Mortgage Choice
Michael Daniels

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08/05/2025

FREE Weekday Video Meetings: Anytime from 7am to 6pm.
 
With only 12 days until the following RBA Board meeting announcement on their cash rate decision, where the futures estimates anticipate another 0.25% cut, I thought it was a good time to update you on the current fixed and variable interest rate environment.
 
As you can see from the chart below, the major bank averages that we record show a continued decline in fixed-interest rate offerings. The fixed rate offerings are scattered, with a range of up to 0.6% between the lowest and highest options.
 
The non-major offerings, which are not demonstrated in this chart, are even more scattered, with offers well below the major bank fixed interest rates.
 
Please call me if you want to discuss your interest rate options. There are many important risks and benefits to consider when deciding between fixed and variable rates.
 
 
 

 

 

06/05/2025

Why are fixed-interest rate home loan offers currently reducing?

On May 5, 2025, the 3-year Australian government bond yield is about 3.451%. This number shows what people earn if they lend money to the Australian government by buying these bonds for three years. It’s like your interest in a savings account, but for bonds.

The yield on Australian government bonds influences the bank’s fixed-rate home loan in a few key ways.

1. Government bonds are considered super safe investments, so their yields set a baseline for interest rates across the economy.
2. Banks don’t just use customer deposits to fund loans; they borrow money from markets, often by issuing bonds or other debt. The rates they pay on this borrowing are influenced by competition with government bond yield offers.
3. Banks add a margin to their bond yield to cover risks (like borrowers not repaying) and make a profit. For example, if a 3-year bank bond yields 3.50%, it might charge 5.50% if it adds a 2% margin.

In short, the bond yield is like a floor for the bank’s costs and gives us a good idea of what the banks will likely offer in the form of fixed-rate home loans.

To answer our opening question, the current 3-year Australian Government Bond rate as of May 5, 2025, is set out below in a chart.

Mortgage Choice Central Coast - Erina - Michael Daniels

 

24/04/2025

One of the most knowledgeable property analysts I have met, over my 30 years in finance, once showed me his discovery that housing markets with steady, consistent growth correlated with high levels of volunteering.

The Census measures volunteering rates. The NSW suburb with the highest rate of volunteering in 2011 was Lindfield. 27% of their adult population were volunteers. Australia was 17.8%, NSW was 16.9%, Sydney was 15.1%, and Hornsby Shire was 22.9%.

I get some of my information from a brilliant, free website that presents Census data in convenient ways. Google "id profile" if you are interested. “id profile” makes this valid point “The level of volunteering can indicate the cohesiveness of the community and how readily individuals are able to contribute to that community.”

The 2021 Census showed that Sydney's volunteer rate dropped to 11.6% from 16.7% in 2016. The 2021 Central Coast volunteering rate dropped from 17.2% in 2016 to 12.1% in 2021. I put these results down to the COVID-19 pandemic. The 2026 result will hopefully bounce back.

 

 

02/04/2025

Have you seen the latest figures on median dwelling prices? Melbourne is now at $781,318, Adelaide at $827,675, and Brisbane at $899,824. It's startling, especially when you consider that Melbourne's median was $960,000 at its peak in September 2022.

Many will point to government policies, arguing that taxes and regulations have deterred investors, which is certainly a factor. However, it seems the primary driver is likely the surge in construction completions relative to other capital cities, leading to a situation where supply has outstripped demand.

 

21/08/2024

One of the best sets of data for monitoring the health of a property market, especially on the Central Coast, is the Rental Vacancy Rate. Investors use this information to gauge the current supply and demand position and predict the future direction of rental yields. This terrific chart shows the history of the Central Coast Vacancy rate since 2005. 
 
The current rental property vacancy rate is around 1%, based on an estimated 37,500 rental properties. A low vacancy rate indicates that rents are more likely to increase as demand appears to exceed supply. 
 
As you can see, the current Central Coast vacancy rate is historically low. Is this scarcity driving up our rents? I will answer that question with more data tomorrow, but I can confirm that my current experience as a mortgage broker on the Central Coast is that we are seeing an increase in renters seeking to buy their own homes and investors looking to purchase cash-flow-positive properties. Both of these trends indicate that rents are on the rise.
 
Please give me a call on 0414255530 if you would like to talk through your property plans.
 

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