Monthly Market Update
Welcome to my Monthly Market Update.
Unfortunately my marketing budget and my technical skills doesn’t allow my present a fancy update with pictures, graphs etc.
My philosophy is that “its content that is important”.
So here we go!
Growth in Perth’s residential market continues to accelerate exponentially with experts forecasting prices to jump to 19% in sum pockets during 2021.
I come across this podcast from CBRE Senior Director Valuations Michael Veletta and it’s a great summary of the current state of the real estate industry.
Michael discusses the impact on the property prices on new sales, the current rental market and impact of the new building constructions based on building grants.
It is well worth sparing the time to update yourself in regards to the current real estate market.
We have seen recently a movement in the fixed rates, with the long term rates over 4 and 5 years increasing slightly and the 2 -3 year rates reducing.
Most of the deals I am working on at the moment, the clients have chosen to have a spilt facility, with a portion of the loan on a fixed rate and portion on variable rate.
This spilt structure gives the clients security in regards to the fixed portion and knowing what their repayments are, while the variable rate gives the clients the flexibility to make extra repayments, access to redraw and have an offset account.
An example of a spilt structure:
Fixed Portion – 2 year fixed @ 1.89%
Variable Portion - 2.48%
However the spilt structure may not be for everyone, and this is why as a broker a complete my full fact find to ensure the products offered suits the clients immediate and future needs.
I have attached a Clients Fact Sheet in regards to Split Facilities for your reference.
REVIEW CURRENT FACILITIES
Clients don’t often don’t have the TIME to invest to review their current interest rates.
Often clients will invest the TIME to review their insurances, seek alternative quotes, because they are reminded very year when the renewed advice hits their inbox.
Where as the clients home loan quietly ticks over in the background unnoticed most of the time.
I am more than happy to invest my TIME, as this is what I do, to assist clients review their current facilities and provide the options.
Based on a couple of recent reviews I have completed, the rates being applied are above current market and we have had success in reducing their rates.
However quite a few clients when we start discussing the options in the market, have also chosen to refinance their facilities and take advantage of the low rates and cash rebates that are on offer in the market.
The commercial side of my business is gathering momentum.
Clients are looking at the opportunities to secure their own premises, which will provide them with the long term security.
They are also considering the option to purchase the property or restructure the ownership of their existing property, into their SMSF.
I would recommend that if this is an option you or your clients are considering, that you proactively engage your financial planner, accountant and lawyer at the outset and seek advice.
I am still attractive variable rates around the 2.90% mark and potentially lower depending on the opportunity.
Also one new entrant into the commercial market is taking more of a traditional but refreshing approach.
They are placing more emphasise on understanding the cash flow and management of the business, which as we know ultimately repays the debt, rather than the strength of the freehold property being offered as security.
This approach will assist clients that necessarily don’t have the freehold security to offer or the ability to fully secure the debt by the property, but have an established profitable well run business.
Fintech lenders continue to be active assisting businesses meet an immediate seasonal funding requirement, who don’t necessarily have the security to secure the debt or the up to date financial information required by some of the more traditional lenders.
On particular lender is now offering an 8 week option with no repayments.
If you have any thoughts, comments or any clients that I can assist, please let me know.
Rates and loan terms quoted are subject to the lenders terms and conditions for the particular product offered.