednesday.

According to the AFR, market economists were tipping headline inflation to jump to 4.6% year-on-year, so this has smashed those expectations.

ABS Head of Prices Statistics Michelle Marquardt said a combination of soaring petrol prices, strong demand for home building, and the rise in tertiary education costs were the primary factors driving up inflation.

It’s also worth noting that the RBA’s preferred measure of inflation – underlying inflation – which strips out the most extreme price moves, came in at 3.7%.

That’s now well above the 2-3% target range the RBA has previously stated was a key measure for triggering a cash rate hike.

If cost of living is up, why would the RBA increase rates next month?

High inflation is bad because it means the real value of your money has dropped and you can buy less goods and services than you could previously.

High inflation also has a habit of getting out of control, because one of the drivers of inflation is people expecting inflation.

Economists would argue that raising interest rates now is a hit we have to take to ensure we don’t end up with runaway inflation (short term pain trumps long term disaster).

Higher interest rates cool inflation in a number of ways, but one of the main ways they can actually save you money right now is via the exchange rate.

If the RBA doesn’t raise rates, investors will likely decide they can get better returns elsewhere around the globe, thereby lowering demand for our currency.

And if Australia’s exchange rate falls, the cost of imported goods, including the oil you fuel your car with, would go up even higher.

So it’s a tough pill to swallow for mortgage holders, but inflation can get out of hand if left unchecked. Prime examples include high inflation in Australia in the 1980s, and more recently Zimbabwe.

What does this mean for your mortgage repayments?

Well, if the RBA increases the official cash rate on Tuesday, as many economists are now predicting, unless you’re on a fixed rate mortgage, it’s likely the banks will follow suit and increase the interest rate on your home loan.

How much your repayments will go up each month will depend on a number of factors, including if the RBA increases the cash rate to 0.25% or 0.5%, how your bank responds, and the size of your mortgage.

If you’re worried about what interest rate rises might mean for your monthly budget, feel free to get in touch with us today to explore some options, which could include refinancing or locking in a fixed rate ahead of any other future RBA cash rate hikes.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First home buyers with a deposit of just 5% will soon have more purchasing power thanks to an increase in property price caps for the highly popular Home Guarantee Scheme.

Most capital cities will get a $100,000 boost to their property price cap from July 1, while regional areas around the country will get a boost of between $50,000 and $150,000 (exact details below).

It’s all part of the Home Guarantee Scheme (previously the First Home Loan Deposit Scheme), which allows you to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance (LMI).

First home buyers who use the scheme fast track their property purchase by 4 to 4.5 years on average, because the scheme means you don’t have to save the standard 20% deposit.

Better yet, not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and your deposit amount.

The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but next financial year it’s opening up 35,000 spots.

Property price cap increases

The new property price caps below don’t just apply to the Home Guarantee Scheme.

They’ll also apply to the Family Home Guarantee for single parents, in which 5,000 spots will be allocated next financial year.

NSW capital city and regional centres: $900,000 (up from $800,000)
Rest of state: $750,000 (up from $600,000)

VIC capital city and regional centres: $800,000 (up from $700,000)
Rest of state: $650,000 (up from $500,00)

QLD capital city and regional centres: $700,000 (up from $600,000)
Rest of state: $550,000 (up from $450,000)

WA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)

SA capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 ( up from $350,000)

TAS capital city and regional centres: $600,000 (up from $500,000)
Rest of state: $450,000 (up from $400,000)

ACT capital city and regional centres: $750,000 (up from $500,000)

NT capital city and regional centres: $600,000 (up from $500,000)

The capital city and regional centre price thresholds apply to areas with a population over 250,000 people, including ​​Newcastle, Lake Macquarie, Illawarra (Wollongong), Geelong, Gold Coast and Sunshine Coast.

Get the ball rolling today

Places in these schemes are generally allocated on a first-come, first-served basis.

And don’t let the expansion to 35,000 spots lull you into a sense of complacency – they’ll get snapped up fairly quickly.

So if you’re a first home buyer or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail and help check if you’re eligible.

And when the spots do become available over the next few months, we’ll be ready to help you apply through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

It’s the hope that kills you. Just ask Carlton fans, NSW Blues supporters, Wallabies sufferers, and hopeful homebuyers who have fallen victim to underquoting. Obviously, you can’t change your footy team, but you can follow these tips to avoid the sketchy real estate practice.

If it hasn’t happened to you, it’s probably happened to someone you know.

You find a dream home that appears within your budget, you get your finance pre-approved, you get your hopes up, and … you get blown out of the water come auction day because the agent has underquoted the property.

But hang in there – all is not lost, as we’ll touch upon below.

What is underquoting?

Underquoting is the misleading practice of advertising a property with a price guide that suggests to hopeful buyers that it could sell below market value, or for less than what the agent knows the vendor will accept.

Accusations of underquoting have been rife in recent times, as national property prices have soared 24% over the past year alone.

Now, there’s no doubt that some agents out there have been intentionally underquoting properties to drum up interest. But not always.

Real Estate Buyers Agents Association (REBAA) president Cate Bakos says on many occasions selling agents get blamed unfairly for their reluctance to predict a strong competitive result, and in many circumstances, vendors exercise their right to change their price expectations without prior consultation with their agent.

“Underquoting is amplified by a rising market,” adds Ms Bakos.

Which means as property prices peak in Sydney and Melbourne, and the rest of the country starts to follow a similar trend, less underquoting should occur.

Why do agents underquote a property?

The main reason vendors and agencies underquote, explains Ms Bakos, is based on the belief that an underquoted property will attract more prospective buyers.

It’s hoped that these buyers will fall in love with the property so much that they’ll find a way to compete against more cashed-up buyers, helping to push the property’s final price up in the process.

“The reality is that many buyers find themselves shortlisting properties that are beyond their financial constraints, and this can lead to disappointment, wasted expenditure for building reports and due diligence, and lost opportunity,” says Ms Bakos.

Isn’t underquoting illegal?

Ms Bakos said while price guide legislation varied between states and territories, the problem was relatively endemic in many cities across the nation.

She said while underquoting was illegal, there were still many legal loopholes that existed in current legislation, particularly in Victoria.

“In Victoria for instance, vendors are not required to state their reserve price for an auction until moments before the auction,” says Ms Baokes.

“And some offending agencies take advantage of this by pitching the property at a price lower than that of a reasonable price expectation or a realistically anticipated reserve.”

How to avoid becoming a victim of underquoting

Rather than rely on the price guide the real estate agent gives you, do your own homework.

You can do this by looking at comparable sales within the last month or two (on websites such as Domain and realestate.com.au), and compare like-for-like properties and locations.

“It’s an approximation, but it’s more helpful than living in the past and working off older, unreliable sales,” adds Ms Bakos.

Here are the REBAA’s other top tips to avoid becoming a victim of underquoting:

1. Compare comparable properties by location, land size and condition.

2. Spend the months leading up to active bidding time (while obtaining finance pre-approval) to inspect, inspect and inspect as many properties and neighbourhoods as you can.

3. Look at other similar properties in the area and see what the agent’s initially-published estimate price range was; what the reserve price was; and what it finally sold for.

4. Consider consulting and engaging a REBAA-accredited buyer’s agent to take care of the process so you can “buy with confidence.”

And last but not least, don’t forget to get in touch with us in advance to get your finance pre-approved.

That way, come crunch time, you can spend less time on your finance application, and more time doing your homework to make sure the properties you’ve got your heart set on haven’t been underquoted.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

It’s taking young couples roughly five years on average to save for a 20% home loan deposit, according to new research. Want to hear something crazy, though? We know how to quarter that timeframe…

Real talk: it’s never been tougher to save up a deposit for your first home.

In Sydney the average timeframe is 8+ years. In Melbourne 6.5 years. And most other places across the country, 4 to 6 years. 

That is unless you happen to know a finance professional who can help first home buyers purchase a home with just a 5% deposit – and not pay any lender’s mortgage insurance in the process.

And how do we do that?

Well, if you’re eligible, we can hook you up with the First Home Guarantee (FHG) scheme – which will release 35,000 places from July 1 (more on this below).

By getting in early on this scheme and reserving a spot, you can quarter the amount of time it takes you to save up for your first home deposit.

Don’t believe us, check out these stats

Below you’ll see how long it’s currently taking first home buyers across the country to save for a 20% home loan deposit (according to Domain data), compared to saving just 5%.

Sydney: 8 years 1 month (20%), down to 2 years (5%).
Melbourne: 6 years 6 months (20%), down to 1 year 7 months (5%).
Brisbane: 4 years 10 months (20%), down to 1 year 3 months (5%).
Adelaide: 4 years 7 months (20%), down to 1 year 2 months (5%).
Perth: 3 years 7 months (20%), down to 11 months (5%).
Hobart: 5 years 10 months (20%), down to 1 year 5 months (5%).
Darwin: 4 years 3 months (20%), down to 1 year (5%).
Canberra: 7 years 1 month (20%), down to 1 year 9 months (5%).
Combined capital cities: 5 years 8 months (20%), down to 1 year 5 months (5%).
Combined regionals: 3 years 10 months (20%), down to 11 months (5%).
Australia-wide: 4 years 5 months (20%), down to 1 year 1 month (5%).

So if you’ve been saving towards a 20% for at least a year, you could be ready to hit the ground running when the 35,000 FHG schemes become available on July 1.

Tell me more about the First Home Guarantee scheme!

Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount (it’s also worth noting that property price caps apply).

But places in this scheme are on a first-come, first-served basis.

So don’t let the recent expansion to 35,000 spots lull you into a sense of complacency.

They’ll go fairly quickly, which means if you’re interested you’ll want to get in touch with us asap to ensure you’re ready to lodge the application come July 1.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.

First home buyers, regional buyers and single parents keen to crack the property market are the big winners in this year’s federal budget – with 50,000 low deposit, no LMI scheme spots up for grabs. 

Want to buy your first home with just a 5% deposit and pay no lenders’ mortgage insurance? 

You could be in luck – the federal government is expanding its hugely popular First Home Guarantee scheme to 35,000 places from July 1, 2022.

First home buyers who use the First Home Guarantee scheme fast track their property purchase by 4 to 4.5 years on average, because the scheme means they don’t have to save the standard 20% deposit.  

The government usually issues just 10,000 spots for the First Home Guarantee every July 1, but next financial year it’s upping the ante.

It’s worth noting that the similar New Home Guarantee scheme for first home buyers (10,000 spots for new builds only), isn’t expected to continue next financial year.

However, regional buyers (10,000 spots) and single parents (5,000 spots) will benefit from similar schemes, which we’ll run through in more detail below.

But first, what’s the First Home Guarantee scheme?

Ok, so the First Home Guarantee scheme (previously the First Home Loan Deposit Scheme) allows eligible first home buyers to build or purchase a home with only a 5% deposit, without forking out for lenders’ mortgage insurance (LMI).

This is because the federal government guarantees (to a participating lender) up to 15% of the value of the property purchased.

Not paying LMI can save buyers anywhere between $4,000 and $35,000, depending on the property price and deposit amount.

But places in this scheme are on a first-come, first-served basis.

So don’t let the expansion to 35,000 spots lull you into a sense of complacency.

They’ll go fairly quickly, which means if you’re interested, you’ll want to get in touch with us asap to ensure you’re ready to hit the ground running come July 1.

The new Regional Home Guarantee

Regional homebuyers will benefit from the announcement of the Regional Home Guarantee.

Under the scheme, 10,000 guarantees each year (from 1 October 2022 to 30 June 2025) will be made available to support eligible regional homebuyers.

The good news is that this scheme will also be made available to non-first home buyers, and permanent residents, to purchase or construct a new home in regional areas.

Details on this scheme are still fairly limited, though. 

For example, it’s not confirmed in the budget papers or ministerial statements whether it will be a 5% deposit scheme like the first home buyer one.

And what’s classified as a “regional area” hasn’t been disclosed yet, but rest assured we’re watching this space closely.

Family Home Guarantee for single parents

For single parents, 5,000 guarantees will be made available each year from July 1, expanding upon the Family Home Guarantee announced in last year’s budget.

The Family Home Guarantee can be used to build a new home or purchase an existing home with a deposit of as little as 2%, regardless of whether the single parent is a first home buyer or has owned property before.

Previously, it was planned that just 2,500 spots would be up for grabs each year over four years, so it’s good to see the federal government expand this scheme until June 2025.

Get in touch today to get the ball rolling

With these schemes, allocations are generally snapped up fast.

So if you’re a first home buyer, regional buyer, or single parent looking to crack into the property market sooner rather than later, get in touch today and we can explain the schemes to you in more detail and help check if you’re eligible.

And when the spots do become available over the next few months, we’ll be ready to help you apply for finance through a participating lender.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.