Matthew is a Lending Adviser and has several years of experience working as a Business Banking Relationship Manager, specialising in commercial and residential lending.

Matthew provides advice on all aspects of lending requirements and structures and has access to a panel of over 30 lenders.

He has worked with clients from many different industries such as property investors and developers, doctors and health practitioners, manufacturers, importers as well as exporters, retailers, pubs and hotels, petrol stations and child care centres.

Valuing the relationships he develops with his clients, Matthew is always considerate of their individual needs.

Property market in Australia: how much do you know?

From capital growth, or snagging the best mortgage rate, to managing household debt, research indicates that most Australians don’t really understand the property market or their individual circumstances as well as they should.

Property investment is about long-term results

While Sydney has recorded strong capital growth over the past five years, its long-term performance pales in comparison to smaller capitals, according to the latest analysis by the Property Investment Professionals of Australia (PIPA).

PIPA — which analysed data from the 2002-2017 Australia Bureau of Statistics Established House Price Index — showed that in terms of capital city house price growth, Sydney finished dead last.

The Harbour City’s house price index has increased a mere 142% over the past 15 years, compared to first-place Hobart, which recorded growth of 220% over the same period. Melbourne came in second (208%), Darwin third (161%), and Brisbane fourth (160%).

This research reinforces the notion that successful property investment is all about long-term results, rather than short-term gains. Educated investors understand the importance of time in the market, not trying to time the market, which is essentially just speculation by another name.

The majority of Australians are unaware of their mortgage rate

An overwhelming majority of borrowers do not know their home loan rate, with 86 per cent of Australians also unaware of their monthly expenses, a new study has revealed.

The Know Your Number Index, commissioned by digital bank UBank, examined Australians’ knowledge of their household and entertainment expenses. According to the data, NSW and ACT residents were least likely to know their mortgage rates (15%),

While there was a slight improvement on last year, there are still too many Aussies out there who don’t know their mortgage rate. Further, 59% of Australians claimed that their current financial situation has caused them stress or loss of sleep, with 44% noting that they’re “constantly worried” about their financial future.

We encourage borrowers to do their research and stay on top of their mortgage rate; this is one of the great benefits of using a mortgage broker who can ensure you get a deal that best suits your needs and takes into account your circumstances. With only 28% of Australians stating that they use budgeting tools, the importance of household budgeting must be noted for its role in minimising stress and supporting a balanced lifestyle.

With the latest data from the Bureau of Statistics uncovering that the cost of living in Australia rose by 2% last year and is the strongest pace growth we’ve experienced in three and a half, it’s never been more important to know your numbers.

Having your finances sorted is an important part of maintaining a balanced lifestyle, and unfortunately too many Australians are experiencing the effects of not truly understanding their finances.

The Reserve Bank of Australia keeps calm on debt, but is closely watching Interest Only loans

The average household mortgage debt-to-income ratio rose to around 140% at the end of 2017 from around 120% in 2012. Despite that figure, the RBA doesn’t appear to be ringing any alarm bells.

“While debt levels are relatively high, and there are owner-occupier households that are experiencing some financial stress, this group is not currently growing rapidly,” said RBA Assistant Governor, Michele Bullock, during a speech at Informa’s Responsible Lending and Borrowing Summit in Sydney on Tuesday the 20th of  February.

“This suggests that the risks to financial institutions and financial stability more broadly from household mortgage stress are not particularly acute at the moment.”

Bullock said the rise in mortgage debt-to-income is “not really surprising” given historically low interest rates that have allowed households to service higher levels of debt. One area Bullock highlighted was the potential for investor lending to raise macro-financial risks.

In 2014/15, around 11% of the adult population, or just over two million people, had at least one investment property and around 80% of those were geared, according to ATO data. Most of those investors own just one investment property but an increasing number own multiple properties. There has also been a marked increase in the share of geared housing investors who are over 60.

“These factors do not necessarily increase the risk of financial stress but they bear watching,” Bullock said.

In conclusion, Bullock states that while there are some pockets of financial stress, the overall level of stress among mortgaged households remains relatively low.

 

To ensure your mortgage best suits your needs and takes into account your personal circumstances, please get in touch.

Matthew Guy has recently been recognised by Mortgage Professionals Australia as one of the industry’s best and brightest, being included in the national ‘young gun’ list. The list of 30 includes emerging mortgage and finance broking elite professionals that are aged under 35, with less than 2 years as a broker and completing more than $15m in loans during the year.

 

Matthew Guy is an Authorised Representative of Prosperity Finance Advisers Pty Ltd ABN 69 143 861 303, 309 Kent Street Sydney, NSW 2000 is a Credit Representative (No 479852) of Hillross Financial Services Pty Ltd Licence 232705 ABN 77 003 323 055 and is one entity within the Prosperity Advisers Group Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person.

What’s all the noise about mortgages?

In recent weeks we’ve seen a shift in lending policy combined with interest rate hikes across many of the major lenders. So what’s happening and why?

There is ongoing debate about whether we are living in a property bubble. What is fact however, is the fast rate of growth in property values. Sydney housing values for March grew at the fastest annual pace for 15 years. According to the latest monthly CoreLogic Hedonic Home Value Index, Sydney housing values grew by 19.7 per cent, while units in the NSW capital grew by 15.3 per cent over the last year. The study also found that four of the nation’s eight capital cities recorded an annual growth rate in housing values in excess of 10 per cent.

Disturbingly, what’s moving in the other direction is household indebtedness and slow growth in household income. At more than 120 per cent of GDP, Australia’s household debt is substantially higher than in most other advanced countries and has risen markedly in recent years. The governor of the Reserve Bank recently flagged that Australian households are carrying more debt than they have before, which is a “significant issue” that the central bank is “watching carefully”. RBA governor Philip Lowe explained recently that an increase in housing prices has gone “hand-in-hand” with a further pick-up in household indebtedness: “In aggregate, households are carrying more debt than they have before and, at the same time, they are experiencing slower growth in their nominal incomes than they have for some decades. For many, this is a sobering combination,” he said.

Recent changes to lending rules plus interest rate rises

APRA, the mortgage regulator, recently introduced measures to limit the flow of new interest-only mortgages from banks to 30 per cent of total new residential mortgage lending. The regulator also provided instructions to banks to ensure that growth in housing investment mortgages remains comfortably below a 10 per cent limit.

APRA has advised the banks that they won’t tolerate going beyond the growth speed limit and that any breach will prompt a review of the offending bank’s capital requirements.

In the past two weeks, the industry has seen a flurry of mortgage rate hikes from big banks and non-major lenders. Increases at AMP, CBA, ANZ, NAB, Homeloans, Auswide, Bendigo Bank, St. George and Westpac have ranged from seven to 117 basis points. Many of the rate rises have been targeted at investor loans and interest-only loans. Lenders cited APRA’s measures as one of the reasons for hiking their rates. The ratings company Moody’s warned that even though Australian banks have already started to raise lending rates, lending rates for interest-only mortgages “are likely to rise further”.

Impact on borrowers

Industry analysts have warned of hard times ahead for borrowers due to increasing interest rates. The mix of record house prices, pending oversupply of apartments in some cities, investor lending curbs, and elevated household debt levels, coupled with rising interest rates on mortgages could be a volatile cocktail for some borrowers.

Plus, it’s possible negative gearing rules may come under fire at this year’s Federal Budget causing even more changes ahead.

What can you do?

For most borrowers, the lending interest they pay is the biggest cost and the biggest expense they’ll ever have and therefore they need to look after themselves. They need to be alert and, as the rates go up, check whether there is a better rate available and shift where it makes sense.

Borrowers can take action to potentially limit the financial impact of these changes by refinancing their home loans. Those borrowers who have not recently reviewed their cost of debt should certainly be talking to an adviser to see if their rates are appropriate. There are many options available from lenders and in today’s market where credit policies and rates are changing constantly, getting a clear view on what is available from an experienced adviser is important.

To discuss your household debt and explore your mortgage options, please call Prosperity on 1800 855 844.

 

Matthew Guy is an Authorised Representative of Prosperity Finance Advisers Pty Ltd ABN 69 143 861 303, 309 Kent Street Sydney, NSW 2000 is a Credit Representative (No 479852) of Hillross Financial Services Pty Ltd Licence 232705 ABN 77 003 323 055 and is one entity within the Prosperity Advisers Group Ph. 1800 445 767. Any advice contained in this document is of a general nature only and does not take into account the objectives, financial situation or needs of any particular person.