I just save $7,000 a year in interest and it only took me 10 minutes

I just save $7,000 a year in interest and it only took me 10 minutes

In 2018 banks started to tighten up lending, due to the findings of the royal commission. It sent the real estate industry to a grinding halt. Many people could no longer get loans. In fact many properties I had to sell 4 times, because the first 3 buyers finance wasn’t approved. As an agent I saw numbers from open homes fall from 10 buyer groups to between zero and 3. So we lost around 70% of our buyers. 

Things are starting to change. Interest rates have dropped 2 months in a row to a record low. You can now get a home loan with under 3% interest. Yes under 3%. 

So how did I save $7,000 a year in interest in 10 minutes ? I had spoken to my bank and asked if they could review the interest I was on. I do this several times a year. Often they will come back with a small .15% adjustment, or sometimes a simple no. So this time I did something different. Kath and I sat down with Julie McKewin a mortgage broker we know. Julie had a look at our situation and frankly was shocked at the interest we were paying. So she rang our bank. Explained who she was and that if they can’t make some dramatic changes we’d need to take our business elsewhere. All that took less than 10 Minutes.  24 hours later we had new rates that were active 48 hours later. Our total saving is $7,000 a year in interest. That’s like a nice holiday or a very large Christmas present, every single year. 

So you should do the same. At the very minimum speak with your bank today and tell them you need a better rate. But I highly recommend you speak with Julie. Sure you can speak to your own broker or another broker. I get zero from suggesting Julie other than helping you out. What I have found is Julie really cares and really over services her clients. She might be able to save you $7,000 a year too.

Why you can now borrow more than you could in 2018.

Interest rates under 3% is not the only good news. Up until very recently banks had to do a stress test on borrowers serviceability if interest rates where up around 7.5%. If they were unable to service the loan at 7.5% the loan would be declined. But now this has been relaxed. For example a couple earning around $100,000 a year combined will be able to borrow around an extra $60,000. The new serviceability buffer is now around just 2.5% above current rates. 

This really changes things. Buyers who previously could only borrow $520,000 could now possibly borrow $580,000, which is a totally different home. 

What’s the biggest mistake buyers make in this market?

This is going to sound so basic. But it’s not getting a proper pre approval from a bank through a broker. I’m still surprised how many buyers tell me their broker said finance won’t be a problem to then not get finance approved. The only way to know for sure is to get a pre approval from a bank through a broker. These are valid for about 3 months. . Many brokers aren’t prepared to do this as they don’t get paid for it. So find a broker that will. Like Julie. 

But if you make an offer on a property and with that offer supply a pre approval letter you have a much higher chance of having your offer accepted. The same if your offer is with 14 days finance and not 21 days. A proper pre approved finance from a bank will make all this so much easier.

Banks are now looking at 4 months of bank statements and analysing borrower spending habits, like how much alcohol they buy, or how often they eat out. Etc. So you need 4 months of very clean spending & saving. 

Where are we headed in the next 5 years.

Check out this Sunshine Coast Council diagram to give you an idea.

No crystal balls here. I’m just a real estate agent so have no real expectations of where the real estate market will go. But what I do know is that over the coming years the Sunshine Coast has some very large projects that the world will notice. The international airport, the development of the Big Pineapple, the high speed cable coming from Asia straight into the new Maroochydore CBD. You can read more about it in my previous blog here. 

Did the Sunshine Coast dodge the real estate down turn?

About 12 months ago on the Sunshine Coast buyers left the market. Properties became much harder to sell, prices slightly soften and it became more of a buyers market. You can see in the graphs below how the medium house prices were affected with many of the suburbs on the Sunshine Coast. Mostly the market was impacted through winter then picked up again mid spring, but some didn’t. 

While the Sunshine Coast market still did well, it did this with considerably less buyers, which meant properties took longer to sell and agents had to work harder to maximise their clients sale price. 

As a whole over the last 12 months the Sunshine Coast Region had a medium house price growth of around 6%, which is an outstanding result considering how the Sydney and Melbourne markets have been hit hard. 

Drilling down to individual suburbs not every suburb fared so well. For example Calounda had a correction of around -5%, Peregian Springs had a very small increase of around 1%. But other suburbs like Buderim performed outstandingly with growth around 8%. With suburbs like Palmwoods, Bli Bli and Nambour having growth around 6%.

I would be watching Maroochydore very closely. Soon the new CBD will open, plus being very close to the international airport, plus the super fast cable from Asia, all means we should have eyes on it. Again I wrote a more detailed blog about the Sunshine Coast growth here.

Below is a small selection of suburbs on the Sunshine Coast with the last 12 months median growth along with number of houses sold. The graphs really tell the story where you can see the flow of prices. For example Sippy Downs pricing tracked downwards from March to Nov in 2018 before recovering.

The Sunshine Coast region as a whole had a median house growth of around 6%.

Disclaimer: I‘m just a local licensed real estate agent. These figures have been obtained through RP data. You need to do your own research and seek individual professional advice

Buderim around 8%, with 615 Houses selling in the last 12 months

Bli Bli around 5.96%, with 168 Houses selling in the last 12 months

Maroochydore 8.77%, with 199 Houses selling in the last 12 months

Sippy Down 3.49%, with 190 Houses selling in the last 12 months

Twin Waters 7.74%, with 85 Houses selling in the last 12 months

Peregian Springs around 0.81%, with 249 Houses selling in the last 12 months

Caloundra  -3.22%, with 40 Houses selling in the last 12 months

Palmwoods around 5.94%, with 127 Houses selling in the last 12 months

Nambour around 5.56%, with 250 Houses selling in the last 12 months

Wurtulla 9.14%, with 122 Houses selling in the last 12 months

Birtinya 9.4%, with 58 Houses selling in the last 12 months

Buddina 11.84%, with 66 Houses selling in the last 12 months

Coolum 14.29%, with 152 Houses selling in the last 12 months

Noosa Heads 12.86%, with 138 Houses selling in the last 12 months 

Cooroy 13.33%, with 121 Houses selling in the last 12 months

Montville 19.92%, with 26  Houses selling in the last 12 months

Disclaimer: I‘m just a local licensed real estate agent. These figures have been obtained through RP data. You need to do your own research and seek individual professional advice

Byron Miller is a local real estate agent on the Sunshine Coast. In 2018 he sold 49 properties & was ranked in the top 6% of real estate agents in Australia

Leave a comment