“Absolutely a seller’s market”: seller confidence rebounds from Covid-19 sting

“Absolutely a seller’s market”: seller confidence rebounds from Covid-19 sting

In news that may come to the relief of would-be buyers battling it out at auctions, over a third (35 per cent) of homeowners are planning on selling in the next five years, according to new research from Westpac.

The Westpac survey of 2,086 Australians aged 18 and over also found that over one in ten respondents (12 per cent) were already taking steps to put their house on the market or had intention to do so in the next 12 months.

Westpac also noted that selling intentions rose 5 percentage points from last quarter, with more than double the number of homeowners now planning to sell since before Covid-19.

For those looking to buy, the pressure is on, as the latest CoreLogic figures found that national property prices grew by 2.1 per cent in February 2021: the fastest recorded growth rate since 2003.

Further, according to figures from the Australian Bureau of Statistics (ABS), new home lending hit $28.75 billion in January, an increase of 44 per cent year-on-year (in seasonally-adjusted terms). The total value of owner-occupier home loans settled in January surged by 52 per cent, year-on-year, to a record-high of $22.11 billion.

Meaning, there has been an influx of new homebuyers eager to win at the auction and get a foot on the property ladder.

Westpac’s Managing Director of Mortgages, Anthony Hughes, emphasised this point, noting that the “low interest rate environment, upbeat consumer sentiment, and improving economic outlook is also underpinning stronger seller confidence as we head into 2021.”

“This will no doubt be welcome news for buyers eagerly awaiting more homes to come on the market,” said Mr. Hughes.

Clearance rates and competition are up

It’s no secret that it may be becoming a seller’s market, particularly in capital cities.

CEO of Real Estate Institute of NSW, Tim McKibbin, stated that the “run up to Easter” may be particularly busy, with the “market intensity of recent weeks set to continue”.

“Vendors are taking confidence from the strength of buyer demand and month-on-month price increases, with many bringing their plans to sell forward to capitalise on the rising market.

“This includes many investors who, if not for the prices currently being achieved, would not necessarily be considering selling,” said Mr McKibbin.

CoreLogic data shows that capital cities hosted 1,587 auctions this weekend. While this was lower than last week’s 2,437 due to a public holiday in four states, the activity was still higher than the same period of time last year.

According to CoreLogic, the Sydney clearance rate was 86.7 per cent, up from 75.2 per cent at the same time last year. Melbourne also hit a clearance rate of 80.9 per cent, up significantly from 66.1 per cent at the same time last year.

CoreLogic analyst, Jade Harling, noted that “last week, a higher 844 auctions were held with an 85.3% final clearance rate and one year ago 830 auctions took place, and a 75.2% success rate was achieved”.

Thirty per cent of Westpac’s surveyed respondents pointed to competition with other buyers and a lack of supply (21 per cent) as the top challenges for would-be buyers.

While there’s little to be done to slow down competition between buyers, increased seller intentions may help knock the issue of lack of supply on the head.

“It is absolutely a seller’s market at the moment,” said Westpac Senior Economist, Matt Hassan.

"Sales have seen a big lift over the last four months and are up over 36 per cent on a year ago, resulting in a significant tightening in supply with listings across the major capital cities now at a 12-year low.”

“The research suggests the situation will rebalance in coming months as more sellers come onto the market, however demand is still expected to remain strong, driving a sustained lift in prices this year and next,” said Mr Hassan.

Tips for your first home in 2021

Until this rebalance occurs, first home buyers will need all the help they can get to compete with experienced investors and next-home buyers.

That being said, here are seven tips buyers may want to keep in mind to try and nab a property this year:

  1. Save your deposit in an account you won’t be tempted to dip into.
  2. Check your credit score early, and work to improve it now.
  3. Calculate your borrowing power so you know how much you can comfortably afford in mortgage repayments.
  4. Discover if you’re eligible for government first home buyer assistances.
  5. Consider a regional move for a more affordable property.
  6. Compare your home loan options carefully and look outside your childhood bank to ensure you’re getting a competitive deal.
  7. Talk to a mortgage broker for expert insights and tips.

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Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

How is interest charged on a reverse mortgage from IMB Bank?

An IMB Bank reverse mortgage allows you to borrow against your home equity. You can draw down the loan amount as a lump sum, regular income stream, line of credit or a combination. The interest can either be fixed or variable. To understand the current rates, you can check the lender’s website.

No repayments are required as long as you live in the home. If you sell it or move to a senior living facility, the loan must be repaid in full. In some cases, this can also happen after you have died. Generally, the interest rates for reverse mortgages are higher than regular mortgage loans.

The interest is added to the loan amount and it is compounded. It means you’ll pay interest on the interest you accrue. Therefore, the longer you have the loan, the higher is the interest and the amount you’ll have to repay.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

What do people do with a Macquarie Bank reverse?

There are a number of ways people use a Macquarie Bank reverse mortgage. Below are some reasons borrowers tend to release their home’s equity via a reverse mortgage:

  • To top up superannuation or pension income to pay for monthly bills;
  • To consolidate and repay high-interest debt like credit cards or personal loans;
  • To fund renovations, repairs or upgrades to their home
  • To help your children or grandkids through financial difficulties. 

While there are no limitations on how you can use a Macquarie reverse mortgage loan, a reverse mortgage is not right for all borrowers. Reverse mortgages compound the interest, which means you end up paying interest on your interest. They can also affect your entitlement to things like the pension It’s important to think carefully, read up and speak with your family before you apply for a reverse mortgage.

What are the pros and cons of no-deposit home loans?

It’s no longer possible to get a no-deposit home loan in Australia. In some circumstances, you might be able to take out a mortgage with a 5 per cent deposit – but before you do so, it’s important to weigh up the pros and cons.

The big advantage of borrowing 95 per cent (also known as a 95 per cent home loan) is that you get to buy your property sooner. That may be particularly important if you plan to purchase in a rising market, where prices are increasing faster than you can accumulate savings.

But 95 per cent home loans also have disadvantages. First, the 95 per cent home loan market is relatively small, so you’ll have fewer options to choose from. Second, you’ll probably have to pay LMI (lender’s mortgage insurance). Third, you’ll probably be charged a higher interest rate. Fourth, the more you borrow, the more you’ll ultimately have to pay in interest. Fifth, if your property declines in value, your mortgage might end up being worth more than your home.

How much deposit do I need for a home loan from ANZ?

Like other mortgage lenders, ANZ often prefers a home loan deposit of 20 per cent or more of the property value when you’re applying for a home loan. It may be possible to get a home loan with a smaller deposit of 10 per cent or even 5 per cent, but there are a few reasons to consider saving a larger deposit if possible:

  • A larger deposit tells a lender that you’re a great saver, which could help increase the chances of your home loan application getting approved.
  • The more money you pay as a deposit, the less you’ll have to borrow in your home loan. This could mean paying off your loan sooner, and being charged less total interest.
  • If your deposit is less than 20 per cent of the property value, you might incur additional costs, such as Lenders Mortgage Insurance (LMI).

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

Does Australia have no-deposit home loans?

Australia no longer has no-deposit home loans – or 100 per cent home loans as they’re also known – because they’re regarded as too risky.

However, some lenders allow some borrowers to take out mortgages with a 5 per cent deposit.

Another option is to source a deposit from elsewhere – either by using a parental guarantee or by drawing out equity from another property.

Will I have to pay lenders' mortgage insurance twice if I refinance?

If your deposit was less than 20 per cent of your property’s value when you took out your original loan, you may have paid lenders’ mortgage insurance (LMI) to cover the lender against the risk that you may default on your repayments. 

If you refinance to a new home loan, but still don’t have enough deposit and/or equity to provide 20 per cent security, you’ll need to pay for the lender’s LMI a second time. This could potentially add thousands or tens of thousands of dollars in upfront costs to your mortgage, so it’s important to consider whether the financial benefits of refinancing may be worth these costs.

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.

How to use the ME Bank reverse mortgage calculator?

You can access the equity in your home to help you fund your needs during your senior years. A ME Bank reverse mortgage allows you to tap into the equity you’ve built up in your home while you continue living in your house. You can also use the funds to pay for your move to a retirement home and repay the loan when you sell the property.

Generally, if you’re 60 years old, you can borrow up to 15 per cent of the property value. If you are older than 75 years, the amount you can access increases to up to 30 per cent. You can use a reverse mortgage calculator to know how much you can borrow.

To take out a ME Bank reverse mortgage, you’ll need to provide information like your age, type of property – house or an apartment, postcode, and the estimated market value of the property. The loan to value ratio (LVR) is calculated based on your age and the property’s value.

Why does Westpac charge an early termination fee for home loans?

The Westpac home loan early termination fee or break cost is applicable if you have a fixed rate home loan and repay part of or the whole outstanding amount before the fixed period ends. If you’re switching between products before the fixed period ends, you’ll pay a switching break cost and an administrative fee. 

The Westpac home loan early termination fee may not apply if you repay an amount below the prepayment threshold. The prepayment threshold is the amount Westpac allows you to repay during the fixed period outside your regular repayments.

Westpac charges this fee because when you take out a home loan, the bank borrows the funds with wholesale rates available to banks and lenders. Westpac will then work out your interest rate based on you making regular repayments for a fixed period. If you repay before this period ends, the lender may incur a loss if there is any change in the wholesale rate of interest.

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.