Well, no need to tell you that 2011 was a tumultuous year! Floods, market slides, Euro debt crisis, new Responsible Lending Laws introduced, exit fees abolished, and falling interest rates.
But with all of these events, I must tell you it was the quietest year I have witnessed in the finance industry. Investors were noticeably absent in 2011 as well as First Home Buyers. Many investors (understandably) sat on the sidelines as they watched property and stock market values recede.
So, what’s in store for 2012? Well, already I am seeing green shoots of recovery, spurred on by a combination of falling rates and lower prices. The Xmas / New Year period which is traditionally a quiet period for us was quite buoyant. Clients are telling us that they are planning to get back into the market to take advantage of the current climate.
Interest rates look like they are headed down further, the only question being how much the banks will pass on? Fixed rates are particularly attractive right now with 3 year fixed rates coming in as low as 5.75% p/a (as at 18/01/2012).
Banks are awash with cash due to low borrower activity and are competing hard for your business. The Catch 22 for them though, is the new Responsible Lending Laws. You see, whilst they are very keen to lend, they are now required by law to ask more questions and satisfy themselves that the loan is “not unsuitable” to you. Older borrowers (over 55) are also scrutinised closely, some lenders restrict repayment terms to 15 years now to ensure debts are cleared by retirement .
So with all these changes, it’s now even more important that you use a reputable mortgage advisor to guide you through the maze and the extra paperwork.
We are also seeing a trend towards Self Managed Superannuation Funds (SMSF). There are significant tax benefits available when buying and borrowing for property inside an SMSF. Plus, it’s a great way to diversify your Super rather than have it all sitting in shares and cash.
Ask us for more info if you have been thinking about setting up your own SMSF. We will be hosting a seminar in Brisbane on this topic on Feb 21st so Brisbane clients keep an eye out for the invitation.
The early signs are encouraging for 2012, and Euro debt crisis aside, I expect this year to be far more active than it was in 2011.
Brad Oliver – Lending and Wealth Adviser
We were told now weeks ago on the news at channel 7, Mitsubishi Japan would open a bank
here in Australia and lend money at 1% are they lies as usual ?
Thank you.
It is true that Japanese Banks view Australia as a fertile market for them as Australian mortgages are strong with great returns compared the low returns they earn in Japan.
I don’t think you will see rates as low as 1% as they are competing against local rates here of around 6.50%. They could offer rates in the low 5% range and still rake in a heap of business.
It would certainly provide a lot of competition against the Big 4….bring it on!
Hello Kai,
We wrote an article that talks more about Mitsubishi’s move into Australian finance in November of 2011. You can read it here:
Mitsubishi increases its presence in Australia’s project financing industry
Any other finance related questions, please don’t hesitate to ask us.
Chris Appleyard.