With uncertainty around interest rates and the property market, we welcome you to our special July newsletter. Outlining insights into the industry, potential opportunities for first home buyers and a look into living costs. We also outline an easy way to compare your energy providers and receive $250 from the Government!

Rising Living Costs

Cost of living has steadily risen in Australia, with prices of petrol, utilities, groceries, and other items increasing in recent months. There are several causes to this including the Russian invasion of the Ukraine, the pandemic and the extreme weather conditions in Queensland and New South Wales which have impacted the supply of these goods and services.

The Victorian Government is offering some relief for rising prices, with the chance to compare energy providers. It is a short application that allows you to see the best priced electricity and gas offers available in your area, and you may be eligible for $250 Power Saving Bonus without having to switch providers.

It is a great way to check if your current utilities supplier is competitive in the market, or whether you need to change. This could lead to monthly savings, along with a $250 payment, when we are heading into a period of increased living costs.

I did this last week, confirmed our energy provider was competitive and got paid the $250 within a week.

Buy now, pay later… on your credit file

The recent expansion in the “buy now, pay-later” market has seen a wider range of offerings enter the fold, with consumers seeing the positives of the new source of credit with fast approval times.

However, the negative impact of these sources of finance are not widely spoken about, with most customers not being made aware of the potential adverse effects on their credit score and their future ability to secure home loans.

What is a credit score? A credit score is a rating that represents a consumer’s credit history, it is based on personal and financial information such as the number of open accounts, total levels of debt, number of credit enquiries/applications, repayment history, and other factors. Lenders use credit scores to assess the likelihood that an individual will repay loans in a timely manner, and impacts if they will lend you money. With credit reports improving over recent years lenders are becoming more reliant on these and so knowing your credit history is becoming increasingly important.

I recently had my ID used to open some of these accounts and was shocked at the impact on my credit rating.

My credit score with an enquiry and opening of a “buy now, pay later” account:

Below is the enquiry and account in question:

Once I noticed these accounts, I called the providers to report the fraud, close the accounts and have them removed from my credit file. Below is my credit score after the removal of both:

It is important to be aware and wary of the impacts of these sources of finances before applying as they can impact your ability to obtain finance in the future.

First Home Buyers

With the current unease in the market and the subsequent drop in the average property prices combined with the number of schemes offered by the Government, this is providing an opportunity for first homeowners to get into the market.
For Victorians, First Home Owners Grants of up to $20,000 remain available, with $10,000 for newly built properties in Metro regions and $20,000 for Regional. Stamp Duty Concessions also continue for owner-occupier purchases up to $750,000.
The Government has also reviewed The First Home Loan Deposit Scheme, now known as the First Home Guarantee. This is an initiative aimed at supporting eligible first home buyers to purchase a home sooner, it enables them to purchase a home with as little as 5% deposit without paying Lenders Mortgage Insurance (LMI).
The major changes include:

• The government has increased the number of spots available in this scheme to 35,000 for the 2023 financial year (between 1 July 2022 and 30 June 2023), up from 10,000 in the same period last year.
• Purchase price has increased to $800k for properties in Melbourne and Geelong, and $650k for regional areas

Other criteria include:

• You must apply as an individual or couple (married/de facto)
• Earning up to $125,000 for individuals or $200,000 for couples
• Intending to be owner-occupiers of the purchased property
• You must have at least 5% deposit

Deposit required examples:

• For a purchase of $600k, you must have a $30k for a 5% deposit and $5k to cover transaction costs. Total of $35k cash required.
• For a purchase of $700k, you must have a $35k for a 5% deposit, Stamp Duty of $25k and $5k to cover transaction costs. Total of $65k cash required.
• For a purchase of $800k, you must have a $40k for a 5% deposit, Stamp Duty of $43k and $5k to cover transaction costs. Total of $88k cash required.

These schemes provide much needed assistance to first home buyers and if you think you qualify for one of them, then get in touch with us and we can walk you through the process.

Interest Rates and Property Market 

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