As the festive season ends and we dive into a fresh new year, it’s always a great time to review your finances, repay any credit card debt that has resulted from the Christmas festivities, and ensure that 2019 is going to be a financial success. We would like to wish you a happy and prosperous new year ahead in 2019.
With interest rates at record lows, borrowing restrictions continuing to tighten, declining property prices in some key markets and interest only loan restrictions starting to be wound back, it is sure to be an important year for property investors. We’ve outlined our key trends that we see playing out in this calendar year ahead of us.
Smarter loan applications
Given the recent tightening of credit policy amongst most Australian lenders, we have seen a rising need for borrowers to examine their personal financial situation more closely than ever before, repay any bad debts and ensure that they’re positioning themselves well when submitting an application to the lender. The days of walking into a bank branch with an estimate of your salary and expenses and walking out with enough capital to buy your property are certainly gone these days.
Increasing competition amongst lenders
With the Royal Commission focusing largely on the larger end of town, this has created opportunities for second and third tier lenders to seize market share. This is particularly true as the regulator lifts restrictions on interest-only loans and we are likely to see further discounting in the market place. For anybody who has not revisited their interest rate on a variable loan, or worse yet is unsure of what their rate is, this will be an opportune time to start exploring your options with us.
Weak currency a boost for Australian expats
The Australian Dollar (AUD) is currently trading at low levels relative to the US Dollar (USD) and especially the Singapore Dollar (SGD). The last 4 – 5 years have created a 30 – 50% discount against many currencies for overseas investors looking to get into the Australian property market. We expect that the AUD is close to the lows so expect to see Australian expat investors taking advantage of this at current levels.
Changing of the guard in Australia
With an election scheduled in Australia in May of this year (2019), we expect to see the Australian Labor Party take the helm and tinker with some key financial policies which could impact investors. The key focus areas are the removal of negative gearing for properties that are not new, reducing the capital gains tax discount from 50% to 25% for those assets held for more than 12 months, and the removal of the franking tax refunds which are largely benefiting lower income earners and retirees. The overall impact of such changes is not as simple as some might expect, as a removal of franking tax refunds may be a boost for property to provide greater taxable income. It’s important to review your own situation in this regard and explore how the changes could impact you.
Cash is king
In a declining property market where access to credit is more difficult than it has been in some time, those who are sitting on cash and/or those who are still able to access capital in this market will be in a prime position to take advantage of forced sales and mispriced opportunities in the marketplace.
We will be keeping you updated on any key changes throughout the year and key events that may impact you. If you have any questions at all, please feel free to send them through at email@example.com or give us a call on 1800 875 216.
To a happy and prosperous 2019!
LoanSuite Pty Ltd is your lending partner for all of your home loan, investment property, business and commercial financing needs. With our wide range of lending solutions, expertise in financial planning and investment strategies, and extensive experience in working with both Australian residents and Australian expats, we are your partners for your lending needs.
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LoanSuite Pty Ltd is an Authorised Credit Representative (Credit Representative Number – 494608) of My Local Broker (Australian Credit License – 481374). Important Disclaimer: Your complete financial situation will need to be assessed before acceptance of any proposal or product.