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We   specialise    in    delivering  services    to    the    expatriate community.  You  can   find our advertising,  articles or  contact details  by visiting or contacting the   following   expat organisations:

www.homesick.com.au

www.newcomersnetwork.com

www.australiansabroad.com

www.southern-cross-group.org

Proper Finance Solutions            Level 1, 1104 - 1108 Toorak Rd Camberwell VIC 3124 Australia    telephone: +613 9809 1444 facsimile: +613 9809 1499

Welcome to the latest edition of our newsletter. Please note that we have decided to send it out at the start of each quarter, rather than at the end.

In this issue:

• 100% finance for Australians overseas
• Australian interest rates outlook
• Property market overview
• Our selection of articles by The Age

As detailed in our last newsletter , banks are continuing to relax lending requirements as a response to the slowdown in housing lending. Interest discounts are being offered, and it is no longer a requirement to demonstrate savings patterns to obtain a mortgage for up to 95% of the property value. 

100% finance is now available for Australians overseas buying residential investment properties back home. Foreign investors can finance up to 80% of the property value. Normal qualifying criteria apply with a loading of 0.3% on top of the standard variable rate.

Australian interest rate outlook

In a statement on monetary policy by the RBA in May 2006, the view is that 'the next move in interest rates is more likely to be up than down'. This is attributable to strong global economic expansion which is forging growth in Australia, a domestic economy operating with limited capacity, strong consumer spending and an expected increase in underlying inflation.

After increasing cash rates by 25 basis points in May, the RBA will be sitting back and analysing the impact of this over the next few months. Indeed rates were left unchanged at 5.75% at June and July's board meetings.

During May and June, the major banks increased interest rates for 3 – 5 year fixed mortgages, indicating expectations of a further rate rise. There have been rumours of another 0.25% rate rise by the end of the year, although last month's report by Macquarie Bank expressed the opinion that the RBA may be hold for the rest of the year, due to a softening in the global economic outlook. The general consensus is however, that there is a bias towards higher rates, rather than lower.

Property market overview

In spite of the upward trend in interest rates, the number of people taking out home loans is continuing to increase from its low point in 2004, according to last month's media release by the MIAA. Both investors and owner occupiers are demonstrating continued confidence. In April of this year, the number of owner occupiers increased in all states except Victoria.

The number of first home buyers has hit record levels as shown by figures from the Australian Bureau of Statistics. In April 2006, 19.1% of total housing loans were taken out by people buying their first homes - the highest level since March 2002. In an MIAA media release about the latest MIAA/BankWest Home Finance Survey, 89% of first home buyers are driven by being able to renovate their home to their taste, 75% want to feel financially secure and 68% want the stability of their own home. The various benefits of owning their own home are perceived to outweigh the commitment of a mortgage.

For further details, please refer to the MIAA Economic Review.
Our selection of articles by The Age

Property market bounces back early

Australia's housing sector appears to be making an earlier than expected comeback following months of sluggish growth, economists say ... more

Jobless drop raises odds of rate rise

Home buyers are more likely to be stung by higher interest rates this year after the unemployment rate fell to a 28-year low .... more

Australia slips further down the rankings

Australia has slipped a notch. Taiwan has taken over our spot as the world's 16th largest economy, as the nation's growth rate has slowed to the middle of the pack of rich countries ... more

Rate rise set to stall house prices

Higher interest rates are expected to thwart a turnaround in house prices in Sydney, Melbourne and Brisbane this year, but the commodities boom will insulate Perth, where real estate prices are rising the fastest ... more

We're spending more than we earn

Australians are spending at an unsustainable rate, shelling out more than they earn, economic forecaster Access Economics has warned .... more

Melbourne house prices rise

House prices in Melbourne continue to rise, figures from the Australian Bureau of Statistics show. Melbourne prices rose 0.8 per cent in the March quarter, pushing prices up 3.8 per cent over the past year .... more

Victoria, NSW victims of a boom with mixed blessings

Australia's resources boom over the past two years has been a mixed blessing. On the one hand the commodity prices boom has been the major factor in growth of the resource-rich states of Western Australia and the Northern Territory ... more

The new generation of baby boomers

Two-day-old Xavier Molloy is part of a new baby boom. Bureau of Statistics figures show the number of births in Australia rose by 2.4 per cent to 261,400 last year, 6200 more than in 2004 ... more

Fringe suburbs prove a babe magnet

Australian families are on the increase once again, and the ramifications are set to forge substantial changes in the Melbourne property market - fundamentally altering the distribution of wealth in Australia's second-largest city ... more

Home loans soar as good times roll

A decade of low interest rates has led Australians to engage in an extraordinary mortgage binge that has helped to more than double Melbourne house prices in the same period... more

In our next newsletter - October 2006

• New property purchase services available to overseas investors 

We will be happy to discuss and research various options for your new or existing mortgage in Australia. There are plenty of deals in store for you, simply contact us by sending an enquiry.

If you would like to send us feedback, please do so on

 feedback@properfinance.com.au