Mortgage Loans, Home Loans, Bad Credit Home Loans

Australian Home values continued to decline during June, as potential home buyers and investors remain pre-ocuppied  with rising interest rates and the state of the global economy.

RP Data-Rismark Hedonic’s latest home value index for capital cities fell by 0.2 per cent in June, the sixth straight monthly fall in capital city home values.

The rate of price decline has been fairly moderate since the beginning of this year, however, when capital city values fell by 1.2 per cent, due to the natural disasters along the east coast of Australia, the report said.

RP Data research director Tim Lawless said market conditions were being dampened by soft consumer confidence fuelled by interest rate speculation and

The combination  of the global economic debt problems and expectations of interest rate increases have held many potential buyers at bay. The other issue that has had a degree of impact on property values is difficulty qualifying for home loans. Lenders are far more stringent as are mortgage brokers in qualifying home loan applications.

“The higher than expected CPI (consumer price index) figures earlier this week are expected to increase the chance of an earlier rate increase. ANZ economists are predicting that rates will be going up next week.

CPI figures released this morning indicate that inflation rose more than expected in the three months to June with a spike in the cost of fresh fruit.  While this may well mean that there is not rate cut on the horizon, the general consensus is that rates will stay where they are for the next month or two.

The consumer price index rose 0.9 per cent in the June quarter, with the overall annual increase adding up to 3.6 per cent. The last time we have had such a high CPI was almost 3 years ago. A recent survey of economists predicted the CPI would reach 3.4 per cent in the April-June period.

Fruit prices increased by 26.9 per cent in the quarter, however a significant reason for this was the cost of bananas following “shortages created by Cyclone Yasi,” according to the ABS, referring to the cyclone that struck northern Queensland earlier this year. The cost of bananas rose 470 per cent in the six months to June.

Petrol increased by 4 per cent in the June quarter, furniture jumped by 6 per cent, and medical services were up 3.4 per cent. Clothing and footwear climbed by 2.5 per cent while transport costs rose 1.2 per cent.

Based on these figures there is a reasonable chance of a rate increase towards the end on 2011.

Home Loans underlying Australian prime residential mortgage-backed securities that are beyond 30 days in arrears have increased to a near all time high.

According to the latest data from Standard & Poor’s Ratings Services, Home Loan Arrears went up to 1.83 per cent in April, from 1.81 per cent in March 2011.

This is just below the all-time peak of 1.84 per cent reached in January 2009.

Meanwhile, the non conforming home loan arrears jumped by 83 basis points to 12.05 per cent during the same period.

The actual number of borrowers who had home loan arrears older than 90 days increased by 4 basis points to 0.75 per cent, largely contributing to the increase in the proportion of home loans that are more-than-30 days in arrears for April 2011,” Standard & Poor’s credit analyst Vera Chaplin said.

Over the last 2 months, more than 400 repossession writs have been issued to home owners by their lenders.

This represents the highest level of repossessions in over 2 years, more than double the number of repossession writs filed in the Supreme Court of Victoria six months ago.

Home Loan providers lodged 206 repossession writs in the Supreme Court last month against people who had defaulted on their home loans. It was slightly less than May’s figure of 221 writs.

The last time repossessions were so high was in July 2 years ago, when 231 repossession writs were filed. In December there were just 89 and in January 90.

Issue of a repossession writ does not always result in a mortgagee sale – sometimes the borrower finds the required funds through mortgage refinance and keeps their property. Occasionally they simply come to an agreement with the lender for more time.

Consumer Action Law Centre policy director Gerard Brody said: “What the figures do show is there are many home owners experiencing mortgage stress.

These figures do not necessarily give the full picture of mortgage stress as many people take action before their house is repossessed and some choose to sell it before the bank does.

AMP Capital chief economist Shane Oliver said the latest figures were a sign of the times, with financial pressures on households growing.

Following several months of anticipation Bank of Melbourne is due to make a re-entrance to Victoria today.

It will take a few weeks for the ATMs to be re-branded accordingly.

In addition to the re-branding of their branches the bank will also employ a larger number of business development managers to promote the bank products and generate more business.

The bank has also created a new website specifically for mortgage brokers.

Victorian mortgage brokers will be able to lodge Bank of Melbourne home loans for their customers.

Brokers can continue to offer the same products to customers and there is no change to the processing of home loans.

For commercial loans, brokers will be able to access the new Bank of Melbourne website at bankofmelbourne.com.au/corporate-business, to find all the forms, documents, tools and information they need.

The bank has spent significant time and resources to ensure a smooth transition for both staff and customers.

According to new statistics from RP Data – First home buyers are staying away from the real-estate market despite speculation of rate drops and overall cheaper interest rates being available on a range of home loan products.

There has been only a very small improvement in first home buyer activity for May. This is despite a number of interest rate reductions with numerous lender offering home loan under 7%.

The average standard variable rate for May was 7.8%. While this is slightly above the 10-year average for rates, the current level of first home buyer activity is significantly lower when compared to other recent periods when the average SVR was at the same level.

It certainly looks like the lack of a reasonable FHOG is impacting first home buyer affordability. This is further affected by the lack of 100% home loans which were previously available.

First Home Owners Grant Boost provided further stimulus to the market, and as mortgage rates started to rise and the Boost was wound back, we saw first home buyer numbers decline and never recover.

There has been a decline of 39.6% in first home buyer activity over the past 12 months. There is little chance that this activity will pick up significantly in the short term.

Citibank’s head of mortgages strategy has tipped that fixed rates are on their way down,  the bank has also reduced its standard 3-year fixed rate home loans by 33 basis points to 6.99%.

Uncertainty over the European debt situation is having a downward affect on the cost of fixed term funding.

The Citibank move was based on a forward looking view of fixed rate pricing. Citibank believes that we will shortly be seeing other lenders drop their fixed rate loan rates.

As the fixed rates begin to move down, these loans will be very attractive when compared with variable rates, labeling the current significant differential between fixed and variable rates as a “really unusual circumstance”.

Citibank’s current Mortgage Plus standard variable rate home loans for LVRs between 80% and 90% are priced at 7.05%, while home loans over $500,000 with LVRs less than 70% are priced at only 6.90%.

As consumer confidence and retail spending are both at very low levels, there is an expectation from the economists at Westpac that the RBA will start reducing rates by the end of this year.

In fact Westpac is forecasting a 1 per cent drop in interest rates before the end of 2012, starting with the first drop of 25 basis points this year.

A 1 per cent saving on home loans would offer a saving of $270 a month on an average a $400,000 mortgage.

The prediction by Westpac was announced as new figures revealed that Melbourne’s property market is still doing exceptionally well with the median house price recovering by $30,000 in the three months to June 30.

The median price rose 5.4 per cent to $590,000 in the June quarter.

Homeowners in Mt Eliza were the biggest winners in the June quarter, with prices soaring 22 per cent to $805,000.

Brighton was up 18.7 per cent to $1,790,000 – and was also the city’s most expensive suburb.

Essendon rose 16.7 per cent to $1,050,000 and St Albans went up 13.5 per cent to $440,000.

Following an average $41,500 decline in Melbourne property prices in the first three months of the year, these figures offer some hope to home owners.

However the median house price is still significantly under the record $601,500 set in the December quarter and real estate experts have forecast only modest price growth in the next 12 months.

Mortgage Refinance is all the rage. According to the latest statistics from AFG, one of the largest mortgage aggregators in Australia, 40% of all home loans written by AFG brokers during June were for Mortgage Refinance purposes. The number of borrowers refinancing their home loans and investment loans rose by 11.4 per cent into May, after rising by 8.1 per cent in April.

Home owners are making every effort to save by refinancing to a cheaper home loan as well as consolidating their unsecured high cost debts into their mortgage and enjoying the savings.

Many lenders big and small have some very competitive offers on rates, fees and switching incentives, and people who already have mortgages are seeing the benefits of reviewing their arrangements