Mortgage Interest Rates to Fall

Australia's mortgage interest rates are set to fall in February, with many experts predicting that further rate cuts may be expected later in the year.

Mortgage Rates are too high and have to come down.

I have been saying that Mortgage rates are too high ever since the RBA raised its official cash rate in November 2010. 

But then again I have also been saying that land prices are way too high, and have been for ten years, and this is the main reason why established homes are higher than they should be. So to lower housing prices, I guess that the RBA's intention may have been to quell demand for new home construction loans.
Whatever their reasoning high mortgage rates have lowered home building starts dramatically through 2011.

Why has housing demand disappeared?
So what happened to the pent up housing demand? Its seems to have evaporated.
I recall experts saying that there was a housing shortfall of 200,000 dwellings. Well nobody is saying that anymore.
And as we build less homes, house prices are falling, and home sales taking longer?
2012 is shaping up to be a time when home buyers can get real value for money, and home sellers are going to have to lower their house price expectations, yet again.
The bottom line is that the best time to buy a home is when everybody else is try to sell a home.

Home buyers Tip
So if you are considering buying a home in 2012, then take your time, and wait for a bargain in house price, location and quality.
Also, only consider buying a home with a long term view of home ownership. Longer than 5 years.
Whilst history tells us that the long term trend in house prices is up, in this housing market there may be a protracted period of prices flat-lining or trending lower. Protect your investment by shopping hard and negotiating on price.

Author: Rick Adlam, Mr Mortgage

Japanese Banks Target Australian Home Loan markets

Mega Japanese Banks are preparing to launch a surprise attack on the mortgage profit margins of Australia's big four banks. Why this sneaky raid will succeed

The big four banks, CBA, NAB, Westpac and ANZ are the envy of the banking world. Meanwhile Japanese banks have been in operating successfully in a recession economy for twenty years. In fact the interest rates they operate on are puny compared to Australian Home loan interest rates and bank margins. So its natural that they want a piece of the action.

Some say that Japanese banks could get a $100 billion of the Australian home loan market in double quick time. I agree.
At the coming February RBA board meeting most financial analysts are punting on a further rate cut to the official cash rate. That normally translates to a similar reduction in mortgage interest rates. However some of the big four banks are hinting at not passing on all of the rate difference, citing rising funding costs as the reason.
A cynic might suggest that the real reason is maintaining profit levels in a shrinking home loan & credit card finance by Australians.

Japanese banks are all cashed up with nowhere to lend

Japanese lenders are brimming with low cost cash because of the recession, and the Japanese savings ethic.
Australian banks on the other hand also pay puny interest rates, but lend that money out at fat profit margins.

Australia's trillion dollar mortgage pie. How big a slice can the Japanese hope to get?

Australia's trillion dollar home loan market looks ripe for the picking.
Snaring just a 10% slice of Australia's Mortgage pie would give the Japanese Banks a $100 billion dollar windfall.

A Japanese Bank raid a cakewalk for four good reasons.

1. Australians have no loyalty to their banks. Aussies love to hate banks. But they don't love them that much.
2. Australian home owners and home buyers will change lenders, and they do so often.
3. Money talks. Australian home buyers and homeowners are hurting financially, mainly because they paid too much for property on the basis of low interest rates, high loan to value ratios on loans and other lax lending practices.
4. Ready-made sales channels. Single unit and franchise mortgage brokers have established channels that the Japanese raiders can tap into instantly.
5. Japanese banks could also operate an online Australian mortgage channel, as this is how a lot of Australians looking to refinance do their research these days.

2012 may prove to be a tough year for mortgage lenders in Australia, and that means a better deal for Aussie home loan borrowers.

That has to be good news for the real estate industry and the home building sector, who have both had a rough 2011.

Summary

The impending Japanese Bank home loan invasion may be the tonic Australia needs to reinvigorate real competition in home loans, the mortgage broker sector, the new home building industry and the housing market, and put a creator in Australia's big four profits at the same time. So are Australian home loans turning Japanese? Yes I think so.