From 1 July, two entitlements – Parental Leave Pay and Dad and Partner Pay – will be combined into one payment.

That means the current entitlement to 18 weeks’ paid parental leave pay will be combined with the current Dad and Partner Pay entitlement to two weeks’ pay. 

As a result, partnered couples will be able to claim up to 20 weeks’ paid parental leave between them, with each partner taking at least two weeks (except in some circumstances). Parents who are single at the time of their claim will be able to access the full 20 weeks.

Other paid parental leave changes include:

Parents can take their parental leave days at the same time; and they can do so at the same time as paid leave and between periods of paid work.

This is designed to give parents more flexibility to manage their work and care arrangements.

Sources:

https://www.fairwork.gov.au/newsroom/news/changes-to-the-paid-parental-leave-scheme

https://www.servicesaustralia.gov.au/dad-and-partner-pay

https://www.servicesaustralia.gov.au/changes-if-you-get-family-payments?context=64479#pplchanges 

If you’ve been hearing lots of stories about people refinancing their home loans in search of lower interest rates, there’s a very good reason.

Refinancing is at record levels, according to data from the Australian Bureau of Statistics.

Borrowers refinanced $19.9 billion of mortgages in February – 22.6% higher than the year before, when refinancing activity was already very high.

 

Why you might be able to refinance to a lower rate

One common reason borrowers refinance is to switch to a comparable (or better) loan with a lower interest rate.

Even if you got a sharp rate when you took out your loan, there are three reasons why you might qualify for a lower rate today:

  1. Lenders often charge lower rates to refinancers than existing customers. In other words, if someone refinanced from another institution onto the same loan as you, there’s a chance they’d be given a lower rate than you.
  2. The mortgage market is very competitive. So even though your lender may have been offering one of the best deals in the market at the time you got your loan, other lenders might have lifted their game since and started offering even better deals.
  3. Your financial circumstances might’ve improved. If you’ve built up equity in your home or increased your household income since you took out your loan, you might now be able to qualify for deals that weren’t available to you then.

 

Refinancing in this climate

Many people breathed a sigh of relief earlier this month when the Reserve Bank of Australia (RBA) left the cash rate unchanged, following 10 consecutive rate rises.

However, when RBA governor Philip Lowe announced the decision, he warned that “some further tightening of monetary policy [i.e. some further rate hikes] may well be needed” to drive down inflation.

If that happens, it is a good idea to keep a close eye on your loan to ensure you don’t pay a higher interest rate than necessary.

Get in touch if you’d like me to compare home loans for you and see if you could refinance to a lower rate. Depending on your situation, switching could save you tens of thousands of dollars over the life of your loan.

One of the country’s leading property economists has delivered an argument for why prices for established homes are poised to enjoy significant growth.

Ray White Chief Economist Nerida Conisbee said problems in the construction and rental markets would push people to buy established homes (i.e. those that aren’t brand new), which would drive up prices.

Starting with the construction problems, Ms Conisbee pointed to Australian Bureau of Statistics data showing that the number of new homes being approved was “trending to its lowest level in over a decade”. Furthermore, many of these new homes would “not be built quickly” due to increased construction costs.

“Many people who would otherwise have bought a new home will be pushed to the established market. Either because the cost to build a new home is too high, it is difficult to find a builder or simply there is no availability in the suburb they want to live in,” she said.

Moving on to the rental problems, Ms Conisbee said the rapid rise in rents would encourage people to buy established homes, particularly those who had recently moved or only planned to rent temporarily.

“When moving to a new city, people tend to rent before they buy. Given a lot of this movement happened over 12 months ago, it appears that as 12-month leases expire, rental increases kick in making buying more attractive than it did,” she said.

 

Demand for established homes is building

Ms Conisbee said while there had been signs of a slowdown in construction cost increases, building costs were unlikely to go backwards, and the pipeline of new homes would take time to fill up again.

“In addition the lack of rental properties will take some time to resolve. Even though the cost of finance has risen rapidly, it looks like this pressure on prices is now being overturned by a shortage of homes,” she added.

As a result, the recent recovery in prices for established homes looked set to continue, according to Ms Conisbee.

“The problems we are having in the construction sector and with rental growth are going to mean that price growth will continue, driving prices back to where they were at the start of 2022 within the next six months,” she said.

 

Contact me for a home loan pre-approval

If you’re considering buying a home, and prices in this part of the market continue to rise, it could be a good idea to take action sooner rather than later.

Before you start your property search, I recommend you contact me for a home loan pre-approval, so you know your borrowing capacity, and therefore how much you can spend on your new home.

Consumers are confidently snapping up new vehicles, and while they continue to gravitate towards the biggest brands, they’re also showing increasing interest in greener vehicles.

A total of 269,002 new vehicles were sold in the first three months of 2023, which was 2.5% more than the first quarter of 2022, according to the Federal Chamber of Automotive Industries (FCAI).

That said, sales in the month of March were 3.9% lower than the year before.

FCAI Chief Executive Tony Weber said “March was a solid month for new car sales given the supply constraints car makers are facing both domestically and internationally,” but that the quarterly number was “a better indicator of the underlying strength of the market”.

In a sign of changing buyer preferences, the number of battery electric vehicles sold in March was 19.5% higher than the year before, while plug-in-hybrid sales were 33.3% higher.

“This growth demonstrates that where Australians can afford a battery electric vehicle which suits their lifestyle, they will buy them,” Mr Weber said.

Toyota leads the way

Toyota was the market leader in March, capturing 13.6% of all new vehicle sales. Next came Mazda (8.5%), Ford (6.7%), Kia (6.6%) and Mitsubishi (6.0%).

The top-selling models in March were:

Thinking about buying a new car, SUV, van or truck? I can help you finance the purchase. Contact me today and I’ll be happy to explain your options.

Australia’s consumer watchdog has sounded the alarm about sophisticated bank impersonation scams that have claimed a number of peoples’ life savings.

The Australian Competition and Consumer Commission (ACCC) said scammers were using new technology to trick their victims. This included:

Another way scammers were inducing people to respond to their fake calls and texts was by making them seem urgent, such as by telling the recipient that fraudulent activity had been detected on their account.

Bank impersonation scams impersonate the big four banks and other institutions.

 

The ACCC’s top five signs of a bank impersonation scam

  1. There is a sense of urgency or threat to the message – such as “your bank account has been accessed”, “your bank account has been locked” or “a payment has been made from your account. If this was not you, please call (phone number)”.
  2. The message looks different to other messages in the SMS thread – for example different wording being used.
  3. The message contains a suspicious link. Never click on links.
  4. The SMS instructs you to call a particular number. Always find your bank’s phone number independently.
  5. The caller tells you to transfer money to a different account to “keep it safe” or for “further investigation”.

 

The ACCC said to suspect a scam if you’re told to urgently transfer funds to another account, you receive an SMS with a telephone number to call, or you’re asked to provide passwords, one-time security codes, pins or tokens over the phone.

Bank impersonation scams are “very hard to detect”

The ACCC’s Scamwatch service received 14,603 reports about bank impersonation scams in 2022.

“We are incredibly concerned about bank impersonation scams because they can be so convincing, they are very hard to detect,” ACCC Deputy Chair Catriona Lowe said.

“We know of a man who lost over $500,000 after receiving a call from someone claiming to be from a major bank’s security department, wanting to know if a payment had been authorised.”

“In another case, a man lost $38,000 after receiving a scam text message about a suspicious transaction. The scam text appeared in the same conversation thread as legitimate messages from his bank. He called the number in the text and was put through to a member of the banks’ fraud team. Unfortunately, it was an elaborate scam and he lost everything.”

In today’s meeting, the Reserve Bank of Australia (RBA) decided to hold the cash rate for the first time since they started rising in May 2022. The cash rate remains at 3.6%. This could provide some reprieve to households that have experienced regular hikes to their interest rates over the last 12 months.

It has been well reported the cash rate has been going up, and with it interest rates for home loans. But what is the connection between the two? And what exactly is the cash rate? We break down how it could actually impact you.

It has been well reported the cash rate has been going up, and with it interest rates for home loans. But what is the connection between the two? And what exactly is the cash rate? We break down how it could actually impact you.

What is a cash rate?

The cash rate is an interest rate set by the RBA that determines what banks and lenders pay to borrow money overnight. This then gets passed down to the consumer through the bank or lender’s own interest rates, both for loans and deposits such as savings accounts.

What is the RBA and why does it set the cash rate?

The RBA is Australia’s central bank, made up of a board of members appointed by the Treasurer. It drives monetary policy for the nation with the aim to encourage economic stability, employment and prosperity for Australians. It aims to meet its inflation target and maintain a strong financial system, as well as issuing the country’s banknotes.

The board meets on the first Tuesday of every month (except January) to discuss policy and potentially change the cash rate. Why would they change it? There are a number of factors. For example, if inflation is above target, increasing the cash rate could help cool down spending by households, which could help bring inflation back down. If unemployment is too high, decreasing the cash rate could encourage more investment and spending to create more jobs.

How does the cash rate impact me? 

The cash rate is one of the main factors influencing the interest rates the banks charge on home loans and place on savings. If the cash rate goes up, variable rates on loans usually also go up, meaning if you have a variable-rate home loan, your repayments would increase. Usually savings interest rates also increase, meaning money you have in a savings account could accrue more interest (depending on the bank).

However, it is important to note the cash rate is not the only determining factor of interest rates. Other factors include funding costs (the cost for the lender to borrow money – where the cash rate plays a role), competition from other banks and risk of default (if a loan is considered riskier, it is likely it will attract a higher interest rate).

Global property group CBRE has forecast a “rent-a-demic” for Australia’s industrial & logistics (I&L) sector.

The main reason is that the I&L national vacancy rate is just 0.6% – the lowest in the world – which should lead to strong rental growth in most capital cities in 2023.

“This is being propelled by the fact that 58% of the 2023 I&L development pipeline is already pre-committed. And even with the substantial incoming 2023 supply pipeline, this surging vacancy demand will not be met,” according to CBRE.

CBRE said vacancies would be unlikely to rise significantly over the next few years. Therefore, rental growth would remain high in the medium-term and even the long-term, as Australia was still in the early phase of a strong rent growth cycle.

“National super prime rents in Australia grew by 6.8% in Q4 2022 to be +25% year-on-year. We expect high single-digit rent growth across most markets in 2023, and compound annual growth rate of 5% nationally over 2023-26.”

One potential headwind is an expected economic downturn, which would lead to less spending by consumers and lower profits for tenants.

“Higher rents coupled with weakening consumer demand will place pressure on smaller occupiers, driving the expectation for greater sub-lease activity,” according to CBRE.

 

Why the long-term outlook for industrial is strong

CBRE’s Regional Director of I&L Advisory and Transaction Services, Cameron Grier, said if consumers did cut back on spending, some sectors would be more affected than others.

“I think we’ll see certain types of demand contract,” he said.

“Market items like televisions, fridges, furniture and items people bought during the pandemic – you only need to buy those every so often. 

“But in terms of all the other things, we’re seeing expansion in most groups. Anyone in food, pharmaceuticals, 3PL logistics space and non-discretionary spend, they’re all needing floorspace.”

Mr Grier said the long-term outlook for industrial space was strong, because Australia was about five to seven years behind countries like America with delivery speed and warehouse logistics efficiency. 

“We look at where those groups are now, how much space they have and the trajectory for growth. It’s huge and we think we’ll follow that same pathway,” he said. 

Depending on your goals and financial circumstances, buying an industrial asset could be a very sound investment decision. Reach out if you need help funding the purchase.

The Australian Taxation Office (ATO) has changed how taxpayers claim deductions for costs incurred while working from home.

You can choose one of two methods to claim working-from-home deductions – the fixed-rate method (which has been updated) and the actual-cost method (which has not).

The revised fixed rate method applies from 1 July 2022 and can be used when you file your tax return for the 2022-23 financial year.

Under the new rules, the number of cents per work hour has increased from 52 to 67 cents. This revised fixed rate covers energy expenses (electricity and gas), phone usage (mobile and home), internet, stationery and computer consumables. 

If you use this method, you can’t claim deductions for any other expenses. 

 

However, you can make separate claims for:

The new fixed-rate rules require you to keep a record of all the hours worked from home for the entire income year. The ATO won’t accept estimates or a four-week representative diary or similar document from 1 March 2023.

 

Actual-cost method

You can claim the actual work-related portion of all running expenses, but you will need to keep detailed records for all the working-from-home expenses being claimed. This includes:

 

Expert advice from the ATO

ATO Assistant Commissioner Tim Loh gave three pieces of advice for taxpayers:

  1. Before deciding which of the two methods you want to use, make sure you’re eligible to claim working-from-home expenses. To be eligible, you must be working from home to fulfil your employment duties, not just carrying out minimal tasks such as occasionally checking emails or taking calls. Also, you must incur extra expenses as a result of working from home.

 

  1. No matter which method you use, keep records. This will give you more flexibility to choose the method that gives you the biggest tax deduction.

 

  1. You can’t claim for things like coffee, tea, milk and other general household items, even if your employer may provide these kinds of things for you at work.

The federal government has announced plans to reduce tax breaks for Australians with superannuation balances above $3 million.

Currently, earnings from super in the accumulation phase are taxed at a concessional rate of 15%. This will continue for all super accounts with balances below $3 million. However, from 1 July 2025, the concessional tax rate applied to future earnings for balances above $3 million will be 30%.

Individuals will have the choice of either paying the tax out-of-pocket or from their superannuation funds.

This change will apply to future earnings – it will not be retrospective. Also, it will not impose a limit on the size of superannuation account balances in the accumulation phase.

About 80,000 people, or about 0.5% of Australians with superannuation accounts, will be impacted, according to government estimates.

Treasurer Jim Chalmers said the government needed to take action given “the challenges facing the economy and the budget”.

“The 2022‑23 Tax Expenditures and Insights Statement … shows that the revenue foregone from superannuation tax concessions amounts to about $50 billion a year. The cost of these concessions is projected to exceed the cost of the Age Pension by 2050.”

With vacancy rates low and rents growing strongly, the market is crying out for more property investors, to increase rental supply and put downward pressure on demand.

But are investors getting out of, rather than into, the market?

There are mixed signals, according to Ray White Chief Economist Nerida Conisbee.

On the one hand, Ms Conisbee noted that while mortgage stress has “risen dramatically” over the past year, this has not led to an increase in forced sales by investors. “Mortgage holders are stressed but they are not yet so stressed that they are being forced to market,” she said.

On the other hand, Ms Conisbee said that with interest rates continuing to rise, some investors may sell properties that are no longer providing enough of a return. “If so, given that fewer investors are buying, it will result in even more pressure on rents,” she added.

Investor sales rose last year but have since fallen

Ms Conisbee said that as the cost of living continues to rise, many households are looking for cost savings. Selling the family home would be a last resort for most, but selling an investment property (particularly if it’s negatively geared) or a holiday home (particularly if it’s rarely being used) would be a more palatable option.

However, Ray White auction data suggests that not only are fewer owners of all types selling up, but the share of investor sellers has also been falling.

“This proportion of investors selling at auction peaked in August at 28%. In February it was 21%. Furthermore, the number of investors selling at auction was far higher in the months prior to when the downturn began and in the months following than it has been in the past six months,” she said.

“Investors that went to market appear to have taken the opportunity to sell close to peak, in anticipation of the downturn. Fewer are selling now given that prices have come back, but also because rents have risen so much, thereby providing a buffer for higher mortgage costs.”

Lower prices means lower deposit requirements

While some investors have exited the market, others have happily collected those fast-rising rents Ms Conisbee mentioned.

At the same time, prices have fallen in many markets over the past year, reducing the deposit requirement.

If you’d like to buy an investment property, I can help. Get in touch so I can compare home loans for you and review your borrowing capacity.