Boothy Bites Episode 8 - Predicting December Rates | Products and Offers | Market & Property Updates

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00:00:00:00 - 00:00:08:26
[Jackie] Hi, everyone. And welcome to Boothy’s Bites for November. Boothy, what? We're already at November. What is going on?

00:00:08:31 - 00:00:16:48
[Chris] Yeah I know it's getting too close to Christmas, isn't it? Yeah. Pretty amazing. Well, what a whirlwind of a year. Anyway, thanks for checking in today.

00:00:16:53 - 00:00:25:25
[Jackie] Thanks for having me. And speaking of a whirlwind, let's jump straight in with the RBA. What have they been up to? What's their well-being?

00:00:25:30 - 00:00:42:41
[Chris] Yeah, so a little bit disappointing for people who borrowed money and also the interest rates did go up. I mean, we kind of talked about it a little bit last month. We've had some pressure with certainly some of the fuel costs in the marketplace. And, you know, some of the things have been sort of keeping inflation a little bit higher than the Reserve Bank of Australia wanted.

00:00:42:45 - 00:01:02:49
[Chris] And again, you know, the rhetoric has always been this year to try really cool inflation. So Michelle Bullock really had no choice but to sort of make those changes. I think there was a lot of deliberation about, you know, when they should hike the interest rate, should it be now or should we wait and just see. But I think in simple terms for me is if they increase now, I think they won't go.

00:01:02:49 - 00:01:18:18
[Chris] My call is there'll be no change in December. And what that means then is we've got a couple of months break with the Reserve Bank. So we don't come back until February anyway. So I think they'd rather do it now, sort of see how that sort of pieces through the Christmas season and then revisit the numbers back in February when we get there.

00:01:18:18 - 00:01:28:37
[Chris] So unfortunately, we cut the quarter percent, which, you know, does impact interest rates going up by a quarter percent as well. But yeah, it's interesting times. I do think this should be the last one in the cycle, though. That's my gut feel.

00:01:28:37 - 00:01:41:16
[Jackie] Your prediction, with fingers crossed, are correct. And everyone can have a bit of a laugh at those couple of months, so fingers crossed! And so what about home loans? What's happening on that front at the moment?

00:01:41:27 - 00:01:59:33
[Chris] Yes, so that means it's becoming a lot more challenging for borrowers or the cost or affordability piece around. You know, applying for new finance has been very, very difficult for a lot of people. So, yeah, it's tough. The refinance market has probably cooled down a lot. It's certainly... there's no cashbacks really left in the market.

00:01:59:33 - 00:02:26:52
[Chris] So that ability and incentive to move has really died down to pretty much nothing. So you know it is a quite a market that we are getting a lot of first home buyers looking to buy their first place. I think you know with the increasing in the difficulty in finding accommodation. But the second thing about that, affordability of renting accommodation, I think that's pushing a few young people or younger people to try and get into the property market on that first property.

00:02:26:52 - 00:02:46:03
[Chris] Yeah, we are seeing a lot of pre approvals and people trying to push in to try and take advantage of the first homeowners grant, the first time the deposit scheme and those schemes as well. So we've been busy doing that. What else would we be doing. The other thing we're really focusing on for a lot of our financial planning clients is really getting cash and budgeting back in the correct structures.

00:02:46:08 - 00:03:04:53
[Chris] And what I mean by that, a lot of our clients who potentially, you know, they've got an investment property, they own their own home, their investment property repayments went to principal and interest. And you know, really now what we're trying to do is sort of restate those loans into interest only and then so they can concentrate on paying principal and interest on their own home.

00:03:05:00 - 00:03:27:21
[Chris] We see obviously from a tax perspective there's a benefit, but when we're sort of 2%, the impact of P&I on that loan was a little bit less. Today though it's obviously a lot harder for clients to manage both. So yeah, we're seeing a bit of that. So cash flow budgeting is one thing, a fair bit of first home buyers via markets and that sort of that's what we've got right now with the kind of work we're doing through the network as well.

00:03:27:25 - 00:03:36:55
[Jackie] Not bad. Still a bit of work around for the team to get through. And so what about the offers that we have on the table at the moment for these home loans?

00:03:37:06 - 00:03:55:39
[Chris] Yeah. So we'll just wait for the new interest rates to come into place of a quarter percent increase. I think pretty much everyone will pass that full quarter percent on right now. Some of the specials that we are working with: St George Bank have had some really heavily discounted interest rates. So, you know, we've been we've been applying for finance through St George's Bank quite regularly.

00:03:55:51 - 00:04:16:08
[Chris] You know, they've been great for large loan amounts and low loan to value ratio loans. They've got some heavily discounted rates which, you know, sort of market leading. A couple of other niches out there: Firstmac, they’re based in Queensland, and they're supporting owner occupiers and investors with some very cheap rates as well. And in fact their investment rates are pretty amazing.

00:04:16:08 - 00:04:36:05
[Chris] So yeah, those guys as well. And then lastly, Bank of Australia, they've got some cheap rates. They’re down sort of that 5.98% principal and interest or interest only variable as well. So yeah, there's some good offers there. I think really my sort of call out for people who are looking at their interest rates, if their own home interest rate is more than 6%...

00:04:36:10 - 00:05:00:42
[Chris] ...they should reach out to a broker and just have a conversation just to get a health check. And if their investment loans are above 6.2%, well, again, they should reach out to their mortgage broker and do a review as well. If they do believe or if the client does believe, they've got lots and lots of equity in their property, which has changed over the last 12, 18 months, we'll again do a review because pricing is dictated by loan to value ratio right now as well.

00:05:00:46 - 00:05:03:43
[Chris] So yes, some really good specials...and it's good.

00:05:03:50 - 00:05:06:43
[Jackie] So all in all, get in touch with your broker.

00:05:06:43 - 00:05:08:55
[Chris] Get in touch. That's it. This is time to do it.

00:05:09:00 - 00:05:15:30
[Chris] And so I heard that you caught up with Heartland Seniors recently. So what have they got on the table? What's on offer there?

00:05:15:36 - 00:05:30:04
[Chris] I mean, that's a really good sort of segue. I mean, most of the time we’re supporting sort of first home buyers. And, you know, wealth accumulates is something that's sort of the demographics that we're looking at. But for someone who's a little bit more mature, probably retired, I mean, you've got to be retired to use this product.

00:05:30:09 - 00:05:59:36
[Chris] There is a product called a Reverse Mortgage. Now, it's not for everyone and it's certainly not something, you know, we provide finance for and don't provide advice around that finance as well. But if you've got like an elderly person who's in a home with lots and lots of equity and they're looking for funds for lifestyle or to renovate their own home or just to maybe even sort of extend loans into retirement. The reverse mortgages is a unique product and Heartland Seniors offers a great product there.

00:05:59:36 - 00:06:16:14
[Chris] They do also aged care. If you've got family members moving into from their own home to aged care as well, they can provide that sort of bridging finance to get into aged care as well. So yeah, reverse mortgage is quite a specialized product. Heartland Seniors is going to, you know, a really good sort of lens and feel around that product.

00:06:16:19 - 00:06:30:34
[Chris] And again, if you will, if you're a mature client... I've got a dog trying to get outside, apologies. He's opening the door right next to me. I'm thinking, what's going on? Someone's breaking in the house and there's a dog breaking out. But if you if you're looking to...

00:06:30:39 - 00:06:31:39
[Laughter]

00:06:31:44 - 00:06:48:32
[Chris] If you're looking to get finance, you know, if your elderly parents are looking for finance, you know, reach out and talk to us. It's certainly for if your elderly parents are having to make provisions to move into aged care, again a great service and a great sort of niche product as well that by Heartland Seniors.

00:06:48:32 - 00:06:50:34
[Chris] So, a little bit about reverse mortgages.

00:06:50:40 - 00:06:57:41
[Jackie] Awesome. And so now moving on to self-managed super funds, what are we seeing in the way of refinancing and purchases.

00:06:57:45 - 00:07:20:09
[Chris] Yeah so again, so similarly it's a niche product. Interestingly, twofold: number one, the interest rates to refinance right now. If you are an old bank client, sort of St George Bank, Macquarie Bank, AMP Bank and other the major banks who aren't providing the product anymore, it's definitely worth a review to refinance and look at whether there's going to be a benefit; we’re looking to save for the 2% interest rates on those products.

00:07:20:09 - 00:07:47:26
[Chris] But on the flip side of that, we do have a lot of clients right now who potentially don't feel it's affordable in their own name to actually gear up and borrow and invest in property. However, they've got quite a large and mature superannuation balance and they feel now's the appropriate time to sort of reach out, get some advice as well, whether, you know, the fund is eligible to actually borrow and can they create that structure. Secondly, is it appropriate to buy property and what's sort of affordability to buy a property in a superfund?

00:07:47:31 - 00:08:08:57
[Chris] Obviously from a servicing perspective, it's down to the rent income, the contributions of the super fund to actually quarantine the serviceability. So you're not going to impact your personal lifestyle, income and expenses by actually gearing in super, which is attractive to a lot of people right now who sort of just want to get through this tougher time in their personal life, but still, you know, want to build wealth through property.

00:08:09:01 - 00:08:15:20
[Jackie] Yeah, awesome. And so now moving on to my favorite kind of Boothy’s Bites: your property update!

00:08:15:25 - 00:08:37:28
[Chris] Well I think have been quite right again so the last... it just seemed there's a lot more property on the market which is great; springtime is always that time, but with that extra property on the market, the clearance rates haven't been as great. Having said that, though, I think it's definitely in pockets. So what I mean by that is the first homeowners space or that sort of affordable investor space being up to sort of that one and a half million dollars.

00:08:37:33 - 00:08:57:19
[Chris] It's been hotly contested. There's no doubt about it. The options are busy. Lots of people go through these open homes and certainly they're not spending too long on the marketplace for that sort of price point. But I think what we're starting to see now is that sort of $2 million plus. that sort of mid-range family home in sort of Sydney, Melbourne, Brisbane; that market is certainly weakened again.

00:08:57:28 - 00:09:16:37
[Chris] Affordability for most has decreased. So therefore the ability to jump into that market, there's less, I suppose, eligibility by borrowers. So yeah, that sort of I think we've got a kind of two markets running parallel right now. And I do expect next year that the high end will start to cull a bit further as well, especially with the volumes...

00:09:16:49 - 00:09:21:42
[Chris] ...no, sorry, the ability to borrow right now is certainly a lot tougher for most. Yeah.

00:09:21:46 - 00:09:26:43
[Jackie] Definitely. And our last little bit, the update with Lydian HQ.

00:09:26:45 - 00:09:42:32
[Chris] Yeah, well we've been, we've been very, very busy this year, so we've been recruiting lots of new brokers to the club, which has been cool... and yeah, look, we've, we've got a little sort of niche space in the Gold Coast now. So we've got Jamie Peach or James Peach or Peachy has joined us up in the Gold Coast now.

00:09:42:32 - 00:10:01:58
[Chris] So yeah, it's been really nice, you know, the last four or five months where we've had sort of five new brokers join the team has been great because now we don't generally have that national footprint of brokers. We've been busy getting them onboarded, getting them sort of sets up, plugging them into some of the networks and the partnerships that we've got and also them going out to market and building their bases.

00:10:01:58 - 00:10:18:28
[Chris] But yeah, we start 2024 with a pretty big team. So it's is, which is very exciting. So yeah, so that's been, it's been great. I tell you I'm knackered though, but anyway, looking forward to Christmas.

00:10:18:33 - 00:10:22:01
[Jackie] You are only six weeks away. Yeah.

00:10:22:01 - 00:10:22:31
[Chris] That's it, yeah.

00:10:22:31 - 00:10:25:41
[Jackie] Yeah, when you’re ...

00:10:25:46 - 00:10:45:01
[Chris] We're on the home run. But no, it's been great and it's so nice to, to support, you know, people starting their businesses or coming over to, you know, enhance the services for their businesses or aspirations, just wanting to grow their businesses. So it's really good that we're having these conversations. And I think certainly the partnership side of the businesses has been really well supported.

00:10:45:01 - 00:11:05:40
[Chris] We've had, you know, a lot of work we've been doing for H&R Block branches, which has been great. And also a lot of the financial partners that have been speaking about offering the service to their clients are now coming online. They're starting to engage and sort of talk about lending and property as well. So yeah, hopefully that sort of financial advice around property lending next year is going to be a big part of Lydian too.

00:11:05:40 - 00:11:08:12
[Chris] So yeah, fingers crossed again.

00:11:08:16 - 00:11:20:29
[Jackie] Yeah, bring it on! Bigger and better 2024. Well Boothy, thank you so much for your time. And thank you to everyone who's watching this. And I guess we'll see everyone for the last one for 2023!

00:11:20:29 - 00:11:23:06
[Chris] Looking forward to Christmas! See you later, guys! Thanks again, Jackie!

00:11:23:11 - 00:11:29:41
[Jackie] Thanks, Boothy. Bye.