There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some weekend reading.
What you need to do to get a home loan with all eyes on lenders
Is there a secret formula to getting a home loan?
According to mortgage brokers featured in this article on Domain.com.au it all comes down to smart and responsible money habits.
Stop gambling and pay your bills on time: that’s the blunt message from mortgage brokers to anyone hoping to get a home loan over the next few months.
New borrowers now need to hand over up to six months of bank statements – and it’s best if they show a track record of careful spending and regular saving.
In the past homebuyers could just estimate how much money they spent each month but banks have become stricter, spooked by pressure from the bank regulator and the financial services royal commission.
A homebuyer’s other debts are a big focus for lenders, says Chris Foster-Ramsay, principal finance broker at Foster Ramsay Finance.
“Particularly payday loans and late payments and gambling,” Mr Foster-Ramsay told Domain.
“The feedback we’re getting from our lending partners is those couple of categories are being particularly scrutinised.”
He says banks will check HECS debts from university study or purchases through buy-now-pay-later service Afterpay – and whether those debts are being paid on time.
Banks have also been looking at spending on new clothes, eating out, takeaway coffee, holiday travel or even childcare.
Brokers say it’s acceptable to go out for dinner, sometimes, as long as a borrower can set a budget for entertainment costs and stick to it.
A potential borrower who is worried their spending patterns won’t pass muster needs to go on a “financial bootcamp” for three months, says 40Forty Finance director Will Unkles, who works with first-home buyers.
“You pull your head in, you spend your money wisely on the right things – that three-month period is long enough for the bank to say that is now habitual,” Mr Unkles says.
“Act as if you’ve got a mortgage the size of what you’re trying to get and see what your quality of life looks like.
“It could be a moment for people to realise, ‘I can’t afford to live if I only had X dollars left’.”
But he acknowledges the “cynic’s view” that some buyers might try to game the system and start splurging again once bootcamp is over.
With the money left over from bootcamp, borrowers need to show a track record of saving.
Most lenders will ask to see at least 5 per cent of a property’s purchase price as genuine savings if a buyer has a deposit below 20 per cent, says Jonathan Lee, owner-manager of Mortgage Choice in Williamstown.
Read the full article here
Figures show a weakening in construction.
Much softer numbers for construction in Q3 2018, to feed into the GDP result.
Somewhat old news by now, but the value of apartment building work done peaked somewhere between April and June this year, with the pipeline falling away now.
The value of apartment building work two peaked about two years ago in Queensland, with the unit market in Brisbane now looking much more in equilibrium than it was.
The September quarter also saw a much weaker result for engineering, and this was in spite on the tremendous ongoing strength in infrastructure construction in New South Wales and Victoria.
Read the full article here
Australian home loan arrears are starting to trend higher
Results indicate a growing trend in home loan errands.
An article on Business Insider looks at how this is affecting Australia’s property market.
Home loan arrears are trending higher in Australia, although they still remain low by historical standards.
According to S&P Global Ratings latest RMBS Arrears Statistics report, delinquent housing loans within Australian prime residential mortgage-backed securities (RMBS) fell to 1.33% in September, down from 1.36% in August.
“The trend was consistent across all states and territories in September except Victoria, where loans more than 30 days in arrears increased to 1.18% from 1.16% in August,” S&P said.
“Western Australia in September retained the top spot for the highest mortgage arrears, at 2.56%, down from 2.60% the previous month.”
The group said arrears for both owner-occupier and investor loans fell during the month.
“Investor arrears decreased to 1.19% in September from 1.23% in August and owner-occupier arrears fell to 1.52% in September from 1.53% in August,” it said.
“During more benign economic conditions, investors have been more impervious to interest-rate rises than owner-occupiers, reflecting their generally higher net wealth position.”
Despite the modest improvement, S&P said arrears continue to sit at slightly higher levels compared to the levels seen in prior years.
“Arrears typically fall at this point in the annual cycle, though the current arrears level of 1.33% is above the 1.17% historical average for September,” it said.
“Arrears remain low overall, though.”S&P Global Ratings
Whether that remains the case will come down to labour market conditions in the future, S&P said.
“Despite declining property prices, mortgage arrears across Australian RMBS portfolios are holding steady,” it said.
Read the full article here
House prices in the nation’s capital
What’s the currently state of play for Canberra’s property market?
In this article for Switzer, John McGrath looks at what’s going on in our Nation’s capital.
The rate of growth in Canberra’s market slowed in FY18 but the city is expecting its fifth consecutive year of price rises in FY19, driven by above average population growth, limited supply of greenfield land for new housing, ongoing job security and the country’s highest wages.
CoreLogic figures show the median house price rose by 3.3% to $674,000 in FY18, a deceleration on FY17 (9.7%) that is largely attributable to tighter lending restrictions, which are impacting every major market across Australia.
Economic forecaster BIS Oxford Economics says Canberra house prices will continue to rise at a slow and steady pace through to 2021, with 10% capital growth predicted – the second highest rate of forecasted growth in the country behind Brisbane at 13%.
As discussed in our recently released annual McGrath Report, the most exciting thing happening in Canberra is the prospect of significant zoning changes that will reshape the city’s largely single level housing landscape to better meet the needs of residents in the future.
Strong population growth, limited greenfield sites for new homes and an impending wave of downsizing are prompting city planners to begin preparing for a ‘more compact city’ with higher density living.
The community’s desire for greater diversity of housing options was acknowledged in The Australian Capital Territory Government Housing Choices Discussion Paper, released in November 2017.
The territory’s residential stock is 81% separate dwellings, which has served the city well in the past but does not suit its rapidly changing community profile.
Canberra has one of the fasting ageing populations in the country and single and couple-only households are becoming far more prevalent.
The apartment construction boom has met some of this demand but it has mostly been in town centres and along major transport routes, which does not serve the 50% of residents surveyed who would like to downsize in their existing suburban communities as they age but have little to no small home options.
This is a significant consideration for planners, given Canberra is expecting a 93% increase in over 65s by 2041.
There is a clear preference amongst residents for more terraces, townhouses and dual occupancies in established areas close to the city.
Infill development in the inner north and inner south has been a success, with valuations firm Herron Todd White noting particularly strong price growth in the inner north in 2018 due to the rising mix of housing, the intrinsic appeal of the leafy district and the buzz over the new light rail.
The challenge for the government is to meet the needs of its changing community whilst also maintaining Canberra’s character as a garden city.
Canberra’s median apartment price decreased -0.8% to $438,000 in FY18, with demand still high enough to meet new levels of supply even with a drop-off in investor activity.
The city has seen significant development, with 6,700 new apartments still in the pipeline until the end of FY20, according to forecasts from Master Builders Australia.
For now, there is enough interest from local, interstate and foreign investors as well as younger generations to keep prices stable.
The vacancy rate remains extremely low, there is a strong tenant base of public servants and yields are very appealing at 5.7% – the highest amongst the East Coast capitals.
Premium developments are attracting the strongest enquiry.
Local developer, Geocon sold 500 apartments pre-launch in its luxury High Society 27-storey twin tower project at Belconnen in July 2018.
Earlier in the year, they sold 250 apartments in one night at the launch of Grand Central Towers in Woden.
A temporary oversupply might eventuate, given weakening investor demand and the cultural challenge of a city that is unaccustomed to apartment living.
First home buyer activity in Canberra peaked at 25% of new loans in early 2018 – the highest it has been since 2009 and well above its long-term average of 19%.
From 1 July 2019, first home buyers with a household income under $160,000 will pay no stamp duty on new or established properties.
Read the full article here
Six fears keeping you from getting rich
Are fear keeping you from getting rich?
An article on Executivestyle.com.au looks at the 6 fears that may be holing you back.
Napoleon Hill, author of the 1937 personal finance classic Think and Grow Rich, says there are six basic fears in life, and every human being suffers from them at some point.
These fears, he writes, are the psychological reasons some people never get rich.
Hill maintains that “Fears are nothing more than states of mind,” and that “One’s state of mind is subject to control and direction.”
In other words, you can avoid them.
But, as Hill writes, “Before we can master an enemy, we must know its name, its habits, and its place of abode.”
As you can probably tell already, his language — and some of his ideas — come across as a little dated, but Hill was clearly clued in to the idea that success might not be just about how much money you earn, but also how you choose to think.
The fears are:
1. The fear of poverty
According to Hill, the fear of poverty is both the most destructive and the hardest to master of the six fears.
This is because of what Hill refers to as “money madness.”
People “prey” on each other financially in order to attain the most amount of money.
The author points out that “A man is considered less than the dust of the earth, unless he can display a fat bank account.”2. The fear of criticism
Hill says the roots of this fear can be traced back to the times when people used to be burned at the stake if they expressed beliefs that were contrary to common beliefs held at the time.
He writes that criticism often becomes a self-fulfilling prophecy which can hold people back from being successful — and rich.
According to the author, criticism does nothing but instill fear and resentment in people, and that parents, relatives, and employers shouldn’t use it.
“Employers who understand human nature, get the best there is in men, not by criticism, but by constructive suggestion.”
3. The fear of ill-health
People fear sickness because they know it could, in an extreme case, lead to death.
Hill says people also fear sickness because of the “economic toll” a sickness can take on the person it affects.
For example, a severe illness could eliminate your ability to work, which would also eliminate your livelihood.
The author cites hypochondria and says that people are often the creators of their own illness.
The more someone thinks they’re sick or is told they’re sick, the more likely they are to actually become sick, which then negatively affects their ability to reach their wealth goals.
4. The fear of loss of love
According to Hill, this fear comes from “man’s polygamous habit of stealing his fellow man’s mate.”
He says it’s the most painful of the six fears and that it “probably plays more havoc with the body and mind than any of the other basic fears, as it often leads to permanent insanity.”
The author says this fear makes people less likely to trust others and more likely to gamble, which can result in spending more than you have and incurring debt.
5. The fear of old age
Hill says that behind people’s fear of old age is their fear of the possibility of poverty.
“‘Poorhouse’ is not a pretty word,” Hill writes.
“It throws a chill into the mind of every person who faces the possibility of having to spend his declining years on a poor farm.”
The author points out that old age not only threatens a person’s economic freedom and independence, but also their physical freedom and independence.
6. The fear of death
The fear of death comes from the fear of the unknown, Hill says.
No one truly knows what comes after death, which is why it scares people.
Hill says the fear of death leads to a “lack of purpose” and “lack of a suitable occupation.”
Without an occupation, it’s hard to become rich.
Read the full article here
Weekend video: Positive & Negative thinking Great Lesson
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