The landscape for investment lending is changing and like most things there will ultimately be winners and losers. The key to coming out on the right side of the equation is to seek advice and get a solid understanding of your options. Contact us for an obligation free asessment.

If you adopt the she'll be right approach and stick your head in the sand then you could find yourself in trouble. The changes occuring are as significant as those during the GFC. Some of the key changes we have seen so far are as follows:

• A number of lenders including AMP pulling out of investment lending altogether
• Lenders only financing up to 80% for investment property
• Lenders increasing interest rates for investment and interest only lending
• Increased restrictions for SMSF lending
• Increase restrictions to overseas and foreigh investors
• Increased restrictions on development funding

As we have mentioned previously those most at risk are off the plan unit purchasers, partcularly those with small deposits or little in the way of equity.

But of course changing conditions also present opportunities both in terms of opportunities to imrpove your finance structure and opportunities to invest.

We expect improved interest rate pricing for home lending and some opportunities to imrprove overall pricing with the correct structure.

Contact us for an obligation free assessment. 

and how to structure your finance  

While there are changes afoot with investor lending the flip side of this is lenders will be keener than ever to chase owner occupied business. This means we are likely to see some pretty sharp offers in the coming months. 

There are already some excellent offers out there that can strip thousands of dollars a year off repayments. If it has been a few years since you have review your home loan now is a good time to contact us for a review of your options.

Even with investment lending there are savings to be had if things are structured the right way.

Contact us now for an initial review

If you are an off the plan unit buyer Contact us to discuss your finance options

As I flagged back in my article in May there is a major problem looming for off the plan unit buyers.

An article in the Fin Review this week also highlighted the issue
http://mtafinance.com/news_and_research/view/1167/unit_buyers_get_crunched

A number of major lenders have just pulled the rug out from under the feet of unit buyers and potentially left them high and dry. "This is causing alarm across the industry," said Tim Brown, chief executive of the Mortgage and Financing Association told the Australian Financial Review. 

"Many of these are first-time buyers who will not be able to fulfil their finance obligation under the contract and will lose their deposit as many of the banks will not finance any investment loan over 80% and in some cases will not lend on investment at all," Tim Brown said. 

Having put down a 10% deposit, apartment buyers typically arrange finance for the rest as the apartment nears completion - now set to find that finance has become both more expensive and harder to secure.

Many lenders will no longer accept a 10% deposit and now require minimum 20% purchaser funding. The tests for loan servicing have now also substantially changed meaning people may now qualify for significantly less than at the time they signed a contract.

Some lenders have also basically said they will not honour previous approvals.  So buyers who thought they had their lending locked in may also be in for a rude shock. 

With people not being able to settle this could have a substantial negative impact on unit prices as contracts fall over.

If you have bought a unit off the plan you need to have your situation reviewd as a matter of urgency to assess your options. Contact us today for an assessment.

The headline consumer price index came in at a lower than expected 0.7 per cent from the March quarter for a 1.5 per cent rise from a year earlier. 

So-called trimmed mean inflation, which strips out volatile price changes, was 0.6 per cent in the second quarter and 2.2 per cent from a year earlier. Economists had tipped gains of 0.6 per cent and 2.1 per cent.

Core inflation remains firmly within the bottom half of the Reserve Bank of Australia's 2-to-3 per cent target range, preserving its ability to cut the official cash rate again if needed.

"With sub-trend growth in the economy, low wages and a global environment characterised by low inflation and strong competitive pressure, the inflation outlook is not a constraint should a weaker than expected demand outlook put the RBA in a position of needing to act on its easing bias," said ANZ Bank analysts Jo Masters and Katie Hill.

(SOURC: THE PROPERTY OBSERVER)

News Ltd columnist Alan Kohler says it will take nothing short of a recession to bring Australian house prices down.

Australian house prices were not in a bubble, but instead, in a "new normal" and are not going to come down on their own, the columnist said.

But he noted Deloitte Access Economics’ latest economic outlook where director Chris Richardson said: “The chance of a recession is higher now than it’s been for quite some time. China’s economy is the key.”

Alan Kohler referenced the RBA's recent comments:

“…there are no examples internationally of large falls in nominal housing prices that have occurred other than through significant reduction in capacity to pay (e.g. recession and high unemployment).”

And: “There is no mechanism to get a large and sustained level shift down in prices while a substantial fraction of the population can -- safely and sustainably -- service the obligations involved in paying the higher price.”

Finally: “…there is no example in Australia or internationally where supply expansion on its own generated housing price declines of a similar order of magnitude to the increases in prices seen in some Australian cities in recent years.”

Noting what’s happening in China, Alan Kohler suggested there is no chance of interest rates going up, so serviceability is only likely to improve.

"In fact, rates are more likely to come down further to try to prevent a recession here."

Kohler concluded the one bright spot was the big increase in the supply of apartments, which has resulted in smaller price rises among apartments than house, especially in Melbourne.

"Those who own a house already are winners; those who don’t will have to buy a flat."

(SOURCE AFR)

Australians might think Chinese investors have pushed up property prices, but "we ain't seen nothing yet," according to Colonial First State Global Asset Management chief economist Stephen Halmarick who is tipping the liberalisation of China's capital markets will inflate asset prices acrosss the globe. 

In recent weeks there has been a lot of focus on the challenges facing China as it opens up its financial markets to foreign investors, and what the associated volatility means for other economies like Australia.

"But what will really matter for the world is how China opens up to allow its people to send money offshore. Australians might think they've seen a lot of Chinese investment in the Sydney and Melbourne property market, but we ain't seen nothing yet," Mr Halmarick said at a panel hosted by the Australian Institute of Superannuation Trustees in Sydney.

China's main equity market, the Shanghai Composite Index, surged more than than 150 per cent in the 12 months to mid-June as the bourse was opened up to foreign investors, before plunging 32 per cent in a matter of weeks. Since the government intervened to stabilise the market with a capital injection in early July the Shanghai Composite has bounced back by 13 per cent. The direction of the ASX has tracked the rocky path of China's market over the past month.

Aberdeen Asset Management head of fixed income Nick Bishop agreed that outflows of Chinese money in the years ahead is likely to have a far greater impact on global financial markets than the recent rise in inflows of offshore capital into China. 

"China is a nation with a huge balance of household savings, because there has been no social safety net. Don't discount the ability of Chinese money to flow offshore and push up global asset prices, even if the economy slows down more than expected."

Mr Bishop said the biggest risk out of China would be a change in direction from policymakers.

"But we expect the authorities to continue to react to market volatility in a way that balances the challenges of the nation's structural reform push and plans to open up its financial markets with managing slower growth." 

According to data from the National Bureau of Statistics, China is on track to achieve its official economic growth target of 7 per cent in 2015, down from growth that was in excess of 10 per cent a few years ago. 

"The official figures show China is still growing at 7 per cent, although it feels a lot weaker," Mr Halmarick said. 

Many fund managers are sceptical of the accuracy of data released by the Chinese state, but it is nevertheless a pretty reliable indicator of relative changes, he said. 

"If all of a sudden the official statistics start saying Chinese growth has slowed to 5 per cent then we'll know we're in trouble, but I don't think that is likely." 

Macquarie Asset Management head of fixed income Brett Lewthwaite said the slowdown in China is being well managed by the state and tipped a "soft landing". 

After all, China has the advantage of being governed by a centralised government with a 10-year fixed term. That makes it easier for policymakers to stick to their long-term reform plans, despite setbacks caused by periods of turmoil. 

"Nobody ever said the liberalisation of Chinese markets was going to be easy," Vanguard Asia Pacific head of investment strategy Jeffrey Johnson said. 

Selling your old home at the same time as buying a new one can be challenging as it’s difficult to know where to start.

It might seem obvious, but the number one thing people overlook is actually finding out the full costs of a move including what they can afford and how much a lender will be prepared to lend them.

People often get so caught up in the emotion and excitement of looking for their perfect home that they overlook the financial realities and costs of such a move. There are a multitude of factors and costs that come into play when changing properties many which most people don’t anticipate. This often means people find themselves caught in a bit of a bind at the 11^th hour and often have to wear a lot of unexpected costs to proceed and end up with a more expensive loan than they anticipated.

Not a great start to something that was meant to be a positive experience.

Getting a proper financial evaluation up front before you start looking means you can get a much clearer understanding of what your options are and the implications of different scenarios.

One of the tools we use for our clients is our Property Changeover Calculator. This allows us to assess the outgoing and incoming costs associated with a move so a client has a better understanding of their end financial position and likely ongoing costs.

We can also explore a range of “what if?” scenarios to assess the impact of different sales and purchase prices.

This means our clients are better informed upfront, and means we can determine the appropriate structure for their needs before they proceed.  

Contact us to discuss your next move or even just to get a financial check up

Valuation firm Herron Todd White has just released it's latest national property clock and has identified Brisbane as a market on the rise. This is consistent with the view of a number of independent researchers including BIS Shrapnel which have pegged Brisbane for growth over the next few years.

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A surprise interest rate cut in Canada and the prospect of a similar move next week in New Zealand have stoked speculation the Reserve Bank of Australia will follow suit later this year.

While the Reserve Bank remains reluctant to cut rates again, the direction taken by two of governor Glenn Stevens' closest global peers helped send the Australian dollar to a six-year low of US73.54¢ on Thursday.

The Bank of Canada's cut its benchmark interest rate to 0.5 per cent on Wednesday. The RBA is expected to sit on its hands for a few more months yet, but it is also hard to see how the underlying terms of trade dynamics and mining capex unwind result in anything but persistent sub-trend growth, stagnant wages, and ultimately a lower cash rate.