How do you compare: how much of your pay goes to your mortgage?

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The property market is going through a boom phase, which means housing affordability is getting tougher. So how much does the average Australian household need to put towards their monthly home loan repayments in the current market? Let’s take a look.

You’ve probably noticed the housing market is going a bit crazy at the moment.

FOMO has taken hold and many properties across the country are selling well above their reserve.

As such, housing affordability has deteriorated, says Moody’s Investor Service, reversing the improving trend seen in 2020 during the peak of the coronavirus crisis.

So what percentage of a pay cheque goes towards a typical home loan?

On average, two-income households need to put aside a quarter (24.6%) of their monthly income to meet repayments on a new home loan, as of February 2021.

That’s up from 22.7% in June and July 2020, when new mortgages were the most affordable they’ve been in a decade.

The deterioration in housing affordability was evident in all capital cities over the five months to February 2021, with Perth remaining the most affordable and Sydney the least.

That said, housing affordability still remains better than the ten-year average of 26.1% and well under its peak of 30.7% in April 2011.

That’s because the average mortgage interest rate has nearly halved to 3.65% since 2011, according to Moody’s.

Want to know how much you can borrow?

Got your eye on an exciting new property and want to know if you can get a loan for it?

Get in touch today and we’ll help you crunch the numbers, work out your borrowing capacity, and discuss your finance options.

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.

Free new mental health support service for small business owners

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Floods, fire and pandemic – it’s been an incredibly tough 15 months for many Australian businesses. And with government support about to end, looking after your mental health will be just as important as taking care of your business’s financial health.

With the federal government’s COVID-19 JobKeeper wage subsidy scheme expiring on 28 March, experts are tipping as many as a quarter of a million jobs could be lost.

When you also consider that rental eviction moratoriums are coming to an end in several states, and flooding is taking place across large parts of Australia’s east, then there is a lot of pressure on small businesses owners across the country right now.

Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson says it’s important for small business owners to consider their mental health and reach out if they’re not coping.

“Help is available to small business owners who need it. NewAccess for Small Business Owners offers free one-on-one telehealth sessions with specially trained mental health coaches providing evidence-based advice on strategies for managing stress,” he says.

Free mental health support

Developed by BeyondBlue, NewAccess is a confidential mental health program where coaches with a small business background work with business owners to tackle challenges.

Businesses can access up to six sessions, with the initial 60-minute assessment designed to talk through your challenges, develop a problem statement and create a personalised needs-based plan.

Subsequent half-hour sessions involve the business coach stepping you through your plan, providing practical tools for managing stress, and reviewing progress.

“Being able to talk to someone who understands the mental load of running a small business will make a real difference,” Mr Billson says.

“Small business owners who look after their mental health, can also help their business.”

No doctor’s referral or mental health treatment plan is required and the free service is available via phone or video call from 8am to 8pm.

Business health support

NewAccess has been incorporated into the ASBFEO’s My Business Health tool, which provides assistance in three key areas.

The section on how to keep your business afloat looks at government support, managing outgoings and cashflow.

How to manage your business explores COVID-19, staffing, workplace health and safety, resolving disputes and insolvency challenges. Where to access support includes a 5-minute wellbeing checkup, links to support services and natural disaster recovery.

And lastly, your business’s financial health

If it’s your business’s finances that are causing you stress, please know that there are lender support services to help you navigate financial challenges.

For example, Australian banks offer a range of financial support options to help farmers and small businesses affected by natural disasters, such as the NSW floods, which can include:

– a deferral of scheduled loan repayments
– waiving fees and charges, including break costs on early access to term deposits
– debt consolidation to help make repayments more manageable
– restructuring existing loans, without the usual establishment fees
– deferring interest payments on a case-by-case basis
– offering additional finance to help cover cash flow shortages.

If you’d like to talk through how some of these options may help your business, please don’t hesitate to get in touch with us or your lender today.

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.

7 ways to make your property more attractive to potential buyers

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Did you know more than a third of Australian homeowners are considering putting their property up for sale so they can take advantage of the current boom in prices? Here’s how to get your property looking spick and span for prospective buyers.

New data shows seller confidence is now higher than it was prior to the COVID-19 pandemic, with 35% of homeowners considering selling by 2026, Westpac says.

And 12% of homeowners are already in the process of putting their house on the market or are planning to do so in the next 12 months.

So, if you’re a homeowner keen to sell your property in the current hot market, below are seven ways you could make it more attractive to potential buyers.

1. Bathroom boost

We hate to say it, but your bathroom/s will likely attract more scrutiny from prospective buyers than any other room.

If your bathroom is moderately new and not too dated, simply pay some professional cleaners to get it sparkling.

However, if your bathroom is fairly dated, consider updating some of the obvious essentials such as a new sink or tapware, updated countertops and cabinets, and a fresh coat of paint.

Also, ensure the taps and shower head are shiny and not leaking, and the toilet is spotless.

2. Kitchen kit-out

Giving the bathroom a good run for its money in terms of scrutiny is the kitchen.

Rest assured there are ways you can revitalise it without blowing the budget, such as replacing old cupboards and pantry doors, upgrading the benchtops, and making sure the taps and electrical fittings are in good working order.

And don’t forget that your kitchen appliances also act as sales props. If they’re old and outdated, they’ll bring the rest of the kitchen down with them. The good news is if you have to buy new appliances, at least you can take them with you!

3. Floor flaws

Nothing screams “I’ve seen better days” like stained carpet, scuffed floorboards, or chipped tiles.

If the floor a prospective buyer is standing on is dirty and dated, it won’t be long until they start thinking about what else is wrong with the house that they can’t immediately see.

If it’s within your budget, definitely consider giving this part of your property a makeover before inviting potential buyers in.

4. Pot plants

One of the quickest and cheapest ways of making the inside of your home feel more alive is to add a bit of greenery in each room.

Pot plants are fantastic because they’re low maintenance, make your place look great, and are great for your health.

And once again, rather than leaving them behind, like most other things on this list, you can take them with you when you sell your property.

5. Energy efficiency

Properties with high energy-efficiency ratings typically sell for up to 10% more, a review of international research shows.

The government’s Your Home website is a great starting point when it comes to making your property more energy-efficient and environmentally sustainable.

It includes information and tips on how to include more energy-saving features in your home, which may include improved lighting technologies, insulation, draught sealing and batteries, to name a few.

6. Paint pizzazz

A fresh coat of paint can make a property look and feel new again. And fortunately, it’s among the most affordable ideas on this list.

Best to play it a little safe though and go for neutral creams and whites that will suit most people’s tastes – you’ll attract more interested buyers that way.

And remember, lighter shades like beige and white also give the impression of more spacious rooms.

Finally, don’t forget the ceilings, even if they’re hard to reach!

7. Gardening gains

First impressions last – so one way to instantly increase the initial ‘wow’ factor of your home is to upgrade its exterior.

Trim any overgrown bushes, mow the yard, apply grass seed where there are bare patches, get some new flowers and plants in the garden beds, and ensure the fence looks great.

If you don’t have the tools for the job, or you’re simply more of an indoors person, consider hiring a landscaper to help out.

Got your eye on your own property upgrade?

If you’re thinking about selling your current property to buy elsewhere, get in touch today to discuss your finance options and borrowing capacity.

We’d love to take some weight off your shoulders when it comes to everything finance, so you can focus on getting your current property ready for sale!

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.

Boom time: Australian home values surging at fastest pace in 17 years

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It’s official: Australia’s housing market is in the midst of a broad-based boom, with the national home value surging 2.1% higher in February; the largest month-on-month change since 2003.

We haven’t seen this kind of fast-paced growth since Guy Sebastian robbed Nollsie to win Australian Idol, Roger Federer won his first of 20 grand slams (against the Scud at Wimbledon), and people primarily used their mobile phones to make calls (well, and play Snake).

The February surge, which was recorded by CoreLogic’s national home value index, was spurred on by a combination of record low mortgage rates, improving economic conditions, government incentives and low advertised supply levels.

What areas experienced growth?

Well, that’s the remarkable part.

Housing values rose in each capital city and rest-of-state region, highlighting the unusual and diverse nature of this housing upswing.

According to CoreLogic’s research director Tim Lawless, a synchronised growth phase like this hasn’t been seen in Australia for more than a decade.

“The last time we saw a sustained period where every capital city and rest-of-state region was rising in value was mid-2009 through to early 2010, as post-GFC stimulus fueled buyer demand,” says Mr Lawless.

So which areas performed best then?

Sydney and Melbourne were among the strongest performing markets, recording a 2.5% and 2.1% lift in home values over the month respectively, and making up for their weaker performances throughout 2020.

The quarterly trend, however, favours the smaller cities, including Darwin (up 5.5% over the past three months), Hobart (4.8%), Perth (4.2%) and Canberra (3.7%).

And Mr Lawless says whether Sydney and Melbourne can sustain their new found growth is yet to be determined.

“Both cities are still recording values below their earlier peaks, however at this current rate of appreciation it won’t be long before Australia’s two most expensive capital city markets are moving through new record highs,” he adds.

“With household incomes expected to remain subdued and stimulus winding down, it is likely affordability will once again become a challenge in these cities.”

New home lending is up, cash rate remains on hold

There were two other very interesting pieces of news this week definitely worth noting for soon-to-be borrowers and refinancers.

Firstly, latest figures from the Australian Bureau of Statistics show the value of new home lending hit $28.75 billion in January, up a whopping 44% from the same time a year earlier in seasonally-adjusted terms.

That’s a record high, according to the ABS, and is reflective of the record low interest rates currently available.

Meanwhile, the Reserve Bank of Australia (RBA) kept the official cash rate on hold at 0.1% during their March meeting.

Now, the RBA Governor Philip Lowe once again stated he doesn’t believe that the economic conditions required to increase the cash rate will be met until at least 2024.

But, there are more and more economic pundits suggesting he might be forced into a change of heart if the prudential regulator (APRA) doesn’t introduce lending caps to help cool the booming property market.

So with all that in mind, if you’d like to explore your borrowing or refinancing options in the current lending landscape – before any potential changes come into play – get in touch today.

We’re here to help you with all your home loan and refinancing needs.

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.

SME credit demand improves, lenders begin next phase of COVID-19 support

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Things are starting to look better for small business owners across the country with just 5% of deferred business loans yet to resume repayments. Meanwhile, there are signs that business credit demand is improving, especially when it comes to asset finance.

The first bit of data comes from the Australian Banking Association (ABA), which shows just 11,263 business loans across the country are yet to resume repayments.

That’s a huge drop from the height of the pandemic back in June when more than 200,000 small business loans were deferred.

With automatic loan deferrals now coming to an end, the next phase of support for borrowers who are unable to make reduced repayments or restructure their loans will involve assistance from specialised hardship teams.

As part of this support, banks have developed an industry-wide, consistent approach to hardship and a new online assistant hub to guide customers in financial hardship and improve transparency.

“Customers can expect a thoughtful and compassionate approach, with clear and transparent explanations, regardless of who they bank with,” says ABA CEO Anna Bligh.

Credit demand improving

The other positive news for business confidence around the nation is that credit demand is showing signs of recovery, especially when it comes to asset finance.

Equifax’s Quarterly Business Credit Demand Index for the December 2020 quarter shows that while business loan applications were down 10.1% from the year before, the rate of decline has softened.

Applications in Victoria were up 7% in December 2020 compared to the September quarter, closely followed by Queensland and Western Australia (+5%).

Better yet, asset finance applications were actually 0.2% higher than the same period a year earlier.

“While overall business credit demand remains down, it is encouraging to see that there are signs of a turnaround,” says Equifax’s General Manager Commercial and Property Services Scott Mason.

“The lifting of extended restrictions in Victoria has allowed for a rebound in business credit applications driven by asset finance.”

How’s 2021 looking for your business?

If you’re starting to feel confident about your business’s outlook in 2021, and you want to explore your finance options to make the most of any upcoming opportunities, then please get in touch.

It’s worth mentioning that the federal government’s ‘temporary full expensing’ scheme – which allows businesses to immediately deduct the business portion of the cost of eligible new depreciating assets – is in place until 30 June 2022.

If you’d like to find out more about how it could assist with your business’s cash flow when purchasing assets, feel free to give us a call today.

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.