Peter Oates Senior Lending Adviser from Lendtribe, specialising in Home, Investment and Construction Loans
Here is a quick wrap up of the Auctions from the weekend, our Mortgage Rates on offer and tip of the week.
Auction Clearance Rates Market Wrap
Once again, we have very positive clearance rates from parts of Australia with standout results from NSW at 81% and the ACT at 86%. You can see in this table the way different states sell property with WA and Tassie not really using auctions as a tool to sell, whereas Victoria, NSW and the ACT always having a solid percentage of total sales coming from auctions held. So, clearance rates from WA and Tassie can be 100% some weeks as they may only have one to two auctions held which is not really a clear indication of the market in those states. Clearance rates a far more useful to determine the mood of Australia as a whole and also the key states that actually use actions as a selling tool. Once again it is pretty positive out there in the property market and is seeming to be more and more a sellers-market with low stock and high clearance rates.
Interest Rates Update
On the Mortgage front, here are some of our rates to consider right now with great variable and fixed rates on offer. The 2.94% Fixed rates are starting to become popular available for 2,3 4 and 5 Years. So, clients looking for long term certainty about their interest have been taking the 5 Year Fixed Rate at 2.94%, but of course this does not suit everyone.
Tip of The Week
Fixing is for certainty, not to beat the banks
Many of our clients are now considering fixing part or all of their lending. Quiet a few of our clients have mentioned they believe that although we my see more rate cuts, that the fixed rates may not fall much further and neither will the variable rate. Whilst you my or may not agree with this view of some clients, it is important to remember that fixing your lending should be driven more by certainty and much less by trying to beat the banks future interest rates. If you are thinking of fixing you should be doing it a budgeting and planning exercise to know your fixed costs for the future. Historically the fixed rates have underperformed in comparison to the variable rate, meaning that in most circumstances clients would have been better of remaining variable versus fixed from a cost perspective. Only a few lenders have the ability and functionality of an 100% or partial offset account against a fixed rate and most lenders limit extra repayments to only $10,000 per annum of the fixed loan amount.
Fixed Rate Break Costs
Clients must also consider the risk of the future Break Cost that could be applied to breaking a fixed loan prior to the fixed period expiry date. The lender will calculate the break cost internally using the market rate at the time of fixing against the current rate and the duration left to the expiry date (there is more to the calculation than that, but this gives us a rough idea of the potential break cost). We have seen break costs be in the hundreds of dollars and also in the tens of thousands too. So, if you plan to fix you must be ready to commit to the fixed period or accept the break cost should you choose to break the fixed period. It is also important to remember that any interruption to the fixed loan could cause a break to be triggered and incur a break cost including: Paying the loan down more than permitted, paying the loan out in full, selling the security or refinancing the loan to another lender. If you are thinking of fixing your lending, refinancing to a fixed rate option or you are currently fixed and looking to sell or get out of your fixed rate. Please contact us to discussed strategic options to achieve your goals and possibly avoid fixing in a product does that does not suit you or paying a hefty break cost you could have avoided.
Talk To Us
If you would like to discuss this tip or anything to do with your plans to borrow more funds or find a better deal on you current lending, please feel free to email myself directly on firstname.lastname@example.org or contact us at Lendtribe.com.au.
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