It’s the start of the new tax year and we’ve noticed a rush from clients to get their 2012 tax returns done – and why not, if you’re expecting a refund (like many property investors will be), it’s simply good cash flow management to not delay the trip to your accountant.
In the credit markets, given the recent push by all lenders to remain competitive, we have seen aggressive offers for discounts on variable interest rates – in particular for new borrowings. Borrowers can expect a discount of 0.90% for borrowings over $500,000 and 1.0% for borrowings over $1,000,000 (within a professional package). This results in variable rates of between 5.88% and 5.90% (with a 0.90% discount) and rates of between 5.78% to 5.80% (with a 1.00% discount).
Two major lenders have cut their fixed interest rates during the week, with one lender’s fixed rates being at their lowest level in three years. The best fixed rates at the moment are:
1 year 5.59%
2 year 5.59%
3 year 5.59%
Currently, 5 year fixed rates do not represent value in our opinion.
We’ve noted that the number of inquiries to fix rates fell by 2% this month. This could be due to expectations that the RBA will further cut the cash rate.
Valuations seem to have firmed in prime suburbs and some selected lenders are still offering free valuations.
We note that one lender will now lend up to 90% of a security valuation to partners of some large law firms and large accounting firms, without the need to pay for lender’s mortgage insurance (LMI). LMI is usually payable where the loan exceeds 80% of a property’s valuation.
Although the lenders are offering competitive rates, we’ve noted that the majority of lenders are somewhat selective and their appetite to lend money has obviously tightened over the last few months.