10 Market Signals You Should Keep an Eye On

home buying - salt finance

If real estate is on your mind, then every day we’re getting messages and storing information around the current state of the market. Between all the different economic commentary, media coverage, and opinions from family and friends, everyone seems to have an opinion on whether house prices are going to boom or bust.

But how do you know what’s actually happening in your local area?

It’s important to remember that every market is different, so we always recommend that doing some research is best. If you wanted to understand market activity in your area, we’ll shed some light by discussing some of the market signals that you can keep an eye on.

Below are the statistics and trends to watch to help you not only understand what your local market is doing but also assist in having more constructive and critical conversations with agents if you choose to discuss your options in more detail.

1. Is your local market gentrifying?

Gentrification is a good indicator of a ‘hotter’ real estate market. Want to know how your area is faring? You need to take a little look at your neighbours.

Ask yourself, “are the people in my area changing?” Demographics aren’t just important to sellers, but investors and upsizers, too. Investors want to buy into areas that are on the rise, families want to get more for their dollar, and sellers want to strike while the iron is hot.

There’s a tonne of stats that point to gentrification and these are freely available via the Australian Bureau of Statistics. Generally, if you live in an area that looks like it’s changing through a rise in young professionals and families setting up a house, then you’ve probably got a gentrifying suburb on your hands.

If you wanted to dig in more, you should look for an increase in couples with children; an increase in residents who lived at a different address five years ago; and an increase in total household income. If you’re seeing positive changes across these statistics, then it shows that your area is becoming more desirable for buyers and renters. This is especially true if you live in an area that has historically been considered unappealing.

2. What are property prices doing?

While it’s important to look at how property prices are currently performing, it’s also a good idea to look at how they’re expected to change in the future.

If property price growth starts to plateau and market outlook predictions are not positive, it may be worth trying to avoid the decline and sell your property while prices are still stable. On the other hand, if property prices have been experiencing strong growth and consumer sentiment is high, it is likely that your property may appreciate in value if you wait.

Keeping track of how property prices are performing in your local area will allow you to stay informed and understand the local market conditions of supply and demand.

Property prices are dictated by supply and demand. When demand is high but supply is low, competition between buyers often drives prices up.

Why is this important? Property prices are dictated by supply and demand. When demand is high but supply is low, competition between buyers often drives prices up. When there are too many properties on the market, however, sellers may need to lower their prices due to less demand.

Knowing the market conditions of your local area, how property prices are currently performing and predictions for the future can give you a well-rounded view of how property prices are actually doing.

3. Are you monitoring days on market?

A good indicator of whether you’re in a buyers’ market or a sellers’ market is days on market. Markets that are in high demand will tend to show a decrease in the average time it takes to sell a property. The greater the days on market, the more likely vendor discounting is.

In saying this, it’s really important to know what the average days on market are in your area. In rural areas and very expensive suburbs, days on market can tend to normally be higher because there are fewer buyers on the market. To find the average days on market over the past quarter or six months, for example, and compare those with the latest days on market figures available.

4. Is the landscape of your suburb changing?

Like demographic change, another clue that your market is in demand is a surge in new developments, infrastructure, and amenities. State and local governments will invest in areas where there is a demand by way of population, or a need to greatly influence the area’s ability to function and grow.

Similarly, developers will seek out areas where they’re confident in getting a good return on investment. Larger scale developments can take 1-2 years to complete, and sometimes longer given all the bureaucratic hurdles. A developer needs to have solid confidence in the area to be waiting all that time.

5. What is happening in surrounding suburbs?

If you’re leaning more towards waiting it out, a good way to understand how your suburb might behave in the future is to look at the suburbs next door. If housing affordability and slow wage growth impact a buyer’s ability to purchase in a certain area, they will tend to look for more affordable ‘next-door’ suburbs, causing a ripple effect on neighbouring postcodes.

If you’re leaning more towards waiting it out, a good way to understand how your suburb might behave in the future is to look at the suburbs next door.

To understand whether your suburb is in a potential ‘ripple’ area, it probably has a similar feel and similar amenities to more desirable suburbs next door. It might be a little further to train stations or schools, but it’s all still very close. The more desirable neighbouring suburb probably has a median value up to 10% higher than your suburb. So if you’re looking to hold, watch median values in your area over six months to a year to see if there is an upward trend.

6. What is consumer sentiment like?

We spoke about media commentary earlier, and this can have an impact on how we all feel and think about the market. But as we also mentioned, every market is completely different, so while one area might be booming, another might really be in the throes of a downturn.

To understand consumer sentiment, you need to look at listings volumes and sales volume. If people aren’t listing, they’re probably concerned they’re not going to get a great price or that there aren’t many buyers out there. If sales volume is down compared to ‘normal’, then that’s an indication that people aren’t buying.

7. What are the latest auction clearance rates?

Multiple factors can affect auction clearance rates, including prevailing interest rates, time of year, public holidays, sudden economic changes (we’re looking at you Covid-19), and even sporting events.

Clearance rates are generally a really key property market indicator, expressed as a percentage of the number of properties sold at auction over a defined timeframe. Clearance rates can act as a temperature gauge to help you understand if you’re in a buyers’ or sellers’ market. And generally, rates above 70% suggest you are in a sellers’ market. In contrast, if a market is regularly recording clearance rates below 70%, it suggests that sentiment is quite low.

Clearance rates can act as a temperature gauge to help you understand if you’re in a buyers’ or sellers’ market.

It is important to keep the volume of stock going to auction at the forefront of your mind, though. If stock levels going to auction are low, then clearance rates are not a trusted indicator of how the market is currently performing.

8. Is there a high level of vendor discounting?

Setting the right price in any market is a hard task, especially if a market is changing rapidly. It is a delicate balance that can be hard to master. Firstly you need to be realistic about the value of your home amid current market conditions. Secondly, you need to choose the right agent who won’t inflate your property’s appraised value just to get a listing.

Vendor discounting occurs when a seller accepts an offer lower than the first advertised price. Vendor discounting is more common in slower markets, particularly if there aren’t many buyers circling, as vendors get nervous that they won’t get an offer any higher.

9. Is a period of economic instability on the horizon?

If you’re considering selling, then we have no doubt that you’re watching and reading the latest real estate news to understand what’s happening nationally, at a state level, and in your own region. Keep up with what analysts are predicting for the future. If the economy is on unsteady ground and analysts are predicting that the market will be negatively affected, then it may be a good idea to sell before heavy price corrections take place.

One of the most respected Australian industry analysts and researchers is Tim Lawless from CoreLogic. He and his team release new figures and analyses on a regular basis, and you can access this analysis here.

10. How scarce is your property type in your area?

When it comes to understanding the value of your property, the concept of scarcity in the current market can give you a better understanding of whether it is likely to sell and whether it is likely to be in high demand. Generally, the scarcer the property, the more expensive it is, but what plays into this is not only property type but location as well.

A good example of this would be an inner-city suburb where there is a very high concentration of apartments, and a short supply of houses; if you own a house in an area like this, particularly a character home, it is likely to be high in value and high in demand. Similarly, in an area close to the city where apartment buildings dominate the skyline, a three or four-bedroom apartment may also be considered a scarce property as there is a smaller quantity of them.

Parting words

We hope the above information is helpful to you during your property journey. As always, we want to emphasise that every market is different, so it’s important to deep dive into what’s happening in your local area, irrespective of what is happening at a national level.

It never hurts to speak to reputable local agents either. They have their ear to the ground, deal with buyers and sellers daily, and will be able to tell you what market sentiment is currently like for properties like yours. Better still, having done your research, you will be able to have a more productive conversation, and will be able to evaluate what they’re saying and ask the right questions with your newfound knowledge.

We wish you all the best.

 

Repost from: Source

Mortgage Deferrals to End This Month, Home Loan Arrears Rising

End of Mortgage Deferrals Salt Finance Mortdale

Mortgage deferrals to end this month, what will happen next?

Australia’s government’s program for mortgage-deferral periods is coming to an end this month. Analysts are seeing the potential of the increase of mortgage arrears number.

According to the data from the Standard & Poor’s (S&P) Performance Index, Australian prime mortgages increased to 1.37 percent in December last year, compared to 1.28 percent 12 months earlier. S&P analytical manager Kate Thomson said low-interest rates and a strong economic recovery were the triggers of the increasing number.

Thomson explained that the expiration of the mortgage-deferral periods will lead to an increase in home loan arrears, especially those of Covid-19 related, in the second quarter of 2021.

The data from S&P also showed that arrears increases have been more pronounced in inner-city areas where population shifts had impacted rental incomes, along with the lack of international tourism and migration.

Victoria’s Altona East has the dubious honour of being crowned the worst suburb for loan arrears, followed by Forrestfield and Byford in Western Australia. New South Wales followed closely with 32 percent, and Queensland comes in at third with 20 percent of the country’s Covid-19 mortgage deferrals.

Thomson said it was important that prudent lending standards were maintained to offset the risks associated with increasing household-debt-to-income ratio pressures where house price growth outstrips wage growth.

According to S&P data, these areas formerly had some of the lowest arrears in the residential mortgage-backed securities market – but analysts warn it may be more difficult for investors with inner-city locations to refinance their properties. Thomson said investors may sell off properties to offload debt.

The next question is, with the upcoming end of the Jobkeeper Payment as well, will it be okay for the Covid-19 related arrears? Should the Jobkeeper Payment program be extended in light of the expiration of the mortgage-deferral periods?

Article source: here

Should you use a mortgage broker to refinance your home loan?

Using a mortgage broker to refinance your home loan - Salt Finance
Whether you choose to use a broker or not, it’s worth checking to see if you’re getting a good deal on your home loan. (Source: Unsplash)

With interest rates at record lows, you might be wondering if it’s time to shop around for a better deal on your home loan.

If you ask Patrick Veyret, a banking expert at consumer group Choice, the answer is yes.

“Refinancing can seem like a daunting process, but right now consumers have all the power,” he says.

“Banks are really scrambling to offer lower interest rates to consumers.”

So if you are going to look for a better deal, is it worth using a mortgage broker to save yourself a bunch of legwork?

We looked at the pros and cons to help you make an informed decision.

 

Mortgage brokers are convenient, but they aren’t free

The first thing to be aware of is how brokers are paid.

Typically, customers don’t have to pay directly for a broker’s services. Instead, most brokers rely on upfront and trailing commissions paid by lenders.

There is an obvious potential conflict of interest here, because the broker’s incentive to maximise their commission may be at odds with your desire to get the best deal possible.

So how does this play out? Here’s a simple example.

“Every lending officer in a bank, and every mortgage broker, is going to come from an initial starting point of, ‘Of course you should refinance’,” says Craig Morgan, an independent mortgage broker who chooses to refund trailing commissions to his clients in return for an upfront fee.

“That’s how they meet their KPIs or in the case or mortgage brokers, how they make their living.”

Another issue to be aware of is that some lenders have products they sell directly that don’t provide commissions to brokers.

In practice, Mr Morgan says this means these loans won’t be recommended by brokers — even if they are cheaper than the alternatives.

Some bank officers are also rewarded for signing up new customers.

However, following the banking royal commission, the major banks have committed to banning incentives for retail staff based directly on sales targets.

 

If you’re using a mortgage broker, ask these questions

There are still good reasons why you might want to use a broker.

Good brokers can bring you options you might not have thought about, or that would be otherwise unavailable.

Using a broker is also going to be more convenient than having to do the research and deal with the banks yourself.

To get the best outcome with a broker, it’s important you come prepared.

Independent financial adviser Jacie Taylor suggests coming along with competitive rates from different lenders.

On top of that, it helps to ask your broker to explain how they operate and why they are recommending certain products.

Here are some good questions for your broker, suggested by ASIC’s MoneySmart.

  • Do you offer loans from a range of different lenders?
  • How do you get paid for the advice you’re giving me? Does this differ between lenders?
  • Why did you recommend this loan to me?
  • What fees will I have to pay when taking out this loan?
  • What features (options) come with this loan? Can you show me how they work?
  • Can you show me a couple more options, including one with the lowest cost?
  • What is the threshold for lender’s mortgage insurance (LMI) and how can I avoid it?
  • What information do I need to provide for the loan application?

You should also check to see that the broker has a proper credit licence using ASIC Connect’s Professional Register. Your broker should appear in searches under one of the three “credit” categories.

If they’re not on the list, they may be operating illegally.

 

The fees you pay to refinance

Lenders charge a range of fees to people refinancing their mortgage.

Common ones are discharge fees (paid when you close a loan), application fees (paid when applying for a new loan) and switching fees (if you are staying with the same lender).

If you are on a fixed-rate loan, keep in mind you are also going to be liable for a break fee, which can be significant.

Even with these fees, it can still be worthwhile to refinance if that means you’re paying less interest over the course of the loan.

But as a general rule, you should aim to make up any fees you pay in saved interest within 18 months.

“If you’re not [in front after 18 months], it’s probably a mug’s game to change your loan,” Mr Morgan says.

 

You can always do it yourself

If you don’t want to use a broker, you can always refinance yourself.

And even before you think about going to see a broker, it’s worth giving your current a lender a call to see if you can get a better deal.

It doesn’t cost anything, and it can save you money. And if you do choose to use a broker later, it sets a higher target for them to beat.

Here are some tips for talking to your lender, from Ms Taylor.

  1. Do your research first, so that you know what other rates are available, including knowing what your current lender is offering to new clients.
  2. Be courteous and confident when dealing with the staff involved.
  3. Ask major banks to beat what other major banks are offering, or if a small lender, ask them to match what’s on offer on the market. Or if appropriate, ask for their rate for new clients.
  4. If you are given a no, ask nicely to speak to someone higher up.
  5. To make it clear you are serious, request a mortgage discharge form. This can sometimes be the tipping point.
  6. For some people who have a lot of equity in their home, it may be worthwhile refinancing for a bigger sum (higher loaned amounts can often secure lower interest rates) and then opting to repay the additional funds after settlement.

 

Repost from: Source

‘The clock is ticking’: what will happen when Australia’s mortgage freeze ends?

Nearly 500,000 Australians whose livelihoods have been hit by Covid-19 could face a ‘financial cliff’ when payment pause ends, analysts say

mortgage freeze - salt financeKristina Carson knows it’s not a get out of jail free card. But with nearly 500,000 others, the Brisbane cafe owner needed help from her bank when the coronavirus pandemic devastated her business.

Australia’s banks have given six months’ grace to thousands of customers like Carson under their mortgage deferral scheme, which with the government’s jobkeeper program has enabled households to keep afloat since the pandemic took hold in March.

“When the opportunity came up to defer loan payments it was really a necessity for me to do that,” Carson says. “I’ve got a 14-month-old son and another on the way in August so we had to make sure that we could keep a roof over our heads and it’s been a big help.”

The big question now is what happens when the scheme runs out in September – because it is clear that the economic slump induced by the crisis has some way to run.

The Australian treasurer, Josh Frydenberg, has already admitted the country is in recession without even waiting for the official confirmation. The latest unemployment figures released this week showed that the jobless rate is 7.1% and most economists believe it will reach double figures in the coming months.

It is a fast-moving situation, and while Australia’s efforts to stop the spread of the disease have boosted confidence, the banks know that many people will not be going back to their pre-Covid income any time soon. With that in mind, they have started talking to their customers to assess whether they will need more help after September.

For people like Carson, who has home and business loans totalling more than $500,000 with NAB, it is not clear what will happen, although she expects some negotiations with her bank.

Salt Finance - mortgage freeze“The payment deferral finishes after six months so then we have no idea what the future will hold,” she says. “We will reassess with them and see what they can offer.

“We know this scheme is not a get out of jail free card and the interest has to be paid.”

According to an NAB spokesperson, the bank is now speaking to its customers “to check-in, see how they are doing and understand where we can help”.

Carson has a newsagency in Brisbane’s CBD and opened a cafe, Más Espresso, last March. Together they employ 17 people. Both businesses depend on foot traffic and, while she says many offices have reopened in recent weeks, they cannot accommodate all their workers because of the government’s distancing rules.

“Even if they all come back there might only be 30% occupancy so we’re looking at a city of only 30% capacity,” she says. “We rely on foot traffic so it’s a long-term thing. We’ll have to think about staffing levels and what we order from suppliers.”

The looming economic cliff edge is causing alarm throughout the country, including at Sydney’s Martin Place, where the Reserve Bank’s experts have been preparing for the worst.

Documents emerged this week revealing that the RBA considered advising the government to suspend real estate transactions during the pandemic in order to prevent the property market from going into meltdown. The RBA thinks that prices could fall 15% in the worst-case scenario.

The payment deferral scheme and jobkeeper have helped stave off those fears so far and the RBA believes that the big retail banks and government will manage the schemes so that the economy does not fall off a cliff.

The financial comparison website RateCity.com.au has warned that there is a hidden cost to the deferral scheme because homeowners’ payments would end up being higher. Someone with $400,000 owing on their mortgage who paused their repayments for six months would see their total balance rise to $407,203, meaning they will pay $62 a month more on their loan.

“In the long run, mortgage deferrals come at a huge cost,” says RateCity research director Sally Tindall. “Banks continue to charge their customers interest even when the loan is paused. This is something many people we’ve spoken to were not aware of.

“The bigger issue is what happens at the end of the six-month pause if someone still can’t make their mortgage repayments. The clock is ticking for these customers who haven’t been able to regain employment and probably feel like they’re on borrowed time.”

In addition, mortgage stress is on the rise, with 37.5% of homeowners under pressure as opposed to 32% before the crisis, according to research by Martin North at Digital Finance Analytics. He says the bank and government support schemes have helped soften the blow on many people who lost incomes in the initial phase of the crisis, but he has detected increasing stress on more professions.

“We’re starting to see pressure on more upmarket jobs. It started with young people in lower income jobs, gig jobs, but now it is more stable jobs,” he says. “If the September cliff emerges then it will heap pressure on firms to reduce staff numbers. Unemployment might remain high for a long time.”

He anticipates that the banks and government will do whatever it takes to keep people solvent and avoid the potential disaster of thousands of homeowners being forced to sell their properties because they cannot keep up with payments.

Salt Finance - mortgage broker“The question is what will banks do?” North says. “They are not in any hurry to foreclose on people because that means they have to declare bad loans and that means they have to hold more capital. So they will try to do anything they can to allow people to keep their homes – they will prefer that to foreclosure because that is just cutting off their nose to spite their face such as is the scale of their investment in the housing market.”

At the sharp end, Carson is hoping that the banks will do just that as she tries to keep on an even keel in the storm.

“It makes it bit easier knowing that we’re going through this with everyone else,” she says. “But not knowing how long it’s going to go on makes it harder. So I hope the banks will be understanding and supportive. Only time will tell what they will require from us.”

 

Source

 

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New-homebuyers could be given $50,000 handout under Property Council of Australia’s bold plan

New homebuyers could be given a $50,000 handout under a proposal by the Property Council of Australia.

It says the move would “kickstart construction for new housing, generate jobs and boost consumer confidence”.

PCA proposal home owners - salt finance

Axing stamp duty and an immigration push are also among the measures being proposed in a seven-point plan to resuscitate the country’s ailing housing market.

The industry warns it’s a vital move, with construction halving and half a million jobs at risk.

Ken Morrison from the Property Council told 7NEWS that 900,000 Australians are currently employed in the construction sector.

“Some big and bold thinking is required to get the Australian economy going again after the impact of the COVID-19 pandemic,” he said.

“If this sector winds down, it’s bad for everybody.”

The Property Council’s plan

  • Buyers of newly built homes would get a $50,000 ‘New Home Boost’ from the federal government;
  • Broad-based tax reforms including the axing of state Stamp Duty taxes;
  • The GST widened in the medium term to include fresh food, health, and education;
  • And a “Welcome to Australia” immigration campaign to drive growth

The industry predicts another 400,000 jobs could go by years end, adding to the 100,000 already lost.

Graham Wolfe from Housing Industry Association says it’s a “very important” move.

“We are at a very, very critical stage right now,” he said.

Taxes and charges currently account for up to 50 per cent of a new home’s cost.

New home sales have also fallen 23 per cent since the lockdown began.

On top of that, a third of current projects have been cancelled.

The lead time for these types of constructions is six to nine months, which means home builders will likely face a harder climb back.

The Federal Government says it’s supporting the sector through Jobkeeper and wage subsidies and is monitoring developments.

For the council’s full proposal, click here.

 

Source

RBA rate cut: Reserve Bank interest rates held at 0.25 per cent

The Reserve Bank has kept Australia’s official cash rate at the historic low of 0.25 per cent, with experts predicting it will remain at that level “for some time”.

At its April meeting this afternoon, the RBA voted to keep interest rates on hold just weeks after it was cut from 0.5 per cent to 0.25 per cent during an unscheduled meeting in mid-March as a result of the escalating coronavirus crisis.

It was the first time a rate cut has been announced outside a regular meeting since 1997, and is a glaring sign of just how severe the situation is becoming.

In a statement, Governor Philip Lowe said the Board had reaffirmed the targets for the cash rate and the yield on three-year Australian government bonds of 25 basis points, as well as the other elements of the package announced on March 19.

“The coronavirus remains first and foremost a very major public health issue, but it is also having very significant effects on economies and financial systems around the world,” he said.

“Many countries are expected to experience large economic contractions as a consequence of the public health response. Large increases in unemployment are also expected.

“Once the virus is contained, a recovery in the global economy is expected, with the recovery supported by both the large fiscal packages and the significant easing in monetary policy that has taken place.”

But he said there were “some signs that markets are working more effectively than they were a few weeks ago” which “partly reflects the substantial measures undertaken by central banks”.

“The co-ordinated monetary and fiscal response, together with complementary measures taken by Australia’s banks, will soften the expected contraction and help ensure that the economy is well placed to recover once the health crisis has passed and restrictions are removed,” he said.

“These various responses are providing considerable support to Australian households and businesses through what is a very difficult period. The Australian financial system is resilient. “It is well capitalised and in a strong liquidity position, with these financial buffers available to be drawn down if required to support the economy.”

He said the Board was committed to doing what it could to “support jobs, incomes and businesses” as Australia deals with the coronavirus.

“The comprehensive policy package announced last month will also support the expected recovery,” he said.

“The Board will not increase the cash rate target until progress is being made towards full employment and it is confident that inflation will be sustainably within the 2–3 per cent target band.

“The Board wishes the best to all Australians as our country deals with this very difficult situation.”

Most experts had predicted the cash rate would remain untouched today, as board members had already signalled it will likely remain lower bound at 0.25 per cent “for some time”.

“As such, the focus of RBA meetings will be on how the board assesses its QE measures and whether they may require adjusting,” Westpac said in a note on Monday.

CoreLogic’s Head of Research, Eliza Owen, said it was no surprise the RBA had left the cash rate on hold after an “extraordinary March period” in which the cash rate was reduced twice and unconventional monetary policy was introduced.

“The record-low rate of 0.25 per cent may be in place for years to come. No doubt the RBA will be closely monitoring the impact of record low interest rates and other stimulus measures on the economy,” she said.

“To date, the policy announcements from the RBA and other sectors of government have been well received with the overall level of stimulus now getting close to 17 per cent of Australian GDP.”

The RBA Shadow Board, based at The Australian National University, said it was “94 per cent confident that keeping the cash rate on hold is the right policy”.

It said the extraordinary events surrounding the COVID-19 pandemic were “certain to push Australia into recession” for the first time in 28 years, and that efforts by the government and the RBA to stem the economic downturn were “unprecedented”.

But Shadow Board member Dr Timo Henckel said it was tough to determine the impact of those efforts given how quickly the situation was unfolding.

“For example, while the latest official ABS figures show an unemployment rate in Australia of 5.1 per cent, this may well double within a couple of months due to the COVID-19 crisis,” he said.

“It is unclear to what extent the Government’s JobSeeker program will help workers remain attached to their employers.

“Looking ahead six months, the Shadow Board’s vote in favour of keeping the cash rate steady at 0.25 per cent is still very high – 88 per cent.”

Meanwhile, all 23 economists and experts surveyed in the Finder RBA Cash Rate Survey correctly predicted the RBA would hold the cash rate at 0.25 per cent today, after the board indicated it had no appetite to cut further.

RBA rate cut

John Rolfe of Elders Home Loans said not enough time has passed since the latest round of announcements.

“The recent financial support from the Federal and State Governments needs to flow through. The RBA needs to keep its powder dry in case this gets worse,” Mr Rolfe said.

Finder insights manager Graham Cooke said the unfolding coronavirus situation and its impact on the economy would likely have a huge impact on the Australian housing market.

“Many economists tell us they expect property price drops of 10 to 20 per cent,” he said.

“The biggest impact, however, is likely to be on sales volume. With auctioneers forced to allow only one-on-one home visits and virtual auctions, and with many Aussies losing their jobs, it is likely that the housing market will hit the breaks fairly quickly.

“Also, the announcement from banks that many homeowners will be allowed a repayment holiday means that the inevitable glut of homes due to hit the market may not do so all at once.

“The big question is – how long will this last, and how quickly can the market pick up after?

“For would-be first-time buyers with a deposit saved and a secure job – this could be a great opportunity for those who missed out on the property dips in 2019.”

 

Source

Banks to help commercial landlords who help tenants through COVID19

Australia’s banks will extend the six month deferral of loans, building on the ABA’s Small Business Relief Package, to 30,000 more businesses across the country. 

This support now extends to 98% of all businesses with a loan from an Australian bank.

covid19

 

Businesses with total business loan facilities of up to $10 million (up from the $3 million small business threshold) will now be able to defer repayments for loans attached to their business for six months. These businesses are generally much larger and employ a greater number of people.  

This extension of support will apply to an additional $100 billion of business loans. Combined with measures already announced, it will mean a six-month deferral of loan payments will apply to up to $250 billion worth of loans, with extra cash available to 425,000 businesses to cope with the crisis during the COVID-19 pandemic.  

During this period banks have also agreed to not enforce business loans for non-financial breaches of the loan contract (such as changes in valuations).  

The new measures will apply in all sectors of the economy, and on an opt-in basis, under the conditions that:  

  • For commercial property landlords, they provide an undertaking to the bank that for the period of the interest capitalisation, they will not terminate leases or evict current tenants for rent arrears as a result of COVID19 
  • the customer has advised that its business is affected by COVID-19  
  • the customer was current in terms of existing facilities 90 days prior to applying 
  • interest is capitalised – meaning either the term of the loan is extended or payments are increased after the deferral period. 

“This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent as it covers approximately 90% of commercial property owners who have loans with an Australian bank.”   

ABA CEO Anna Bligh

Australian Banking Association CEO, Anna Bligh said “as this crisis has deepened and more businesses are affected we are building on the Small Business Relief package to ensure more businesses are given a lifeline to help them survive through the coronavirus pandemic ,” Ms Bligh said.  

“Banks are expanding their support to an extra 30,000 thousand businesses by raising the threshold of those who qualify for the six month deferral of loan repayments from $3 million to up to $10 million in total loan facilities.  

“The type of businesses this applies to includes commercial landlords of properties such as local shopping centres, pubs, clubs and restaurants, who must agree not to terminate leases or evict current tenants for rent arrears due to COVID19 in order to access support.  

“This will help protect many more thousands of small businesses from being evicted if they are struggling to pay the rent as it covers approximately 90% of commercial property owners who have loans with an Australian bank.   

“Where landlords within this threshold do the right thing by their tenants, banks will do the right thing by them. 

“When combined with the previous small business assistance announced just over a week ago, this means $250 billion worth of loans covered are able to access a six month deferral of payments, which means dollars staying in the pockets of businesses throughout this crisis,” Ms Bligh said.   

Businesses with total loans of more than $10 million may also be eligible for relief, but this will need to be considered on a case by case basis as they are often much more complex in their structure. 

Banks have developed this relief package following discussions with APRA and ASIC to provide the appropriate regulatory treatment. 

This measure is announced subject to authorisation from the ACCC. 

Source

COVID-19 Update: We’re here for you!

salt finance covid-19

 

What an extraordinary, challenging & difficult time this is for all of us right now coping with COVID-19.

The team at Salt Finance would like to take the opportunity to offer our sincerest and deepest support to everyone being affected by this horrendous virus.

There have been so many developments in the past few days regarding COVID-19 and things continue to change daily for all of us, our family, friends & colleagues.

From a lending and borrowing perspective, there have also been and there continues to be significant, positive change and action taken by lenders during this time.

Tomorrow, we will share what I believe are the most crucial updates for homeowners and business owners related to lending and what you can do. So please keep an eye out as it really does matter to all of us. Also, we’ll be announcing a great new initiative to make staying up to date even easier for you. Be sure not to miss that!

In the meantime, I would like to assure you that we are still here and working for you. We will not close, and we have no plans to close. 

So please get in touch if you have any urgent needs, so we can prioritise them.

Salt Finance Team