First homebuyers brush off virus threat and steam ahead with plans to purchase

Daily Telegraph/ MARCH 22, 2020

Sydney’s eager first homebuyers have kept their dreams of property ownership alive in the face of the coronavirus threat, adapting their buying strategies to the pandemic changes sweeping the country.

Agents reported interest in virtual property tours and online auction bidding platforms surged over the past week as house hunters sought to avoid large crowds.

First homebuyers were among the buyer groups leading the technology uptake and in some instances were the only buyers contending for sales, agents told The Sunday Telegraph.

Realestate.com.au data revealed activity from first homebuyers – which hit a 10-year peak in December – remained high in the recent month despite uncertainty over how the virus would affect the market.

The listing group’s chief economist Nerida Conisbee said government benefits were proving a strong incentive for first-time buyers to stay active in the market.

Key benefits included the First Home Buyer Deposit Scheme allowing buyers to use only a 5 per cent deposit and stamp duty discounts for purchases under $800,000.

First-time buyers were also among the groups most likely to be encouraged by record low interest rates.

The cheapest variable home loan rate on offer is just 2.49 per cent and rates could drop even further following the Reserve Bank of Australia’s decision this week to cut the cash rate to an unprecedented low.

“First homebuyers may be just as stretched as everyone else but they still need a place to live,” Ms Conisbee said. “They also, traditionally, become more encouraged when they sense there is better buying.”

Ms Conisbee added that while the first homebuyer market remained resilient, it could easily change given nothing like the COVID-19 pandemic had been witnessed before. “It’s hard to know what will continue, things are changing daily,” she said.

Auctioneer and Cooley Auctions founder Damien Cooley said most of his company’s auctions this week had interest from online bidders, including one auction where all of the registered parties bid online.

 

“The (online) interest has really gone up in the last week,” he said.

Smartline mortgage broker Ben Dennis said many first homebuyers were eager to get into the market while they could. “We’re in uncertain times but there are people with good jobs who aren’t as worried,” Mr Dennis said.

McGrath-Newtown agent Adrian Tsavalas said the first-timers typically bidding at auctions this weekend were employed in the tech industry, law or health. Those in retail or with small businesses were largely absent from sales.

“First homebuyers seem less fazed by coronavirus. Other buyers, who would buy more expensive properties, are a bit more cautious, some of them lost money in shares,” Mr Tsavalas said.

Nurse Jasmin Ananoria and husband Jihan, who works in corrective services, said they were confident in their recent unit purchase in Asquith because they saved a decent deposit and bought well within their budget.

“The peace of mind you get from owning your own home is something that is really valuable,” Ms Ananoria said.

“I value the feeling of not having to worry if our (tenancy) contract will be renewed … we just wanted a home no matter how small, as long as we won’t have a hard time paying the monthly repayments.”

Parramatta units were Sydney’s most popular choice for first homebuyers, followed by those in Randwick, according to realestate.com.au inquiry levels. Other popular markets were mostly cheaper suburbs out west, including Blacktown, Schofields and Liverpool.

Dee Why units were the top choice for first-time buyers on the northern beaches, while Lane Cove units attracted the most north shore inquiries.

Preliminary CoreLogic figures revealed 64.4 per cent of Sydney auctions cleared this week, with 680 of 923 results reported.

The clearance rate for Saturday auctions was marginally higher at 66 per cent. The clearance rate for the same week last year was 52.1 per cent.

Saving your home: How to ask for a mortgage payment pause  (By Nicole Pedersen-McKinnon)

SMH/March 21, 2020

I don’t often write this, but your lender is your friend.

If you are suffering financial hardship and look like losing your job as the whole country grinds to a Coronavirus-induced halt, PLEASE call them.

Banks and financial institutions have long been required to offer hardship provisions to ease the burden if customers find themselves in financial difficulty. After all, it is in their best interests to get the money owed somehow – even if more slowly.

Institutions began taking this obligation far more seriously after the Hayne royal commission slammed them for their unconscionable actions last year. And amid this global pandemic -which is now not just medical but financial – they will be even more lenient.

Lenders have variously committed to waiving fees and charges, all the way through to debt consolidation and repayment holidays.

Some have even raised the possibility of interest-free periods.

Australian Bankers’ Association chief executive Anna Bligh said: “Banks stand ready to support customers and if anyone is in need of assistance, they shouldn’t wait but come forward as soon as possible.”

Here are some of the things you may be able to do to held reduce your mortgage burden.

All – bar one that I will point out – will ultimately cost you more in interest. But, ultimately, that is not the issue right now.

It’s about not losing your home.

Consolidate your debt

This means rolling any personal loans and perhaps credit-card debt – although minimum monthly payments on these are set so low, you would probably would save more in the short term by just making those payments – into your lower-interest rate mortgage.

Say you consolidated a fairly typical $20,000 five-year car loan into your mortgage. This would slash about $300 off your total monthly repayments.

The downside is while you were on track to pay $4900 in interest (at 9 per cent), you would end up paying triple at $15,076 (at a 5 per cent rate, which might be average over the loan’s life).

A longer-term loan, even a smaller, lower-rate one, will cost you more.

The key to getting a consolidation to work for you over the long term is to resume making the “car repayments” component of your mortgage at their original level as soon as you can, to ditch this portion of the debt cheaper and quicker.

You should even be able to request that your lender make a “separate split,” with the time allowed for the consolidated portion, so the purpose does not get all mixed up.

Take a repayment holiday

For your mortgage, it should be relatively quick and easy to arrange for a pause in your repayments. Most of the administration would be on the lender’s end.

Such a repayment holiday is fairly routinely offered if a household is cash-strapped after a borrower becomes unemployed.

For example, NAB is offering to pause home loan repayments for up to six months, including a three-month checkpoint.

For a customer with a typical home loan of $400,000, this will mean access to an additional $11,006 over six months, or $1,834 per month.

Just be aware that the interest will accrue while you are not paying off the loan, and you will be paying interest on interest, so it will end up costing you significantly more to become mortgage free.

This is the dream solution: cut your repayments to just the principal amount.

If it is truly interest-free, this also would not set you back a cent extra over the life of the loan… in fact it should save you money.

However, I’m guessing that lenders would want some compelling evidence that if you don’t get this deal, you would otherwise default on the loan, to extend you this kind of economic olive branch.

Start the loan clock ticking again

Besides debt consolidation, this is the option to which a lender is most likely to agree.

You what is called re-amortise your loan or, in essence, restart a whole new 25-year or 30-year term, cutting your repayments by the more, the longer you have held your current loan.

You can calculate your potential lower repayment (and also check how much extra this will see you pay overall) on my free app – My Mortgage Freedom Date – available online from the Apple store.

Hopefully, by the time you read this, there will be some solid, more widespread income support on offer from the federal government, so your biggest asset – your home – will not come under threat.

However, if you feel you are in serious trouble – or can see it quickly looming – call your lender today. For the big-four banks,

contact numbers are: ANZ 13 13 14, CBA 13 30 95, NAB 13 22 65 and Westpac 1800 067 497.

 

You can also call the National Debt Helpline on 1800 700 700 for free advice from a financial counsellor.

(Nicole Pedersen-McKinnon is the author of How to Get Mortgage-Free Like Me. Follow her on Facebook, Twitter, or Instagram)

Most popular suburbs for big house buyers: Baulkham Hills and neighbouring areas come up top

The Daily Telegraph/MARCH 15, 2020

BONDI or Manly might be what the world thinks of when it comes to living in Sydney but locals who actually want the Australian dream of a family home with a backyard go to one place — Baulkham Hills.

The suburb, which is split between the Hills Shire and Parramatta councils, was the most popular area in the country for families wanting four-bedroom houses.

It was also the most coveted location for buyers of all house types in the Greater Western Sydney area, with buyer demand nearly doubling since 2019, according to a realestate.com.au measure of online search activity.

Adjacent suburbs North Rocks, Winston Hills, Kings Langley and Castle Hill rounded out the top five most viewed suburbs more than 15km west of the CBD.

“Baulkham Hills is off the charts right now,” realestate.com.au chief economist Nerida Conisbee said. “It’s always been popular with families but now it’s huge.”

The increased interest in the northwest coincided with the opening of the Sydney Metro Northwest train line in May last year. The line connects much of the region to Sydney’s north shore and beyond.

Housing experts said the region’s increased popularity was also due to its proximity to Sydney’s second CBD at Parramatta — and the big houses on large blocks.

Additional Australian Post Office data revealed the region accounted for the bulk of suburbs with the most requests to redirect mail from newly moved NSW families and households between 2013 and 2019.

Kellyville residents used the most redirect services, followed by Castle Hill, Port Macquarie, Mosman and Baulkham Hills.

One of the biggest contributors to Kellyville’s growth was the North Kellyville housing estate, which effectively doubled the size of the suburb.

McGrath-Castle Hill agent Tamara Wikaruk said the schools, shopping options and large blocks had always been a big draw for families but the new train line was bringing even more people to the area.

“We’re getting significantly more out-of-area buyers,” Ms Wikaruk said.

Fiona Ross moved from Baulkham Hills to Kellyville 11 years ago and said the region was growing fast.

“The rail link has been a huge change,” she said. “There is a lot more people and it’s much easier to get around, especially for teenagers.”

Her family is taking their home at 20 Valenti Crescent to auction next weekend but will be staying in the area.

“We love the feel of the home. There is plenty of space you never feel like you need to be stuck in the same room, which is good as a family,” she said.

MOST REQUESTS FOR RE-DIRECT MAIL SERVICE 2013-2019

Kellyville

Castle Hill

Port Macquarie

Mosman

Baulkham Hills

Source: Australian Post Office

 

Pressure on RBA to cut rates after global central banks move on virus

SMH/ March 16, 2020

The Reserve Bank is under pressure to cut official interest rates and signal other moves to boost the country after central banks around the world announced financial crisis-like moves to protect the global economy.

As Prime Minister Scott Morrison said the coronavirus outbreak was now “well beyond the GFC”, some of the world’s most important central banks took coordinated action to secure the economy.

The US Federal Reserve is slashing its official interest rate by a full percentage point, taking it to a range of zero to 0.25 per cent. America now has official interest rates higher than Australia where the Reserve Bank is sitting at 0.5 per cent.

Only a week ago it cut rates by half a percentage point as the scope of the coronavirus outbreak became apparent.

The bank is also announcing it is re-starting quantitative easing measures. It will buy $US500 billion ($802b) worth of American government debt and increase its holdings of mortgage-backed securities by $US200 billion ($322b).

“The [bank] expects to maintain this target range until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals,” it said in a statement.

The move came as the central banks of Canada, England, Japan, Europe and Switzerland announced a “co-ordinated action” to pump liquidity into the global financial system.

The banks agreed to effectively cut the price of American dollar swap arrangements among themselves by a quarter percentage point.

“The swap lines are available standing facilities and serve as an important liquidity backstop to ease strains in global funding markets, thereby helping to mitigate the effects of such strains on the supply of credit to households and businesses, both domestically and abroad,” the Bank of England said in a statement.

Last week, the Reserve Bank had to pump $8.8 billion into the Australian financial sector because of liquidity issues in the local market.

Across the Tasman, the central bank of New Zealand on Monday morning cut its official interest rate by 0.75 percentage points to a fresh record low of 0.25 per cent.

Following an extraordinary meeting of its board, the NZ bank said it would make the deep cut and hold rates at that level for at least the next 12 months.

“The negative economic implications of the COVID-19 virus continue to rise warranting further monetary stimulus,” it said

“Since the outbreak of the virus, global trade, travel, and business and consumer spending have been curtailed significantly. Increasingly, governments internationally have imposed a variety of restraints on people movement within and across national borders in order to mitigate the virus transmission.”

It also revealed it may engage in its own form of quantitative easing “should further stimulus be required”.

NAB economists said it had expected the Reserve to cut official interest rates to a record low of 0.25 per cent at its April meeting.

“But fast-changing events mean the risk of an inter-meeting rate cut by the RBA to 0.25 per cent is likely to have increased sharply,” they said.

“This was not how the RBA behaved during the global financial crisis or even after the 9/11 terrorist attacks, preferring to move at scheduled board meetings.

“However, with the next board meeting still three weeks away on April 7 and the world and Australian economies continuing to rapidly deteriorate, there seems little point in waiting three weeks to deliver further support to the Australian economy on the interest rate front.”