Finance Update March 2024

Happy autumn! Hope you’re enjoying the falling leaves and the return of the football codes. Here’s what’s making news in finance and property:

  • Investor activity rises
  • Stamp duty costs rising
  • Conditions improving for FHBs
  • New home purchases up 5.3%

The latest tranche of home loans data from the banking regulator, APRA, has revealed three interesting shifts in the mortgage market over the past year.

First, there’s been a meaningful rise in investor activity during that time. During the December 2022 quarter, 30.2% of new loans were for investment purposes; but in the December 2023 quarter, the share increased to 32.4%. There’s been a corresponding decline in owner-occupier activity, which fell from 67.7% to 65.6%.Second, there’s been a sharp decline in borrowing with a debt-to-income of 6 or greater (e.g. someone on a $100,000 salary borrowing $600,000 or more). This fell from a 11.0% share of new loans in December 2022 to only 5.6% in December 2023.

Finally, the share of borrowing with a loan-to-value ratio of 80% or higher has actually increased, from 30.6% of new loans in December 2022 to 31.4% in December 2023.

Whether you’re an owner-occupier or investor, I can advise you about your borrowing power and help you get a great home loan.

New research by the e61 Institute and PropTrack has revealed there’s been a significant increase in relative stamp duty costs in recent decades.

Back in the early 1980s, buyers in Sydney, Melbourne, Brisbane and Adelaide needed to do about one month’s work to cover the cost of stamp duty, assuming they purchased a median-priced property and earned the average post-tax income. But as of 2023, it takes about six months’ work in Sydney and Melbourne, five in Adelaide and four in Brisbane.

Last year, almost all buyers faced a stamp duty rate equivalent to at least 3% of the sale price, while, in the early 1990s, almost all buyers paid less than this amount.

PropTrack senior economist Angus Moore said the two reasons stamp duty had become relatively more expensive were because property prices had grown faster than incomes and state governments had allowed ‘bracket creep’ to occur with stamp duty tax brackets.

“Bracket creep happens, firstly, because the price brackets have been updated only infrequently and, secondly, because home prices have grown, often substantially, since the brackets were last set,” he said.

“That means more properties have moved up the brackets and are now paying higher rates of stamp duty.”

First home buyers are able to enter the market a little faster than a year ago, new research has found.

At a national level in February, it took 4 years 9 months for a first home buyer to save a 20% deposit on an entry-level house, compared to 4 years 11 months the year before. For an entry-level unit, the time to save a deposit was 3 years 5 months – one month faster than the year before.

Domain classified an entry-level property as one ranked at the 25th price percentile (with the 1st percentile being the cheapest home and the 100th being the dearest). Domain’s calculations assumed that first home buyers were a couple aged between 25-34, earning an average salary for someone their age.

The reason that first home buyers are now able to save a deposit more quickly is not because property prices have fallen over the past year – because they’ve actually increased. Rather, it’s because earnings power (through a combination of higher wages and higher savings account interest rates) has grown faster than property prices.

Do You Know What You Can Borrow? Let’s Explore Your Homeownership Potential

Are you caught in the exciting whirlwind of envisioning your dream home? Whether it’s a cozy suburban house or a chic urban apartment, the journey towards homeownership begins with understanding what you can borrow. At Bayland Finance, we’re here to shed light on this crucial aspect of your journey and empower you to make informed decisions. Let’s delve into five key points that play a pivotal role in determining what you can borrow.

1. Deposit: The Starting Point

Your deposit is often the initial stepping stone in your homeownership journey. Lenders typically require a deposit as a percentage of the property’s purchase price. The larger your deposit, the more favorable your borrowing position can be. Assessing your savings and understanding how much you can comfortably contribute sets the stage for a successful home loan application.

2. Income: Your Financial Foundation

Your income forms the bedrock of your borrowing capacity. Lenders consider your regular income, whether from employment, investments, or other sources, to gauge your ability to repay the loan. Understanding your income streams and stability is essential to determining the amount you can borrow comfortably.

3. Assets: Beyond Income

Assets encompass more than just your income. This category includes savings, investments, and valuable possessions. Lenders assess your assets to gauge your overall financial stability and your ability to manage potential financial fluctuations.

4. Liabilities: Balancing Act

Liabilities refer to your existing financial commitments, such as credit card debt, personal loans, and ongoing expenses. Lenders assess these to ensure that you have sufficient capacity to manage new loan repayments alongside your existing obligations. A clear picture of your liabilities is crucial in determining your borrowing potential.

5. Expenses: Realistic Budgeting

Your day-to-day expenses play a significant role in your borrowing capacity. Lenders take into account your living expenses, from groceries to utility bills, to assess how much you can comfortably afford to allocate towards loan repayments. An honest evaluation of your expenses helps you set a realistic budget for your potential mortgage.

Bayland Finance: Your Homeownership Partners

Understanding what you can borrow is a pivotal step in your homeownership journey, and at Bayland Finance, we’re here to guide you through every detail. Our team of experts is well-versed in the intricacies of the lending landscape, and we’re committed to helping you uncover your borrowing potential. By considering key factors such as your deposit, income, assets, liabilities, and expenses, we can provide you with a clear estimate of what you can comfortably borrow.

Are you ready to take the next step towards homeownership? We invite you to reach out to us at Bayland Finance. Our experts specialize in understanding the offerings of different lenders and tailoring solutions that align with your unique financial situation. Let us be your trusted advisors on the path to homeownership. Contact us today to embark on your journey with confidence. Your dream home awaits, and we’re here to help you make it a reality.


Unlocking First Home Buyer Incentives: Your Pathway to Affordable Homeownership

Are you a first-time home buyer dreaming of stepping into the realm of homeownership? Exciting opportunities await you, as the Australian government has introduced a range of incentives tailored to make your journey smoother and more affordable. At Bayland Finance, we’re committed to helping you understand and leverage these incentives, guiding you toward the home of your dreams. Let’s explore the enticing first home buyer incentives available to you.

Government Schemes: Home Guarantee Scheme

Introducing the Home Guarantee Scheme, a game-changing initiative that empowers first home buyers with the ability to purchase a property with as little as a 5% deposit, all without incurring the cost of lenders mortgage insurance (LMI). This scheme, previously exclusive to singles and couples, has now expanded to encompass friends and family groups who have not owned a property in the past 10 years. Even permanent residents are eligible to participate, making the dream of homeownership accessible to a wider range of aspiring homeowners.

While the opportunity is enticing, it’s important to note that some income eligibility criteria apply. Our team of lending experts at Bayland Finance is here to guide you through the details, ensuring you have a clear understanding of how this scheme aligns with your financial situation.

Stamp Duty Exemption and Concession

In Victoria, the state government is offering a generous incentive to help alleviate the financial burden of stamp duty. First home buyers can benefit from a complete stamp duty exemption on properties valued up to $600,000. And the good news doesn’t stop there – for properties valued between $600,001 and $750,000, a partial stamp duty concession is available. This incentive has the potential to save you thousands of dollars, leaving more room in your budget for other important aspects of your home buying journey. Note that different concessions apply for each state.

First Home Owner Grant

For those opting for brand new homes or constructions, the First Home Owner Grant (FHOG) is an enticing opportunity. This grant provides a one-off payment to eligible first home buyers, further enhancing your ability to make your homeownership dreams a reality. Whether you’re envisioning a brand new abode or looking to build your dream home from the ground up, the FHOG is there to provide you with valuable financial support.

Bayland Finance: Your Guiding Light

At Bayland Finance, we understand that navigating the world of home financing and government incentives can be overwhelming. That’s why we’re here to be your guiding light through every step of the process. Our team of lending experts is well-versed in the intricacies of these incentives and schemes, and we’re dedicated to helping you unlock their full potential.

Our mission is simple: we’re here to answer your questions, provide clear explanations, and tailor solutions to match your individual needs. With years of experience in the industry, our expertise extends beyond financial guidance – it’s about providing you with the peace of mind and confidence you need as you embark on this exciting journey.

In Conclusion

The path to first-time homeownership in Australia has never been more inviting, thanks to a range of government incentives designed to ease your financial burden. From the Home Guarantee Scheme’s low deposit requirements to stamp duty exemptions and the First Home Owner Grant, these opportunities are designed to turn your homeownership dreams into reality.

And at Bayland Finance, we’re not just here to witness your journey – we’re here to guide you through it. Our team of lending experts is committed to providing you with the knowledge and support you need to make informed decisions that align with your financial goals. When you’re ready to take the first step towards affordable homeownership, reach out to us at Bayland Finance. Your dream home is waiting, and we’re here to help you make it a reality.

7 Reasons to use a Mortgage Broker

Your Financial Compass, Without the Price Tag: We’re a Free Service

Are you considering taking the big step towards homeownership? Or perhaps you’re contemplating a strategic investment in the property market?

Either way, navigating the labyrinth of home loans, interest rates, and financial jargon can be a daunting task. This is where mortgage brokers come in – your trusted allies in the world of property finance. With over 70% of loans now being submitted through mortgage brokers, it’s clear that they’re not just a trend, but a strategic advantage. Let’s delve into why using a mortgage broker can be your key to unlocking a seamless and customised home financing journey.

At Bayland Finance, we believe that everyone deserves a secure financial future.
Our team of lending specialists are dedicated to helping you every step of the way – from first home buyers to those looking to buy their dream home, or build their investment property portfolio.

With our personalised approach and commitment to customer service, we can help you navigate the complex world of lending and find the best solutions to achieve your future goals.

1. We Educate and Advise

Imagine having a personal guide through the intricate maze of home loan options, policies, and lenders. Mortgage brokers are exactly that – experts in the field who specialise in connecting you with the most suitable loan options. They have an in-depth understanding of the lending landscape and stay updated on the latest market trends. This wealth of knowledge is invaluable in helping you make informed decisions that align with your financial goals.

2. Tailored Solutions, Personalised Service

No two individuals have the same financial situation or aspirations. A mortgage broker recognises this and tailors solutions to match your unique needs. They take the time to understand your financial position, future plans, and preferences, and then match you with loans that fit like a glove. This personalised service ensures that you’re not just settling for a loan, but embracing a financial solution that complements your lifestyle.

3. Unbiased Advice

Mortgage brokers are not affiliated with any specific lender, which means their advice is unbiased and driven solely by your best interests. They act as intermediaries between you and the lenders, negotiating terms and rates on your behalf. This transparency ensures that you’re presented with a range of options and can make an educated choice that aligns with your financial wellbeing.

4. Saves You Time and Effort

The search for the perfect home loan can be time-consuming and overwhelming. Mortgage brokers simplify the process by doing the legwork for you. They compare loan options, negotiate rates, and manage paperwork, saving you precious time and sparing you from the stress of dealing with banks and lenders directly.

5. Maximising Your Borrowing Capacity

One of the crucial aspects of securing a home loan is understanding your borrowing capacity. Mortgage brokers have the expertise to evaluate your financial situation and help you determine how much you can borrow. This enables you to explore homes that might have seemed out of reach, ultimately bringing you closer to the house of your dreams.

6. Access to a Wide Network

Mortgage brokers have access to a broad network of lenders, including those that may not be easily accessible to the general public. This means you can explore a diverse range of loan products, interest rates, and terms, increasing your chances of finding a loan that aligns with your financial goals.

7. Smooth and Efficient Process

From the initial consultation to the final settlement, mortgage brokers streamline the loan application process. They are well-versed in the documentation requirements and can guide you through each step, ensuring that nothing is missed. This efficient handling minimises the chances of delays and roadblocks along the way.

Why Choose Bayland Finance as your Mortgage Broker?

When it comes to selecting a mortgage broker, experience and reputation matter. Bayland Finance boasts over 16 years of expertise in the mortgage broking arena, positioning them as industry leaders.

Their commitment to exceptional customer service and tailored solutions has earned them recognition as the MFAA mortgage broker of the year winner for the regional VIC/TAS area. This accolade is a testament to their dedication to helping clients achieve their property finance goals with a personal touch.

Navigating the complex world of home financing can be made simpler, smoother, and more rewarding with the assistance of a mortgage broker. These experts offer not just financial advice, but a partnership that is committed to your financial success. With a vast network of lenders, personalised service, and an unwavering dedication to your needs, mortgage brokers like Bayland Finance are the bridge between you and your dream home. So, why not embrace their expertise and embark on your home financing journey with confidence? Your financial future deserves nothing less.