Weekly wrap - Friday 3rd September
We know people have been dying to find out what's trending in lending. There were a few changes here in Queensland, with some COVID restrictions and a few things happening, so we had a bit of a time away from the office. But we are back in and firing along. And there’s heaps happening!
Approval times are improving significantly.
For the third or fourth month in a row now, approval times are getting shorter and shorter. A lot of the banks have effectively caught up in some areas of their businesses. And in particular, a lot of that is the front end. They’ve gone from three weeks a little while back to somewhere between two to five days.
Investment is going up!
We see that both locally and interstate, which has been really interesting. The Gold Coast is getting a lot of interstate investment from Sydney and Melbourne. But even regionally, in the Townsville area, a lot of investors are seeing good value in the market up there. That is great for property owners looking to sell, as well as for existing owners with rent.
Do you need to sell to take advantage of the market?
A lot of people are looking to take advantage of the current favorable market and to sell. Sales are being reflected in valuations on existing properties. So, if you do have a home, and you're not planning on selling, you can still take advantage of the market being really good. Firstly, get a property valuation done, which we can organise through the bank, and get an understanding of how much equity you have available. Remember, you must still retain some equity in the property. We can't use all of it. But then, whatever the difference is, there's a couple of different ways that we can use it.
- Wealth creation. One way is taking advantage of the investment market or the rental market being so hot, if we can release some equity, we can put that towards purchasing an investment property. Interest rates are really low, plus the rental market is strong, so the yield or the return is really good. In a lot of instances, that property is paying itself off, so you can be either neutrally geared or positively geared. So, it's either covering itself or it's putting a little bit of cash back in your pocket. Normally, we'd see interest rates being higher if the rental market is this hot or this busy. But since the rates are so low, and valuations generally good, to get equity and the rental market being so good, it's a great way to use it.
- Debt reduction. For a lot of clients that may have gone through some changes with COVID, it's been a really good chance to consolidate some debts, get it all tidied into one repayment, and get that paid down. In an example of clients who did just that: the house was a one household family, at the time and they had lost this job for quite a period. So it was a really tough period for quite a while when COVID first hit. They'd also taken on a little bit of debt and some cards and it had added up. We sat down and brought seven facilities into that consolidation. They continue to make the same repayment of $1,600 per month, but that money will be cleared within less than three years. Now, on top of that, they've gone from a 3.16% interest rate pa down to 2.39% pa, and that's on a variable, owner occupied loan. So they were saving about two and a half thousand dollars in the first 12 months, that's a saving of $7,500 in the first three years, just on interest savings. And wait, there's more! Our clients got $3,000 cash back to refinance! Such a great result to be able to sit down with those clients and give them the great news! Historically, even two years ago at 3.99% pa, we were high fiving. To think, fixed rates are 1.99% pa and variable rates are 2.3s - 2.5s. What that means to a household budget, and how clients can help get ahead if they have some strategy and they have some structure, that's where we come in, obviously.
Those are just two awesome ways to get equity out and make your money work for you.
And quickly, a big shout out to all our friends and family and everyone in New South Wales and Victoria at the moment. We had our couple of weeks in lockdown here, and that was a big adjustment. But you guys have been going through this for a really long time, so just a big shout out to everyone to keep pushing through. And by all means, if there's anything we can ever do - please shout out, we are always happy for a phone call or a video call.
Photo: @rodemedia