Sydney’s meeting on the 6^th September saw the RBA’s board of directors came to an agreement to keep the cash rate unchanged at 4.75 per cent.

It was the ten-month anniversary of last year’s shock rise on Melbourne Cup Day, and the longest stretch of a stable cash rate in four years.

The volatility in worldwide markets and the likelihood of continuing debt and economic problems in the US and Europe made the possibility of a rate increase almost non-existent.

The decision followed huge overnight falls in Europe which wiped billions of dollars off the Australian share market.

With consumer confidence at a record low, struggling tourism and manufacturing industries, and poor retail sales, the decision also came after months of uninspiring economic data.

In addition the unemployment rate has risen to 5.1 per cent, whilst a decrease in the number of job advertisements being published is evident.

Building approvals have also fallen, with the construction industry suffering due to low levels of activity.

RBA have said that the near-term growth outlook still looks weaker than what was expected a few months ago, with conditions in global financial markets very unsettled over recent weeks. There is continuing uncertainty about both the resolution of sovereign debt problems and the prospects for economic growth in Europe and the United States.

This uncertainty and financial volatility has severely reduced confidence, and both firms and households in major countries are likely to behave with more caution. This will result in tighter than usual financial conditions.

Experts predict that rates will remain on hold until the end of the year.

Most people are taught early on to learn from mistakes. But losing thousands of dollars due to a bad judgment on an investment property doesn’t pay.

With investment property the stakes are high and the possibility of losing a lot of money is huge. You can go bankrupt simply by taking out the wrong investment loan or purchasing a property in an area that is about to fall into decline.

25 per cent of property investors sell their investment property within just a year of purchasing it, a recipe for a personal financial crash.

So before you jump into property investment, here are a few of the common mistakes.

Thinking in the short-term

A property is like any other investment. You must set goals, consider time frames and strategies and what you can afford to spend. To achieve stable capital growth, it is best to hold on to your property for at least 7 to 10 years.

A lot of houses and dwelling units can double in value during that time, but of course prices won’t increase evenly from one year to the next. Using a buy-and-hold strategy will protect you from these market vagaries and maximize profit.

Choosing to “pick and flick” investment properties, i.e. hold on to them for the short term, will make it very difficult to accumulate wealth and losing a lot of money is a high risk.

Buying on emotion

An investment property is very different from a home. A common error is to pick your investment property because you “like it”, instead of on the basis of capital growth and rental income. You should always think about the features that will increase rental return, and not what you personally may prefer.

Wrong finance

Pre loan approvals are essential. Successful investors never buy a property on impulse, so it is advisable to take the time to study how different loans work and how you should structure repayments.

If you are looking to invest in property, contact SuperRate and one of our consultants will be happy to advise you.

The preferred choice of destination is Queensland, with 51 per cent of interstate investors owning a property there.

This is despite house and unit prices in Queensland falling more than 6 per cent in the last financial year, further than every other state. However, in terms of interstate investor popularity Queensland was far ahead, with Victoria second best at 14 per cent, New South Wales at 12 per cent and with South Australia at 11 per cent.

Tasmania and the ACT have the highest proportion of investors who currently own property interstate, at about 50 per cent and 57 per cent respectively, whilst SA and Queensland have the lowest proportion, at 10 per cent and 9 per cent respectively.

Experts say that the appeal of Queensland comes from people purchasing properties that they could rent now and holiday in or retire to in the future.

This suggests that investors are choosing rental properties in the areas they believe will give them the best returns, regardless of where they live.

It’s possible that some people are moving interstate for work and lifestyle reasons, but keeping their existing properties to generate rental income or in case they intend to return.

If you have a question about home loans or are looking for a great deal, contact SuperRate.

Generally, a project home builder constructs one or two display homes and once contracts are signed, they begin to construct others. If they do not have contracts signed, they will not build; as a result there is a stoppage to supply.

For the apartment developer it is very different, as if they wish to construct an apartment block containing 300 apartments, for instance, banks would require them to at least sell 70 per cent of the plan. Whilst that is 210 apartments dealt with, the apartment developer would have to hope that the remaining 90 apartments would be sold before the completion of construction. With so many available apartments up for sale at one time it’s easy to flood the market and cause prices to fall.

It’s fairly common to re-sell apartments at lower prices than they were originally purchased for. One of the reasons for this is the number of apartments that are being sold at one time (supply); another is the land to asset ratio.

This assumes that the value of land appreciates at 10% per annum, whilst the value of buildings depreciates at 1.5% per annum. If properties double every seven to ten years, this means an increase in property value of between 7 and 10 per cent each year. Then, if building values depreciate and land values appreciate over time, these two forces are working against each other to give an overall increase in value of between 7 and 10 per cent annually.

If you are looking to enter the property market or have a question about home loans, contact SuperRate.

Experts believe that Australia’s high inflation is likely to keep the rates stable in the short term, as the domestic economy remains strong and the Reserve Bank is worried about inflation.

There is little reason for them to cut rates beyond the crisis of confidence that is emerging across the rest of the globe.

Australia’s real estate market is considered the most overvalued in the Western world. It is thought that the property market of Australia could follow a similar path to Japan’s crash during the late 1980s, when housing prices dropped by 60 per cent. Prices could fall to where they were in mid-2000, which would mean young families would be able to afford housing again.

The debt problems Europe and the US are currently facing has led the money markets to price in a cut of 1 percentage point in the official Australian official cash rate by the end of 2011.

A cut that size would help struggling families save $200 a month in average monthly repayments on a loan of $300,000.

However, even if the RBA cuts rates, interest rates could shoot up as costs of borrowing rise in the global market.

Demand on charities for financial relief has risen by 12 per cent, an increase many blame on mortgage stress and cost of living pressures. January to March this year saw a 30 per cent rise in arrears on mortgage payments, with repossession notices served to home owners by lenders at their highest in two years.

Over the past ten years there has been a significant change in the mortgage market, household leverage and a substantial increase in property prices. These factors, together with increased borrower sensitivity to interest rate rises, may result in a significantly worse mortgage performance in any future downturn than during the last recession.

Household debt as a percentage of income has gone up from 49.4 per cent in December 1991, during the last recession, to 156.4 per cent in December 2010. Over the same period, interest payments as a percentage of disposable income have increased from 9 per cent to 11.9 per cent, although interest rates now are less than half of what they were in 1991. Many are concerned that this places mortgage borrowers in a very vulnerable situation.

These figures show a significant shift in the indebtedness of Australian borrowers, who are now significantly more sensitive to changes in interest rates than they were 20 years ago.

If you have a question about home loans or are looking for a great deal, contact SuperRate.

There are two kinds of mortgage protection and it is important that you take out the most appropriate type of mortgage protection insurance policy for your personal needs.

Mortgage Insurance, or Lenders Mortgage Insurance, protects your home loan provider or lender. If you are no longer able to pay for your mortgage, this will ensure that the bank or the lender does not incur any financial loss in the process.

When do you need Mortgage Insurance?

Each mortgage provider varies but, in general, if you borrow greater than 80% of the proposed value for your property, or are taking out a low-doc home loan, you should definitely consider mortgage insurance. Once your mortgage provider has completed the valuation and is satisfied with your personal finances, your lender will have provisional acceptance subject to mortgage insurance approval.

Prior to 18 months ago, mortgage insurance was easily acquired with approvals being completed within 24 hours. However, following the global economic crisis, the scrutiny and turn around times have greatly increased. Nowadays, it takes anywhere from four to five days for the mortgage insurance company to review your file, and if they should need clarification or further information you shouldn’t expect a reply for an additional 4-5 days. Mortgage insurance companies are now much stricter to ensure that they perform full due diligence on every application before any document are signed off.

If you are considering purchasing a home loan, contact SuperRate for a great deal.

Many feel that LMI is a product used as leverage against the consumer. Although it is insurance paid for by the consumer, the benefits are for the lender. There are concerns with defaults – if there is a claim paid against the LMI policy, the insurer will go after the borrower to reclaim their losses.

A policy could be active for up to 25 years, although they are often a lot shorter. However, if the borrower changes their mortgage they are required to take out a new policy, even if they have paid the premiums on the older policy for a number of years.

Unless it is within the first 24 months of the policy, they receive no rebate of the premiums they have already paid.

A loan worth $350,000 could attract a premium of $8,400 per year with additional charges and duties.

With no product disclosure statements issued, consumers are given very little information about lenders mortgage insurance. This becomes a problem when lenders are trying to refinance for clients.

There also is a lack of disclosure of commissions paid to the lenders and no commission claw-back in the event that a policy is cut short.

If you are looking for a mortgage, contact SuperRate for a great deal.

Nationwide, building approvals dropped 3.5 per cent in the month of June, after a decline of 7.9 per cent in May. On an annual basis, building approvals sank by 15.5 per cent in June from a 14.4 per cent fall the previous month.

Economists had predicted an increase of 3 per cent in building approvals in the month and a decline of 10.3 per cent for the year.

Only Canberra and Sydney of the 8 capital cities showed an increase in detached houses during the second quarter.

These weak housing numbers underline current erratic economic behaviour, with consumers reticent to take out new home loans.

This is directly related to the drop in building approvals, but economists predict economic growth will pick up in the medium term and buoy the housing sector.

Underlying demand is still exceeding supply with Australia constructing only about 135,000 units while there is an annual need for 200,000 houses.

It is estimated that building approvals are running about 10 per cent below their long term average, suggesting a rental squeeze and a rise in house prices.

If you have are looking for a great deal on a home loan, contact SuperRate.

The consumer price index went up by 0.9 per cent, and the underlying inflation rate, which strips out unusually large movements, rose by the same.

The Australian dollar increased to a record high and the prices of bonds fell as the investors wagered that the RBA may increase interest rates as early as August.

Many fear that there could be grim consequences in 2012 if they delay for another six months.

However, the underlying CPI is strong, which could urge the RBA to increase the interest rates sooner than expected.

RBA’s goal is to keep headline inflation between two to three per cent during the course of the economic cycle.

The RBA last raised the cash rate in November 2010, increasing it to 4.75 per cent.

The central bank is predicted to keep the cash rate unchanged for a few months, due to the increasing uncertainty within the international market.

Among those concerns are the European sovereign debt problem and the possibility that the US government might debt default if it does not raise its debt ceiling.