Spring 2020

It’s October and Spring is finally here. This is always a wonderful time to get out in the garden or in nature, on foot or on your bike, even if travel restrictions mean we need to stay closer to home this year. In Melbourne we are virtually under lock and key but we are making the most of it! In the last 5 months the Investors Choice team has worked hard in re-imagining and re-engineering our entire business systems to make it easier to work with us. We have heard your feedback and have developed an entire encrypted online portal, no more fact finders! When you come back to us again to discuss your finance I think you will be delighted with what we have created.

Over the last 8 weeks I have participated in over 25 webinars, training sessions or summits on what impact Covid-19 will have on the economy. I have never trusted the media with reports and have always gone to the source to secure the raw data and information. I have to admit there has been many mix messages and I was definitely in a wait and see after the previous months of webinars that I had attended.

However on Friday, in my monthly call with my mentoring private clients, I pulled it all together and showed how all the messages are pointing to optimism. There is too much to summaries here re the rise of remote working, affect on regional house prices, changes in home design, reduction in immigration, increase in domestic travel, the bubble effect, industries that have innovated, new fin and property tech companies that will change how we buy real estate – so much, and that was just the first 5 webinars. Later this month we are going to be spending a day together combing through the data and looking for opportunities, in property, business and personally. I look forward to sharing some highlights next newsletter.

Normally I am a positive person but I have to admit I had a ‘go slow’ on many of these clients throughout April, May and June whilst I monitored what lay ahead but July and August started showing signs that things were not as bad as forecasted. Economists started indicating they over stated the downside, even the banks started pulling back their 15% property market drop predictions to 5% – less than what most markets went up last year. And Westpac is predicting 15% growth in 2021-2022.

Even the budget leaks are indicating this is a BUILD and GROW budget – this is all about jobs and stimulus. The markets are predicting an interest rate cut, but it has not come through this month, and the RBA have said they are not putting rates up for possibly 5 years. There is pent up demand and those with secure employment and a buffer of savings are now on the starting blocks. Yes 2021 will be one of repositioning and recovery and small businesses (especially us in Melbourne) are really going to have a tough time keeping staff and trying to recover but with interest rates so low, Australia being one of the safest countries in the world, and a vaccine getting closer and closer, if you are in a position to do something please contact us.

As most of you know I spent 20 years as a mining engineer and I have been speaking to friends in the industry and it corroborates what I am seeing with many of the countries rebuild plans and I think we might just see our commodities leading the way to a better economy. This is also good news for WA and NT and Qld mining towns that have had negative growth for many years – however this is not an endorsement to buy there – this is just a glimmer of hope to those who have – I encourage you to possibly get ready to sell.

Gold companies profited from rising gold prices, up almost 30% this year due to gold’s status as a ‘safe-haven’ investment. Iron ore miners benefited from a lift in demand from China and rising iron ore prices, up 46% this year. Every major world economy will be spending on infrastructure – in short they need our iron ore.

While homewares and electronics retailers and those with a strong online presence enjoyed increased demand from Australians staying close to home. Australians have saved more in the last 6 months with savings ratio up to 19.8% the highest since 1974. Yes we are in a recession but it has been artificially created. Previously we were riding on a wave of economic growth, 29 years without a recession, prior to Covid-19 we were not heading to recession. Australia is truly a lucky country and we are uniquely placed to open the boarders late 2021 possibly sooner with a vaccine, and we will welcome highly skilled and International students back to Australia.

Challenges remain, however. Unemployment rose to 7.5% in July, the highest level in 22 years, but no-one expected it to fall to 6.8% last week. The budget will also address this and I predict no ‘economic-cliff’ will emerge.

There are headwinds but there is also an underlining optimism. One conference I attended had Sir Richard Branson speak… let’s be clear on this he has a hotel business, an airline business and he launched his cruise business the first week of March 2020 …. if anyone had a reason to curl up into a ball it would be him. BUT wow! The disruption and speed of development of technology, societal change, education and so much more has him excited for 2021 and beyond. If he can draw positives from now then I am sure most of us can.

Optimism is the undying belief that the future is bright, but it’s not a denial of the current state. Its about having a vision in a time of crisis, when it’s OK to feel your way in the dark because you have a direction and you’re moving forward.

We are moving in the right direction.

I have also been reading from some of the works of Marcus Aurelius, he was a Roman emperor from 161 to 180 A.D. During his reign there was the Antonine Plague, it lasted 14 years, it killed 5 million people (and him). His writings follow the virtues of the Stoics. One of their common slogans of Stoicism is:

“Fear does us more harm than the things of which we’re afraid”.

And to someone a bit more recent Warren Buffet:

“Be fearful when others are greedy, and greedy when others are fearful.”

For those who have a safe job and savings….this just could be your time.

If it is make a time to talk to us today www.investorschoice.com.au/bookacall

As always here is to Your Property Success.

Jane Slack-Smith
Director Investors Choice Mortgages


Economic Update Video – October 2020

On October 6th the Government will outline one of the most important Federal Budgets in living memory.

The biggest government stimulus program since WWII has resulted in a budget deficit of $85.3 billion in the 2019/20 FY, with more spending on the cards to drive economic growth.

The Reserve Bank has kept the cash rate at its current record low of 0.25%.

Please get in touch if you’d like assistance with your personal financial situation. Click here



Low interest rates drive interest in refinancing

Interest rates in Australia have hit their lowest in history, and are unlikely to head in an upwards direction for some years to come. Philip Lowe, Governor of the Reserve Bank of Australia indicated the cash rate would be likely to stay at 0.25 percent for some years, and the board would not increase the cash rate until there is progress towards full employment and the target range for inflation. i

Refinancing your home loan is a great way to take advantage of this low interest rate environment. For those with a mortgage, it’s a golden opportunity to save thousands, if not tens of thousands, of dollars over the life of your mortgage and is definitely not to be missed!

Refinancing on the rise
According to figures released by the Australian Bureau of Statistics (ABS), there has been a 52.1% increase in refinancing compared to June last year. The current low interest rate environment, together with changes in financial situations for many due to COVID-19, could be driving the significant increase compared to the same time last year.

So don’t get left behind, talk to us about refinancing your home loan as soon as possible to take full advantage of the low-interest home loans now available.

So why refinance?
Refinancing is replacing your current home loan with a new one, usually with a different lender. Whether you’ve taken out a home loan in the last 12 months or have been paying yours off for some time, it can be worth assessing if there is a better loan for your current circumstances.

Most homeowners refinance in order to save money and reduce the term of their home loan, however there are many ways refinancing can be used to improve your financial position or lifestyle.

By refinancing, you can access the equity you have in your home, which can then be used to renovate and add value to your home, buy an investment property, invest in shares, fund your children’s education or even start your own business.

Some homeowners are motivated to refinance in order to get a home loan that is better suited to their circumstances and access features such as a redraw facility, offset account, flexible repayment arrangements, or to change the type of loan, eg from a variable to a fixed rate.

Refinancing can also be a strategy to consolidate your debts including credit cards with high interest charges or personal loans into one easier to manage, lower interest rate payment. If you are suffering financial hardship we can help you negotiate with your lender. They may agree to charge you a lower interest rate, not charge further interest payments for a period of time or other options that could improve your ability to manage your financial situation.

What to watch out for when refinancing
While refinancing can save you a great deal of money over the long-term, it’s important to be aware of some of the potential costs and downsides when replacing your existing home loan. These include:

  • Discharge fees: you may have to pay a discharge fee to your current lender in order to terminate your loan.
  • Break fees: this is a fee to compensate the lender for any loss of profit they have incurred on a fixed-rate home loan.
  • Upfront costs: these are not always charged on home loans but they can be when refinancing. They include establishment fees, settlement costs and valuation fees.
  • Lenders Mortgage insurance (LMI): If you’re planning to borrow more than 80 percent of your home’s current market value, you may be asked to pay lenders mortgage insurance, even if you already paid this with your previous lender.
  • Higher total interest payments: While refinancing is often with the goal of finding a lower interest rate, extending the length of your loan may mean you end up paying more interest over the total length of your loan.

How can we help?
Refinancing a home loan is a big step and the home loan environment is complex but we are here to guide you through the whole process and find a solution tailored for your needs. Make a time to talk to Lisa today, Click to Book a Time