Bad Credit Loans, Bad Credit Home Loans – Bad Credit Finance Australia

It has taken 17 months, but finally the prices of Australian property are beginning to show some weakness. RP data research indicates that prices across the country’s capital cities have dropped by about 0.7% for the first time since 2008.

Experts believe that significant property price downturn is unlikely despite references to an Australian Property Bubble by some overseas economists. Australia is different because of our housing shortage issues. Nevertheless people do react to economic conditions such as movements in interest rates as well as availability of finance.

In the three months to June, all capital cities with the exception of Adelaide have either maintained average prices or experienced minor drops.

ANZ economist David Cannington also said the result was expected given the market had undergone so many months of continuous growth.

Despite the drop in quarterly growth, in annual terms Australian house prices are still 10.5 per cent higher than what they were a year ago.

Reports by RP Data suggest that our property market is quite healthy with basic market fundamentals being in check.

There are no escalating rates of mortgage defaults nor repossessions to suggest that our market is in trouble.

According to research recently completed by Galaxy for The Benevolent Society, 80% of Australians are worried about the lack of adequate infrastructure and affordable housing as a consequence of growing and ageing population.

Most of the people interviewed believed that as Australia’s population over 65 doubles and the number of taxpayers to support them halves, government must take urgent action in order to address the current funding shortfall.

The costs of aging population and the lack of present government strategy to deal with the situation is of concern to all age groups interviewed. The other issue that presents significant concerns is that of affordable housing.

The most financially vulnerable group of Australians are those not far from retirement and living in rental accommodation. Government must have a strategy in place to meet the needs of such people as their number will be growing over the coming years.

Australians have made more mortgage applications during the June quarter than in the March quarter.  According to a report by Veda Advantage, Home Loan applications were up by 2.3 per cent in the June quarter. Whereas consumer demand for unsecured credit has dropped with credit card application numbers being down by 9 percent.

While we have seen a minor increase in demand for mortgages over the past three months, the results over the past 12 months are showing a home loan application drop of 20.3 per cent compared with the June 2009 quarter. The most significant reason for the lower numbers on an annual basis is the changes introduced by government to the First Home Buyer Entitlements. As these dropped off so did the home loan application numbers.

According to a spokes person from Veda Advantage there’s no sign in Australia of  a US-style sub-prime mortgage crisis.

Veda Advantage statistics on bad credit instances including loan defaults, arrears, bankruptcy and the like suggest that the Australian numbers of bad credit loan applications have actually fallen over the last couple of years.

Consumer credit quality has improved. Over the last two years households have adjusted to the tougher economic conditions by being more cautious and people with poor credit history seem to be staying out of the home loan market.

Australian annual inflation figure has come in at only 3.1 per cent, making another interest rate rise next month less likely.

The consumer price Index headline rate for the past June quarter was 0.6 per cent, but the headline rate for the past year was 3.1 per cent,  significantly under the expected rate of 3.4 per cent.

Given the CPI figures there seems to be little reason for the RBA to move on rates next week.  This is especially true given that the country is in the middle of an election campaign.

The cost of living is proving to be very significant to the outcome of the  Australian voter.

The inflation news are very positive for all home owners with a mortgage.

It now looks more likely that RBA will not lift rates until the end of 2010. Of course this will not necessarily prevent other lenders from lifting rates independently of the RBA.

“Certainly home buyers will be happy, politicians will heave a sigh of relief they won’t have to focus on interest rates in this election campaign.

“The government’s probably got more reason to cheer than the Opposition, but that’s the way things go.”

The lower than expected CPI is not such a surprise given the difficult trading conditions being experienced by most retailers.

One of the largest contributors to the headline CPI figure was a 5.9 per cent rise in tobacco and alcohol prices, for an annual rise of 8.7 per cent.

This was the result of the Federal Government’s 25 per cent tobacco excise, introduced earlier in the year, Mr James said.

JP Morgan economist Helen Kevans said both headline and core inflation came in below expectations, “so that’s definitely reducing the chance of an RBA rate hike next week”.

The median market forecast was for the headline CPI to have risen by 1 per cent in the June quarter.

The Australian Bureau of Statistics data shows the CPI rose 3.1 per cent through the year to the June quarter.

The biggest price rises in the quarter were for tobacco, surging 15.4 per cent, hospital and medical services, rising 3.8 per cent, and automotive fuel, up 2.1 per cent.

Credit Union Australia would like to compete with Australia’s largest second tier lenders. According to the Australian Financial Review, CUA is about to expand its marketing budget by 50% and reinvest its retained earnings in organic growth, mergers and systems efficiency in a bid to double its size within five years.

CUA currently holds a mortgage book of $7.8 billion and is intending to grow this over the immediate term.

Growth will not be at the cost of customer service. CUA feels that it has been able to perform well over the past couple of years because of it’s strong credit policies which ensure that the credit union does not offer loans to people who are unable to afford them.  Consequently CUA has maintained very low levels of loan arrears.

Non-bank lenders have suffered significant market share losses during the GFC and many simply went out of business due to lack of funding.

Non bank lenders are slowly regaining market share  as rises in interest rates cause borrowers to look for better deals through refinancing.

According to statistics provided by AFG, refinancing accounted for 39% of new business in June, up from 33% for the previous six months, the highest result the group has seen since July 2008.

In general, consumer confidence in non-bank lenders is returning as they are coming up with loan offers which provided better value than the banks.

It is clear that the Australian first home saver accounts offer has not been taken up by too many First Home Buyers.

The prime minister Julia Gillard believes that despite best intentions the scheme has clearly missed the mark.

Obviously potential home buyers have seen the scheme for what it is…too little and too slow.  By the time any first home buyer manages to save up their deposit with the ’supposed help’ from the government the property prices would have moved further and left them behind.

According to information obtained by the Seven network under Freedom of Information legislation indicated the $1 billion fund intended to help first home buyers has actually hardly been touched.

The $1.2 billion scheme was launched two years ago.  The intention was to encourage saving via first home saver accounts with the government providing matching funding of up to $3740.

At the time that the scheme was established there were predictions of up to 750,000 such accounts being created. Instead only 15,300 took up the offer with only $40 million being spent.

According to the Treasury , the scheme is a failure and requires rethinking.

The National Rental Assistance Scheme is not keeping up with the ever increasing rental costs therefore failing to provide adequate assistance to Low-income tenants trying to afford to keep a roof over their heads.

Over the past 15 years the median weekly rents in capital cities rose 41 per cent.  Whereas the Commonwealth Rent Assistance – an untaxed income supplement paid via Centrelink to low-income renters – has remained essentially unchanged.

Renters are struggling to cover the larger landlord bills from their shrinking allowance.

Singles without children saw among the largest shifts in relative expenses, with the government’s maximum rental assistance sinking from a 21.4 per cent share to 16.4 per cent over the period. Other renters, such as couples with children, saw a similar reduction, the TUV report said.

The falling share of rental assistance shows another aspect on Australia’s housing affordability problems. On the one hand we have a large number of low-income renters struggling to meet weekly payments, on the other we have home prices rising by as much as 20% over the past year in most capital cities. Therefore home ownership is becoming an unattainable dream for many.

The TUV report comes as politicians from the major parties focus on population issues, particularly around asylum seekers and long-term sustainable growth, but have said little about specific housing costs.

Charity organisations have also noted the stress on households, particularly for those on a low income.

”We have seen a significant increase in people seeking assistance from our organisation to help them meet rising rent costs,” said St Vincent de Paul research and policy manager Gavin Dufty.  ”Government need to review and assess the adequacy of the private rental rebate to ensure that it provides real housing assistance to those most in need,” he said.

Australian Mortgage arrears have remained at levels higher than normal as a result of ongoing interest rate increases.

Based on information collated by the Standard & Poor’s latest Mortgage performance Index,there has been a slight drop on home loan arrears underlying Australian prime residential mortgage-backed securities (RMBS).

Standard & Poor’s credit analyst Vera Chaplin said this figure was in stark contrast to historical trends, where arrears tend to decline as the impact of Christmas spending wears off.

Home loans that are greater-than-30 days in arrears have remained at or above 1.44 per cent over the last four months, following a series of interest rate rises since October 2009.

However Home Loan arrears on subprime mortgages have grown by59 basis points to 11.94 per cent in May 2010, from 11.35 per cent in April 2010.

“As the outstanding balances of home loans underlying subprime and nonconforming RMBS amortize, we expect higher volatility in the arrears percentages reported,” Ms Chaplin said.

Both Party leaders Julia Gillard and Tony Abbott understand that the Australian economy looms large as a concern for voters.

Their economic skills will be tested early in the campaign when the Reserve Bank board meets to consider whether or not to lift Australia’s official interest rate.  The next RBA meeting will take place before the elections in early August.

Voters may appear to be interested in a vast range of subjects, however the subject closest to their hearts is their mortgage.

Certainly they will try to shift voter attention away to unemployment however this is unlikely to do the trick. Voters want to know that the new government will prevent their home loan interest rate from going through the roof.

The Prime Minister and Treasurer have ensured the campaign will be about the economy and how their Government’s decisions saw Australia avoid the deep recession that engulfed other major economies.

“[It] was no coincidence that we did get this grand economic statement last week confirming that the budget will be in surplus within three years because one thing that does tend to dog the Labor Party generically is that they are like a party of big spending and big debt,” she said.

Certainly many voters consider issues of schooling, pensions, hospitals and the overall debt position of this country.  But the subject of interest rates is never far behind.

Irrespective of the election outcome, Australia’s mortgage belt where interest rates are hurting.

Despite a lower than average cash rate of 4.5 per cent, the standard variable rate is well above 7 per cent because of independent rate rises by the banks.

The board of the Reserve Bank meets on the third of August, and Annette Beacher of TD Securities warns a mid-campaign rate rise is a possibility.

“I don’t think you can rule out an interest rate adjustment during this election campaign. I think inflation is very much a concern and very much on the RBA’s radar screen,” she explained.

Tony Abbott says a Coalition government will keep rates low, but Annette Beacher thinks that is playing with fire.

“Probably not the wisest choice of words from the Opposition Leader. I always think that anyone in opposition or government should distance themselves from the Reserve Bank of Australia and its policy decisions,” she warned.

“We all know the Reserve Bank is independent and I suggest anyone in government, or aspiring to be in government, should respect that.”

John Howard campaigned in 2004 and 2007 on a theme of keeping interest rates low, despite the Reserve Bank’s independence from government.

Commsec’s Craig James says there is now no doubt that the Reserve Bank will re-assert that independence if required.

“We know last election campaign the Reserve Bank did lift interest rates,” he cautioned.

“That was the first time during an election campaign that interest rates have been increased, so there is a precedent [that has] been set, and if the Reserve Bank believes that there is no alternative to holding off for a month or two in terms of rates then it will be lifting rates and really that is a major focus, I think for both sides of politics, as well as financial markets.”

The potential trigger for a rate rise will be next week’s official inflation reading from the Australian Bureau of Statistics.

Economists believe a blowout in consumer prices, if it eventuates, would see the Reserve decide to act, taking the cash rate to 4.75 per cent with what would be the seventh increase since October last year