Here’s four stories that might impact your finances as we hit the mad-dash to the holiday season:

1. Banks not passing on full rate cuts - what do to.

2. Housing Turnover is recovering from a historic low.

3. Controversial First Home Buyer Scheme passes Parliament.

4. Why you should avoid Afterpay during the holiday season.

As always, get in touch if you need help with a home loan.

Call me now on: 0402 408944

Are you upset banks aren’t passing on the full rate cuts? Then read this...

The RBA has lowered interest rates three times in the past five months and each time there’s been a wave of disappointment homeowners whose banks aren’t passing on the full savings.

Why does the RBA cash rate affect your home loan interest rate?

The cash rate that the RBA meets and sets each month is essentially a lever that dictates the interest rates banks need to pay to borrow money on overnight markets. The overnight market rate in turn impacts the costs banks incur to continue holding the variable rate loans they’ve issued.

So when the cash rate goes up or down, banks will all react differently.

Here’s what you need to know

• RBA cash rate movements impact the existing variable rate for a homeowner but not their fixed rates.
• Just because a lender passes on the full savings for one RBA rate cut, doesn’t mean they will the next time.
• Some lenders pass on the rate cuts right away, some wait a few weeks.
• Banks can and often move their interest rates without the cash rate being adjusted.
• Choosing a lender or a home loan has to be about your long-term strategy and how that bank reacts to the RBA rate adjustment is just a small factor in choosing a loan.

As a broker, here’s two ways I can help right away;

1. Provide you with a full breakdown of how all banks and lenders have reacted to the 2019 RBA rate cuts.
2. Analyse your current loan and interest rate and see if a more competitive deal might now exist.

Housing Turnover coming back from a historic low.

One large factor that is often underreported when talking about the national property market slump is the percentage of turnover in the market - the percent of property on the market that sells.

Recently released data by the RBA has shown that housing turnover is a 30 year low but there is good news on the way. With the election out of the way, lower interest rates and the start of the spring selling season the numbers are starting to rebound.

Here’s some other key takeaways:

• Analysts claim one of the biggest reasons for the historic low was a low level of stock.
• Around 70% of housing turnover today is from existing property.
• Turnover from newly built housing is rapidly falling.

If you’re looking to take advantage of buying conditions before the market might heat up again, I can help make sure you’re setup with the right loan.

First Home Buyer Help is on the way

A controversial new scheme has passed in parliament that aims to help First Home Buyers get into the property market. The program will help buyers get into a property with a 5% deposit but it’s estimated that less than 1 in 10 buyers will receive it.

The big savings are that the government will ‘guarantee’ the loan so that the borrower will not have to pay Lenders Mortgage Insurance (LMI).

Other details around the scheme are still a bit unclear but here’s what we know so far:

• The scheme is capped to 10,000 buyers a year.
• It will ‘guarantee’ loans for first time buyers with deposits as small as 5%.
• There is an income cap of $125k for individuals and couples earning more than $200k.
• There is a price cap in cities and regional areas. Queensland (Capital city and regional centres) up to $475,000.00, rest of state - up to $400,000.00
• The scheme will start on January 1st 2020.
• It will only be available through some lenders.

If you’re thinking about this scheme or know someone who is, let me know. I can make sure you’ll have a good chance at being one of the lucky 10,000 who receive this.

Why you should avoid Afterpay

Buy-now-and-pay-later business, Afterpay is definitely shaking up the payment marketplace. There’s even a nightclub that’s proposing to offer it to it’s customers. Even still, it’s a highly debated issue among Australians.

My advice about Afterpay

And if you’re thinking about purchasing, investing or refinancing a property in early 2020, don’t use Afterpay for your holiday shopping.

More generally, if you’re going to use it, do it after you’ve got your home loan. Banks and lenders that see Afterpay on your banking statements get nervous about your saving and spending habits. More simply, it raises flags about a consumer's ability to budget and live within their means.

I’m working with customers who have very strong loan applications but are running into issues because of just a few small Afterpay transactions.

If you’re going to use Afterpay, use it as a short term incentive but make sure to pay it back as quickly as possible.

If you need a hand managing your existing Afterpay payments, or would like to know more about how these could impact your home loan application, I'm happy to speak with you.