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

Pepper Home Loans has announced a drop in the interest rates on both its Flexi Advantage and Self-Employed Advantage products.

The non-bank lender has slashed up to 25 basis points off its Flexi Advantage product, taking it to just 8.49 per cent on mortgages with a loan to value ratio of up to 70 per cent.

Up to 50 basis points were reduced off the Self-Employed Advantage Home Loan, taking the interest rate to 8.74 per cent on loans with an LVR up to 70 per cent.

Pepper has also made a number of product policy changes to introduce more loan flexibility to the borrower.

As part of the policy changes, second jobs and casual employment will now be seen as an acceptable income.

Furthermore these mortgages will now be available up to $1 million for loans with an LVR up to 80 per cent.

According to a recent survey of over 1000 loan applicants conducted by Mortgage Choice, over 66% of people who refinanced their mortgages recently were able to secure a lower interest rate and a better loan.

The survey also found that 54 per cent who refinanced changed their loan product and lender when refinancing, while 46 per cent stuck with the same lender but changed their mortgage.

Of those, 23 per cent were now saving more than $300 a month, while 88 per cent were saving more than $50 a month.

These figures are not surprising given a spate of interest rate increases in recent month – people are doing what they can to save money on their home loan.

From October 2009 to May 2010, the Reserve Bank raised its cash rate six times, taking the rate from 3.25 per cent to 4.5 per cent.

While most economists agree that the RBA is unlikely to move on rates in the next few months, many are predicting a rate rise by the end of the year or early next year.

“With a recent spate of rate rises and the possibility of more before 2011, plus a renewed focus on mortgage exit fees, it is no surprise Australians are refinancing to a cheaper mortgage deal and/or one that better suits their current needs and goals,” Ms Sheppard said.

“In good news for borrowers, the survey revealed that most of the people who refinanced their mortgage were not burdened with loan exit fees.

Of those surveyed, 24 per cent said they were refinancing to switch to a cheaper loan, through a combination of lower interest rates, fees and charges.

Eleven per cent said they refinanced to consolidate debts and 10 per cent said they were funding renovations.

Other motivations to refinance were buying an investment property (nine per cent) and accessing additional funds for other reasons such as holidays.

In a bad credit market, much of the refinance activity is due to debt consolidation and an attempt by borrowers to keep their heads above water.

“We are happy to see so many respondents keen to add value to their property through renovation and others utilising their market knowledge to invest further in their property portfolio,” Ms Sheppard said.

“This is good news for the residential market and something I am sure the construction industry will welcome.”

Ms Sheppard encourages borrowers to throroughly investigate their options before committing to a loan.

According to a new research conducted, over 90% of home owners aged 55 and over would prefer to stay in their homes for as long as possible rather than move to a retirement village.

An Australian Housing and Urban Research Institute survey of 1,600 ageing home owners found the vast majority of home owners wanted to stay in the familiar surrounds of their own home, even though the alternative is at times more suitable to their needs.

The survey also found 37% of older Australians did not want to live in a retirement village, although some of them required special assistance on a day to day basis.

In response to the survey, SEQUAL chief executive Kevin Conlon said equity release products provided these older home owners to tap into the stored wealth of their home in order to stay in their home.

However, he said seniors considering equity release products should find an adviser that has gained industry accreditation.

Equity Release products provide home owners with the flexibility of accessing some of the equity ion their home without the need to pay it back during their lifetime.

Economists believe that banks will commence a series of independent interest rate moves right after the elections.

There is no expectation of any action from the Reserve Bank until November 2010 or even later. Banks are unlikely to continue absorbing the extra costs of funding for that long.

Minutes from the RBA monthly meeting show the reserve bank is playing a ‘wait and see’ game, wary of global economic uncertainty and satisfied earlier rate rises had taken excess heat out of the economy.

AMP Capital Investors chief economist Shane Oliver said the outlook for the official cash rate meant banks would be more likely to increase interest rates independently of the RBA.

The minutes were published on Tuesday as a new survey indicated wage growth was slowing and the downward pattern is expected to continue.

The RBA minutes further confirm that the board was “comfortable” leaving the cash rate unchanged at 4.5 per cent following a drop in annual underlying inflation to 2.75 per cent.

While markets had settled “somewhat”, the board also felt there was “still more uncertainty over the global outlook”.

Economists from AMP Capital Investors and TD Securities said a rise in the base rate was now unlikely until at least November.

Citi economist Paul Brennan forecast that the RBA would lift the cash rate by about 100 basis points over the course of 2011, but said an increase was unlikely this year.

According to a Morgan Stanley strategist, Australian home owners and property investors are taking part in a “Ponzi” scheme which will backfire. The expert claims that our property is overvalued by as much as 40% and will show negative growth over the next decade.

This is further talk of an “Australian Property Bubble” that we have heard of all too many time of late.

Morgan Stanley claims that owner-occupiers are in too much debt and investors are taking a risky approach by relying on capital gains to repay their mortgages.

The expert claims that the First Home Buyers scheme was not a healthy policy for the local property market as it has only put further steam into an already overheated market.

“Buying an asset that’s over-priced never ends well,” he said. “The real return on residential property over the next decade is likely to be negative, in my view.

“Investors have become Ponzi borrowers — Hyman Minsky’s term for borrowers who rely on capital gains to repay debt and interest — in the belief that housing is a ’sure thing’ as far as long term growth is concerned.  The overseas expert is saying that historical analysis of prices contradicts this belief.

However anyone who has lived in Australia for the past 4 decades at least (as has the writer of this blog) would have witnessed plenty of historical evidence that will blow the ‘overseas expert’s’ theories out of the water.

Australian Bureau of Statistics figures show overall average house prices rose 18.4 per cent for the full year to June, with Sydney prices rising 21.4 per cent — the largest since it began recording these figures in 2002. While this may be true, there was a drop of between 10% and 25% in property values in 2009 – the most significant value losses were experienced by Sydney.  Now that we are seeing 20% increases, no one seems to take a broader market view , say over the past 5 – 10 years..instead everyone is focusing on the past year.  Certainly if one was to consider home values over a longer term there would be clear evidence that we have not seen more than 15% increase in these over the past 2 – 3 years.

Furthermore the rate of growth has been slowing in recent months as rising interest rates feed through the economy.

Commonwealth Bank of Australia, the nation’s largest bank by market value, also warned last week it could be forced to raise rates independent of the Reserve Bank. CBA’s full-year results showed some key business units were struggling with higher costs.

The RBA – one of the few central bank’s in the developed world to raise rates since the global financial crisis — has been on hold since May as six rate rises since October feed through the economy. The official cash rate stands at 4.5 per cent.

According to figures released by the Commonwealth Bank, in a sign that financial pressures have somewhat eased for many borrowers, the number of account holders whose loan problems are being closely monitored by the CBA has almost fallen by 50% over the past 12 months.

Figures released by the bank as part of its record $6.1 billion profit announcement demonstrate that far fewer customers are still experiencing problems with mortgages and personal loans as compared to October 2009.

Certainly late last year the fallout from the GFC was having its biggest effect on the Australian economy. There was the threat of rates going higher and higher and at the same time as the Reserve Bank moved to battle inflation.

CBA had put on a large number of people during 2008 to manage problem loans and customers with mounting debts.

By June 2009, 9325 account holders had sought assistance from the bank for their home and personal loans and outstanding credit card bills. Mortgages took up an increasing share of the referrals during the remainder of the year. The total number of customers requiring help with their loans went up to 13,299 in October before starting a slow but steady drop from January.

That figure has since decreased to 5132 customers with credit card problems, which has remained at a relatively constant level for the past six months, now drowning out the smaller numbers of borrowers with problem home loans and personal loans.

The figures are a useful guide to the wider affect across the community of mortgage stress given that the Commonwealth Bank is the largest lender in the Australian housing market. They also underline just how much customers have been focusing on reducing their levels of debt.  Current statistics indicate that 70 per cent of CBA funded home-loan borrowers were well ahead on their monthly repayments. The average figure among them is nine payments.

Nonetheless, like its competitors, the CBA has introduced more stringent lending criteria since the first-time home buyer boom of last year that was underpinned by government cash handouts to prevent the housing market slipping into recession.

There has been a drop to a nine year low in Australia’s home loan commitments during June 2010.

While Home Loan commitments for owner-occupiers fell 3.9 per cent in June, almost twice the market forecast of 2 per cent,  the total value of housing finance fell by 1.9% seasonally adjusted, to $20.710 billion.

Our housing market is finally beginning to show some cracks under the weight of ongoing price increases and interest rate boosts.

We are not seeing as many investors in the market with people choosing the ‘wait and see’ approach instead.

Mr James said the poor construction finance figures would signal concerns about a lack of demand for projects in the second half of the year.

The ABS said finance for construction projects also dropped 5% during June 2010. There is indication of overall deterioration in the property market and especially the residential housing sector.

We will no longer be able to rely on the housing sector to prop up the Australian economy. Undoubtedly this was one of the factors which led to RBA leaving rates on hold last week.

The Reserve Bank of Australia has just announced that rates will remain at 4.5% . This decision was widely anticipated by economists following the release of lower than expected inflation figures last week.

The Consumer Price Index (CPI) rose 3.1 per cent in the year to June quarter, slightly over the RBA’s target level of 2-3 per cent.

RBA is comfortable that interest rates are now approximately where they should be and in in line with economic indicators.

In addition to the CPI figures, uncertain conditions in Europe have also forced the RBA to hold rates.

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.