Homeowners impacted by COVID-19 encouraged to contact lender

,

Homeowners who have had their income impacted by the coronavirus outbreak are being encouraged to seek out hardship options with their lender.

The economic impact of the coronavirus outbreak is evolving daily, if not hourly, across the Australian financial landscape.

Businesses have closed, jobs have been lost, and casual workers have had their hours slashed from work rosters.

If you’re one of the many Australians who have been affected – or are worried that you soon will be – rest assured that you can talk to your lender about hardship options without it affecting your credit report.

Here’s a statement released by Commonwealth Bank CEO Matt Comyn, for example:

“We encourage our retail customers who may be facing hardship due to impacts of the virus to contact us so that we can provide them with assistance, for example hardship options including deferral of loan repayments.”

What are some other options?

If you don’t believe you need to seek financial hardship, but you’d still like a bit of extra breathing room, it may be worth considering refinancing or renegotiating your home loan.

There have been four rate cuts in the past year – including one last month that reduced the RBA’s official cash rate to a record low of 0.5%.

And here’s the thing: lenders don’t automatically drop your repayments when the interest rate falls.

So if you haven’t asked your lender to reduce your home loan rate over the past year – or even the past month – then you may be able to reduce your monthly repayments by refinancing.

Get in touch

We understand that these are tough and uncertain times, yet rest assured we’re here for you no matter what lies ahead.

If you’d like us to help you explore either your hardship or refinancing options then please get in touch – we’re ready to assist you any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

The coronavirus economic stimulus plan for SMEs explained

,

Small businesses all around the world are facing uncertain times. However, rather than shutting up shop until COVID-19 passes, the federal government is hoping to stimulate SME spending through a raft of initiatives and tax incentives.

Indeed, the government estimates its two new business investment initiatives have the capacity to support more than 99% of businesses across Australia (3.5 million SMEs).

Basically, it’s hoping these measures will encourage SME owners to “stick with investments they had planned, and encourage them to bring investment forward to support economic growth over the short term”.

Let’s take a look at what they involve.

Instant asset write-off threshold increase

The instant asset write-off threshold has been increased from $30,000 to $150,000 (ex GST) and can now be accessed by businesses with an annual turnover of up to $500 million (up from $50 million) until June 30 2020.

Assets that may be able to be immediately written off include a concrete tank for a builder, a tractor for a farming business, or a truck for a delivery business, for example.

Now, it’s important to keep in mind that “write-off” doesn’t mean “free asset”.

Basically, this initiative allows you to immediately claim all the tax deductions you would have claimed over the life of the asset.

This can help with your business’s cash flow, as getting this cash back sooner means you can re-inject it straight back into other parts of your business.

Accelerated depreciation deduction

The other big initiative in the federal government’s plan to support SMEs is accelerated depreciation.

Basically, businesses will be able to immediately deduct 50% of the asset cost in the year of purchase and then also depreciate the remaining 50% over the asset’s useful life, so long as the business has a turnover of less than $500 million.

This initiative will provide businesses with a 15-month investment incentive (through to 30 June 2021) to support business investment and economic growth over the short term, by accelerating depreciation deductions.

Sound a little confusing? The good news is that the Business.gov.au website has two great case studies that explain exactly how this initiative works in more detail.

Get in touch today

If you’d like to find out more about the instant asset write-off or the accelerated depreciation deduction, and how they might work with an asset purchase for your business, get in touch today. We’d love to help out any way we can.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 buyer numbers spike to 10 year high

,

First home buyers are throwing themselves into the property market in numbers not seen since 2009.

The number of owner-occupier first home buyer loan commitments reached its highest point in ten years in January, with newcomers taking out 9,945 loans (seasonally adjusted), according to ABS data.

That’s a 3.2% rise on the previous month and a 20% increase on January 2019 (7921 loans).

A recent upwards trend in the home loan market was also reported in figures released by The Australian Prudential Regulation Authority (APRA).

The APRA data showed a 12.4% increase in the value of new housing loans settled by authorised deposit-taking institutions (aka lenders) in the December 2019 quarter.

What’s fuelling the spike in first home buyers?

Two things, mainly.

The first is the federal government’s First Home Loan Deposit Scheme.

The scheme, which started on January 1, can allow first home buyers to purchase a property with a deposit of 5% without having to pay Lenders Mortgage Insurance (LMI).

As of late February, it was reported that the majority of the 5,000 places available through 25 non-major lenders for this current financial year were still available to be reserved by potential first home buyers. So if you’d like to find out more get in touch!

The other main contributing factor to the growth spurt in first home buyer numbers is low rates.

Earlier this month the Reserve Bank of Australia (RBA) cut the official cash rate by 25 basis points to a new record low of 0.50%.

This came after three cash rate cuts in 2019, with the latest as recent as October.

And interestingly, RBA Governor Philip Lowe has hinted more rate cuts could be on the way in coming months, saying the RBA will continue to closely assess the implications of the coronavirus

Get in touch

For those thinking of entering the property market for the first time there’s a lot of recent changes to consider – including the record-low RBA cash rate and the federal government’s First Home Loan Deposit Scheme.

So if you’re thinking about purchasing your first home soon, get in touch today, we’d love to help you through the process.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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 owners impacted by coronavirus urged to contact creditors

, ,

SME owners concerned about the coronavirus outbreak impacting their cash flow are being urged to talk to their creditors as soon as possible.

Earlier this month the RBA cut the official cash rate by 25 basis points to a new record low of 0.50% due to the impact of the coronavirus outbreak on global financial markets.

And as the economic ripple effects of the coronavirus start to hit Australian businesses, financial and consumer law firm MyCRA Lawyers says the repercussions of not meeting loan repayments in a timely fashion could impact businesses for five years.

“The risk of an extended and prolonged economic downturn is real and affecting the entire economy,” says MyCRA Lawyer’s CEO Graham Doessel.

“The problem is even though the tourists and customers may have stopped, the bills won’t stop and that can mean defaults on people’s credit files.”

Mr Doessel says as soon as you are 14 days or more late in making a loan repayment it can go on your comprehensive credit file for two years.

“This will impact your ability to access credit,” Mr Doessel says.

“[If you] get a default or a court judgement on your file you will be feeling the financial symptoms of coronavirus for five years.”

What to do if your business is affected

Mr Doessel says if your business is struggling to meet its bills you should contact your creditors straight away and apply for hardship.

“Most lenders have a positive obligation to offer hardship in genuine cases. If you have seen your cash flow decimated due to coronavirus, reach out to your creditors and ask for some breathing room,” Mr Doessel says.

“Whatever you do, do not stick your head in the sand, because you can’t hide from your financial obligations.”

Mr Doessel adds that lenders and companies like Telstra, Optus, AGL and Origin Energy have hardship policies for genuine victims of circumstances beyond their control.

“Anyone who finds themselves financially affected by the virus should make a list of their bills and contact each credit provider – in writing if possible – to let them know the circumstances and to check no bills have gone unpaid,” he said.

“Most companies have the discretion to forgive a debt in extreme cases.”

Businesses impacted by the bushfires

The coronavirus outbreak comes as many Australian businesses are still reeling from bushfires.

Indeed, a NAB survey has found that two-thirds of Australian SMEs have been directly or indirectly impacted by the recent bushfires, with business disruption, higher insurance, and lower customer confidence cited as key factors.

“We know that many families and businesses face an uncertain future and we recognise the significant impact the fires have had on cash flow, loss of customers and supplier disruption,” says NAB Chief Customer Officer of Business and Private Banking Anthony Healy.

We’re here to help

There’s no doubt many Australian businesses are doing it tough right now – whether that’s because of the coronavirus outbreak or the summer bushfires.

If yours is one of them, please get in touch. We’re ready to assist you in any way we can and will work through your available options with you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.

RBA cuts cash rate to record low amid coronavirus concerns

The Reserve Bank of Australia (RBA) has cut the official cash rate by 25 basis points to a new record low of 0.50% as the coronavirus outbreak impacts global financial markets.

RBA Governor Philip Lowe said the coronavirus has clouded the near-term outlook for the global economy and global growth in the first half of 2020 will be lower than earlier expected.

“Prior to the outbreak, there were signs that the slowdown in the global economy that started in 2018 was coming to an end,” Governor Lowe said in a statement.

“It is too early to tell how persistent the effects of the coronavirus will be and at what point the global economy will return to an improving path.”

The RBA previously cut the official cash rate to 0.75% in October, which was the third interest rate cut in 2019.

More rate cuts on the way?

Governor Lowe also hinted that more rate cuts could be on the way in coming months, saying the RBA will continue to monitor developments closely and assess the implications of the coronavirus for the economy.

“The Board is prepared to ease monetary policy further to support the Australian economy,” Governor Lowe said.

Prime Minister Scott Morrison earlier in the day said he expected the big banks to “do the right thing” by Australians and pass on any rate cut in full.

“And honestly, I don’t see it any different to what Qantas did when we called out to Qantas and we said, we need your help to get some people out of China,” the Prime Minister said.

Want to know what this rate cut means for your home loan?

With this being the fourth RBA cash rate cut since June 2019, it can get a bit confusing as to just how much of these cuts your lender is passing on to you.

The good news is we’re following the market closely and can tell you which lenders pass this fourth rate cut on to their customers in full, and which lenders don’t.

So if you’d like to find out, then please get in touch – we’d be happy to help break it down for you.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute 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.