Boothy Bites Episode 10 - Hit the ground running in 2024

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00:00:00:00 - 00:00:07:18
[Jackie] Hi everyone! Hi, Boothy. Can you believe we're back filming our first Boothy’s Bites for 2024?

00:00:07:22 - 00:00:23:24
[Boothy] I know. Happy New Year, everybody. I feel exhausted already. It's only been two weeks here, and my list of things to do has got pretty long. But I think we've just spoken about some better things, you know, about where we're going camping and having holidays this year. They're the better things to do lists. Anyway, cool. And how are you, Jackie? You well?

00:00:23:25 - 00:00:40:42
[Jackie] Yeah, I'm good, thank you. I had such a good time away at my parents place down in Woolgoolga and then down on the Gold Coast for New Year's. So yeah, I'm similar to you: that to do list is definitely growing but hey let's you know. (laughs) What did you get out of the holidays?

00:00:40:42 - 00:00:55:10
[Chris] Yeah, so I was very lucky. So my kids are a little bit older now, so they don't want to hang around with dad as much, but it's cool. So you have a bit of downtime. Family Christmas. I cook Christmas turkey and have some Yorkshire puddings for the family, which was great. And then a bit of work, and my girls are working through the break.

00:00:55:10 - 00:01:08:16
[Chris] So I did a bit of work on the party boat as well. So that's hence why I look like a little bit tanned and burnt. So I'll probably need to get better at my factor 50 application and then got away for a bit of a sail with a couple of mates, which was beautiful. So ticked some nice boxes.

00:01:08:16 - 00:01:18:37
[Chris] And Kelly, my wife, she managed to go to the Gold Coast without me but with my boy Will, and she had a great holiday there too. So yeah. Now look really, really nice and excited to be back for 2024 too, for sure.

00:01:18:39 - 00:01:27:36
[Jackie] Yeah. Awesome. Okay, well, let's jump in the full 2024, starting with what's the latest news within the walls of the Reserve Bank of Australia?

00:01:27:50 - 00:01:45:25
[Chris] Yeah, well, so I mean, they haven't had a meeting for a couple of months, which is, which has been great. And, and we felt, you know, last year at the end of last year that the sentiment with regards interest rates was, was sort of slowing for increasing interest rates. You know, we had that sort of late call last year to increase by 25 basis points and inflation.

00:01:45:25 - 00:02:03:07
[Chris] And that inflation data has been sort of closely watched really nicely. Only last week we got the inflation data in, I think it was for November. And again, that came in lower than expected, which was down at 4.2%. The RBA looking for inflation to between that sort of two and 3%, so there's still a bit of work to be done.

00:02:03:07 - 00:02:20:36
[Chris] But certainly with the increases that we've had last year and that sort of the slowdown of the prices that we're seeing right now, I think we should drift by midyear pretty close to that sort of top end of that band, that sort of 3% which is great. So, you know, we meet on, I think the 5th of February...

00:02:20:36 - 00:02:43:01
[Chris] ...the next one is which is cool. So, you know, we are expecting and the economists predicting that no rate change there, which is good. Again, that sentiment seemingly is you know, the next meeting will be March. And I believe that that should be it then. And then we take a break between them. April. So between there's actually this year there's a couple of meetings which that they're stopping doing.

00:02:43:01 - 00:03:04:26
[Chris] So certainly between April there's nothing and then May June they catch up again. So really for me, the sentiment I feel is that we're probably right at the top end of this cycle now. I don't think we're going to see interest rates decrease any anytime soon, but certainly by the second half of this year, we'll have to start looking at the data a little bit more closely to see, you know, what the next cycle of interest rates could be.

00:03:04:39 - 00:03:31:06
[Chris] And, you know, a lot of time in these situations, you know, the RBA has tightened up very quickly and actually move those interest rates up extremely quickly. Maybe they have to sort of taper that off a little bit and give us a little bit back. Interestingly, though, we had Albanese came out yesterday and has reaffirmed that the tax cuts are going to be in place for the tax year 2024 and 5, and that obviously puts a bit of cash back in the system for those lower tax rates and lower tax brackets.

00:03:31:06 - 00:03:50:49
[Chris] So again, that is actually putting cash in the system, whereas the Reserve Bank taking it out. And we again, we sort of have to figure out what that impacts on spending and things will be as well because obviously that creates the inflation. So long winded, we're on hold, maybe have two breaks and yeah, we'll dig deeper in the next couple of months, yeah?

00:03:51:10 - 00:03:56:03
[Jackie] Sounds good. And so what are some of your favorite lender offers at the moment?

00:03:56:07 - 00:04:15:54
[Chris] Yeah. So I think with some of our larger lenders, they don't sort of advertise their specials. So, you know, myself and the team here at Lydian are fighting really hard with discretionary discounts for our clients at the large banks. I'm talking now CBA, Westpac, ANZ and NAB and they're great sort of groups. So we are getting some good discretionary rates.

00:04:16:01 - 00:04:34:19
[Chris] Typically the large banks want larger deals, lower loan to value ratio, so their pricing does really favorably. Some of the more smaller lenders. We've got Heritage Bank, which have got a great variable P&I for homeowners at 5.99%, which is really, really cheap money you know that's a great rate and I'm really attracting lots of people to them.

00:04:34:33 - 00:04:51:48
[Chris] And I suppose then we've got a swag of lenders in that 6.09% owner up. So we've got Adelaide Bank, Ubank, Bank of Queensland, Firstmac all trying to attract that sort of low P&I own home. Again, it's for a low loan to value ratio loans as well. So 6.09% is sort of the median. For the investors...

00:04:52:01 - 00:05:10:17
[Chris] ...we've got Heritage again there, P&I at 6.24%, which is a pretty cool rate. And yeah, so interest only rates that typically a little bit higher and St George Bank who've got a 6.60 interest only rate that was a special we just got before. So again if it's a discretionary request we're getting some pretty good rates there for interest only.

00:05:10:17 - 00:05:27:38
[Chris] So, and what I would say is we're trying to get people back into that sort of budgeting and housekeeping of managing their finance. So making sure your investment debt is interest only, making sure your home loan, you know, we're concentrating on repaying that, getting some redraw, getting ahead of the repayments. They're using, offset, etc.. So that's our strategy.

00:05:27:43 - 00:05:35:54
[Jackie] And so speaking of the housekeeping of financials, how is Lydian helping our clients kickstart their New Year?

00:05:35:58 - 00:05:50:40
[Chris] Yeah. So I think importantly, we've all got to have a things to do list than as much as it probably upsets people opening the financial side of things because you go, okay, it's been really hard and I don't really want to think about it after I've been having such a good time on holiday. A lot of our clients are coming back and we're doing reviews.

00:05:50:40 - 00:06:05:52
[Chris] So again, simple things. Let's make sure that you're getting a great rate at your existing lender. Okay, So we'll go into bat for you there and fight for a better rate for you. You know, we are looking at clients who now are coming out of that sort of that difficult period last year where you really weren't sure about, you know, where interest rates are going.

00:06:05:54 - 00:06:26:29
[Chris] We have a bit more confidence now. We probably had some time to sort of talk about what our personal wealth creation plans are for 2024. So clients are coming to us and going “Right, I want to know with certainty, you know, what can I borrow to buy another property, whether it's my first home or an investment property”. So reviewing valuations of property, making sure you know that we've got an affordable lender as well.

00:06:26:39 - 00:06:47:45
[Chris] I've got a bit of work because there's a massive disparity in affordability with all of our lenders right now. So with what you know what, you can borrow one lender is can be about 20% or 25% different at other lenders. So really working hard with affordability. Other one, you know, a few people spend a little bit of money on the credit cards lately, you know, holidays have caught up on a credit card, some dirty spending for, you know, big gifts and things like that.

00:06:47:45 - 00:07:07:12
[Chris] So we were doing some debt consolidation. So getting rid of those Citibank or other credit cards at 20% and putting you into the home loan at sort of 6% and and getting back on track. Same with car loans as well, sort of you know, people get caught up with personal loans for vehicles and things like that. So a bit of debt consolidation getting again that budgeting and repayments back on track as well.

00:07:07:12 - 00:07:16:57
[Chris] So yeah, check in, have a review meeting you know whatever your plans for 2024 are we can talk you through it and then we've got some things to do as well with that you know with next steps. Yeah.

00:07:17:07 - 00:07:22:03
[Jackie] Yep. Sounds good. I might have to give you guys a call. (laughs)

00:07:22:08 - 00:07:26:29
[Chris] Oh, you’re not speaking to me. (laughs)

00:07:26:34 - 00:07:31:55
[Jackie] And I'm hearing a lot about self-managed super fund lending at the moment. Can you tell us more about that?

00:07:32:00 - 00:07:47:45
[Chris] Yeah, so and that's an interesting one. So again, as interest rates have risen over the last year and a half and sort of budgeting and expenses for your personal household have increased, you know, because of the weight of the, you know, the repayments for that debt. You know, people are still aspirational. They still want to invest in property.

00:07:47:45 - 00:08:09:41
[Chris] Right? But it may well not be as affordable in your personal name to buy that investment property. However, you know, you've got a good job with the contributions which are going into superannuation on a monthly basis or regular basis with your wage. And secondly, you might have built up quite a large portfolio and super. Property is an asset classes, you know, is a lot of people are more comfortable in that rather than shares and funds and things like that.

00:08:09:41 - 00:08:26:42
[Chris] So aspirational people making a decision this year who are going “Right, well I'm a bit tight to borrow in my personal name where I don't want to do that and stress my personal finances but I've got a large pool of funds in my super; I want to diversify some of the investments I've got away from funds and shares into direct property”.

00:08:26:42 - 00:08:58:08
[Chris] Self-managed super funds is a good way to do that. It's not for everyone. There's a lot of sort of rigor around how you borrow on that and we'll talk to a specialist broker and also we can get you advice around to doing that. But in simple terms, your contribution to your super, the rent income that you get from the property and the lower loan to value ratio borrowing that you typically do in that environment, the structure of buying property in this manner can actually, you know, get you an affordable assets which will repay the debt off over sort of 15 or 20 years, which wouldn't be unreasonable.

00:08:58:21 - 00:09:16:53
[Chris] And it's just another way to invest in property. So, you know, again, reach out. It might not be suitable for you right now, but we can plan around, you know, what steps we have to do to actually get you into a lender. But there's lots of lenders who've got that appetite right now. Interest rates are slightly higher. That sort of 7%, maybe seven and a half percent principal and interest.

00:09:16:53 - 00:09:38:45
[Chris] So you do have to pay a bit of a premium for that. But for any people who want to get involved in property in 2024, potentially, we'd like to look at the options between personal name and self-managed super funds. We've got, you know, we've got some specialist brokers in our team who do this very, very well and also give good advice and certainly give you clarity and transparency about taking those next steps as well.

00:09:39:00 - 00:09:43:10
[Chris] So again, it's an option for aspirational accumulators.

00:09:43:10 - 00:09:48:49
[Jackie] Amazing! And so what about a property update? What's the latest there?

00:09:48:54 - 00:10:08:11
[Chris] Yes, well, we've gone through Christmas, so I know the clearance rates and auctions were a little bit down at the end of the year. I'm really keen to see what the listings are going to be over the next couple of months because I think last year people were uncertain about 1.) buying property and 2.) listing their properties because property prices were going up.

00:10:08:24 - 00:10:25:30
[Chris] I think property prices now will probably stabilize a little bit. We've seen that on the sort of higher end of property markets and the clearance rates for those high value properties have been a bit tough. We talked before about sort of that lower end of property up to sort of $1,000,000 that's really attractive to first time buyers with all the benefits.

00:10:25:30 - 00:10:47:00
[Chris] We’ve got that new Queensland benefit come out just recently. I think it's $30,000 of cash for a first buy, which is really a big incentive and a big cash injection to deposit to buy property. So I think that that sort of lower end of purchase price between sort of $500 to $1,000,000 is going to be well-supported and we'll see a bit of an appreciation in that sort of end of the market.

00:10:47:00 - 00:11:05:40
[Chris] So, you know, your lower end apartments I think will appreciate and will continue to do well, the higher end of your sort of two and a half, three, $4 million homes may struggle a bit this year. But just be interested to see what listings come on the market because we've got sort of second, second half of summer coming right now as well.

00:11:05:45 - 00:11:16:48
[Jackie] Yes, sounds good. Stay tuned. And so my last question, what's happening at Lydian HQ? Is everyone behaving themselves now that they're back from holiday?

00:11:16:53 - 00:11:37:55
[Chris] (Laughs) I think so. Well, I mean, we've we've had a couple of we've had a coffee catch up this week with a really unique lender called Vado. So that so that's a private lender. So we've all been doing a bit of learning, everyone's been coming back with all of their plans. So I've had some really good meetings with a lot of the brokers talking about what their business plans are for 2024, how they're going to reach out and help their clients and do reviews.

00:11:38:00 - 00:11:54:23
[Chris] And again, you know, look at repricing and reviews for existing clients, which is really cool. So, you know, we've dusted off back in business. Everyone's back working right now. I'm really excited for this year. We've got no new recruits as yet, but we've got a few people we're actually interviewing and supporting with potentially onboarding with Lydian...

00:11:54:23 - 00:12:14:22
[Chris] ...so that's really exciting. Our operations team are doing great. You know, they've come back and they're doing lots of reviews for the guys. Our marketing team have got plenty of activity for, you know, for the branding and sort of engagement documents for clients. So yeah, everyone's been really, really busy and obviously, you know, Jackie's back, Rocksy's back, the whole gang's back.

00:12:14:22 - 00:12:21:51
[Chris] And Jo Wynn's got a list as long as there are things to do too. So we never really had a break.

00:12:21:55 - 00:12:24:24
[Jackie] We're ready to hit the ground running again.

00:12:24:28 - 00:12:28:53
[Chris] And we've already given out two Lydian trucker caps this year. Whoa!

00:12:28:58 - 00:12:37:01
[Jackie] Can't wait to see those photos. Well, Boothy, thank you so much. Thank you, everyone, for watching. And we'll see you next month.

00:12:37:06 - 00:12:38:48
[Chris] See ya, Jackie! Ciao!

00:12:38:52 - 00:12:44:39
[Jackie] Ta, bye!