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Unnecessary red tape for planning approvals is driving up house prices, according to Victoria’s red tape commissioner.

Population Surges: The Impact on Australia’s Property Market

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NEWS & INSIGHTS | MORTGAGE BROKERS | PALM CAPITAL

Population Surges: The Impact on Australia’s Property Market

Explore the implications of Australia’s anticipated population surge on the property market in 2024. Learn how heightened demand for housing may impact prices, rents, and affordability. Discover opportunities and challenges for homebuyers, renters, policymakers, and industry stakeholders. Understand the importance of fostering sustainable growth, promoting housing affordability, and embracing innovation to navigate the evolving property market landscape.

Unnecessary red tape for planning approvals is driving up house prices, according to Victoria’s red tape commissioner.

Implications of Population Surge

Australia has long been recognised as a desirable destination for immigrants, boasting a high quality of life, robust economy, and diverse cultural fabric. Over the years, this influx of migrants has played a pivotal role in driving population growth and fuelling demand in the property sector. However, projections indicate that the pace of population growth is set to accelerate in the coming years, propelled by factors such as skilled migration, natural increase, and international student enrolments.

One of the primary consequences of this population surge is the heightened demand for housing across the country. With more people choosing to call Australia home, the need for residential properties is expected to soar, exerting upward pressure on prices and rents. This trend is particularly pronounced in major urban centres like Sydney, Melbourne, and Brisbane, where population growth tends to be concentrated.

Opportunities and Challenges

For prospective homebuyers, the prospect of a rapidly evolving property market presents both opportunities and challenges. On one hand, increased demand may translate into capital appreciation, potentially yielding substantial returns for investors and homeowners alike. On the other hand, intensified competition could make it more difficult to enter the market, especially for first-time buyers or those with limited financial resources.

Similarly, renters may find themselves grappling with rising accommodation costs as landlords capitalise on the heightened demand. This dynamic underscores the importance of implementing policies that promote housing affordability and ensure equitable access to shelter for all segments of the population.

Policy and Industry Response

From a policy standpoint, government authorities face the imperative of fostering sustainable growth in the property market while averting the risks of overheating and speculative bubbles. This entails striking a delicate balance between stimulating supply through infrastructure development and regulatory reforms, while simultaneously safeguarding the interests of consumers and fostering inclusive urban development.

Moreover, industry stakeholders must adapt to the evolving dynamics of the property market by embracing innovation, leveraging technology, and adopting agile business models. Whether it’s embracing sustainable construction practices, harnessing the potential of proptech solutions, or diversifying investment portfolios, proactive measures can help mitigate risks and capitalise on emerging opportunities.


The way some see it

In conclusion, the anticipated population surge in 2024 heralds a new chapter in Australia’s demographic story, with far-reaching implications for the property market. While the prospect of sustained growth presents exciting prospects for investors and developers, it also underscores the need for prudent planning, robust governance, and a commitment to housing affordability. By working collaboratively and embracing innovation, stakeholders can navigate the complexities of this evolving landscape and build a more resilient, inclusive property market for generations to come.

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Private Loans vs. Bank Loans: Who Should Consider Each?

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NEWS & INSIGHTS | MORTGAGE BROKERS | PALM CAPITAL

Private Loans vs. Bank Loans: Who Should Consider Each?

In the realm of personal and business financing, the debate between private loans and bank loans continues to be a topic of interest for borrowers seeking the best financial solution for their needs. While both options offer avenues for acquiring capital, understanding the nuances of each can make a significant difference in achieving financial goals. Private loans present a unique set of advantages that may be better suited for certain candidates compared to traditional bank loans.

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What are Private Loans?

Private loans, often referred to as peer-to-peer loans or alternative loans, are loans provided by individuals or private institutions rather than traditional financial institutions like banks. These loans are facilitated through brokers and online platforms that connect borrowers directly with investors willing to lend money in exchange for a return on their investment. The terms and conditions of private loans can vary widely depending on the platform and the agreement reached between the borrower and the lender.

Bank Loans: The Traditional Option

Bank loans, on the other hand, are the conventional means of borrowing money from financial institutions such as banks or credit unions. These loans typically involve a rigorous application process, credit checks, collateral requirements, and fixed interest rates. While bank loans offer stability and reliability, they may not always be the most accessible option for certain borrowers due to stringent eligibility criteria and longer processing times.

Who Should Consider Private Loans?

  • Individuals with Limited Credit History: For individuals with limited credit history or less-than-perfect credit scores, obtaining a bank loan can be challenging. Private lenders often have more flexible eligibility criteria and may be willing to consider other factors, such as income and employment history, in their lending decisions.
  • Entrepreneurs and Small Business Owners: Start-ups and small businesses often struggle to secure financing from traditional banks due to their limited operating history or lack of collateral. Private loans can provide a viable alternative for entrepreneurs seeking capital to fund their ventures, offering quicker approval processes and more personalized terms.
  • Borrowers in Need of Quick Funding: Private loans are known for their expedited approval processes, with some lenders offering funding within days of application approval. This makes them an attractive option for individuals facing urgent financial needs, such as medical emergencies or unexpected expenses.
  • Those Seeking Flexible Terms: Unlike bank loans, which often come with fixed repayment terms and interest rates, private loans offer greater flexibility in negotiating terms and conditions. Borrowers can customize their loan agreements to suit their specific needs, whether it’s adjusting repayment schedules or negotiating lower interest rates.
  • Individuals Seeking Higher Loan Amounts: While traditional banks typically impose limits on the amount of money they’re willing to lend, private lenders may offer higher loan amounts, especially for well-qualified borrowers. This can be beneficial for individuals looking to finance large purchases for developments or consolidate existing debts.

Valuable sources of financing

While both private loans and bank loans serve as valuable sources of financing, understanding the differences between the two is crucial for determining which option is best suited for individual circumstances. Private loans offer flexibility, accessibility, and expedited funding processes, making them an attractive choice for borrowers with specific needs or challenges. However, it’s essential to carefully evaluate the terms and conditions of any loan offer and consider factors such as interest rates, repayment terms, and overall affordability before making a decision. Ultimately, the best loan option will depend on the borrower’s financial situation, objectives, and preferences.

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Are more buyers using mortgage brokers in 2023?

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Are more buyers using mortgage brokers in 2023?

According to recent data, a record number of Australian homebuyers this year worked with a mortgage broker.

A record-high 69.5% of all new residential house loans finalised in the first three months of 2022 were negotiated by mortgage brokers, according to a report produced by the Mortgage and Finance Association of Australia.

About 52.1% of all newly finalised loans were arranged via brokers in the previous two years.

Mortgage brokers provide extra options for borrowers.

Mortgage brokers are legally obligated to put their clients’ best interests first at all times under the new best interest legislation. Borrowers who work with a broker have a significantly greater chance of getting a loan that is a good fit for their unique situation and needs since brokers often have access to loans from about 30 different lenders. This can be done either by traditional methods such as banks, or through private mortgage lenders.

home buyers using mortgage brokers

Mortgage brokers are trained to handle difficult situations

Brokers’ preexisting connections to their lending institutions allow them to provide creative answers to difficult questions.

For instance, brokers will be aware of which lenders will be more ready to work with borrowers who have bad credit, atypical income sources, or an irregular job history.

A customer would have a very hard time standing up to an unreasonable lender without the help of a professional.

Mortgage brokers may provide extra value even to the simplest loans

Even if you’re a seasoned borrower in good standing with simple financial needs, it’s best to work with a broker.

Brokers rely on word-of-mouth and repeat business to grow their clientele, so providing exceptional service is in their best interest. This implies that brokers pay close attention to their customers’ needs, are dependable, answer calls quickly, and go the additional mile for them.

In order to guarantee the loan is appropriate for the borrower’s future ambitions, a broker will often look beyond the immediate aims of the sale. They will also alleviate a lot of worry and trouble from the loan application process by handling most of the paperwork. Most importantly, brokers will guarantee that consumers’ loans are structured correctly to minimise interest and fees, which is especially crucial for borrowers who have many loans.

Contact us to get in touch with a broker

If you need a mortgage broker, or would like to know how much you can borrow through traditional or private mortgage methods. please contact us.

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Variable Rate Mortgages

Variable Rate Mortgages – Why Do I Need One?

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Variable Rate Mortgages – Why Do I Need One?

Borrowers have been strongly encouraged to refinance in order to lock in a lower fixed rate by the current interest rate climate.

As a result of five consecutive base rate increases, lenders have been steadily increasing their rates, making the average 2 and 5-year fixed deals appear relatively high in comparison to variable options and prompting a discussion about whether borrowers should now consider a variable rate mortgage.

What are the differences between fixed and adjustable rate mortgages?

The biggest advantage of a mortgage with a fixed rate is the stability it provides. This can be done through both traditional lending methods, as well as private lending methods (private mortgages).

Mortgage payments are consistent each month throughout the term of the product, independent of changes in interest rates; nevertheless, early repayment is often subject to an early repayment fee.

Variable Rate Mortgages

Variable discount rates change as a function of the broader economy and financial markets.

Mortgages, both residential and buy-to-let, may have either a fixed or variable interest rate, but the conversation about each is distinct.

Whether you’re getting a home loan, there are a few reasons why you may choose to go with a fixed rate rather than a variable one

Many considerations go into deciding between a fixed-rate and a variable-rate mortgage for a home.

The major advantage of a variable rate mortgage over a fixed rate mortgage is that the borrower may be able to lower their overall mortgage payments if the rate stays low for a long length of time. However, because of the uncertainty associated with the rate’s potential movement, many borrowers would rather have a fixed monthly mortgage payment.

For those who are willing to commit to a longer period, certain mortgage lenders may reward you with special terms.

Some creditors stress at a lower rate and may provide more money if all borrowing is at a fixed rate of at least 5 years.

You should carefully consider the pros and cons of both fixed and adjustable mortgage rates before making your final choice. Your mortgage advisor will look at things like your down payment, credit history, and how much money you need to borrow. They are familiar with the lending landscape and can advise you on which lenders will provide you with the funds you need.

When are variable rate mortgages right to finance a buy-to-let property?

Possible rental revenue is taken into account when determining loan amounts in the BTL market.

In order to determine the maximum amount that may be borrowed, lenders conduct a stress test taking into account both fixed and variable interest rates.

Investors may leverage their rental revenue into bigger borrowing amounts if the lender uses a lower stress rate. Some lenders, however, make an exemption for limited liability corporations and low tax rate filers.

This means that the amount you need to borrow will have an impact on whether you go with a fixed- or variable-rate BTL mortgage, in addition to your desired rate, level of security, and degree of flexibility.

The choice between locking in a mortgage interest rate and taking your chances with an ever-changing market rate is not one to be made lightly.

Our consultants are available to assist landlords and those interested in becoming landlords with determining the maximum loan amount that can be obtained with either a variable or fixed rate mortgage for a buy-to-let investment property, taking into account the individual’s current financial situation. You may also use our mortgage calculators to get a better idea of how much money you’ll need to make monthly mortgage payments.

Today’s most competitive mortgage rates

Current residential variable rates look to be lower than fixed rates by about 0.5 percentage points. This disparity is somewhat higher in the buy-to-let market, although as was discussed above, a lower rate may actually result in less borrowing.

With these massive hikes, no mortgage lender wants to be seen as giving rates below the rest of the market, which might result in an influx of applications they may not be able to handle or may make them unprofitable.

How important is it to consider variable rates?

Mortgage rates might rise dramatically if the base rate rises more quickly than predicted, increasing the appeal of a fixed-rate offer. On the other hand, if inflation cools down during the following two years, some banks may decide to lower their interest rates. In this situation, locking into a 5-year fixed agreement before inflationary pressures subside might mean paying a higher rate than the tracker rate in years two or three.

The current market for variable rates does look to be very cheap, and if the discounted variable rate is much lower than a fixed rate arrangement and the early repayment penalties aren’t too high, it may be wise to go that route.

Anyone who is risk-averse should probably avoid selecting a variable interest rate. Although it’s possible that a variable rate may result in lower monthly payments, there’s also a chance that you’ll end up paying more for the loan in the long run if the rate stays high.

When it comes time to renew your mortgage or apply for a new one, our knowledgeable advisers can explain your choices and help you choose the best one for your unique situation, down payment, and monthly mortgage payments.

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Who are private mortgage lenders?

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Who are Private Mortgage Lenders?

Traditional banks and lenders do not offer a private mortgage. Private home loans function similarly to standard loans, but you are not constrained by the stringent servicing requirements.

Private mortgage lenders are often used for short-term funding.

The majority of private mortgage lenders offer secured loans, meaning they consider collateral such as a home’s equity before extending credit. They will make a loan against the asset and are not concerned about the credit risk you pose.

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What types of loans do these brokers offer?

Private lenders specialise in short-term finance, but they don’t stop there:

  • Bridging loans: Short-term loans used to purchase a new property while simultaneously selling an existing one.
  • Caveat Loan: Your property is used as collateral to obtain a new mortgage. A caveat loan has a period of shorter than one year.
  • Second mortgage: Second mortgages are loans taken out against already mortgaged property. If a borrower fails, the first lender takes priority.
  • Bad credit loans: For borrowers with low credit scores, private lenders may be willing to extend credit.

Who Makes Use of Private Mortgage Lenders?

People that employ private lenders usually have a lot of assets but little cash. The need for quick money to cover a gap prompts them to take out a loan against their assets.

  • House flippers, who require just short-term financing and are confident in their ability to sell their houses swiftly.
  • Small-business owners when there is a cash shortage.
  • Property developers in need of short-term financing to buy additional locations.
  • Newly created enterprises that do not have any financials to disclose
  • A borrower seeking to purchase an unusual property that a bank would not finance.

If you don’t own a home, private lenders may be able to assist you fund your property objectives. However, interest rates are quite expensive. There are specialised lenders that can assist borrowers with weak credit, therefore a private lender should only be used as a last choice.

Is a Private Mortgage Reliable?

Private home loan lenders are great for short-term lending options that cover an instant demand for money and bridge a gap. These lenders can obtain funds more quickly than banks.

Benefits of using a private mortgage broker
Disadvantages of using a private mortgage broker
Because they do not scrutinise as thoroughly as a bank, they may offer flexible and quick settlement.Typically, private lenders only offer loans against collateral, therefore they are not a smart choice if you do not have any such assets.
Short-term financing allows you to pay off your debt faster.Rates offered by them are quite expensive.
They do not consider your credit history and instead lend depending on your asset position.Most private lenders only offer up to 80% of a property's value, making it an unsuitable option for people with little or no down payment.
They provide specialised loans that can't be found at traditional lenders.Because the loan period is short, the options on the loans are minimal, and they do not include redraw or offset accounts.

Is it Trustworthy?

Yes. Private lending in Australia, contrary to common opinion, is secure since it is supervised by the same regulations and standards that govern banks.

You may also engage with a reliable mortgage broker to weed out any dodgy vendors and identify secure and trustworthy private lenders.

What Is the Fee for a Private Mortgage?

Fees charged by private lenders are often the same as those charged by traditional lenders.
Application fees, appraisal fees, legal fees, and loan setup fees are all part of the costs.

Private house loans, on the other hand, are expensive due to their high interest rates.

Their interest rates begin at 6%, and the amount charged is determined by the loan amount and the quantity borrowed.

What Is the Process of Obtaining this kind of mortgage?

The funds are provided to the borrower by the private lender depending on the borrower’s security.

The lender will evaluate the security offered and determine how the loan will be repaid.

Lenders typically use a low ball figure when estimating how much they can get for the property in the event of a default on the loan and subsequent sale.

At a fixed interest rate, the specified time is generally shorter than two years.

A private house loan includes the following terms:

  • The type of loan
  • Loan duration
  • The interest rate (negotiated by lender and borrower)
  • Exit options

Is IT Better Than Bank Lending?

Under some circumstances, private lenders may be a preferable option for borrowers.

Private lenders do not adhere to traditional credit requirements when lending you money, but there are restrictions on when you may spend them.

  • Private lenders do not conduct credit checks. – Because private lenders do not have a banking licence, they are classified as non-bank lenders.
  • Rather than considering a person’s credit history when making a loan, they look at the borrower’s assets.
  • Private lenders are subject to wider economic circumstances and reactive when a crisis strikes.
  • Some lend to those with weak credit, but a specialised lender may be a better alternative.

Palm Capital can investigate your mortgage alternatives with banks before turning to a private lender.

We have over 50 lenders on our panel, which includes banks, specialised lenders, and private loans.

We will ensure that you obtain the best deal on your home loan because banks provide better rates and specialised solutions for borrowers in unusual circumstances.

Call us or make an online enquiry today.

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