Young buyers wary as panic sets in | The Australian

FIRST-HOME buyers Lee Brown and Jessica Tompkins are desperately saving for their first home. So, at first glance, it seems odd that they are hoping Kevin Rudd does not extend the boost to the first-home owners grant in the coming budget.

But the Sydney couple say that rather than give young investors a much-needed leg-up in the property market, the grants - which are worth up to $21,000 for those wanting to build a new home - have driven up prices and created panic among those trying to beat the June 30 cut-off.

Prompted, perhaps, by speculation last week that the boost will not be extended beyond June 30, there was a marked increase in the numbers of people at auctions and home inspections in all capital cities over the weekend, despite the Anzac Day holiday.

Auction clearance rates were significantly higher than last weekend in Melbourne, Sydney and Adelaide.

But while there appears to be a last-minute rush among home buyers, the recently engaged Mr Brown and Ms Tompkins are determined not to get in over their heads. Since they began house hunting last October - when Mr Rudd announced the doubling of the $7000 first-home owners grant for established homes, and a tripling for new homes - the asking price of the house and land package they are interested in has risen by $44,000.

Now they hope prices will fall back to more reasonable levels once the boost ends, as property analysts predict. "A lot of young people are panic buying, that is what we have found, particularly in the last couple of months," said Mr Brown, 26, an environmental consultant. "We feel a lot of pressure to buy now or lose out on the $21,000."

Ms Tompkins, who works in marketing, said the couple had expected prices to fall as the global financial crisis took its toll. "We would be better off if they cut the grant because there won't be so many people out there trying to snap up houses," she said.

In Port Melbourne, Ana Laskova, 24, and Dean Pavlickovski, 31, attended an auction for a two-bedroom apartment yesterday, only to watch the property sell for a significantly higher price than they were prepared to pay. "We would like to buy given the extra stimulus, but the grant is not going to make the difference in our decision," Mr Pavlickovski said.

The home buyers have joined a queue of experts condemning the scheme as counter-productive and a waste of public funds. SQM research managing director Louis Christopher said there was a panicked rush of first-home buyers due to speculation the boost was unlikely to be extended.

He said couples such as Jessica and Lee should wait. "Now is not the time for first-home buyers to rush in. If they wait, demand will dry up and prices will fall," he said. "The first-home buyers grant doesn't help housing affordability at all."

Critics argue the grant has artificially raised prices for homes under $500,000, pitted investors against first-home buyers and disrupted the rental market.

"The first-home buyers grant has been counter-productive," said Kevin Lee, head of Smartline Mortgages.

Property analyst Michael Matusik said there were no more first-home buyers in the market than a decade ago and the boost had simply exaggerated prices."It should be called the vendor's grant," he said. "In the outer suburbs of major capital cities the prices went up between $7000 and $14,000 in a 24-hour period immediately after the announcement. There's anecdotal evidence that it has boosted housing construction, but over the longer term all it has done is bring forward construction."

However, Housing Industry Association senior economist Harley Dale said the tripling of the grant for new dwellings had been highly effective in boosting the property market. "It has done a lot to stimulate the property market and has been especially successful in driving first-home buyers to build their own homes," he said. "In the case of first home buyers who are building new homes it isn't just a situation where demand has been brought forward, demand has actually increased."

Open houses across the country have been inundated with potential first-home buyers eager to enter the market before the boost is shut down or decreased.

In Melbourne, real estate agents were surprised by the strong turnout over the weekend, as a higher than anticipated numbers of house-hunters braved heavy downpours and blistering winds to attend inspections. Real estate agent Craig Stephens said the Prime Minister's hints that the grant would expire had prompted a "massive spike" in numbers attending open-house inspections over the weekend.

Young buyers wary as panic sets in | The Australian

First Home Loan Specialists Comment

I find this an interesting article given the current situation. This type of lobbying is why I think the Federal Government will take the middle ground and the First Home Owners Grant back to $7,000 for established properties and take some of the heat out of this section of the market.

They will then cut the boost to $14,000 for newly constructed properties and continue this through to 31 December 2009. After that they will end the boost.

For what it is worth that is my opinion.

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Tanner under pressure on home buyers grant

The Federal Government is under pressure to reveal if it plans to make any changes to the first home owner grant in next month's Budget.The first home owner grant was doubled from $7,000 to $14,000, and tripled for those buying newly-built homes to $21,000, to help the housing sector through tough economic times.

Acting Treasurer Lindsay Tanner will not say if the Budget will include an extension or changes to the scheme, but he has warned prospective buyers the increased grant is limited.

"We're not going to have a first home owners grant at the level that it's been forever," he said.

Earlier this week Prime Minister Kevin Rudd kickstarted speculation on the grant's future when he said "all good things must come to an end." Ron Silverberg from the Housing Industry Association says the uncertainty could see people rush into buying to secure the extra assistance.

"It probably would be desirable that the Government clarify the situation," he said."It will be a very hectic weekend through builders' display homes and real estate agents' offices."

Shadow Treasurer Joe Hockey says there are problems with the current scheme. "The first home owners grant may be pushing up the prices of housing," he said.

The increased grant is currently due to end on June 30 and the Government says a decision will be announced when the Budget is handed down next month.

Tanner under pressure on home buyers grant - ABC News (Australian Broadcasting Corporation)

First Home Loan Specialists Comment

It looks like the debate will never end. Will they continue the first home owners grant?

No-one knows!

Greg Brierley
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PM - Housing help may continue

PM - Friday, 24 April , 2009 Reporter: Alexandra Kirk

LISA MILLAR: According to the Prime Minister all good things come to an end.That was how Kevin Rudd responded yesterday when pressed about delaying the end of the boosted First Home Owners Grant.That big boost may still finish at the end of June, but the Government is hinting that something a little less generous may take its place.

From Canberra, Alexandra Kirk reports.

ALEXANDRA KIRK: Bank managers are flat out processing a flurry of loans from first home buyers with the uncertainty over whether the Federal Government will extend the more generous First Home Owners Grant beyond the current used-by date of the 30th of June. While the fillip to the construction industry will continue over the next 12 to 18 months - because first home buyers only have to have signed a contract by the end of June - many are worried about a rapid slump. When asked what happens next - this is how Kevin Rudd chooses to answer.

KEVIN RUDD: All good things must come to an end.

ALEXANDRA KIRK: That infuriates the Opposition, which is demanding a categoric yes or no. But today the acting Treasurer Lindsay Tanner gave more of an insight into the Government's thinking.

LINDSAY TANNER: It's due to end on June 30th and therefore the level of the grant to return to its normal level, that's the position that prevails as things stand at the moment. I can't speculate on whether or not we may choose to modify that, that'll be something that people will have to wait until the Budget to see.

ALEXANDRA KIRK: The Housing Industry Association wants the Government to put an end to all the speculation.

RON SILBERBERG: It probably would be desirable that the Government clarified the situation for first home seekers at the earliest opportunity. It was expected to do that in the Budget, it might be prudent that it brings forward an announcement.

ALEXANDRA KIRK: The Association's executive director Ron Silberberg has been lobbying the Government to at least retain the $21,000 grant for newly built homes. He says that's what stimulates the economy and creates jobs.

RON SILBERBERG: Our estimate is that if the Government retain the $21,000 grant for new housing and reverted to a $7000 grant on established, we would generate an extra 15,000 jobs in the housing industry and in manufacturing and service sectors.

ALEXANDRA KIRK: And that option's been left open by Mr Tanner.

LINDSAY TANNER: We're not going to have a first home owners grant at the level that it's been forever because it was put in place to deal with a specific sort of economic circumstances. But the question on exactly how and when that exit occurs is something that we will be addressing.

PM - Housing help may continue

First Home Loan Specialists Comment

An extract from the transcript of story on the ABC's PM Program.

And so the plot thickens. The Federal Government is on record one day indicating that all good things must come to an end and the next day it suggests that well it might end but not all of it. I agree with HIA representative that an announcement needs to be brought forward.

I do not hink they have to announce details of what they propose to do but just indicate in what capacity the First Home Owners Grant will continue if at all.

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First home owner boost 'should continue' - ABC News

Federal Opposition housing spokesman Scott Morrison has urged the Government to extend its increase to the First Home Owners Grant (FHOG).

Last year the Government doubled the grant for people buying their first home from $7,000 to $14,000 and tripled it to $21,000 for those buying newly-constructed homes. The extra grants are due to expire at the end of June.

Mr Morrison says the Government has the money to extend the increases."We do think the money should come from the social housing program - more than $6 billion that will simply not be spent in the timeframe the Government has provided for," he said. "So there is money there to enable the First Home Owners Grant and to end the confusion and end the delay."

But Prime Minister Kevin Rudd has again made it clear the boost to the grant is unlikely to be extended. He says it has served its purpose."[It's purpose was to] give a helping hand on the way through, add to confidence in the economy and on top of that boost jobs for our tradies," he said. "As I said, we've been very clear in our announcements about how long this program would last and, as I said before, all good things do come to an end."

Earlier the Master Builders Association (MBA) predicted there would be substantial job losses in Western Australia's economy if the boost was axed.

Last-minute rush

Developers are bracing for a rush of last-minute applications, but builders and banks are worried the buying will dry up after the June 30 end date.

Mortgage and Finance Association of Australia CEO Phil Naylor argues the property sector still needs to be propped up. "We think there is a good reason to extend it for a further period. Anyhow, we've never suggested there should it a permanent feature in the environment but because we're looking at trying to stimulate the economy, we think it's been a good move," he said. "Even if only the Government continued that part of the grant that related to new commencements. That in itself would be a welcome stimulus."

But some economists disagree. BIS Shrapnel senior economist Jason Anderson says first home buyers are flooding the market for other reasons, mainly low interest rates and cheaper houses. "We've got extremely attractive housing rates so part of the motivation for first home buyers is the relief that's coming through in interest rates and the boost has clearly created an extra impetus behind that," he said. "I think if we look at previous cycles, when we've had very substantial rate cuts, you're first home buyers numbers have tended to recover, but over a 12-month period, and clearly the rate of improvement that we've had in the last six months in particular, has been amplified by the boost scheme."

He says people wanted to get into the market before the grant boost expires should not rush in to a mortgage blindly. "I don't think that people should be acting in a fashion where they're not sitting down and doing their numbers properly," he said."It's always the best thing to work out what you think you can afford with higher interest rates in where we are today."

First home owner boost 'should continue' - ABC News (Australian Broadcasting Corporation)

First Home Loan Specialists Comment

The argument continues. The Prime Minister has now placed the Government firmly in the middle of the argument. They can now end the First Home Owners Grant boost and take the "I told you so" position or leave the boost in place and take "We are generous" position. It has been reported today that the Victorian Government will scrap all their First Home Owners assistance on established and it will apply only for new dwellings.

It may be that the Federal Government will follow suit. All will be revealed in the May budget.

Greg Brierley
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PM flags end of first home owners grant | Herald Sun

THE boost to the first home owners' grant will not be extended beyond June 30, Prime Minister Kevin Rudd has suggested.

"The first home owner's boost, as you know, we have indicated that will conclude within a very fixed and finite time frame,'' he told reporters in Perth. "It's had strong useful results so far, but I have got to say all good things must come to an end."

The grant was raised from $7000 to $14,000 for existing dwellings and from $14,000 to $21,000 for new homes as part of the Government's $10.4 billion stimulus package last year.

Mr Rudd said the Government was still measuring the full effects of the boost but it was important the community understood deadlines were imposed for a particular purpose

PM flags end of first home owners&squo; grant | Herald Sun

First Home Loan Specialists Comment

It is becoming clearer that the Government is softening up first home buyers for the impact of the First Home Owners Grant boost ending on 30 June. Although given recent reports regarding the backlog of loan applications and the rush to buy any property that is placed on the market if it is below $500,000 then it might be the boost has alsready started to come to an end.

Another more cynical argument might be the Government might be taking away before giving back to demonstrate how generous they are amongst what is looking like a terrible budget next month.

However, it must not be forgotten it is only the boost that ending and the First Home Owners Grant Scheme will remain in place with its $7,000 for established properties and $14,000 for new homes. Again, I would not rule out the Government taking the middle ground and only ending the boost for established properties and retaining the $21,000 for new homes.

Equally, the First Home Owners Savings Scheme will also be available so all is not lost for first home buyers.

The question still remains.

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First-home buyers swamping banks | smh.com.au

LENDERS are struggling to keep pace with an unexpected increase in applications from first-home buyers, taking as long as a month to approve loans, which has led to some buyers missing settlement dates.

Strict new lending criteria are adding to delays, as is the inexperience of new home buyers having trouble navigating a maze of paperwork.Banks are being forced to add staff to mortgage processing divisions, which they had previously run down.

In a recent note to mortgage brokers, seen by the Herald, St George Bank's head of intermediary distribution, Steve Heavey, said the bank had hired additional staff to cope."Our processing area continues to be under increased pressure as we clear our pipeline following our recent campaigns," he wrote. "We ask for your patience during this period and request that you manage your customers' expectations during this difficult time."

Mr Heavey also raised the issue of borrowers missing settlement dates if documents were signed incorrectly."The additional time required to reissue and re-check documents can inhibit the bank's ability to meet a customer's required settlement date, and in some instances result in settlement dates being missed.

"First-home buyers have until June 30 to qualify for the increased first-home owners grant, worth up to $24,000 in NSW for a new home and $14,000 for an established one.

A spokesman for the Commonwealth Bank, Steve Batten, said the bank had also taken on extra staff in its mortgage processing division. He said about half of all applications received by the bank for the first-home buyers grant in NSW required "a rework" because of insufficient or incorrect information provided on the forms, adding to delays. The figure was 90 per cent in Queensland.

"There is a massive volume at the moment of people trying to get into the market," Mr Batten said. Staff were working at weekends to clear the backlog, and waiting times for approval had been reduced from 20 days to 10.

Citibank recently told brokers it would no longer be granting pre-approved loans, where a property has not been secured. RAMS has warned that loan approvals will take up to 28 days.The principal broker at Citieast Finance, Peter Howe, said one lender had taken an entire month just to start looking at an application."The process of organising finance and buying a property can be quite daunting for some first-home buyers," he said."A good broker will do everything possible to have your finance approved and ready for settlement. This is not so easy at the moment; there are a couple of banks with products that are very attractive to first-home buyers that are struggling to process the volume of applications they have received in the last months."

In the current market, processing time should be as important [a criteria for borrowers] as available interest rates.

"An adviser at Ward Finance, Roger Ward, said the flight to the safety of the big banks had caused a logjam in their mortgage approval sections: "It's taking about three to four weeks to get loans priced and approved."

The principal broker at The Home Loan Office in Bankstown, Murat Bayari, said lenders had been caught out by the first-home buyers rush. "When there was a downturn last year, the banks may have cut back on their lending staff. When the rush actually hit, they weren't prepared."

First-home buyers swamping banks | smh.com.au

First Home Loan Specilists Comment

This article adds weight to our contention that First Home Buyers need to be educated, supported and guided through the purchasing process when accessing the First Home Owners Grant. A good Mortgage Broker should have checks and balances in place so that rework on loan applications is not required.

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Kevin Rudd First Home Owners Grant

The Rudd Government's boost to the first-home owners grant stirred up many old wives' tales that have sustained the great Australian dream of home ownership. It's time to dismiss a few of them.

Across the country, baby boomer parents whisper in the ears of their progeny that now is the time to buy. They warn: "You'll never get in if you don't." They say: "You're better off paying off your own mortgage than your landlord's." For those not yet convinced, they resort to the old catchcry: "Rent money is dead money."

What they forget is that average house prices are now seven times the average annual salary, up from about three times when the boomers first bought in. They forget, too, that in the months since the temporary boost to the first-home owners grant - $7000 for established homes and $14,000 for new ones - house prices in the sub-$500,000 category have ballooned.

Seemingly unaware of the false economy, first-home buyers have engaged in a game of mutually assured destruction, and in fact, have been bidding house prices up.

Australians are frustratingly single-minded when it comes to owning property. It's like an affair in which a lover is so besotted by their partner, they forgive all their minor foibles, and even some outright abusive behaviour.

For the record, rent money is not dead money. Renters are paying for a service - shelter and protection from the cold. Hardly wasted money. Worse still, the deriding of rent as "dead money" incorrectly implies that money spent on mortgage interest payments is somehow "alive money", or a useful investment.

Last time I checked, a mortgage holder with a $300,000 mortgage pays $1400 a month in interest payments straight to the pockets of those same banking chiefs we all say we despise. Hate them, but you're paying their salary.

But it's not just parents egging young buyers on, it's politicians. As preparations for this year's budget enter their final stages, the Rudd Government must decide whether it will extend the deadline for the increased first-home owners grant past June 30. I don't think they should, but suspect they will.

Labor has undergone an about-face on housing policy. The contrast between pre-election posturing and the reality in government is stark. On July 27, 2007, the Labor opposition hosted a "housing affordability summit" in the main committee room in Parliament House. About 150 housing experts from all over the country braved Canberra's winter chill to discuss solutions to the housing affordability crisis.

I was there. There was little agreement on what needed to be done, but summiteers were unanimous in what shouldn't be done. Everyone agreed that increasing the first-home owners grant would simply result in higher house prices.

Labor seemed convinced and produced a discussion paper quoting the chief economist at ANZ, Saul Eslake, saying: "Anything which puts additional cash in the hands of buyers … results merely in more expensive houses."As the paper concluded: "This analysis suggests that simply increasing the first-home owners grant in isolation may not make housing more affordable in the long run if it leads to inflationary pressures on the cost of homes. It is important that policy proposals designed to assist first-home buyers, are economically responsible so that the benefits are not eroded through additional pressure on house prices."

Labor went on to design a suite of housing proposals to take to the 2007 election including first-home saver accounts, a $600 million National Rental Affordability Scheme, a $500 million Housing Affordability Fund, and a dedicated housing minister.

The key attraction of the first-home saver accounts was that savings would accumulate incrementally over time and not put immediate upward pressure on house prices. Money - plus Labor's co-contribution - could only be retrieved after four years.

What a difference being in government makes. John Howard once said that political parties always favour improving housing affordability while in opposition, but when in government, always try to stop house prices falling. "A true housing crisis in this country is when there is a sustained fall in the value of our homes and in house prices," he said.

Thanks to the global recession, that is now a real threat. House prices have plunged in many advanced economies, including Britain. Australia is somewhat different, as we have not built enough new homes to keep pace with demand. But rising joblessness will make it harder for families to keep up with mortgage repayments, meaning forced sales and lower house prices, in some areas at least. It has already happened in the richer suburbs of Sydney, where thousands of finance sector employees have been sacked.

So the Rudd Government, which was elected promising to improve housing affordability, now wants to seek re-election next year as the party which stopped house prices from falling.

They're being egged on by Treasury boffins who think reduced housing affordability for first-time buyers is a small price to pay for the confidence boost that existing home owners get from homes that maintain their value.

It's an argument that politicians are only too keen to hear, because the political sums on housing are simple. Australian households can be divided into three, roughly equal-sized, groups: renters, mortgage holders and those that own their homes outright. While the first group like flat or falling house prices, the second two prefer it if house prices rise.It's not hard to see which way the cards are likely to fall on budget night.

Jessica Irvine Kevin Rudd home owner's grant

First Home Loan Specialists Comment

Another article that critises the introduction of the First Home Owners Grant Scheme boost. The article outlines some very solid arguments, some of which are being proven right now in the market.

It is my opinion that is why the Government will take the middle ground and apply the boost to only new construction on the basis that this has a greater economic impact than using the boost on established housing.

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Government grant leads to inflated housing market | Dynamic Business

By Jessica Stanic on Tuesday, 21 April 2009

Low interest rates and government grants have led to inflated housing prices according to Adrian Raftery, CEO of accountantsRus.

Raftery says that activities over the last few months have led to unhealthy, yet familiar symptoms as property prices rise as prospective first home owners rush to get the First Home Owners Grant before 30 June.

“There is no doubt that there is momentum building in the housing market for properties under $500,000.” But Raftery says that this momentum is being driven by the property industry who are keen to drive activity, and first home owners with little or no investment experience.

“Of course a property agent is going to say now is a good time to buy. Don’t get caught out until you have done your own due diligence and can afford to meet commitments ,” warned Raftery, a Certified Financial Planner and Chartered Accountant. He believes that the First Home Owners Grant is merely inflating the property prices being paid by the size of the grant.

Instead, Raftery feels that the First Home Owners Saving Scheme is a better government initiative as it encourages youngsters to save first before making large financial commitments. He also suggests that it should be mandatory for potential buyers to have a 20 percent deposit to reduce loan defaults, as well as avoid mortgage insurance, in the future.

“The latest national credit card debt figures ($45 billion) shows that we are a nation of bad savers. We need to change the mindset.”“I would rather miss out on $24,000 from the Government than to lose fifty or a hundred grand down the track,” said Raftery.

Government grant leads to inflated housing market | Dynamic Business

First Home Loan Specialists

A very good word of caution from this article. A good mortgage broker should be able to help with the risk of overcommitting. I consider that ensuring the first home buyer is educated, supported and guided through their first purchase should be mandatory for accessing the First Home Owners Grant even after the end of the boost.

I would also support the Government increasing the benefits of the First Home Owners Savings Scheme which seems to have been forgotten in the rush to get the boost.

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Home ownership out of reach: survey

Half of Victorians and Tasmanians believe the great Australian dream of owning a home is out of reach, a survey says.

Galaxy Research carried out the survey on behalf of the Master Builders' Association, and found 50 per cent of people in those states were "not confident" of ever owning a house. A staggering 20 per cent of adults are resigned to never having their own home, according to the survey.But compared to the rest of the country, Victorians and Tasmanians seem optimistic.

Nationally, 57 per cent of renters were not confident they would ever own a home, while 21 per cent of people earning between $50,000 and $69,000 believed they would never own their own home. Half of parents believed their children would never be able to afford to buy a house.

Master Builders executive director Brian Welch said the results showed governments needed to do more to improve housing affordability."Unless government attitudes change soon, future housing will increasingly be bought, built and owned only by Victorians who are asset or income rich," Mr Welch said. The survey was carried out in late March, with 298 people over 18 surveyed in Victoria and Tasmania, and 1,051 people surveyed nationally.

Business Spectator - Home ownership out of reach: survey

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Nation Building - Economic Stimulus Plan - Transcript of Tanya Plibersek video

The Hon Tanya Plibersek MP - Minister for Housing

Hi, I’m Tanya Plibersek, the Federal Minister for Housing. Thanks for your questions and comments.

The housing and construction sector is a big part of our economy. It accounts for almost 9% of all employment in Australia.That’s why housing has featured so strongly in the Nation Building and Economic Stimulus Plan.

We introduced the First Home Owners Boost in October to encourage building and give first home buyers a better chance to get into their own home.The First Home Owners Boost was designed to be a time-limited measure ending on 30 June 2009. It’s important that measures like this have a clear end date so that economic activity is brought forward, supporting jobs when we need them most.

Of course anyone thinking of buying a house needs to do their own sums. Buying your own home is a major decision and you need to be sure you can keep up the payments in the future, especially if your personal circumstances change, and when interest rates go up again.

We have also said the global financial crisis is changing and developing, and if it’s deeper or longer than originally thought, we stand ready to take further action in the area of housing construction.

Some people wanted to know how we are progressing on our commitment to build 20,000 new units of public and community housing. I’ve already approved funding to fully repair over 10,600 public housing dwellings and make minor repairs to an another 38 thousand. All States and Territories have started hiring tradies to do the work.

For example in NSW, they’ve already issued work orders of almost $100 million and 500 homes have been fixed up already. This work is spread throughout the state of NSW.

I have also approved funding for the first stage of new construction projects. Under the first stage over 2,600 homes will be built right across the country. I will be making decisions on proposals to build another 17,700 homes over the next few months.

Our aim is to support jobs in the housing industry through this measure as well as to build much needed housing for some of the most vulnerable people in our community, including aged and disability pensioners and people who have been homeless.

It’s estimated that this measure will support 15,000 jobs over the next couple of years. If you are a builder, developer or tradie looking to get involved in the building or repairing of these homes, you can find contact details for your state or territory on the Housing section of this website.

I have also received several questions about the Tax Bonus. If you’ve got questions about the bonus, please contact the Australian Taxation Office on 1300 686 636 or check out the Treasurer's comments on the video transcripts section of this website. Thanks again for visiting the website and submitting your questions and comment

Nation Building - Economic Stimulus Plan - Transcript of Tanya Plibersek video

First Home Loan Specialists Comment

It would seem pretty clear from this response that the boost will end on 30 June 2009. The Government consider that the other measures in the stimulus package will be take up the gap left by the First Home Owners Grant boost.

This probably means that there will a stampede of First Home Buyers trying to get the boost before it finishes. This will make buying an established home very competitive. So it could be an option to build a new home instead.

Greg Brierley
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Diving into the deep end | The Courier-Mail

ARE you fed up paying your landlord's mortgage and wondering if now is the time to dive in and buy your own place?

Rising rents and a lack of available rental properties means right now you could possibly afford to purchase a property with little or no change to your current expenses.

More than 42,000 Australians have taken up the first-home owner grant offered as part of the Federal Government's stimulus response to the global financial crisis. New South Wales has seen the highest uptake, with 14,404 first-home owners receiving the boost, followed by Queensland (9319) and Victoria (8632).

The grant sees first-home buyers given $14,000 (up from $7000) and first-home builders $21,000 (up from $14,000). It reverts back in July.

More than one third of Australian households are renting, the biggest age group being 35 to 44-year-olds. But before you make the leap to home ownership you should ask yourself how secure your employment is. You have to consider whether you have any concerns about the health of the business you work in and be careful about over-committing.

Suncorp wealth adviser Leanne Wilson says it is "most definitely" still cheaper to rent than buy when looking under $450,000."It works out that the rent is about 74-84 per cent of mortgage repayments, with a 20 per cent deposit and 6 per cent interest over 25 years," she says."And of course that doesn't factor in the cost of maintenance of the property and rates, body corporate fees. Obviously renting also gives you flexibility, especially when you are in a job where you move around a lot."

The attraction for a lot of people is also the lifestyle. If they can't afford to buy near the CBD, rent is an affordable option. "The median weekly rent for a two-bedroom house in inner northwestern Brisbane is $400 a week or about $1730 a month. A two-bedroom unit in the inner city will cost you $430 in weekly rent, or $1860 on average per month, according to December quarter data from the Rental Tenancy Authority.

In comparison, a $300,000 home loan with a basic interest rate of 5.91 per cent a year over 30 years would be $1782 a month in repayments. A $400,000 loan would see you paying back $2376 over the same term at that rate.

The number of first-time owners has risen by 18 per cent since the grant was increased. Builders such as Devine Homes, for which the low-income earner is a crucial target, hope the grant period will be extended. Devine has launched a campaign offering to double the first-home buyer's deposit on house and land packages bought before the end of June. Buyers will also receive free mortgage payment insurance for 12 months. Devine's house and land packages range from $299,900 to $419,000.

The Government has made it clear it will not offer open-ended incentives to any part of the economy, and it is not known how it regards the stimulus to one sector of the housing market when other markets such as investment property are plummeting.

However, there are signs the Government's increase in the first-home owner grant is having an impact on home building. Building approvals in February surged by a seasonally adjusted 7.8 per cent, the first increase in the monthly series since June last year.

But the Master Builders of Australia have a pessimistic outlook for their trade, saying there is likely to be significant job losses in 2009 and 2010. MBA chief economist Peter Jones wants to see the eligibility period for the $21,000 first-home builders grant extended.

But the real estate agents are laughing.Over at Ray White, a record $2.37 billion in sales were posted last month, thanks, in part, to the boost to the first-home owners grant. Ray White's Mark McLeod says it was the group's strongest sales month in 18 months and a 15 per cent improvement on the corresponding period in March, 2008.

While the grant has its critics, who suggest it artificially inflates residential property prices, it is clear the take-up rate is high and it will stimulate a housing construction cycle as existing inventory is cleared. First-home buyers are having other incentives thrown at them, too. If the first-home owners buy a property for less than $500,000 they do not pay stamp duty in Queensland. Similarly, many developers are matching the grant with cash, holidays or appliances.

But remember, first-home buyers should aim to pay no more than 30 per cent of their gross income in mortgage repayments. Also, they should factor in an extra 1 to 2 per cent on interest rates to take into account future rate rises.

Many people with a mortgage repaying 40-50 per cent of their income to the bank are in severe stress. Still, developers are reporting increased traffic through home display villages, while auction clearance rates are up sharply in existing homes under $500,000.

So far, variable mortgage interest rates have fallen by about 4 per cent since September and banks remain willing to lend for mortgages. While they do want more collateral, the major banks will lend over residential property.

Mortgage Choice senior corporate affairs manager Kristy Sheppard says renters should definitely consider moving into property ownership, whether to buy a home or an investment property. "At present, opportunities are fantastic for potential property owners who are confident of their job security and/or financial situation," Sheppard says."The historically low interest rates, government incentives such as the first-home owner boost, low rental vacancy rates and continuing high levels of population growth are all positive factors for Australians looking to buy a property."

Those who are currently renting are paying their landlord's mortgage repayments when in fact they could be paying their own.

Diving into the deep end | The Courier-Mail

First Home loan Specialists Comment

The message is loud and clear in this article. "This is a good time to buy into the property market as long as you do not overcommit yourself and have good job security." These risks can be managed and you should be helped with these decisions by a good mortgage broker.

Greg Brierley
Principal
T: 1300 884 809
E: greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Banks in the hold-up business | The Daily Telegraph

By Alison RehnApril 14, 2009 12:00am

ACCORDING to Treasurer Wayne Swan, I am playing an important role in supporting activity and jobs in the housing sector.

My boyfriend and I just bought our first house.We lapped up the Rudd Government's first home owner's grant - doubled to $14,000 - and jumped out of the vicious renting cycle.

All good, right? Not quite.Now I'll be the first to admit I was a little bit naive in thinking all I had to do was sign a few forms and the house would be ours.I was sure the process would be geared around busy people, who figure the hardest job is trawling through homes every Saturday for six months. Making a decision on which house to buy isn't so much "Woo hoo!" as "Thank God that's over".

And then, of course, there's the move from one end of town to the other, and dealing with blokes who know that your bed is your favourite possession and promise to look after it in their truck, but rip its sides anyway. And don't even ask what they did to the front door when they shoved the piano through the entrance.

But none of that comes close to the stress of dealing with a broker, a lawyer and a bank. Nothing could prepare me for the bunny-boiling attention I got every day from our lawyer for about a month.

I had to change my mobile phone ring tone because I started to hate it.The lawyer rang constantly to ask when the bank would grant us unconditional approval for our home loan. Just in case I had a clue.

Unfortunately the first home owner's grant - while doing its part for the economy - has prompted a record number of first home buyers into the market, swamping the banks with loan applications. The bank held up our settlement for weeks. The day we moved in was supposed to be our day of settlement. We weren't even close. We had to start paying rent to the owners. We still weren't free of the rental trap.

We were so far behind our broker tried to help out by coming to my workplace to sign some more forms.This was it, I was sure. Now the bank will surely get things moving. We are heading in the right direction.Unfortunately the broker didn't co-sign one document, so the bank helpfully returned it. To our old address. And so there I was, standing at a cafe in the rain, waiting for the broker to bring me another form. With teeth clenched I watched him sign his name. Twenty-three days after we were supposed to settle we finally became mortgagors.

I don't know what's better - no longer paying someone else's mortgage, or no longer recognising our lawyer's number on my mobile phone. Having walls I can bash pictures into anywhere I want is awesome.

But I hope I won't be buying another home any time soon.

Banks in the hold-up business | The Daily Telegraph

First Home Loan Specialists Comment

This is another example of why First Home Loan Specialists was established. We recognised that the First Home Buyer needed to be supported and guided through the purchasing process. We liaise with everyone involved including the real estate agent and solicitor. This should be a very enjoyable process.

First Home Buyers are what we specialise in.

Greg Brierley
Principal
T: 1300 884 809
E: greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

Govt responds to land rent scheme questions - ABC News (Australian Broadcasting Corporation)

The ACT Government has rejected Opposition calls to release the name of the lending institution involved in its land rent scheme.

The Opposition says the Government needs to confirm whether the institution is still willing to take part so people considering using the scheme do not miss out on the increased first home buyer's grant.The Federal Government's first home buyers grant is due to expire on the 30 June, 2009.

The ACT Treasurer Katy Gallagher says she does not want to risk losing the lender's involvement by revealing its identity."The scheme is ready, it's there, we're committed to it," she said."And really it's about now for that financial institution to finalise their details. And that remains out of the Government's control but we are certainly working with them, talking with them, providing them with any assistance they need in order to fully commit to the project."

The ACT Greens say they will not be calling on the Labor Government to act before the end of the financial year.

Greens MLA Amanda Bresnan says calls for the lender to be identified are unhelpful. "For this lender to come out and say who they were might actually endanger the scheme," she said. "I guess in talking about housing affordability this is one of the things that will assist towards that. We do need a scheme along these lines to work, we think it's a good scheme and that's why we will stick to the 30th of June deadline which we gave the Government."

Govt responds to land rent scheme questions - ABC News (Australian Broadcasting Corporation)

First Home Loan Specialists Comment

This is a very innovative scheme if the ACT government can get it up and running. The ACT is very proactive in this area with a detailed Affordable Housing Strategy being implemented. The program that I like is the OwnPlace Program which sells 15% of all new land releases as house and land packages for under $300,000.00.

Check it out on the ACT Land Development Agency website. The link is below in this blog.

Greg Brierley
Principal
T: 130ww0 884 809
E: greg@firsthomespecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Property prices to fall in July if first home grant ends | Herald Sun

PROPERTY prices are heading for a fall if the higher first home buyer grants are not extended, Australia's largest mortgage broker warned.

Fears are growing that the first home buyer frenzy that has supported the prices of more affordable properties is about to end. "Disturbingly, the rebound in Australia's mortgage market could quickly turn to a hangover if Government grants are withdrawn at the end of June," Australian Finance Group sales and operations manager Mark Hewitt said."Once the boost to the first home buyer grants end in June, we face the possibility of a bleak mortgage winter."

Mr Hewitt said 29 per cent of home loans applied for in March were taken out by first home buyers. But he said this apparent boom was masking a growing number of loans that were not approved.A sharp drop in the number of lenders in the market meant it was harder to get a home loan.

Buyers advocate David Morrell, of Morrell and Koren, said recent high auction clearance rates were giving a false impression of the state of the property market. He said many owners were still living in the past, believing they could get 2007 prices. Many top-end houses were passing in well below reserves."Deals will be done . . . eventually they always must be," Mr Morrell said. "But don't expect to see a buyers stampede for cheque books."

Property prices to fall in July if first home grant ends | Herald Sun

First Home Loan Specialists Comment

This is an interesting comment. The Government is staying very quiet on whether they are extending the boost and they will have to find savings in this budget. The message they are currently sening is that the boost will not be extended.

It maybe that the middle ground is taken by the Government and the boost will only apply to building new homes.

Greg Brierley
Principal

T: 1300 884 809
F 02 62412545
E: Greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Price is right but not for an 'untouchable'

Maria Tumarkin April 4, 2009


AS A single parent with one income and two kids, I was convinced that I would be renting till I was 80, but then came a miracle unlike any other. A global financial tsunami struck, clearing streets and markets of the usual AB demographic and allowing C-graders such as myself our 15 minutes in the property market.

All of a sudden, the tightly shut gates of property transactions opened wide and the media across the country reported that first-home buyers were "storming into the property market", spurred by historically low interest rates, slumping house prices, generous government grants and outrageous rent increases.

Make no mistake, we are talking about a one-in-100 year event, a unique combination of favourable factors, and that's according to the Mortgage Finance Association of Australia chief executive, Phil Naylor. Could it be, I wondered, that now was my best chance to sneak into the market under the cover of the global financial crisis? Were the time and the price just right for deviations from the nuclear family, such as myself, to be considered as legitimate first-home buyer material?

The media coverage of the first-home buyer takeover of the property market, otherwise known as the "first home sales boom", seemed to shout one loud "Yes" into my ear. It was not for nothing that The Financial Review quoted figures from the Australian Bureau of Statistics, which indicated that first-home buyers accounted for 26.5 per cent of all home loans issued in January 2009. All over the country people just like me were "jumping at an opportunity", "taking advantage" and getting "galvanised for action". "Grants help teens into a house of their own," reported The Age. "Battlers best placed for the house price recovery," trumpeted The Australian. "Downturn is the start of the way up for gens X and Y," argued George Megalogenis in The Weekend Australian.

I could never work out which gen I belonged, but, by God, if teens, gens and battlers were doing it, what was I waiting for? After more than a decade of repression, my yearning for a place to call my own was finally and irrevocably unleashed. With 80 per cent of my wage going straight into my landlord's account for several years now, I was finally going to get the change I had been waiting for.Because I would rather die than take my kids to a place "where country charm meets city convenience", all I could hope for was a small apartment in a state of conspicuous disrepair.

Before I did anything, however, I sought the help of my very smart and financially together friend, because, frankly, despite a so-called "world-class" PhD from the University of Melbourne, when it came to prowling the market I felt too terrified and too stupid to do it on my own.

Having found an apartment that, we hoped, would scare off most of the real estate glitterati, my friend and I discovered that the demand from people with either partners or money or, better still, both was much greater than we had anticipated. The global financial crisis may be the ultimate equaliser, but in the land of real estate, a university-employed sole parent with multiple dependents and no savings (are you kidding!) remained the very embodiment of the "great untouchable".

An award-winning buyers' advocacy group, to which I turned in the hope that they would represent my modest interests to the real estate agents, would not touch me either. Despite claiming to apply the same level of integrity and experience to acting for the rich and powerful and for the average single-income Joes and Josephines, they did not extend their expertise to properties less than $500,000.

At least they were clearly apologetic, unlike the real estate agents and the mortgage broker, who stopped picking up his phone the day after our pre-approval meeting. When, after repeated attempts to contact him, he finally re-emerged for a fleeting moment, I was treated to the modern-day equivalent of the sudden grandmother death syndrome — the email lost in the vast recesses of the cyberspace.More and more of those emails were sent, none reaching me.

We are all busy people, so let me cut to the chase. I could not do it. Crisis or no crisis, I could not afford to buy a place that I could raise my kids in, so I had to retreat back into my totally unaffordable rental abode and lick my wounds there. One-parent families make up close to a quarter of all families in Australia with children under 15, and I wonder how they are faring now. Are they getting their slice of the pie or only the crumbs at best? Neither low interest rates nor extended government grants can truly fix the basic affordability issue and for many single parents this is, undoubtedly, the real crux of the matter. When Peter Costello implored parents to have one for "the country", I did my bit. Can "the country" now please do something for my kids?

Price is right but not for an 'untouchable'

First Home Loan Specialists Comment

I found this article very interesting and cannot help but think, with the rush of First Home Buyers, how many times does this scenario actually happen. This article really provides the basis on which that we established First Home Loan Specialists. We take you through the entire buying process step-by-step and place you into a position where you understand exactly what is necessary at your particular stage of the buying process.

If you find that you do fall a little short of the financing criteria then there are ways to increase your deposit. Please do not dishearten if you do not succeed initially. All is not lost. Check out my website for more details.

Greg Brierley
Principal

T: 1300 884 809
F: 02 62412545
E: Greg@firsthomeloanspecialists.com.au
W: www.firsthomeloanspecialist.com.au

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Grant drives home loans to record levels

Renters have the best chance in a decade to upgrade to home ownership, as the cost of servicing a mortgage falls and first time buyers benefit from government grants, a leading mortgage insurer says.

QBE Lenders' Mortgage Insurance Ltd chief executive Ian Graham said the federal government's boost to the first home owners grant and 45 year low interest rates had made buying a home more attractive than renting. "While there is significant uncertainty in relation to employment, an increasing number of first home buyers who are confident about the future have decided the time is right to take advantage of government incentives, low interest rates and attractive housing prices," Mr Graham said.

Conditions supporting a jump from renting to owning a home are the best since the late 1990s, according to QBE LMI April half year property research, conducted by residential property forecaster BIS Shrapnel. The research shows that by June this year, the cost of renting in Sydney and Melbourne will be more than half way to the cost of paying off a median priced home.

Median weekly rents in Sydney and Melbourne relative to mortgage repayments will rise to 66 per cent, from around 40 per cent in 2008.In Canberra, Brisbane and Perth, weekly rents will account for 80 per cent of a mortgage repayment and in Adelaide just over 75 per cent. During the late 1990s, median rent were at or above 80 per cent of the weekly cost of buying a home in Brisbane, Adelaide, Canberra and Perth and above 60 per cent in Melbourne and Sydney.

In calendar 2008, rents rose 8.4 per cent - the fastest annual pace since 1989 - recent Australian Bureau of Statistics (ABS) data show. But house prices fell by an average rate of 3.3 per cent across Australia in the year - the biggest annual fall in 23 years. Mr Graham said first home owners had great incentives to buy property. "The first home owner buyers grant scheme has helped first home buyers to get over the deposit hurdle and is driving new lending enquiry/home loan approvals to record numbers," he said.

Last October, the federal government doubled the first home owners grant to $14,000 for established dwellings and tripled it to $21,000 for newly built homes. Between September and February, the Reserve Bank of Australia (RBA) cut the cash interest rate by four percentage points to 3.25 per cent, a 45-year low, while commercial banks lowered their standard variable mortgage rates by 3.75 percentage points.

 Grant drives hnome loans to raecord levels

First Home Loan Specialists Comment

This report lends more weight to the argument to extend the First Home Owners Grant Scheme boost. There is certainly more pressure being built on the Federal Government to extend the boost. However, there is no guarantee that this will happen and the Federal government will have to cut spending somewhere in the May 09 budget.

The question to ask is "Are you willing to bet that the Federal Government will extend the boost?" If you are not then I consider that now is the best time in a number of years to buying your first property.

Greg Brierley
Principal

T: 1300 884 809
F: 02 6241 2545
E: Greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Housing damage won't be drastic | The Australian

IT'S ridiculous, but Rudd government ministers still can't bring themselves to admit Australia is in recession and is likely to remain there through 2009.However, Julia Gillard, Wayne Swan and Lindsay Tanner have all admitted that unemployment will exceed the 7 per cent forecast for 2010 in the Government's Updated Fiscal and Economic Outlook in February.

The 7per cent figure, on any sensible definition, was already an admission of a recession, and now it will be worse. Just look at the latest forecasts from the Organisation for Economic Co-operation and Development, with growth in the OECD area expected to fall by 4.3 per cent this year, global growth to fall by 2.75 per cent and world trade by 13 per cent, and unemployment to rise to more than 8per cent (10 per cent in 2010).

As the Treasurer cautiously concedes, this has obvious implications for jobs in Australia. It also has implications for housing prices, which are of great interest to most Australian households. According to the OECD, in nearly all of its member countries real (inflation-adjusted) house prices are falling and in previous housing cycles the contraction phase typically lasted about five years, with an average fall in real house prices of the order of 25 per cent.

In the US and Britain, (nominal) home prices already have fallen by more than 20 per cent. The Standard &Poor's/Case-Shiller index for 10 leading US cities is down 30 per cent from its 2006 peak and the 20-city index is down 29 per cent. Nothing like this has happened in Australia, nor is it likely to.

Last year, average housing prices fell 3 per cent, with larger falls at the high-priced end of the market. However, according to the RP Data-Rismark index, the best available measure of housing prices, in the two months to February this year, prices rose 1.1 per cent .Does this mean the fall in housing prices is already over and from here on prices will rise?

That looks like too optimistic an expectation, given the severity of global recession. But, as with the Australian economy overall, there are good reasons to expect our housing market will stay in much better shape than housing markets in the US, Britain, Europe and Japan. At the moment housing prices are being buoyed by the combination of the Government's measures to subsidise first home-buyers and rapidly falling interest rates. The area of the market for houses and apartments below about $600,000 - which accounts for about 80 per cent of sales and more than 90 per cent of housing loans - is running hot.

This is beginning to worry some people, including the Commonwealth Bank's managing director and chief executive Ralph Norris. He told a conference in Hong Kong the banks had to make a careful assessment from a credit and risk perspective about whether some of the potential home buyers could be overcommitted as a result of job losses and, later on, higher interest rates.

This risk also requires a policy response because the Government's June 30 deadline for the first-home buyers' grant is creating an unnecessary frenzy in the market. If, as is highly likely, the Government intends to extend this deadline, it should say so now. And it should say it will phase it out, to avoid the risk of a sudden drop in prices as the bring-forward of home purchases abruptly ends after the deadline.

However, even if it does this, the question remains of what effect recession, rising unemployment, the loss of competition in mortgage lending and more restrictive lending criteria from the banks will have on Australian housing prices. Macquarie Bank's interest rate strategist Rory Robertson, who has argued vigorously and persuasively against dire predictions of 30 per cent or 40 per cent falls in local house prices, makes a comparison with the early 1990s recession. Then, despite a savage 7 per cent decline in full-time employment, house prices rose modestly, thanks to falling interest rates.

Now, of course, we have the worst global recession since the '30s and an international credit crisis, but an authoritative analysis last week by Anthony Richards, the Reserve Bank of Australia's resident housing expert, highlights several important reasons for expecting Australian housing prices to perform better than in many other countries. One is the significant improvement in housing affordability.

This has come from two factors, the first being the four percentage point cut in official interest rates and its substantial flowthrough to mortgage rates. (The rate cuts have improved the debt servicing ratio of the household sector by 5 per cent of household disposable income, freeing up cash flow for spending or paying down debt.) The other factor is the ratio of housing prices to income, which has declined significantly from its peak in late 2003 as a result of a much slowerrise in housing prices and strong income growth.

Richards says this suggests any overvaluation of housing prices in the boom years also has eased significantly. In fact, households have changed their behaviour in several important ways since 2003, including through increased savings and increased housing equity injection, as households slowed their borrowing for housing and borrowing against their houses. This change reflected the earlier slowing of the housing boom in Australia, compared with the US, Britain and others.

These developments were encouraged by the RBA's rate increases from 2003 and the accompanying warnings of the dangers of a housing price bust if the boom continued from the bank's then governor, Ian Macfarlane. The quality of home lending in Australia is also higher, with little in the way of sub-prime style lending, which means arrears on mortgage repayments, defaults and impaired loans will remain significantly lower here. Our big four banks also have had minimal exposure to securities based on sub-prime style loans.

Another positive frequently mentioned is the gap between housing supply and demand as a result of a rapidly growing population. Although Richards thinks the size of the gap is probably exaggerated, the housing market is relatively tight. This contrasts with overbuilding in the US, although a shortage of housing hasn't stopped a crash in prices in Britain.

It's an impressive list of positives, but I suspect as recession extends here and unemployment rises, the most likely outcome is at best a period of stagnating house prices, with a real risk of a fall, albeit a far more modest one than in the US and Britain.

Housing damage won't be drastic | The Australian

First Home Loan Specialists Comment

A general roundup of the current property market situation in Australia reported in The Australian today. It provides some indication that the Australia will not suffer house price decreases like those in the US and Great Britain. Food for thought.

Greg Brierley
Principal

T: 1300 880 809
F: 02 6241 2545
E: Greg@firsthomeloanspecialist.com.au
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New home sales provide another glimmer of hope for economy - SmartCompany | Business news, trends and ideas for Australia

Sales of new homes increased 3.9% in February as the increased first home owner grant helped spark the residential housing sector .It was the second consecutive monthly rise and the first time new dwelling sales have topped 7500 since June last year.

Housing Industry Australia chief economist Harley Dale is particularly encouraged by a 4.7% jump in detached home sales in February. Detached home sales are now up 8% in the last three months.

Dale says the housing data provides a glimmer of economic hope. "I think the best signs at the moment are actually coming from the residential sector. The new home building sector historically is a leading indicator of what the rest of the economy is going to do. The grounds are there to expect that we'd start to grind out a recovery in the second half of the year."

Dale says the enlarged first home owner grant has been a resounding success, with around 10,000 grants approved each month. Around 25% of these have been for new homes, which attract a grant of $21,000. But the enlarged grants will end on 30 June and opinions are divided as to whether the Federal Government should extend the deadline.

Commonwealth Bank chief executive Ralph Norris has expressed concern about first home buyers stretching themselves just to take advantage of the grants to buy homes they cannot really afford, while employer groups want the housing stimulus to continue.

"We see merit in consideration of continuing the new home bonus part of the program, because clearly that boosts home construction which in turn boosts demand for labour and building materials," Dale says. "It's having a tangible effect on the economy."

Dale also says there is little evidence to support the idea that first home buyers are heading for trouble. "We do need to be aware that in a rising unemployment market, these recent first home buyers are quite clearly more vulnerable. But there are some counter arguments as well. The average age of the first home buyer is much higher...and we know that lending conditions on the part of banks have been tightened considerably."

He says a number of large volume home builders are reporting that one in two first home buyer inquires are falling over because the bank has refused finance. Dale anticipates there could be rush of people trying to cash in on the grant in the coming months if it becomes clear it will not be extended.

New home sales provide another glimmer of hope for economy - SmartCompany | Business news, trends and ideas for Australia

First Home Loan Specialists Comment

The pressure continues on the Government to extend the First Home Owners Grant beyond the 30 June 2009 cut-off date. The Housing Industry Association (HIA) is offering the middle ground in the argument. I think that, if the Government wants to help the economy through this Grant, the HIS proposal is a good one as there would greater economic benefits from constrcuting new homes than using the First Home Owners Grant to buy established properties.

My question would be "Can the supply of land keep up the demand?" if the HIA proposal was accepted by the Commonwealth Government.

Greg Brierley
Principal
T: 1300 884 809
F: 02 6214 2545
E: Greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Broker News - Strong support to extend boosted FHOG

Australians strongly support the federal government extending the boosted First Home Owners Grant beyond its June 30 deadline, a national survey has found. An online poll conducted by independent mortgage broker, Loan Market Group, found 91% of respondents believed the increased grant should be extended.

Executive director at Loan Market Group, John Kolenda, said these results backed calls to continue the grant due to the positive impact it has had on the residential market. Furthermore, Kolenda said that while government's initiative to increase the FHOG last year had provided 'a solid foundation for the property market during the crisis,' he felt that ending it on June 30 would jeopardise the markets' complete recovery.

"We are urging the government to extend the boost to the grant for another six months and our survey shows strong public support for that stand," he said. He also dismissed claims that the increased grant had inflated property prices - or that it had rendered first-time borrowers vulnerable to bankruptcy. Rather, Kolenda found that the grant had provided stability to the residential market.

"There are many consumers and small medium enterprises finding it more difficult to get credit now than they otherwise would have historically, indicating that our banks are well on top of managing borrower risk," said Kolenda. The survey found 39% of respondents intended to enter the market, 28% had home loan pre-approval, 24% felt the boosted grant had been good for the market and only 9% were against extending it.

Broker News - Strong support to extend boosted FHOG

First Home Loan Specialists Comment

It looks like the push is on to extend the First Home Owners Grant boost beyond the 30 June 2009 cut-off date. However, the economic pressure of the funds already comitted in the two financial packages may mean that the Government may have to slash spending somewhere. I am expecting a tough budget in May. So there is no guarantee that the Government will extend the boost.

Greg Brierley
Principal
T: 1300 880 809
F: 02 6241 2545
E: Greg@firsthomespecialist.com.au
W: www.firsthomeloanspecialist.com.au

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First home buyers flock to grant - Real Estate - News | City South News

ASK any real estate agent which sector of the property market is doing well right now, and they’re likely to nominate the lower price brackets that typically appeal to first home buyers .

A beefed up First Home Owner Grant (FHOG) is certainly seeing first timers flock back to the market, but it begs the question - are today’s first home buyers paying an inflated price just to get an enlarged hand out?

The FHOG, normally set at $7000, has always been a welcome helping hand for first home buyers. However late last year, as part of the government’s economic stimulus package, the FHOG was boosted to $14,000 for the purchase of an established property, or $21,000 if you opt to build a new home.
As you can imagine, first home buyers have wasted no time taking advantage of the enlarged grant, especially when it comes hand in hand with significantly lower interest rates.

Australian Bureau of Statistics (ABS) figures show first home buyers currently account for around 26.5 per cent of all new home loans - the biggest proportion since the ABS started keeping records in 1991. But there’s a catch. The increased FHOG ends on June 30, 2009. There is a possibility that the boost could be extended as part of the May federal budget, but that’s an unknown. At this stage, from July 1 the FHOG reverts back to a flat $7000.

This is seeing a rush of first timers racing against the clock to sign a purchase contract before 30 June. Some industry pundits are saying this is pushing up property prices in the low end of the market while values continue to languish in the more expensive price brackets. The danger is that unless the boost to the FHOG is extended, prices in the lower end of the market could slump after 1 July, when the FHOG drops back to $7000.

For first timers buying at present, that could mean paying more than they need to - perhaps an extra $10,000, $20,000 or even more, just to secure an extra $7000 in government handouts.While this scenario is a possibility, the more generous FHOG is hard to go past.

Sure, it may be inflating prices but it’s allowing many young Australians to get their foot in the property market, something that may not have been possible without the extra cash of a more generous FHOG. That said, a property purchase should never be rushed. The old maxim, "act in haste, repent at leisure" definitely applies to buying a home.

It’s always worth taking the time to be sure a property is right for you and that the price represents good value. Your home is a long term investment and buying in an area with good growth potential will help you make money over time. Doing your homework here is arguably more important than rushing into a purchase decision in a bid to benefit from the government’s extra helping hand.

First home buyers flock to grant - Real Estate - News | City South News

First Home Loan Specialists Comment

This article confirms our belief that First Home Buyers need to understand the whole buying process. Part of this buying process is selecting the right house at the right price to suit your needs. But, I still consider that now is the best time for First Home Buyers to get into the market.

Greg Brierley
Principal

T: 1300 884 809
F: 02 6241 2545
E: greg@firsthomeloanspecialist.com.au
W: www.firsthomeloanspecialist.com.au

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Low interest rates help ease mortgage stresses | The Australian

THE number of Australian families facing mortgage stress has fallen by 300,000 from its peak last August as lower interest rates and government stimulus packages ease the pressure on households.

But the respite provided by $52billion in government handouts and rate cuts totalling 400 basis points since September will be short-lived, as the number of families facing home loan repayment stress is set to skyrocket later this year as job losses bite. More than 1.2 million households could find themselves in some form of mortgage stress if unemployment reaches 7.5 per cent by December, with 460,000 families "close to the edge", said Martin North, managing director of Fujitsu Consulting.

Other figures released yesterday by researcher RP Data-Rismark show housing prices are bumping off the bottom, rising nationally 1.1 per cent in the first two months of the year, after falling 3 per cent last year. First-home buyers, who took advantage of the increased grants, and interest rates at 45-year lows of about 5.9 per cent, would be hardest hit, Mr North said. "If unemployment were to rise to 7.5 per cent by December, up to one-third of the 125,000 first-time buyers who entered the market in the last 12 months could find themselves in mortgage stress."

Mortgage stress is generally regarded as paying more than 30per cent of household income in home loan repayments. Fujitsu bases its definition on 13 survey questions asking about people's ability to repay their mortgage.

"Falling interest rates and government intervention have made a significant positive impact on mortgage stress," Mr North said."This is good news in the short term, and the additional government payments will reinforce this trend over the next couple of months."

Fujitsu's March survey found the number of households suffering mortgage stress fell 5.5 per cent compared with February, with 587,000 families in some degree of pain.In a survey of 2000 households, the consulting firm asked first-home buyers if they could afford to buy, with the number saying yes jumping from 21.5 per cent in June last year to 53.4 per cent per cent in March.When asked how important the first-home owners grant was, 56 per cent said it was vital or very important last June compared with 85.4 per cent in March.The survey found people's biggest worry in terms of servicing their mortgage was fear of unemployment, followed closely by the poor performance of their investments

Low interest rates help ease mortgage stresses The Australian

First Home Loan Specialists Comment

The advantage of using a Mortgage Broker is that loans are tailored to individual circumstances. Reputable mortgage brokers will ensure that rising interest rates are included in the loan analysis.

The other impact of unemployment can also be addressed through available loan products that allow for borrowers to have a "grace" period where the interest accumulates on the loan and no repayments have to be made.

So if your in a relatively stable job and use a repuable mortgage broker then the risk of mortgage stress should be minimised.

Greg Brierley
Principal

T: 1300 884 809
F: 02 6241 2545
E: Greg@firsthomeloanspecialist.com,au
W: www.firsthomeloanspecialist.com.au

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Business Spectator - Aust residential property values rise 1.1%

Australian residential property values have risen 1.1 per cent in the first two months of 2009, recovering from a three per cent fall last year, new data shows.

The RP Data-Rismark Hedonic Property Index released on Tuesday showed Sydney and Melbourne were the key drivers of the 2009 rebound, with dwelling values up 0.5 per cent to $509,900 and 1.9 per cent to $428,600 respectively. The research showed the market had been helped by lower mortgage rates - which are at their lowest point in nearly 40 years after peaking at 9.6 per cent in August last year, before dropping to 5.8 per cent currently.

Economists expect the Reserve Bank of Australia (RBA) to cut the official cash rate by at least 25 basis points when the board of the bank meets next Tuesday, April 7. "The recovery in prices over the last quarter has been driven by the 40 per cent reduction in mortgage rates, the boost to the first home owners grant, the government's fiscal stimulus and a significant housing shortage," Rismark International chief, Christopher Joye, said.

Mr Joye said the first home owners grant had been a successful policy, and the health of Australia's financial system meant the market had been more resilient than other countries around the world. "The resilience of Australia's housing market has also been underpinned by our robust banking system, which (sic) CBA (Commonwealth Bank of Australia) recently reporting that its 90 day mortgage default rate was a stunningly low 0.38 per cent," Mr Joyce said.

Business Spectator - Aust residential property values rise 1.1%


First Home Loan Specialists Comment

More evidence that the property market is in pretty good shape and that it is widely agreed that interest will cut further at RBA April meeting.

Greg Brierley
Principal
www.firsthomeloanspecialist.com.au

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Extend first home owner grant: Coalition

A third of the federal government's $6 billion spend on public housing should go to the private residential construction sector, the opposition says.

Data released on Tuesday showing a rebound in house prices is another sign that the more generous first-home owner scheme should be extended beyond June, housing spokesman Scott Morrison says. The government, as part of its first stimulus package last year, temporarily doubled the grant available to first home buyers of existing homes to $14,000 and tripled it to $21,000 for buyers of newly-constructed homes. It is leaving any decision to extend the stimulus measure to the May budget.

"Improved property values, together with rising house sales and easing mortgage stress, pointed to the private housing construction sector as a key to stimulating economic activity," Mr Morrison said. "At least $2 billion should be diverted from Labor's over-ambitious program to spend $6 billion on public (housing),"

Instead it should be diverted to the private sector through the first-home owner grant scheme, he said. Mr Morrison said it was "fanciful" that states and territories could spend $6 billion on public housing in less than two years."Last time it took more than eight years to achieve that result," he said.

© 2009 AAP

Extend first home owner grant: Coalition


First Home Loan Specialists

This is the start of the pressure for the First Home Owners Grant Scheme boost to be retained. I am not convinced in the current economic climate and the Goverment's need to control the deficit that they will continue the boost.

With interest rates tipped to come further in the next couple of months, I consider that now is the best time to go out and purchase your first home.

If you are a first home buyer then check out our free 8 part Specal report for First Home Buyer at www.firsthomeloanspecialist.com.au.

Greg Brierley
Principal
First Home Loan Specialists

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Business Spectator - More rate cuts likely after flat lending

More rate cuts likely after flat lending
AAP

Lending to the private sector was flat in February as personal and business loan volumes fell, supporting the case for further interest rate cuts central bank figures show.Total credit provided by financial intermediaries was unchanged, following a 0.6 per cent rise in January, the Reserve Bank of Australia said on Tuesday.The result took the annual growth rate down to 5.4 per cent, its slowest pace in 15 years, or since 1994.

RBC Capital Markets senior economist Su-lin Ong said the data support the case for a further interest rate cut after the RBA board meeting on monetary policy next Tuesday."At the margin, the data continue to support the case for lower cash rates in Australia, but the timing remains more debatable with the RBA continuing to hint at a reluctance to cut much further," she said in a statement."The disappointing domestic data since the March meeting and still challenging global backdrop suggest that the case for a cut next week remains compelling."We expect a 25 basis point move." The key cash interest rate was left unchanged in March at 3.25 per cent.

Meanwhile, lending for housing credit rose 0.6 per cent in February, and by 7.1 per cent over the year, seasonally adjusted, while other personal credit was down 0.8 per cent in the month, and six per cent in the year, the RBA data show.

Business Spectator - More rate cuts likely after flat lending

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