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Property Vs Shares - The Real Story

   

Have you seen BT’s latest advertising campaign?? 

 

They have spent a truck load of money illustrating why shares are a better investment than property!!!

 

We contacted BT to find out the assumptions used in their campaign, and as expected, they are unrealistic. While it’s not our intention to undermine shares as an asset class, we do want to get the facts straight.

 

So in the interests of providing a balanced view, we have produced our own version of the ad and then provided an explanation on why we achieve a different result.

 

Here’s the link to BT’s TV ad:

http://www.youtube.com/watch?v=OPPNqP6r2Z8

 

Here’s a link to our video:

http://www.youtube.com/watch?v=GyjcHoal_o8

 

 

Tax Time! Free Depreciation Review Courtesy Of BMT & Associates

Courtesy Of BMT & Associates a free review of depreciation is being offered. Call us on 1300 725 489 or email us @ info@mortgageblitz.com.auto arrange your complimentary review.

If you own an Investment Property now is the time to review that old Depreciation Report to ensure that you are getting the full amount of deductions that you are entitled to!

BANKS Haul In 13 Billion Dollars In Fees

Australian banks collectively made $12.7 billion in fee income from their customers last financial year - up nine per cent on the previous 12 months, according to official figures.

The business sector bore the brunt of the growth in charges, with fee income from that sector leaping 20 per cent to almost $2.2 billion - despite flat corporate lending growth.

Much of the rise in charges on the business sector was driven by fees on current loans as banks re-priced their loan books to account for higher funding costs, the Reserve Bank of Australia's June quarter bulletin, released on Thursday said.

The RBA said businesses that used only part of their loan facilities were the hardest hit.

"Fees on undrawn loan facilities appear to have risen significantly," the RBA said.

The central bank also said that households paid $5 billion in fees to banks in 2008/09, up three per cent on the previous year. The increase was driven largely by fees on home and personal loans and credit cards.

Fee income from home loans jumped 17 per cent to $1.235 billion as more customers re-financed to move from fixed rate to variable rate loans as interest rates fell.

Personal loan fee income collected from households increased by 14 per cent, and income from credit cards rose by eight per cent.

RBA board member Jillian Broadbent on Tuesday said "the banks in Australia at the moment are not lending very much".

"If anything that's a dampener on our economic growth," she told stockbrokers in Melbourne.

According to figures released by the Australian Bureau of Statistics last month, total lending finance declined 12 per cent to $49.6 billion in March 2010 from $56.4 billion in March 2009.

The Australian Bankers' Association (ABA) on Thursday said the extra fees slugged on businesses was driven by large corporates buying more loans from banks during the global financial crisis when capital markets froze.

Ms Broadbent said banks continued to lend to households but at "nowhere near" levels seen in previous years.

"At one stage housing lending was growing at about 15 per cent and now it's growing at about five per cent."

The strong demand for deposits from businesses meant fees on deposits were flat, while lower transaction fees drove an 11 per cent drop in household deposit fees, the RBA said.

Households paid 84 per cent of total exception fees collected by banks, or $1 billion, unchanged on the previous year as exception fees on home loans fell by six per cent.

This was offset by a 13 per cent rise for exception fees on personal loans and a 10 per cent increase on credit card fees.

Let Mortgage Blitz show you how to minimise bank fees! Call 1300 725 489 today.

Let us help you to save on bank fees now!

Source: Ninemsn Money

 

ZERO STAMP DUTY FOR NSW INVESTORS FOR NEXT TWO YEARS STARTING 01/07/2010

For the next two years some buyers of new homes and apartments will pay no stamp duty, and payroll taxes will be cut as the NSW government relies on a sustained property and business-led recovery.

The Treasurer, Eric Roozendaal, today announced that the state economy had returned to the black this financial year with a modest surplus of $101 million - a turnaround of $1.1 billion on the $990 million deficit predicted a year ago.

In what he described as an "Australian first", Mr Roozendaal announced the centrepiece of his budget: for the next two years from July 1, stamp duty would be cut to zero for people buying a home or apartment worth under $600,000 off the plan.

NSW Budget 2010 Zero stamp duty lure for older homeowners to downsize

NSW retirees are being coaxed into selling their oversized houses and downsizing to newly built residences, in a NSW budget plan aimed at boosting the new homes industry.

Homeowners aged over 65 are being offered stamp duty savings up to $22,490 to encourage them to move.

The discount applies to purchases of newly constructed houses and units, off-the-plan acquistions, and house and land packages.

The senior downsizers will pay zero stamp duty on property purchases costing up to $600,000 in what is billed as a policy first for the housing market.

About 70 per cent of NSW sales are under $600,000.

NSW houses have a $546,000 mean price, and units a mean of $457,000, according to the most recent Ho

The state government scheme extends stamp duty cuts from the traditional preserve of first homebuyers, who have preferred to buy established residences, as part of its concerted attempt to kick-start the ailing residential construction industry.

The budget also offers zero stamp duty - and the potential saving of $22,490- to all home buyers and investors, albeit with a strict restriction.

It will only be available if they put a deposit down for an off-the-plan purchase or house and land packages costing less than $600,000.

There will also be a 25 per cent stamp duty cut for home buyers and investors - and a potential $5623 saving - if construction is already under way.

The stamp duty discounts will be available for the next two years.

NSW Treasury expects between 1000 and 2000 seniors to take up the offer annually following its July 1 start date.

Another 5000 to 6000 investors and home buyers are expected to take up the wider off-the-plan offering, at an annual $60 million cost to revenues.

The government has budgeted for the seniors zero stamp duty initiative to cost $10 million in each of the next two years.

The seniors must sell their primary place of residence to move into the newly constructed house or unit.

"For people aged over 65, it won't matter at what stage of construction the home is - they will pay no stamp duty," NSW Treasurer Eric Roozendaal said.

The newly constructed homes for seniors must not have been previously occupied or previously sold.

For couples, at least one of the parties must be aged 65 or over to be eligible.

The initiatives are designed to help lift the NSW housing construction out of the doldrums.

NSW housing construction has been trailing Victoria for the past five years and Queensland for the past four years.

Last June, NSW housing construction fell to record lows when just 422 units and townhouses were approved, compared with the previous 10-year June average of 1400 approvals.

"The zero transfer duty for people aged over 65 will contribute both to the goal of helping older homeowners seeking to downsize their home, and the goal of encouraging new home construction," the budget papers said.

"The greater concession for purchasing off the plan will assist the financing of new developments."using NSW data.

Source: Jonathan Chancellor (Sydney Morning Herald)

Confused By Credit Rules? So Is Everybody Else.

Signing up for a home loan or credit card is a significant milestone for most Australians, but research has found many people are confused about how much it will cost...Making it more important than ever before to call us, your trusted Mortgage Advisor to make transparent the true costs of a mortgage.

A University of Queensland study looked into how well consumers understand disclosure documents for different types of loans and credit and store cards before signing up for them.

Study author and law lecturer Paul O'Shea says he was not expecting perfect results but was still surprised by the outcome.

"We knew there were unacceptably low levels of consumer comprehension of important features of consumer credit contract transactions when we started," he said.

"What we didn't know was how bad it was."

The government-commissioned research showed 94 per cent of people could not work out the total cost of credit for a home loan, including interest repayments, using existing disclosure documents.

Mr O'Shea says people with previous experience in applying for credit showed better comprehension levels than those with no experience.

But even having a history with credit did not always produce better results.

"Fifteen per cent of participants understood how long it would take to pay off their credit card limit if they only made the minimum monthly payments," he said.

"Only 10 per cent of participants could realistically estimate how much that would cost."

'Pot luck credit'

Nicole Rich, policy and campaigns director at the Consumer Action Law Centre, says if people do not understand what they are signing up for, they are probably not getting the credit product they most want.

"[It] sort of makes it pot luck whether you actually get the best deal that's available to you on that day or not," she said.

"We really need to make it easier for people to understand the most important features ... so people can make an informed decision."

The study was recently released to the public ahead of the Commonwealth takeover of consumer credit regulation from the states from July 1.

As part of reforms to credit regulation, the Government will be releasing a green paper on credit issues, such as pre-contractual disclosure information, for public consultation in the next couple of months.

'Less paperwork'

The main aim of the research project was to come up with a pre-contractual disclosure model that would be simpler to use and easier to understand.

Using feedback from study participants, researchers created a one-page document that contained vital credit information.

In the case of credit cards it included information about annual cash advance rates, fees and charges, interest-free periods and minimum repayments.

More comprehension tests were then carried out which showed there were higher comprehension levels when the simplified models were used.

Mr O'Shea says the revised format would make it easier for people to understand what credit providers are offering and give consumers "more effective choice".

Ms Rich says the credit industry should get on board to help simplify disclosure documents.

"The problem for consumers is it often doesn't actually suit the interests of industry to have clearer and simpler disclosure of information," she said.

"The more confusing it is, the harder it is for consumers to find their way in the market and the easier it is to charge consumers higher prices - because we can't really tell the difference anyway."

No argument

Ian Gilbert, policy director at the Australian Bankers Association, says there will be no argument from the banking industry about simplifying disclosure documents.

"The banks are not going to stand in the way of simpler, clearer and effective disclosure for consumers. That's in everybody's interests," he said.

Mr Gilbert says the amount of disclosure paperwork credit providers give to customers at the moment is necessary because of legislation.

"The law specifies that there's a range of disclosures that need to be made to consumers, not only in the contract but before they enter into the contract," he said.

"What's currently being disclosed is what is mandated under law. Failure to do so would attract a civil penalty."

But he says changing documents "wholesale" is expensive and banks would have to find a way to recoup the costs if changes were made to the regulation.

"How those costs are absorbed and dealt with by banks is going to be a decision for them individually," he said.

SOURCE: ABC News

For your next mortgage application, don't leap in blind! Call us on 1300 725 489 to ensure that the costs of a mortgage are fully disclosed to you prior to signing any forms!

 

RBA Takes Breather & Plays Safe Amid Europe Concerns

The Reserve Bank has given borrowers a breather, leaving interest rates unchanged amid renewed signs of global economic weakness.

The central bank's decision today to keep its key cash rate at 4.5 per cent snaps a series of three rises in as many months, and follows a month of turmoil on global financial markets.

Chronology of interest rate moves since 1990
Home loan, borrowing and stamp duty calculators
The RBA's statement: why the central bank stayed put

 

Interest rates to June 2010

Worries about a worsening debt crisis in Europe sliced 8 per cent - or more than $100 billion - from the value of Australian stocks in May, and virtually eliminated any expectation of a rate rise by the RBA today. The monthly shares slide was the worst since the depths of the global financial crisis.

''Since the board last met, concerns about sovereign creditworthiness in several European countries have been a focus of financial markets,'' RBA governor Glenn Stevens said in a statement accompanying today's decision. ''Investors have generally displayed a good deal more caution.''

Even so, Mr Stevens said ''global growth is still expected to be at about trend pace in 2010". While conditions in Europe have been relatively weak,  growth in Asia - home to many of Australia's top trading partners - ''continued to be quite strong and may need to moderate in the year,'' he said.

Since October, when rates were at half-century lows, the RBA has lifted the official interest rate six times in a bid to discourage excessive spending as the economy rebounded from last year's slowdown. Those rate hikes have piled about $300 on to the average monthly payment for a typical 25-year, $300,000 mortgage.

The Australian dollar was little changed after the RBA's verdict, closing locally at 83.85 US cents, from 83.64 US cents just prior to the announcement.

Wait and see

While financial markets are predicting interest rates are likely to be at the current level in a year's time, some economists are forecasting more rate rises this year.

''They're obviously waiting and seeing what the effects of past interest rates have been,'' said NAB head of Australian economics and commodities Robert Brooker.

''We don't think they'll be moving up again until towards later in the year.''

Similarly, Michael Blythe, economist at the Commonwealth Bank, expects the RBA to stay put for a while at least.

"In the near term, as long as the Europe story is still unfolding and market volatility is high, the RBA would continue to sit on the sidelines,'' he said.

"The current level of interest rates are biting but if the RBA is still talking about Asia being strong and forecasting inflation at the top end of their band, rates would still go up later this year.''

"We are forecasting rates at 5.0 percent by December. I think the market has got a bit carried away about what's happening in Europe. As the RBA rightly points out, Australia's economy is still nicely poised."

Economic conditions

Despite rising company profits, low unemployment and an increase in weekly wages, the recovery remains patchy.

Data out today showed building approvals sank15 per cent in April, the most since November 2002. Retail sales, though, rebounded, rising 0.6 per cent in April, twice the pace of growththat had been expected by economists.

Indeed, the statement accompanying this month's RBA rates verdict deviated from previous months, being unusually concise, and making little mention of Australia's economic conditions.

''There was no reference to some of the emerging signs of domestic weakness such as retail sales over the first quarter,'' said Moody's Analytics' economist Matt Robinson. Retails sales rose just 0.1 per cent in the first quarter the year.

Mr Robinson also said home loan growth, measured both by the RBA and the Australian Bureau of Statistics, is slowing. Additionally, RPData showed home prices were flat in April, after a year of 1 per cent monthly gains.

''It's conspicuous in its absence any reference to how the interest rate increases are affecting the Australian economy. That just makes me go: 'Were they deliberately quiet on it?','' said Mr Robinson. ''They don't know whether they've done enough or whether they've done too much.''

Source: SMH Chris Zappone