Will Bell Monthly Update April 2021

Hey guys, Will here coming back to you with another update on all things finance giving the rundown of home loan news, property market update and some comments on the border economy, so we will jump into it. 

Local Home loans news

So first off in home loan news. I’ve got a lender provides same interest rates for borrowers with owner occupied and investment debt. So that’s quite a number of borrowers. And if you’re one of those, you probably should know by now that investment lending incurs a higher interest rate, then owner occupied lending. So owner occupied is your own home. So there are lenders out there offering that discount. So if you’ve got a large amount of investment debt, that may be something to look into. 

Second off the rank, fixed rate increases. I’ve observed the last probably two or three weeks, a couple of the fixed rates have increased. That’s in relation to the 10 year bond price, increasing in fears of inflation. To that, I would say, I wouldn’t worry too much about it. If you look at the last kind of 20, odd years, the the overall trend is down.

So and until I see kind of a reversal of that trend, I wouldn’t make too much of it just yet. We’ll just keep an eye on it.

The other bit of home loan stuff I wanted to touch on was this article, which is basically commenting on the number of complaints we get through AFCA. So AFCAis basically the Ombudsman the Australian Financial Complaints Authority. 

I just wanted to outline this because a lot of people don’t understand that basically, big corporations are dominating the way we’re governed. And this is an example. So right now, at the moment, I commented on last week, the Responsible Lending regulation was getting wound back. It’s going through Parliament as we speak. But at the same time from the Royal Commission, mortgage brokers have more regulation in the form of best interest duty. Yeah, I just wanted to outline that because it’s actually getting harder for mortgage brokers, even though under 1% of all the home loan complaints are actually about mortgage brokers, they’re actually about lenders. And now we’re in an environment where the banks are gonna, they’re gonna get in, they’re gonna get a lending environment that was the same as what we had 10 years ago. So yeah, there’s a bit of an irony there. 

And it kind of pays to understand these things. Because if it’s easy for the banks to lend money in the future, it probably gives you a bit of a hint about what’s going to happen with the property market. So that’s all for home loan news. 

Property market news 

Low supply, which has been really the story for probably six months.  There are more auctions, I’ve noticed out here on the Mornington Peninsula, everything’s going to auction that’s because there’s a low supply and agents know they can push market prices up. 

I have noticed added to that probably a little bit less demand on the buyer side. But that’s probably to be expected because for the last six months, we were coming out of lockdown. So we had some pent up demand there.

The other market news is Bank of mum and dad becomes the top 10 mortgage lender. So that’s pretty easy to figure out what that means. Basically mum and dad are giving kids loans, or they’re acting as guarantor for their first home loan, so to me, it kind of says, and I’ve noticed this through just the business that I’m doing, it kind of says it kind of tells me well, is there an actual limit to house prices? 

Because that’s an argument right, with the property prices or how high can prices go, but we keep finding ways of being able to borrow the money to buy these houses. And that’s been my argument for a long time. What if the bank, the Reserve Bank drops their rates to negative and money is basically free to borrow like how it is in Europe, what happens to property prices? So that’s been my argument for quite a while. And this probably shows probably supports that a little bit. 

Broader economy

On to the broader economy. So last time I commented on the broader economy being weak. Also, I think I commented on CPI inflation versus asset inflation. So I just want to touch again, because that’s really important for people in the west to understand.

Because CPI, inflation is basically the cost of stuff. And if the cost of stuff goes up, it basically means our wages are going up. The thing with CPI inflation is our wages haven’t been going up for the best part of a decade. Despite our government and central bank, trying to push that, instead, what they’ve done is push asset prices higher, which basically means people who are wealthy are getting more wealthier. And if you’re on the bottom, and you don’t own any property or assets, it’s just harder for you to level up and actually buy your first home. 

So that’s a really important thing I think people need to understand. And in the coming decade, I believe there will be a lot more money required to be printed. And we may get some CPI inflation, but I think with my opinion, not financial advice, I think we’re going to get increased asset inflation. 

So house prices are gonna go up the process of everything’s gonna go up. So yeah, there’s a, there’s an article here from the Guardian saying inflation will increase but that shouldn’t mean the end of stimulus kind of shows you that these guys don’t actually know what’s happening, because the stimulus is basically money printing, and the only way you’re going to get inflation is through printing money. 

So the kind of backward common sense is that we’re going to get inflation, but they’re going to keep printing money. So we’re going to get more inflation. So basically just means what I just said, which is house prices are going to go up. 

I think all asset prices are gonna go up gold, crypto, bonds, property, everything, it’s all going to go up. And rounding out. Just wanted to, I just heard a comment from, from a fellow professional in the finance industry. And he kind of made this comment, which is, which is an assumption that’s not really true, which is they’ll make home loans harder to get if house prices are too high. And that’s one I hear a lot. But I mean, if that was true, then at some time in the last 15 years, 20 years, home loans would be a lot harder to get. And the obviously not that hard because house prices is still going up.

So I did link an article in here. I’d have a geezer. Yeah, this is just the argument between our regulators. And I guess the thing you need to understand here is, is that our regulators don’t care about property prices. They care about keeping a stable banking system. And the reason they care about that is that in the recession we had to have when Westpac and ANZ nearly went bankrupt Keating brought in the four pillars policy at the time, which was a smart idea. And basically, these regulators were given the target of keeping a stable banking system. And that was it. 

Unfortunately, a stable banking system has met house prices continually going up. And until they change that, I think that’s what we’re going to keep on getting. That’s it for this update. If you’ve got any homeland questions or anything you need, you’ve got my details. Cheers.


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