Data released today by the Australian Bureau of Statistics (ABS) has shown 2014 home loan approvals are off to their strongest start in five years.
Loan Market director Mark De Martino said that 13 per cent more home loans were approved in the first two months of 2014 than compared to 2013. The data also showed it was the highest total of January and February approvals since 2009.
“The data released today by the ABS confirms that 2014 is off to a great start – home owners and buyers are returning to the market and they’re building momentum,” he said.
The ABS figures showed that 52,460 home loans were approved in February, a two percent rise from January. Mr De Martino pointed out that with February being the shortest month of the year, approvals for March and April could set new records.
“In the shortest month of the year there were only 227 fewer home loan approvals than the best month in 2013. Considering this, we should expect to see demand for finance growing and reaching new highs throughout 2014,” he said.
Mr De Martino said that with no clear indication on where rates were going to head next, consumers would benefit from the rate stability and banks aggressively competing for new business.
“Without the cash rate moving, banks and lenders are offering other incentives to get new customers, such as cash back offers. Fixed rates haven’t been this competitive in years too – lenders are adjusting rates in opposite directions for different rate terms.”
“The long period of rate stability has been great for more cautious consumers. We’ve seen many buyers take up variable rates because of their relative stability over the past year. It can be easier to build a budget around repayments that stay the same.”
When looking for finance, many people want to know the maximum amount they can borrow. This is called your borrowing capacity. This figure can be affected by your income and any debt you have.
You may be wondering how you can increase your borrowing capacity. Here are some of our top tips.
1. Save a larger deposit
It may take you a little longer, but saving a larger deposit can help you borrow more. You’ll have more equity to use when buying your home. At the same time, having a larger deposit will also show your lender you have the ability to save.
2. Pay off debt
Make a point to pay off all the debt that you can before applying for a home loan. Pay off your credit cards, personal loans, hire purchases and other debts. You’ll be doing yourself a favour in the long-run too, as getting rid of this debt as soon as possible will result in less interest paid.
3. Think about a fixed loan
One of the advantages of obtaining a fixed loan is knowing how much your repayments will be. This is also a good way to increase your borrowing capacity, as your costs over a period of time will be fixed.
4. Reduce your expenses
Eliminate any unnecessary expenses in your life. These could include saving on groceries, utilities, clothing or entertainment. Once this has been done, your outgoing expenses will be lower and you’ll be in control of your finances and a more attractive candidate.
5. Increase your income
It’s easier said than done, but increasing your income is great way to boost your borrowing capacity. Perhaps you could take on a paying flatmate, get some extra shifts at work or obtain a loan with your partner.
6. Resolve your credit issues
Have you ever obtained a credit check? These are a great tool to help you clear up your credit issues. They can show you whether you have any bad debts or money outstanding and if your credit rating is good. From there, you can identify what needs to be paid and if there are any errors potentially showing up on your record.
7. Stay on top of your finances
Your financial records are important and you’re going to need them when you apply for a home loan. Keep track of your spending habits, income and savings and use these as evidence to prove you’re financially stable. This will help make you look more trustworthy and financially switched-on. It’s also good to have current information about your income so you can prove you can meet repayments.
In winter we all want to be cosy and warm at home. By making smart decisions about the way you heat your home you can save money and maximise the value of your property. Depending on what you’re looking for, there are many stylish or environmentally friendly (some are even both!) ways to heat your home and create a statement.
The first consideration is whether you have an existing hearth, freestanding unit or built in during a renovation as a design feature. The second consideration is how important the eco principles of the heating solution are to you and your family. There are pros and cons to most heating solutions and you need to think about your budget, ongoing fuel costs, safety (particularly for children) and how much heat you need in the space you have.
If your area is relatively mild, you won’t need a big roaring fireplace, even though they do look great. Think about a gas burning decorative fireplace that gives the look of fire, but without too much heat. In colder climates for serious heat, an open fireplace will always do the trick but think about a wood or pellet burning stove, which will be practical as well as provide heat.
EcoSmart have a huge range of freestanding fireplace options which you can take with you if you move. They don’t require a flue or any installation, you just take them out of the box and they’re ready to go. They tend to use bio-ethanol, which is comes from agricultural waste. The designer range features contemporary glass fireplaces like the ‘Ghost’, perfect for small spaces, through to the sleek ‘Oxygen’ range.
Gas log fires give the look and feel of a traditional log fire and can easily be retro-fitted into an existing fireplace, burning natural gas or LP gas. LP gas costs more than natural gas and contains more carbon, but burns about three times hotter.
A split system heating and cooling system might add value to your home as well as being used in both summer and winter. If you like having a constant heat rather than a specific heat source, like a fire to sit around, then this is a great option for you. Shop around for an energy efficient model to cut down on your electricity bills.
A traditional, flued wood-burning fireplace breathes life and heat into any room. But before you start thinking about a traditional brick chimney, look into a new insert type heater. They’re designed to fit into your existing brick chimney to change it to a modern fuel efficient and low pollution wood heater. These type of insert type wood heaters have almost the same efficiencies of their free-standing counterparts.
Fuelling the fire can be expensive so you might want to look to the sun to really save. The SolaMate Solar Heating system is Australian-designed and heats your home using the power of the sun. The system pumps fresh air through the solar panel that sits on your roof. The air is heated as it moves through the solar collector before it’s pumped back into the ducted heating system to warm your home. The upfront cost is higher, but ongoing is relatively inexpensive, from as little as 10c a day.
For more information visit www.homeheat.com.au
There comes a time in the life of every family when the question is asked – should we renovate or upsize? The home you had when your first child was born may not be big enough to comfortably live with a bigger family. So the hard task of deciding what to do pops up.
The upsize vs renovate debate is generally centred on two key things – your budget, and your appetite for routine disruption. For some people, they might have the budget to spend on either upsizing or renovating, but no desire to disrupt their home life for an extended period. Whereas others might love the challenge and creativity involved with a renovation.
Your budget, and more specifically your overall financial situation needs to be reviewed when you’re making the decision to upsize. Your mortgage broker can advise you on the amount of equity you have in your current home. So talking to a mortgage broker before you make any hard and fast decisions is smart.
Things to consider
Buying a new home
Do your research and make sure you have a realistic idea of how much you’re likely to make from the sale of your existing home.
Speak to a mortgage broker before you make any big decisions.
Revisit your budget. If you’re going to increase the size of your loan to buy a bigger home then make sure you have worked out where the money is coming from and factor in possible rate rises.
Don’t forget to take into account costs like stamp duty, agent fees and moving, and if it’s a bigger home, your running costs like electricity, gas and rates might be higher.
Do your suburb research. School zoning might be different and life might be more expensive (or cheaper) in some areas.
Talk to your mortgage broker about freeing up the equity in your home. You may have access to more than you think.
Get a quote from at least three builders or, if you’re doing the majority of the work yourself, cost out every single part of the renovation so there are no surprises.
Keep your eyes out for good renovations in your area and contact the builder.
Check your local council’s regulations regarding home renovations. You’ll probably be required to consult with your local area, so have a chat with your neighbours and get them on side.
Factor in the cost involved for sketches, technical drawings and plans to be drawn up.
There’s a real chance of going over budget so factor in a contingency. Do the maths on whether the whole cost (including contingency) stacks up against buying a new home.
Renovations are incredibly disruptive, especially for children’s routines. Make sure you are well organised and if you can offload any extra furniture while the reno’s are taking place to create extra space.
At its third meeting of 2014 the Reserve Bank of Australia (RBA) announced the cash rate will remain at 2.50 per cent for the eighth consecutive month.
Loan Market director Mark De Martino said that consumers would continue to benefit from low interest rates and suggested those looking to purchase should take a hard look at getting into the market while rates were at a record low.
“With the Aussie dollar surging back to 92 cents this week, we may start to see increasing speculation that the RBA will have to lift rates to protect the economy,” Mr De Martino said.
Mr De Martino said that lenders were responding to the rate inactivity with a variety of incentives to attract new customers and the competition in the fixed rate space was particularly rivalrous.
“We’ve got lenders moving fixed rates in opposite directions, offering cash back incentives for switching and putting forward honeymoon rates that are well below what we normally see,” he said.
Mr De Martino suggested that consumers looking at taking up a fixed rate take a hard look at some of the products on offer right now.
“If we’re not at the bottom of the rate cycle, we’re pretty close. There’s not much more room to go down. If you’re tossing up the idea of fixed or variable you should ask yourself if you think the current variable rates will average what your fixed rate would over the term of the loan,” Mr De Martino said.