Amanda Watt

A drop in the number of home loans taken in January and a big fall in the average loan size taken by first home buyers given falling or easing house prices highlights the prospect of greater home loan affordability in 2016, according to the head of banking business act., Amanda Watt.

Over the month of January, the value of new home loans taken by property buyers dropped 3.4% to $31.9 billion, according to new data from the Australian Bureau of Statistics (ABS). The value of home loans for owner occupiers dived 4.3% to $20.5 billion in January from December while the value of home loans taken by investors also fell by 1.6% to $11.4 billion as buyers withdrew from the property market.

Reflecting greater home loan affordability, the average loan size for first home buyers fell by $9,300 to $338,800 between December and January. The average loan size for all owner occupied housing commitments fell by $5,400 to $372,400 for the same period. The overall number of home loans taken by owner occupiers in January plunged 3.9% to 55,786.

“While January is traditionally a slower month, these are still positive signals. Home buyers will welcome any drop in funds needed to buy their first home or make a property investment and the latest housing finance data highlights that buyers borrowed almost $10,000 less to buy their first home in January,” said Watt.

“While the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments was unchanged at 15.1%, the good news is that growth in house prices has slowed in some cities while prices have dropped elsewhere, so people are needing to borrow less to buy.

“Auction clearance rates nationwide have fallen from last year’s highs and are trending downwards and investor demand for property has cooled due to higher interest rates on loans. Meanwhile, a drop in share prices in January could be drawing money away from the property market into equities. All of these factors are helping to take pressure off property prices,” said Watt.

Fixed-rate loans, as a proportion of all new home loans, rose to 13.6% in January from 12.9% in December, as borrowers took advantage of low fixed rates, which have in some cases fallen below variable home loan rates due to downward pressure on wholesale market interest rates.

act. is an innovative banking service that redirects profits back into social projects. For each product act. has, including home loans, act. allocates ‘impact dollars’ – real dollars taken from the profit it earns – and it gives them back to its customers, who can then donate to a community-focused project of their choice listed on letsact.com.au.

Each month, act. will put some of the profits it’s made from its banking operations into consumers’ impact accounts. Consumers can then use the dollars in those accounts to support projects listed on letsact.com.au. The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act.

act. recently won Money magazine’s 2016 Best of the Best award for Best Innovative Banking Product. “This award is evidence that act. customers can make a difference in the world just by doing their daily banking and getting involved in crowdfunding. As we grow our business, we are giving more impact dollars to customers to donate to social projects, thereby helping us and them to make a difference. As a community inspired banking business, we are using some of our profits to make the world a better and more liveable place,” said Watt.

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Amanda Watt

Home buyers can save thousands of dollars by repaying their home loans more quickly by making extra repayments and using offset accounts, with the head of banking business act., Amanda Watt, who warns borrowers should watch out for some traps on no-frills and fixed home loans which may restrict repayments.

Watt recommends the following seven home loan tips for home buyers who want to get on top of their mortgage sooner.

Tip 1: Repay extra.

If you’ve got extra cash, put it straight on your home loan and save money. The more of the principal you repay now, the more you’ll save. If you hold an average first home buyer’s loan of around $350,000 taken over 25 years at a rate of 5.5%, you can save $30,475 in interest costs simply by putting an extra $100 on your loan each month. And you’ll be debt free sooner. Watch out for this on fixed loans as you may incur charges on extra repayments or you may only be able to repay an extra 5% to 10% of the loan amount.

Tip 2: Reduce your loan term.

When you’ve got a home loan, time means money. So the quicker you repay your loan, the less interest you’ll pay. If you take a $350,000 loan over 25 years at an interest rate of 5.5%, you’ll pay $294,791 in interest over the life of the loan if you repaid in monthly instalments. But if you repaid the loan over 20 years, you’d pay $227,825 in total interest costs – that’s a saving of $66,966!

Tip 3: Use an offset account.

Offset accounts are a great way to cut interest costs. Offset accounts link your home loan to a savings or transaction account. The balance in the savings account is then used to offset the home loan balance, reducing interest costs. As interest is calculated daily on the home loan, the benefit to borrowers accrues as soon as there is cash in the offset account. There are tax benefits also as tax isn’t paid on the interest credited to your savings account because the interest is not actually being earned as it offsets the home loan interest.

Tip 4: Save a bigger deposit.

The more you borrow, the more you will repay in interest. So, if you are saving for your first home, start making the sacrifices now and save as much as you can before you buy. Make sure you claim the first home owner’s grant and any other subsidies state governments offer.

Tip 5: Fixing your loan.

Locking in part or your entire home loan could provide good security against future rate rises. There’s a chance that interest rates have bottomed this year and we’ll get a rate rise next year and a fixed rate could insure you against this. But the risk is that if official interest rates fall, you’re stuck with the fixed rate for the term of the loan. So splitting your loan between variable and fixed portions to take advantage of both types of loans may make sense.

“But you need to check whether you can make repayments, as many fixed loans on the market do NOT allow for extra repayments, limiting your choices. act. fixed loans allow limited repayments and also have partial offset facilities, something many other fixed home loans don’t offer,” said Watt.

Tip 6: Opt for a basic home loan.

Most lenders offer basic home loans without the frills. Interest rates start from about 4% a year and for that, you might get a simple principal and interest loan on which you can make monthly repayments. Such loans may suit you if you’ve got a tight budget and simply want the lowest cost home loan. But they can have pitfalls if you can’t make extra repayments and such loans typically don’t offer offset facilities, which can help reduce interest costs.

Tip 7: Negotiate.

Some lenders are waiving establishment fees on loans and fees such as valuation costs or negotiating on interest rates to win home loan business. So ask about the best possible offer.

act. is a newly established banking service that redirect profits back into social projects. The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act. Home loans will generate the greatest amount of impact dollars. For example, a customer that holds an average first home loan size of $350,000 mortgage with act. could generate approximately $43 a month to reinvest in the social project of their choice.

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Amanda Watt

A rise in the proportion of first-time home buyers in the market in December as well as a jump in home loans being taken out by owner occupiers could indicate housing is becoming more affordable given softer conditions in property markets, according to the head of banking business act., Amanda Watt.

Over the month, the value of new home loans taken by property buyers rose 0.8% to $33.5 billion, according to the new data from the Australian Bureau of Statistics (ABS). The value of home loans for owner occupiers increased 0.9% to $21.9 billion in December from November while the value of home loans taken by investors rose 0.6% to $11.6 billion.

The overall number of home loans taken by owner occupiers in December jumped 2.6% to 58,552. In more good news, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 15.1% in December 2015, off an 11-year low of 14.9% in November 2015.

“Reflecting greater home loan affordability, the average loan size for first home buyers dropped $6,400 to $348,100 between November and December while the average loan size for all owner occupied housing commitments fell $8,500 to $377,600. This drop in loan size has coincided with a slowing in property markets in most capital cities as indicated by falling auction clearance rates and, in some cases, falling median house prices,” said Watt.

“So money continues to pour into property and much of it has recently come from owner occupiers following stricter prudential regulations on home loans given to investors. The data also reveals the staggering size of Australia’s home loan industry. In December 2015, the value of outstanding home loans funded by banks and other authorised deposit-taking institutions totalled a record $1.46 trillion, made up of $931 billion in home loans to owner occupiers and another $528 billion to investors,” said Watt.

Fixed-rate loans, as a proportion of all new home loans, leaped to 13.0% from 11.4% in November, as borrowers took advantage of low fixed rates, which have in some cases fallen below variable home loan rates.

act. is an innovative banking service that redirects profits back into social projects. For each product act. has, including home loans, act. allocates ‘impact dollars’ – real dollars taken from the profit it earns – and it gives them back to its customers, who can then donate to a project of their choice listed on letsact.com.au.

“We’re finding that our customers, who are mostly aged between 24 and 45, are interested in more than just interest rates on their products. They want to make ethical consumer choices and bank with a socially responsible business. act. gives them that opportunity. Consumers can donate banking profits to a whole range of inspiring, community-focused projects simply by doing everyday banking. Each month, act. will put some of the profits it’s made from its banking operations into consumers’ impact accounts. Consumers can then use the dollars in those accounts to support projects listed on letsact.com.au,” said Watt. The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act.

act. recently won Money magazine’s 2016 Best of the Best award for Best Innovative Banking Product. “This award is evidence that act. is a fresh innovative banking model which is changing banking for good,” said Watt. “Check out our video here which explains what act. is and how we can all make a difference in the world just by doing our daily banking.”

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Amanda Watt

A reduction in the proportion of first-time home buyers in the market in November to its lowest level since June 2004 highlights the difficulty that many Australians face in buying a home, according to the head of banking business act., Amanda Watt.

In sobering new data, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 14.9% in November 2015 from 15.0% in October, its lowest proportion since June 2004 when it was just 14.3%, according to the new data from the Australian Bureau of Statistics (ABS).

Over the month, the value of new home loans taken by property buyers rose 1.8% to $33.3 billion. The value of home loans for owner occupiers rose a healthy 2.4% to $21.8 billion in November from October, according to housing finance data released today by the ABS. The value of home loans taken by investors rose a more modest 0.7% to $11.5 billion after falls in earlier months. The overall number of home loans taken by owner occupiers in October rose 1.8% to 56,798.

“First home buyers are pulling out of the market, with the proportion of buyers well down on its highs of around 30% in 2009. With property prices very high in some cities, especially in Sydney and Melbourne, this is stopping young Australians from taking a home loan and entering the property market,” said Watt.

“However, with some signs that demand for property from investors is cooling from its 2015 highs, including a fall in auction clearance rates in some cities and falling house prices in Perth and Darwin, as well as slowing price growth elsewhere, this could improve the outlook for first-time buyers in 2016,” said Watt.

The average loan size for first home buyers fell $1,000 to $354,500. The average loan size for all owner occupied housing commitments rose $3,700 to $386,100.

“It appears that demand for housing from investors is cooling due to the steps taken by Australian regulators to stem  demand. This could work to take pressure off property prices this year, opening the way for more first-time buyers to make their first home purchase,” said Watt.

In May, banks tightened lending criteria such as loan-to-value ratio (LVR) after the Australian Prudential Regulation Authority’s introduced supervisory measures to cap the growth of investor lending. In June, APRA released a temporary directive to five banks requiring them to increase the capital they hold against their residential mortgage exposures.

act. is an innovative banking service that redirects profits back into social projects. For each product act. has, including home loans, act. allocates ‘impact dollars’ – real dollars taken from the profit it earns – and it gives them back to its customers, who can then donate to a project of their choice listed on letsact.com.au.
act. recently won Money magazine’s 2016 Best of the Best award for Best Innovative Banking Product. “This award is evidence that act. is a fresh innovative banking model which is changing banking for good. act. gives control to each customer to decide when or where their profit allocation or ‘impact dollars’ are spent by blending retail banking with crowdfunding. act. celebrated its first birthday in November. Check out our birthday video here.”

The amount of impact dollars a customer generates depends on the act. banking product they choose and their banking habits. Home loans will create the greatest amount of ‘impact dollars’. For example, a customer that holds an average first home loan size of $354,500 with act. could generate approximately $44 month to reinvest in the social project of their choice.

The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act.

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Australian investors are finally pulling back from pouring money into property, with new official data highlighting a pullback in investor home loans, which could help to take pressure off properly prices in 2016, according to the head of new banking business act., Amanda Watt. However, a reduction in first-time buyers is a warning that house prices are still unaffordable for many Australians.

Over the month of October, the value of new home loans dropped 2% to $32.6 billion, driven by a sharp 6.1% drop in the value of investor home loans to $11.5 billion. At the same time, the value of home loans for owner occupiers rose just 0.4% to $21.2 billion, according to housing finance data released yesterday by the Australian Bureau Statistics (ABS). The overall number of home loans taken by owner occupiers in October fell by 0.5% to 55,571.

In another sign that the Australian property market is slowing, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments fell to 15.1% in October 2015 from 15.4% in September 2015.

Fixed-rate loans, as a proportion of all new home loans, fell to 9.1%, their lowest level in four years, as investors took advantage of record low variable interest rates. The average loan size for first home buyers rose $3,900 to $355,700. The average loan size for all owner occupied housing commitments rose $3,000 to $382,400 for the same period.

“It appears that demand for housing is falling due to two reasons. First, the campaign by Australian financial regulators to take the heat out of property investment appears to be working effectively, with the value of investor home loans dropping sharply in October after prudential regulations were introduced to curb sharp rises in property investment,” said Watt.

“Second, first home buyers have pulled in some areas, no doubt due to the very high level of property prices, particularly in Sydney and Melbourne, where unaffordability remains a bar to entry to the property market.”

In May, banks tightened lending criteria such as loan-to-value ratio (LVR) after the Australian Prudential Regulation Authority’s introduced supervisory measures to cap the growth of investor lending. Then, at the end of June, APRA released a temporary directive to five banks requiring them to increase the amount of capital they hold against their residential mortgage exposures. “We expect the level of property investment to continue to fall in 2016 as higher interest rates on investment home loans begin to take effect,” Watt said.

“No doubt, this will help to take pressure off property prices and give some relief to first time buyers in 2016,” she said.
act. is an innovative banking service that redirects profits back into social projects. For each product act. has, including home loans, act. allocates ‘impact dollars’ – real dollars taken from the profit it earns – and it gives them back to its customers, who can then donate to a project of their choice listed on letsact.com.au.

act. recently won Money magazine’s 2016 Best of the Best award for Best Innovative Banking Product. “This award acknowledges that act., which was launched in November 2014, is a world-first banking model which is changing banking for good. act. gives control to each customer to decide when or where their profit allocation is spent.”

“act. blends retail banking with crowdfunding, offering consumers an opportunity to create their own social impact, by choosing how a portion of profits generated from their own banking is distributed to social and not-for-profit projects.”
act. celebrated its first birthday in November, after a strong start. “More than $150,000 has so far been raised for some awesome community projects. We thank our customers and partners so much for their continued effort in supporting act.,” said Watt. “Check out our birthday video here.”

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Fixed-rate loans, as a proportion of all new home loans, fell to 10.0%, their lowest level since July 2012, as borrowers took advantage of record low variable interest rates. Housing finance data released today by the Australian Bureau Statistics (ABS) reveals the number of first home buyer home loan commitments as a percentage of total owner occupied housing finance commitments fell to 15.4% in July 2015 from 15.8% in June 2015 despite two official interest rates cuts earlier in the year.

Over the month, the value of new home loans taken for owner occupier housing rose 2.2% to a record $19.3 billion in July while the value of investment housing loans rose 0.5% to $13.6 billion, taking the total value of home loans written in the month to a record $32.8 billion.

Reflecting the huge investment into Australian property, the total value of outstanding home loans written by banks and other authorised deposit-taking institutions (ADIs) hit a fresh record of $1.4 trillion, made up of $863.9 billion in home loans to owner occupiers and another $549.4 billion to investors.

The average loan size for all owner occupied housing commitments jumped $9,500 to $364,400 while the average loan size for first home buyers rose just $900 to $341,200.

act.’s Amanda Watt said improving affordability in some Australian capital cities was luring more owner occupiers and investors into the market, despite the upfront expense of buying a home. The Adelaide Bank/Real Estate Institute of Australia Housing Affordability Report shows improved housing affordability nationally in the second quarter of this year, with the proportion of income required to meet loan repayments falling by 0.5 percentage points to 30.3%.

“Younger Australians and investors are being attracted into the property market, with the number of home sellers exceeding buyers in some of Australia’s smaller cities, which is leading to lower prices and improved affordability in many locations.

“While Sydney house prices are very high, with a median around $1 million, we are seeing a pull-back in some cities like Darwin and Perth, which has pushed down house prices. Along with lower interest rates, this has made owning your own home more achievable, though some first home buyers are clearly still struggling to raise a deposit and service a mortgage,” she said.

“Looking ahead, we could see a stabilisation of house prices in coming months in Sydney and Melbourne, with the recent volatility in share markets likely to subdue some activity in property markets to a degree as some investors realise losses on the equity portfolios,” Watt said.

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A new report reveals Australian businesses earned a record $266.8 billion from internet sales in 2013-14, while more are using social media to build their brands and followings, said Amanda Watt, who heads up act., a new banking business which uses online platforms and social media to build support for crowdfunding of community-focussed projects.

The report from the Australian Bureau of Statistics (ABS), Summary of IT Use and Innovation in Australian Business 2013-14, reveals the value of e-commerce in the Australian economy jumped 8.2% to $266.8 billion, a new high. The ABS report also shows 47.1% of Australian businesses had a web presence that year, surprisingly steady from a year earlier.

Almost one in three businesses had a social media presence (31%), a jump from 26% a year earlier. Bigger companies (200 or more persons) were more likely to be using social media (66% up from 64% in 2012-13), compared to 42% for businesses with 5-19 persons, up from 34% a year earlier.

The information media and telecommunications industry recorded the highest proportion of businesses with a social media presence (59%), followed by the arts and recreation services industry (56%). In the financial services and insurance sector, almost one in three businesses had a social media presence.

Amanda Watt said the innovative act. business is making its banking products available to the public online and is actively using social media to build awareness and engagement surrounding the social projects for which it seeks crowdfunding.

“Essentially, act. gives customers (activists) the opportunity to earn and donate via an online platform banking profits to a whole range of inspiring, community-focused projects – simply by doing something they already do everyday,” said Watt.

“There are no branches – everything is done over the phone and online. Our customers can decide which community-focussed project to support by visiting letsact.com.au. We give impact dollars back to our customers, who can then donate to a project of their choice, whether they are focussed on the environment, homelessness or protecting animals,” Watt said.

“We build support for these projects and give updates via our social media presence on Twitter, Facebook and LinkedIn. The crowdfunding of such projects has proved more successful using social media, which more easily connects supporters to their projects in a very cost effective way.

“The sharing of video and photos on social media lends itself perfectly to crowdfunding; video sharing, especially on Facebook, is for example growing at a very rapid rate. Moreover, the sharing our stories on social media ensures no geographic boundaries exist, so in Australia projects are shared and funded by people on the other side of the country.”

act. is a newly established banking service that redirect profits back into social projects. The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act. Home loans will create the greatest amount of impact dollars. For example, a customer that holds an average first home loan size of $330,000 mortgage with act. could generate approximately $41 a month to reinvest in the social project of their choice. act. is a division of Community Sector Banking – a collaboration between Bendigo and Adelaide Bank and Community 21.

“This crowdfunding process enables our customers to give something back to social causes they are passionate about by choosing an act. product. Each project has a time limit of 60 days to get funded and if not enough money is pledged, the money is directed back to the customer to be put towards a different project. All of this is done transparently and quickly online, so consumers know immediately where their impact dollars are going.”

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The report, the Australian Prudential Regulation Authority (APRA)’s Quarterly Authorised Deposit-taking Institution (ADI) Property Exposures for the March 2015 quarter, reveals the total size of ADIs’ housing loans grew 1.9% or $23.9 billion from the December 2014 quarter and was up 9.0 per cent or $107.1 billion from a year earlier.

There were 5.3 million housing loans outstanding with an average balance of $243,000 as at March 31, 2015. A significant proportion of these loans, or 37.4%, were interest-only loans, according to the APRA data. Of home loans approved just in the March 2015 quarter, 42.3% were interest-only loans, reflecting the flood of investor money into property.

The March quarter report reveals owner occupier home loans accounted for 65.4% of home loans, rising to a fresh high of $852 billion, an increase of 1.5% from the December 2014 quarter and up 7.2% from a year earlier. Investment loans accounted for 34.6% cent of all home loans, totalling a record $450.2 billion, up 2.6% from the previous quarter and a jump of 12.4% from a year earlier

Major banks held the bulk of home loans at $1.06 trillion while other domestic banks held $148.6 billion on 31 March 2015.

act.’s Amanda Watt said the data highlights the huge size of Australia’s home loan market as Australians continue to pour their savings into property at a time when returns from term deposits and other cash investments are low.

“Given interest rates remain at very low levels, we are likely to see this strong flow of money continue into the property market through the remainder of 2015 and into 2016,” said Watt.

“While property prices in Sydney and Melbourne remain at very high levels, record low interest rates and the stabilisation of property prices in some smaller capital cities will likely improve home loan affordability, attracting first home buyers,” said Watt, who heads up act., a new division of Community Sector Banking – a collaboration between Bendigo Bank and Community 21.

act. is a newly established banking service that redirect profits back into social projects. For each product we have, whether home loans, credit cards or savings accounts, we allocate ‘impact dollars’ – real dollars taken from the profit we earn – and we give them back to our customers, who can then donate to a project of their choice listed on letsact.com.au, whether they are focussed on the environment, homelessness or protecting animals,” said Watt.

“The amount of impact dollars a customer generates depends on the act. banking product they choose and their banking habits. Home loans will create the greatest amount of ‘impact dollars’. For example, a customer that holds an average first home loan size of $330,000 mortgage with act. could generate approximately $41 a month to reinvest in the social project of their choice,” said Watt.

“The calculator on act.’s banking page reveals how impact dollars customers generate each month by banking with act. The process is transparent and effective and it enables property investors to give something back to social causes they choose by opting for an act. home loan,” she said.

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