Confidence in the economy hits decade high

Confidence in the economy hits decade high

Confidence in the economy surged to a 10 year high, representing a remarkable turn of events months after enduring a recession comparable to The Great Depression.

The Westpac-Melbourne Institute Index of Consumer Sentiment lifted by 4.1 per cent to 112 in December, a level not seen since October 2010.

The monthly index, compiled from telephone interviews with 1200 adults in the first week of December, is now 48 per cent above the low recorded in April, representing an economic turnaround in just eight months.

This compares favourably to other recessions. In the eight months following the global financial crisis, sentiment rebounded 8.4 per cent.

“The recovery in sentiment in the COVID recession has been much more rapid” than other recessions, Bill Evans said, chief economist at Westpac.

“...There are still risks, notably around vaccine developments.”

People’s outlook was brighter because the country appears to be containing the COVID-19 coronavirus, the economy performed better-than-expected in the September quarter, and vaccines appear to be on the way, Mr Evans said. This led to a 10 per cent lift in people’s outlook on the economy in the next 12 months -- another a decade high.

The positive sentiment was echoed in the ANZ-Roy Morgan consumer confidence survey, which experienced a 1.7 per cent rise to 109.3 -- pushing it to its highest level all year.

“Consumer confidence rose this week as Australian’s perception of their economic and financial prospects continued to improve," David Plank said, head of Australian economics at ANZ.

The window to snap up a bargain is closing

Fewer believed it was the right time to buy a home with sentiment falling from last month’s seven year high. A fall of 5.9 per cent to 124.2 was recorded, placing it still 4.4 per cent above its long run average.

The result “suggests the turnaround in Australia’s housing markets – which are all now seeing price gains – may be starting to shift views on affordability and prospects for bargain buys,” Westpac’s Mr Evans said.

Housing values have gone up in every capital city other than Melbourne in the September quarter, according to ABS data, once again posting unseen highs.

People sensed property prices were recovering. The index on house price expectations lifted by 9.4 per cent to 143.7 -- an increase of 2.5 per cent for the year.

Spending on major household items is beginning to slow down, the survey found. A lift of 0.7 per cent for the month left it nearly 6 per cent higher than it was over the same period a year earlier.


“The surge in sales of household goods we saw earlier in the pandemic is now slowing,” Mr Evans said, “but activity remains well above pre pandemic levels.”

Families are still struggling

A suite of relief measures have helped the majority of people, but with unemployment and under-employment still high, there are families still doing it tough.

This was reflected in the ‘finances verses a year ago’ sub-index. The gain of 6.9 per cent pushed it to 96.1.

“Those experiencing a deterioration continue to slightly outnumber those seeing an improvement, but the sub–index is over 30 per cent above April’s lows,” Mr Evans said.

“This gain came despite the reduced support from the Government’s JobKeeper and JobSeeker measures and the ongoing reductions in bank deposit rates.”

Job prospects are looking better

The index measuring growing unemployment dropped to its best level in nearly 10 years. The Unemployment expectations index fell 16.2 per cent to 106.3, indicating renewed confidence in job security and less people worrying about losing their jobs.

There were a couple of reasons for the uplifting outlook, Mr Evans said. Unemployment forecasts have been lowered as almost half of the 932,000 jobs lost due to the COVID-19 pandemic were recovered, according to ABS figures.

Brighter forecasts

More is known about the economic impact of the coronavirus pandemic today than when it first struck almost nine months ago, leading to banks revising their forecasts for both this year and the ones coming.

The outlooks are upbeat. Westpac now expects growth of -2 per cent in 2020 and of 4 per cent in 2021, anticipating the economic impact of the COVID-19 pandemic being less than originally expected.

The unemployment rate, at one stage believed to hover around the 10 per cent mark, is now forecast to lower to 6 per cent by the end of 2021, and return to its typical 5.2 per cent in 2022.

“(The) revised unemployment forecasts indicate that the unemployment rate will return to close to its pre–COVID level in less than three years,” Mr Evans said.

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Can I apply for an ANZ non-resident home loan? 

You may be eligible to apply for an ANZ non-resident home loan only if you meet the following two conditions:

  1. You hold a Temporary Skill Shortage (TSS) visa or its predecessor, the Temporary Skilled Work (subclass 457) visa.
  2. Your job is included in the Australian government’s Medium and Long Term Strategic Skills List. 

However, non-resident home loan applications may need Foreign Investment Review Board (FIRB) approval in addition to meeting ANZ’s Mortgage Credit Requirements. Also, they may not be eligible for loans that require paying for Lender’s Mortgage Insurance (LMI). As a result, you may not be able to borrow more than 80 per cent of your home’s value. However, you can apply as a co-borrower with your spouse if they are a citizen of either Australia or New Zealand, or are a permanent resident.

How can I get ANZ home loan pre-approval?

Shopping for a new home is an exciting experience and getting a pre-approval on the loan may give you the peace of mind that you are looking at properties within your budget. 

At the time of applying for the ANZ Bank home loan pre-approval, you will be required to provide proof of employment and income, along with records of your savings and debts.

An ANZ home loan pre-approval time frame is usually up to three months. However, being pre-approved doesn’t necessarily mean you will get your home loan. Other factors could lead to your home loan application being rejected, even with a prior pre-approval. Some factors include the property evaluation not meeting the bank’s criteria or a change in your financial circumstances.

You can make an application for ANZ home loan pre-approval online or call on 1800100641 Mon-Fri 8.00 am to 8.00 pm (AEST).

How long does Bankwest take to approve home loans?

Full approval for a home loan usually involves a property valuation, which, Bankwest suggests, can take “a week or two”. As a result, getting your home loan approved may take longer. However, you may get full approval within this time if you applied for and received conditional approval, sometimes called a pre-approval, from Bankwest before finalising the home you want to buy.  

Another way of speeding up approvals can be by completing, signing, and submitting your home loan application digitally. Essentially, you give the bank or your mortgage broker a copy of your home’s sale contract and then complete the rest of the steps online. Bankwest has claimed this cuts the approval time to less than four days, although this may only happen if your income and credit history can be verified easily, or if your home’s valuation doesn’t take time.

Can I get a NAB home loan on casual employment?

While many lenders consider casual employees as high-risk borrowers because of their fluctuating incomes, there are a few specialist lenders, such as NAB, which may provide home loans to individuals employed on a casual basis. A NAB home loan for casual employment is essentially a low doc home loan specifically designed to help casually employed individuals who may be unable to provide standard financial documents. However, since such loans are deemed high risk compared to regular home loans, you could be charged higher rates and receive lower maximum LVRs (Loan to Value Ratio, which is the loan amount you can borrow against the value of the property).

While applying for a home loan as a casual employee, you will likely be asked to demonstrate that you've been working steadily and might need to provide group certificates for the last two years. It is at the lender’s discretion to pick either of the two group certificates and consider that to be your income. If you’ve not had the same job for several years, providing proof of income could be a bit of a challenge for you. In this scenario, some lenders may rely on your year to date (YTD) income, and instead calculate your yearly income from that.

Remaining loan term

The length of time it will take to pay off your current home loan, based on the currently-entered mortgage balance, monthly repayment and interest rate.

Why should I get an ING home loan pre-approval?

When you apply for an ING home loan pre-approval, you might be required to provide proof of employment and income, savings, as well as details on any on-going debts. The lender could also make a credit enquiry against your name. If you’re pre-approved, you will know how much money ING is willing to lend you. 

Please note, however, that a pre-approval is nothing more than an idea of your ability to borrow funds and is not the final approval. You should receive the home loan approval  only after finalising the property and submitting a formal loan application to the lender, ING. Additionally, a pre-approval does not stay valid indefinitely, since your financial circumstances and the home loan market could change overnight.

 

 

Does Australia have no cost refinancing?

No Cost Refinancing is an option available in the US where the lender or broker covers your switching costs, such as appraisal fees and settlement costs. Unfortunately, no cost refinancing isn’t available in Australia.

Can I change jobs while I am applying for a home loan?

Whether you’re a new borrower or you’re refinancing your home loan, many lenders require you to be in a permanent job with the same employer for at least 6 months before applying for a home loan. Different lenders have different requirements. 

If your work situation changes for any reason while you’re applying for a mortgage, this could reduce your chances of successfully completing the process. Contacting the lender as soon as you know your employment situation is changing may allow you to work something out. 

If I don't like my new lender after I refinance, can I go back to my previous lender?

If you wish to return to your previous lender after refinancing, you will have to go through the refinancing process again and pay a second set of discharge and upfront fees. 

Therefore, before you refinance, it’s important to weigh up the new prospective lender against your current lender in a number of areas, including fees, flexibility, customer service and interest rate.

Can I refinance if I have other products bundled with my home loan?

If your home loan was part of a package deal that included access to credit cards, transaction accounts or term deposits from the same lender, switching all of these over to a new lender can seem daunting. However, some lenders offer to manage part of this process for you as an incentive to refinance with them – contact your lender to learn more about what they offer.

What is an ombudsman?

An complaints officer – previously referred to as an ombudsman -looks at formal complaints from customers about their credit providers, and helps to find a fair and independent solution to these problems.

These services are handled by the Australian Financial Complaints Authority, a non-profit government organisation that addresses and resolves financial disputes between customers and financial service providers.

How much of the RBA rate cut do lenders pass on to borrowers?

When the Reserve Bank of Australia cuts its official cash rate, there is no guarantee lenders will then pass that cut on to lenders by way of lower interest rates. 

Sometimes lenders pass on the cut in full, sometimes they partially pass on the cut, sometimes they don’t at all. When they don’t, they often defend the decision by saying they need to balance the needs of their shareholders with the needs of their borrowers. 

As the attached graph shows, more recent cuts have seen less lenders passing on the full RBA interest rate cut; the average lender was more likely to pass on about two-thirds of the 25 basis points cut to its borrowers.  image002

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.