19 June 2024
This week we had Simon Orbell of Smartmove Mortgage Advisors provide an update on the current banking and mortgage market. If you need assistance navigating this evolving landscape, don’t hesitate to get in touch with Simon here.
Here is a summary of the latest insights:
Timing of RBA Meetings: New Schedule
The Reserve Bank of Australia (RBA) has adjusted its meeting schedule, now convening eight times a year instead of monthly. Meetings will not occur in January, April, July, or October. This change may influence the timing and frequency of interest rate adjustments, making it essential for borrowers and investors to stay informed.
Outlook for Interest Rates
Economists predict that interest rates may begin to decline in November, with potential reductions ranging between two and four cuts by the end of 2025. However, three significant factors are causing some concern:
– Stickier Inflation: Inflation is not decreasing as swiftly as the RBA desires, which could delay rate cuts.
– Strong Employment Data: Robust employment figures might indicate an overheated economy, influencing the RBA’s decisions.
– Stage 3 Tax Cuts: Set to take effect on 1 July, these cuts could further complicate the economic landscape.
Upcoming Inflation Results
Key inflation data releases are on the horizon, with the next monthly result due on 26 June and the quarterly result on 31 July. These figures will be crucial in shaping the RBA’s monetary policy.
Stage 3 Tax Cuts
Starting 1 July, the stage 3 tax cuts will be implemented. These cuts are expected to increase borrowing capacity, roughly equivalent to two rate drops, potentially boosting borrowing power by up to $100,000, depending on individual financial situations.
Tax table comparison, taxcuts.gov.au website, 2024.
Lenders Mortgage Insurance Waivers
Traditionally, Lender’s Mortgage Insurance (LMI) is required for loans exceeding 80% of the property value, with some exceptions for first home buyers and certain professionals. However, a major big four bank has introduced a groundbreaking policy allowing low-risk borrowers to access up to 95% loans without LMI. This new policy has specific limits for Northern Beaches suburbs:
– Houses: Maximum purchase price of $5,000,000
– Units: Maximum purchase price of $4,000,000
– Manly: Maximum purchase price of $6,000,000
– Palm Beach: Maximum purchase price of $8,000,000
If you think you could benefit from this new policy, don’t hesitate to get in touch so we can discuss in more detail.
Enhancing Borrowing Capacity
Borrowers have numerous strategies at their disposal to enhance borrowing capacity. Engaging with a trusted broker can help explore these options, potentially increasing borrowing power by hundreds of thousands or even over a million dollars depending on a range of factors. It is crucial, however, to ensure that repayments remain manageable and that as a borrower you fully understand the associated pros and cons.
Comprehensive Financial Advice
Lastly, as part of the Viridian Group, Smartmove Mortgage Advisors now extends its expertise beyond mortgages, offering assistance in several financial areas, including:
– Income Protection and Life Insurances
– Superannuation
– Tax Savings
– Asset Protection
– Asset Ownership Structuring
– Retirement Planning
– Estate Planning
Should you require any of these services, you are encouraged to reach out for guidance in these areas, ensuring a holistic approach to their financial well-being.
In this dynamic financial environment, staying informed and seeking expert advice is more crucial than ever. Whether it’s understanding the implications of RBA meetings, maximising borrowing capacity, or exploring broader financial planning, Smartmove Mortgage Advisors are here to help navigate these complexities. Contact Simon on the details below.
Simon Orbell
Mortgage & Finance Advisor, Team Leader & Director
Mobile 0403 403 899 | Email sorbell@smartmove.com.au
Thinking of selling? Get in touch here for a confidential discussion.
