Results Home Loans

May 2024 Update

What’s been going on this month?

Stay current with Results Home Loans and any updates in the market

Rate Movements

As of 13 May 2024, RBA has decided to leave rates unchanged, keeping the Cash Rate at 4.35%.

RBA Cash Rate in May 2014 was 2.50%.

CURRENT INTEREST RATES FOR HOME OWNERS

Based on a $500,000 loan over a 30 year term at 80% LVR with Principal and Interest repayments.

CURRENT INTEREST RATES FOR INVESTORS

Based on a $500,000 loan over a 30 year term at 80% LVR with Interest Only repayments.

Lender Turnaround Times

As at 13/05/2024

Under 24 hrs

2 Days

3 + Days

Industry News

Government announces boost to housing construction

Recent data and forecasts suggest that the Reserve Bank of Australia (RBA) may not have reached the peak cash rate at 4.35%, with discussions emerging about the possibility of further rate hikes. Economists like Warren Hogan from Judo Bank anticipate multiple rate increases by late 2024, citing improving business activity and persistent inflation pressures. Hogan argues that the current rate might not be sufficient to stabilize prices, especially considering the recent stronger-than-expected inflation figures. Similarly, experts like Alan Hemmings from Home Loan Experts also foresee a potential rate hike, given the ongoing inflationary pressures. Despite recent drops in inflation, there remains a discrepancy between goods and services inflation, indicating continued price pressure. Overall, while the RBA evaluates controlled aspects of the economy, inflation remains above the target band, prompting discussions about the potential need for further rate adjustments.

Estimated Maximum borrowings

Based on joint annual income of $120,000.00

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$550,000.00

Case study

SMSF Property Investment

Ward and Karen, came to us with a combined superannuation balance of approx. $300,000 wanting to leverage their Self-Managed Super Fund (SMSF) to venture into property investment.

After completing a thorough analysis of the borrowing capacity within their SMSF, we reviewed Ward and Karen’s options with our lenders who specialise in SMSF loans to ensure we presented a structure tailored to their needs and objectives.

This involved careful consideration of loan-to-value ratios, interest rates, and repayment terms to optimise cash flow and minimise risk within their SMSF.

Unlike traditional loans, lenders assessing SMSF loans prioritise different criteria for servicing. They typically focus on the consistency of contributions into the SMSF along with the proposed rental income for the property being purchased.

Most lenders do not require an assessment of the client’s personal financial position, meaning that if the SMSF can service the loan based on the above, then they do not need further personal information.

However, consideration of liquidity in the SMSF is required after the property has been purchased. This means that the SMSF generally needs to have some cash or shares (i.e. liquid assets) left in the fund after settlement to meet loan repayments should there be be a delay in receiving rental income or to meet upcoming expenses of the fund.

It is also worth noting that legal advice is required when obtaining a SMSF Loan as the individual members (Ward and Karen in this instance) are required to provide a personal guarantee for the SMSF. This is a simple meeting with a solicitor, where they explain the risks of being a guarantor and sign off on the loan documents issued by the lender.

Results for Ward and Karen:

Acquisition of an investment property with a value of $600,000.
Generation of a steady annual cash flow of $28,600 from rental income.
SMSF Loan of $480,000 at 7.74% with repayments of $3,435 per month.
A healthy buffer of just over $140,000 cash in the fund post settlement allowing diversification of Ward and Karen’s SMSF investment portfolio, reducing dependency on traditional asset classes and bolstering their retirement security.

Thank You!

The value of a strong network and reliable partnerships cannot be overstated, and your referrals have not only brought us new business opportunities but have also reinforced the belief that we are on the right path to providing exceptional products and services to our customers.

So we wanted to take a moment to express our deepest appreciation for the outstanding support and collaboration we have received from you as our referral partner.

Your willingness to recommend our company to your own network speaks volumes about the trust you place in us, and we are honored to have earned such trust.

We truly appreciate the effort you put into every referral. Please know that we are always here to reciprocate your kindness and support. Should you ever require assistance or need a reliable partner for any venture, please don't hesitate to reach out to us.