Loading
Loading...

Complete Lending Solutions Est 2002

Get in touch | 0427 257 257

slide-1

A blog about credit, interest rates,

the property market

and whatever else I feel like writing about.

It’s our own research.

It is not mass-produced editorial

where a business pays for its name

and logo to be inserted on it

and claims it as its own.

REAL ESTATE BUBBLE, OR THE BOOM CONTINUES?

    Last week I registered to bid on a 2 x bedroom, 1 x bathroom, 0 x garage apartment at Bondi Beach. The real estate agent had a price guide of $1,200,000. It went off at $1,605,000. I did not bid because I do not usually bid unless the property is on the market and is below my client’s affordable purchase price. The apartment sol...

November 16th, 2020

THE UNKINDNESS CUT POST RBA

THE UNKINDNESS CUT POST RBA   On 3 November 2020, the Reserve Bank announced a reduction in the cash rate, 3-year yield target, and the interest rate on new drawings under the Term Funding Facility to 0.10% from 0.25%. It also announced the purchase of $100b bonds and that it was not** expecting to increase the cash rate for at least 3...

November 10th, 2020

THE COLOUR OF THE MONEY OR THE INTEREST RATE CUT

  It’s the colour of the money the RBA may print rather than the size of any interest rate cut that will matter the most on Melbourne Cup day, Tuesday, 3 November 2020. The bond market has priced in a 0.24% official cash rate cut (see chart below) but how many $billions of bonds will the RBA buy as the Buyer of Last Resort? What do you...

October 30th, 2020

7 AUCTION RULES

  Follow our 7 rules of bidding at your next auction to increase your chances of success.   1. KNOW THE MARKET. Determine the fair market price of the property and then decide what the property is worth to you.   2. DON’T BID AGAINST YOURSELF. Unless the property is for sale under the gavel, think well before bidding if the...

October 27th, 2020

A FEE! A FEE! AN INTEREST FOR A FEE!

  With a bit of horse trading, the retailer bettered their competitors’ cut-throat prices. I was surprised to be offered a buy now, pay later plan as payment, so I used my negotiating skills to my advantage. I got an additional 5% discount because I convinced the salesperson’s manager that if they were happy to pay the service and tran...

October 21st, 2020

DEBT – NOTHING ELSE MATTERS

  The interest rate swap (IRS) market is pricing an approximate 0.15% cut in the Official Cash rate by the Reserve Bank on Tuesday, 3 November 2020, but with keener expectations than for the October 2020 meeting. Interpreting the implied forward yield curve (blue line) and the IRS yield curve (red line) on the chart, the IRS market expects th...

October 16th, 2020

BEST TIME IN 12 MONTHS TO REFINANCE / REVIEW YOUR HOME LOAN (September 2020)

Central Banks around the world, led by the Federal Reserve, are not only the Lenders of Last Resort but are now the Bonds Buyers of Last Resort as well. With the great chase of yield, the Interest Rate Swap Rates have fallen below the Commonwealth Government Bond Rates, and remarkably, this has been sustained since July 2020 as the below chart s...

September 30th, 2020

INTEREST RATES – THE BOND MARKET’S FORECAST (September 2020)

Back on 20 March 2020 (last RBA interest rate cut) the bond market’s expectations was that the Reserve Bank was to keep interest rates at or below 0.25% for just under 2 years. As of 30 September 2020, and with the benefit of seen the printing press actions taken by Central Banks over the last six months, the expectation is that the Reserve Bank...

September 30th, 2020

SHOULD I FIX OR STAY VARIABLE? (September 2020)

The bond market, especially the very long end of the bond market (10 years and over), is very susceptable to a significant sell off because of the re-inflation risks taken by the Federal Reserve and other Central Banks. Staglfation may come back to haunt Central Banks. The mood of the bond market can change at any time. We frequenlty monitor mov...

September 30th, 2020

MEDIAN HOUSE PRICES - A TALE OF TWO CITIES (September 2020)

The Sydney property market (median house price) has held remarkably well over the last six months, albeit with a small price decline. Melbourne faired far worse than any other capital city. There are two divergent scenarios that can unfold from here. Cheap money and the proposed axing of Responsible Lending Laws may sustain a housing boom (green...

September 30th, 2020

A BATTLE OF WITS

  There are always exceptions to the 7 Auction Rules. Here, I enjoyed a robust battle of wits with the auctioneer. Great auctioneer and top bloke. If you love a good battle of wits as much as I do, watch the action at the auction on video! Oh, by the way, see if you can pick up any tactics used. Read the client’s review, as well as oth...

September 28th, 2020

IT HAS ALWAYS BEEN COMPLIMENTARY!

  Our complimentary auction bidding fee for our CLS clients includes – Auction attendance. Bidding. Auction success. Any negotiations on the day before the Auction. Any negotiations on the day of the Auction if the property is passed in. Our Service Guarantee (check it out at bidsquare.com.au).   Follow us to stay up...

September 22nd, 2020

INTEREST? Oh, you mean FEES!

  Let us number crunch for a hypothetical no interest credit card with a limit of $1,000 and a $10 per month fee (aka an interest payment) for non-zero balances with a $35 monthly repayment and express this as an amortised loan (to calculate the implied interest rate). Based on the $1,000 initial debt, the implied average interest rate yo...

September 21st, 2020

HANDS UP - if you like this customer review!

  Our clients don’t hold back on their reviews. Hear how one client describes her experience. “Alex nearly gave my husband and I a heart attack at auction! He was playing it so cool that we thought he was not going to bid in time! … My dad wanted to smack him over the head to tell him to &@*$ bid! … Alex was knowledgeable and helpf...

September 16th, 2020

4 BIDS CAN BUY A PROPERTY AT AUCTION

  The bidding for this property opened at $1,400,000. I started bidding at $1,701,000. The property sold to my clients for $1,751,000 after I bid only 3 more times.   Guess what? Our auction fee was again complimentary. Want to know why? Read our post WHY DO WE OFFER OUR CLIENTS COMPLIMENTARY BUYERS’ AGENT SERVICES? to find th...

September 9th, 2020

WHY DO WE OFFER OUR CLIENTS COMPLIMENTARY BUYERS’ AGENT SERVICES?

  We believe that our mortgage brokering clients deserve support and professional advice when purchasing property. Buyers’ Agents usually charge as much as real estate agents do, and most people cannot afford their services. Negotiating with real estate agents and bidding at real estate auctions is also my specialty, and our clients appr...

September 2nd, 2020

The Psychology of Real Estate Auctions

  I approach each real estate auction as an open reveal Poker Game intermingled with Mexican Standoffs and subtle Psychological Warfare tactics.   I can read the auctioneer and size up the other bidders. I know when and how to bid, when to fold and when to unfold, giving you a clear and distinctive advantage at auctions.   Whethe...

August 25th, 2020

STAGFLATION – HANDS UP IF YOU KNOW WHAT IT MEANS

  The Federal Reserve is broadcasting, as soon as this Thursday 27 August 2020, that is going to unleash inflation in a big way. Jerome Powell may well turn out to be the antithesis of former Fed Chair Paul Volcker. Volcker is famous for stopping the runaway inflation of the late 1970s/early 1980s when interest rates in the USA rose to 19%....

August 24th, 2020

We help you BUY AND FINANCE YOUR HOME

  We can now reach you online and help you buy and finance your home, with the same enjoyable and almost effortless experience that we created for our existing clients. Now, a little bit about us. We hold our own Australian Credit License and we can advise you on and broker your home loan. Visit creditbroker.com.au to make use of ou...

July 29th, 2020

What does the Interest Rate Yield Curve say?

As at close of business on Friday 10, July 2020 the bond traders, as implied by the Interest Rate Swap Yield curve, say that the Reserve Bank will not increase interest rate until July 2023. Their expectations can change at any time, so we shall keep you posted. For a definition of the implied forward rates and how they are calculated vis...

July 13th, 2020

Should the RBA follow the market's interest rate cut pricing?

Further official cash rate cuts are possible if a global Coronavirus COVID-19 pandemic develops and is sustained for longer and substantially hurts the economy.   The market’s 0.25% rate cut pricing (reflected in the below interest rate yield curve as at 29 February 2020) and expected on Tuesday, 3 March 2020, includes any negative impact on...

February 29th, 2020

Official Cash Rate & Future Direction of Interest Rates – December 2019

What is the Yield Curve implying?   The below graph plots the Implied Forward Interest Rate yield curve (blue line) which is derived from the Interest Rate Swap yield curve (red line) as at 31 December 2019. Any changes to today's yield curve will also change the implied forward interest rates and market expectations of future Reserve...

December 31st, 2019

Do rising mortgage rates trigger lower house prices?

While it certainly is true that higher interest rates increase borrowing costs, this generally happens in periods with higher economic growth, rising inflation, rising incomes, higher levels of employment and increasing consumer confidence. House prices also fluctuate on supply and demand, net immigration and other economic variables. The gre...

December 17th, 2019

The great divide

The Australian Securities and Investment Commission released their updated RG209 guidelines for all credit licensees (banks, mortgage brokers, finance companies, etc). This is the most astonishing example ASIC gave on how a lender can meet their Responsible Lending Obligations of the National Consumer Credit Protection Act 2009 (Commonwealth)....

December 11th, 2019

Openn negotiations

I have been contacted by a prospective purchaser seeking assistance with bidding on a property she was interested in and advertised on openn.com.au; and credit advice and brokering on her loan. The short answer was "Welcome to online auction bidding". Openn claims on their website, and I quote, "Welcome to transparency in real estate". I h...

December 5th, 2019

What your great grandparents paid for their home and home loan interest rate

Not often you will find graphs that show what your great grandparents paid for their house and what their home loan interest rate was at the time. Now you do. Owner Occupied Variable Home Loan Interest Rates since 1959.   Sydney Median House Prices since 1979 (Author QED Realty)

December 4th, 2019

Sydney property hits 47.8 times earnings

An Oatley apartment was sold at auction on Saturday 30 November 2019. I was not surprised that there was a dozen or so hopeful bidders, with several bidding relentlessly. The successful bidder paid 47.8 times earnings ( (rent less outgoings) divided by (the purchase price plus costs) ) to buy the property to the delight of his family. If a...

November 30th, 2019

Official Cash Rate & Future Direction of Interest Rates – October 2019

What is the Yield Curve implying?   The below graph plots the Implied Forward Interest Rate yield curve (blue line) which is derived from the Interest Rate Swap yield curve (red line) as at 29 October 2019. Any changes to today's yield curve will also change the implied forward interest rates and market expectations of future Reserve B...

October 29th, 2019

Here we go again – if you are ripped off …

  Refinance. Only if it was as simple as anyone that wants to grep a media headline tells us to – yes you guest it – refinance.   The biggest hurdle is … wait for it … affordability, i.e. are you able to pass the lenders’ post Royal Commission scrutiny on your living expenses, credit score, credit file, comprehensive credit reporting, serv...

October 7th, 2019

Loyalty Tax

  Now that we had three Reserve Bank interest rates cuts in June, July and October 2019 and banks have not passed in full the Reserve Bank cuts, the topic of the "Loyalty Tax" has surfaced.   Withhold some of the Reserve Bank rate cuts for existing loyal customers but offer ever increasing discounts for new business.   On 5 April 201...

September 24th, 2019

Best Interest Duty

The Morrison Liberal government’s proposed Consumer Credit Protection Amendment (Mortgage Brokers) Bill 2019 contains a new best interests duty obligation on mortgage brokers but not on lenders.   The application of this test would require mortgage brokers to ensure their conduct meets the standard of 'acting in the best interest of their...

September 5th, 2019

Need Some Assistance?

  ‘Need some assistance? Speak to a Mortgage Broker’ the ad boasted.   But the best part of the ad was 'Access 3,000+ loans from over 20 lenders.'   A simple arithmetic calculation equates to an average of 150 loans per lender.   Now this is simply amazing!   Does anyone know of any lender that has 150 loan produc...

August 27th, 2019

Whinging Mortgage Brokers

Recently, there has been a lot of extra whinging from numerous mortgage brokers that the time and effort required to prepare a loan application has increased, and wait for it, wait … it is eating into their profitability.   They sight noticeable differences in the way home loans are assessed by lenders and subsequently, wait for it, wait … in...

August 22nd, 2019

3 year fixed versus variable comparison August 2019

You have heard it before, many, many times before (so we shall keep it short) from brokers to branch lending experts to the media - applying for a home loan requires making many decisions ... most borrowers struggle with the decision to fix or not to fix ... banks always win when you fix your home loan interest rate ... you have limited extra repay...

August 5th, 2019

Did they not think that APRA has the last say?

On Thursday, 20 June 2019 Westpac made a bold move to reduce their serviceability assessment rate from 7.25% to 6.50% for first home buyers. APRA set a floor of 7.00% in December 2004. Late Thursday night, Westpac made an abrupt about-face back flip after incurring the prudential regulator's wrath by removing the it without approval. W...

June 20th, 2019

Responsible Lending – ASIC, Westpac and The Federal Court

The Federal Court of Australia, New South Wales | NSD293/2017 | Australian Securities & Investment Commission v Westpac Banking Corporation ACN 007 457 141.   In an opening submission on Monday, 6 May 2019 barrister for ASIC, Jeremy Clarke, SC, alleged that Westpac breached responsible lending laws 261,987 times between 2011 and 2015.  ...

May 7th, 2019

Official Cash Rate & Future Direction of Interest Rates – April 2019

The below graph plots the Implied Forward Interest Rate yield curve (blue line), and the Interest Rate Swap yield curve (red line).   The yield curve is interpreted as follows – (i) Short Term (less than 6 months) – the Reserve Bank to cut the official interest rate by 0.25%. (ii) Medium Term (12 months) – interest rates to be steady....

April 30th, 2019

Oh, by the way … this is what you will not find on our website!

Experts That we are experts, specialist and have 150 years combined experience, that we partner with our clients, continually exceed expectations, we are customer focused, or our lender panel has over 35 lenders that offer more than 2,500 products.   Biggest Financial Commitment We won't tell you a mortgage can be the biggest financ...

July 2nd, 2018

Is the Multi-Decade Bond Bull Market Over?

Yes! It is very likely that the 3-decade long bull bond market (lower interest rates) ended on 2 August 2016.   On this day, the 10-year Commonwealth government bond futures contract traded at 98.20 (equivalent to 1.80% yield) on the ASX 24 Futures platform (aka Sydney Futures Exchange). The 3-year Commonwealth government bond futures contrac...

June 24th, 2017

QED Realty Offers an Auction Bidding Service

Property Auctions Bidding at Auction need not be daunting or intimidating. Most auctioneers are predictable in their style in order to lull bidders into feeling secure. They also make efforts to create pressure and excitement so that an immediate sale may be secured under the gavel. But if you are able to read the auctioneer, size up t...

December 13th, 2016

Official Cash Rate & Future Direction of Interest Rates – December 2016

The Reserve Bank decided to leave the Official Cash Rate unchanged at 1.50% on 6 December, 2016.   Why did some lenders increased variable interest rates the day before the Reserve Bank board meeting? This is what the lenders have said. There is a need to regularly review interest rates for investment loans to ensure they reflect econom...

December 6th, 2016

Official Cash Rate & Future Direction of Interest Rates – August 2016

The Reserve Bank reduced the Official Cash Rate from 1.75% to 1.50% on 2 August 2016. Is the multi-decade bond bull market over? The 3 decade long bull bond market seems likely to be almost over because – 1. First, quantitative easing, bond purchases and negative interest rates are ineffective compare to the Global Financial Crisis. 2....

August 2nd, 2016

Nominal, Real and Complex Median House Price Indices

  House Price Indices Changes in house prices measured by this index are nominal house price movements. In isolation, this is not a true and accurate measure of property trends and price deviation from fundamental values.   What Drives Property Prices Demand The main drivers are – planning laws, particularly changes in dwelling de...

January 3rd, 2016

Implied 3 Month Forward Interest Rates

What does the Interest Rate Swap Yield Curve Imply? What is a Yield Curve? The yield curve shows the relationship between yield and the term to maturity, at any given point in time. It provides important information on what the wholesale market’s expectations are on monetary policy, economic activity and inflation. What is the Interest...

January 2nd, 2016