”Your Mortgage Or Your Life” - My Mortgage Broker, Ivan Kaye, Talks Me Off The Ledge

Hi Ivan,

Thank you for being so amazing on the podcast this week. You spoke so well and I know it’ll help so many people.

Here is a link to listen on Apple Podcasts: https://podcasts.apple.com/au/podcast/self-care-ish-divorce-dating-doing-you/id1681043804?i=1000635351642

A link to listen on Spotify: https://open.spotify.com/episode/6gGSexD31OifwrZieNiU8M?si=9205d626a08a48d5

And a link to listen on Youtube: https://youtu.be/MU-mS_QwUBM?feature=shared

Now, let’s get a mortgage! Haha. 

Meghan 

Meghan Loneragan

hello@selfcare-ish.com.au

selfcare-ish.com.au

+61427356125

Some questions 

• do  you feel like you are laying yourself bare - with your mortgage broker ? Do you feel they are Judging you on your finances and financial position … .How do you compare with others? 
• Mortgage broker or direct with bank?
• How do you know which mortgage broker to chose ?
• Interest rate rises - is this the right time to buy property
• What property to buy - an investment property? Your own home? 

Some insights 

Getting divorced can be likened to  being an entrepreneur who is leaving a stable job - and going full time into a start up - welcome to Club  Fear - with challenges , financial issues , juggling of children,  finding a place to live …..

Your legs  turning to jelly ….

A mortgage brokers  job  is to assess where you are , what you’ve got and what you get - they are professionals - not there to judge but to help you through your journey to lend money to buy assets and help you with your finances.

You are the ceo of your own life - finance 101 - draw a  triangle - 1. Cash flow - lifestyle 2. Assets - those create income Assets -  you - take care of you , property , shares , business, super  3. Risk can happen - take care of risk - minimise the investment in you 4. Leverage opm - other People’s money - exponential returns

Mortgage brokers - why a mortgage broker - you can go to your bank and 60 other employees - get best rate, best mortgage for you , independent , choice ! Can go back to your existing bank with other

It’s all about trust - trust your banker , trust your mortgage broker . Surround yourself with people that are great at what they do and who you know like and trust 

Ark Monthly Update - October 2023

Market Summary 

• In August 2021 the ASX 200 hit an all time high of 7,632, but has dropped over this time to a low of 6,407 in October. Over the last 12 months the ASX has traded within a limited range, and is now 6,985 today.
• Global shares have followed the same path, with the S&P 500 (the US Stock Index) hitting a peak of 4,818 before dropping down to 3,636 at the lows. It has then since recovered back to 4,314 today. 

Israel/Palestine Conflict

We're going to start with the conflict in Israel and Palestine today, as many of you have asked about the impact of this on your superannuation and investments. Sadly, the tensions between these two groups has ramped up significantly over the last two weeks, and as of last count about 4,200 people have lost their lives. 

Putting aside the tragic cost this has had on the families and communities of those who have passed away, today we'll assess the likely impact of this conflict on business and share prices. 

To start, the market has largely shrugged off the economic impact of this conflict, with share markets unchanged since the escalation two weeks ago. 

There may be impacts on the price of oil however. In fact, oil prices began to rise again in the aftermath of the Hamas attack due to fears of the involvement of other countries in the conflict. 

Obviously, the Middle East is a very volatile region, and a very large producer of crude oil, so the fears of other countries becoming involved in the conflict are pushing prices up in anticipation. 

As you can see in the table below, of the top 9 oil producing countries in the world, 5 are located in the Middle East so it is a very important region to fund the world's energy needs.




The rationale for this is simple, let's say Iran becomes involved in the conflict, which at this stage is a realistic scenario. War involves effort and resources, and every resource that goes into fighting a war is one less resource that can focus on producing oil, Iran's largest export. 

This might result in a reduction in the amount of oil that Iran can produce, and due to supply and demand will push prices up. 

So the price of oil has already started to increase in anticipation of this. 

That being said, as you can see in the chart below, oil is a very volatile asset to begin with. Over the last 10 years it has endured some wild swings, and the price has already increased significantly over the last few months as you can see on the far right. 




So there's a strong argument to say that the oil price reaction is just within the realm of ordinary volatility, and may not be affected in the long term by this conflict.

The below graph shows the nominal price of oil compared to the price of oil in the oil crisis of 1979. As you can see, the price of oil in real terms are still below the highs of 1979 and are in line with the mid-2000's.




How will this affect the share market?

Okay, so how are shares likely to react?

As I mentioned earlier, shares are largely unchanged over the last two weeks. 

The notable exception to this is of course the Israel stock market, which is down 10% in the last two weeks, as measured by the Tel Aviv 125, their primary stock index.

That being said, Israeli shares make up such a small portion of global shares (0.4% to be precise) that it's not going to have a material affect on your portfolio.

 Oil shocks in the Middle East are also relatively common. The below graph shows the price of oil after various geopolitical events and how long oil prices were raised.




So why are share prices unchanged? The simple reason is that stock markets are essentially just a bunch of businesses at the end of the day.

These businesses are valued on the profits they generate, and the conflict in Israel simply isn't going to affect the profits of Apple, Microsoft and Google (nor BHP, Commonwealth Bank and CSL in the Australian index) in any material way. 

To illustrate this point, one of my favourite charts (there's a few) is the Wall of Worry.



As I've explained to many of you in the past, there is always something for investors to worry about. Whether that's wars, recessions, terrorist attacks, or even a few pandemics there's always going to be something going on in the world for investors to be concerned. 

As you can see though, despite these many negative events occurring over the last 120 years, the Australian Share market has returned 11.70% p.a. since 1900 which is a fantastic result. 

For those doing the maths, if you had invested $1 into the sharemarket back in 1900, and lived to the ripe old age of 123, you'd now have $813,842 for your efforts. 

So the key take away here is that worries are normal around the economy and investments, and sometimes they become intense, and have a very real impact on markets, but they eventually pass and the stock market just keeps rising. 

To use an analogy, negative economic news can be like stormy weather in the world of investments. Just as bad weather doesn't change the fact that you own a sturdy house, negative economic news doesn't change the value of a good long-term investment.

This is why I recommend focusing on what you can control, which are the factors below:

• Long-Term Perspective: When you're investing for the long term, you're focusing on the big picture. Economic conditions can go up and down, but history shows that economies tend to grow over time. Just like weather patterns change, economic conditions are not static.
• Diversification: They say diversification is the only 'free lunch' in investing. This means spreading your investments across different types of assets. By doing this, you reduce the impact of negative news on any single investment.
• Time Averages Out Fluctuations: The stock market, for example, can have daily or even yearly ups and downs. But over the long run, it tends to go up. Negative news can cause temporary drops, but if you have time on your side, these short-term fluctuations become less important.
• Buy Low, Sell High: Negative economic news can sometimes create opportunities to buy investments at lower prices. When others are worried and selling, you might find good deals. Over time, as the economy recovers, the value of your investments can rise.
• Emotional Decision-Making: If you react to every piece of negative news, you might make hasty decisions that harm your long-term goals. A relaxed approach can help you stay the course and avoid impulsive moves.

So, to summarise, negative economic news like a war might make you uncomfortable temporarily, but as long as you have a solid plan and a long-term perspective, it's unlikely to change the fundamental value of your investments.

Please keep in mind this in General Advice only, for personal advice specific to you please get in touch over the phone or email.

Regards,

Chris Magnus 

House Prices are increasing and people getting gazumped time and again!

Housing values keep increasing, and is now more than  the peak recorded in April 2022 - at this rate of growth should be passed before end of year! 

In Oz - most city recorded price growth over both the month and quarter, except for Hobart. Perth and Adelaide are experiencing record-high prices, while Brisbane is likely to set a new record! 

People are getting gazumped everywhere .

3 things you can do to prevent from getting gazumped 

1. Maybe use a property buyer ? 

It is a very ‘active’ market. Having boots on the ground will give you a big advantage.

Buyers agents  rely on the relationships they build and their reputation. A good buyers agent have their client’s interests (the buyer) at heart - not the seller 

Remember the real estate agent is getting paid by the seller - and will do all in their power to maximise their price - they are not your friend! 

2. Make sure you have the conveyancer can immediately review the contract

3. Organise home loan pre-approval - 100% free 

Putting in an offer on a property and then spending weeks trying to arrange a mortgage can leave you open to a more prepared bidder. Instead, ensure you have conditional pre-approval for a home loan. That will give you a good idea of your available budget so you can negotiate with confidence. 

What is loan pre-approval?

A loan pre-approval means that a lender has agreed – in principle – to lend you an amount of money towards the purchase, subject to certain conditions being fulfilled. While a pre-approval is not a full or final approval,it allows you to know your maximum available funds so you can narrow your search, negotiate with more certainty and bid with more confidence if you're going to buy at auction.

A pre-approval is a valuable step in getting you closer to your new family home or investment property. It's not a requirement in the home buying process, but it can make life easier.

You should take note of the required documentation and make sure that it’s all provided. This could include things like:

• proof of identification,
• recent payslips,
• Bank account statements, and
• Credit card statements.
• Serviceability - Identification of maximum amount you can afford and that banks will lend to you
• Work out which best bank to use taking into account interest rates and policies that suit you

If you’re successful in obtaining pre-approval (congrats!), it is usually  valid for 90 days.

Start the process here

www.bsi finance.com.au

Marrickville - punching above it’s weight

Marrickville - the home of the fighter Jeff Fenech is punching above its weight

The gentrification of  Marrickville and surrounds has resulted in it being top growth suburb in Sydney growing by over 8% this year! (CoreLogic - see graph)

Ev Foley agrees and shares her view on the market in API magazine

The young professionals, artists and musicians have moved in giving it a  bohemian atmosphere.

Baba’s place - a warehouse converted into  a Lebanese restaurant meeting place  - round the corner from Messina and  “the Factory” hosting sydney fringe festival epitomises the grunge trendiness gives a taste of the vibe of the suburb 

Marrickville’s achieved rockstar status says Aris Dendrinos Richardson and Wrench, who  has just sold a three-bedroom, one bath property on Renwick Street in July for $2.1 million, well above the median dwelling price of $1.7 million.

It seems as if Marrickville will continue to outperform the market !!

Marrickville - A good place to buy? 

API magazine

Below is September’s property outlook - by CoreLogic

If you are interested in a free discovery consultation to see whether you are maximising your property portfolio , leverage index and getting the best mortgage solution - feel free to connect with me - connect with me here 

https://www.bsifinance.com.au/

Interest rates are likely at peak days the banks

New RBA governor Michele Bullock assumed the role yesterday (18 September) following Mr Lowe’s departure after his seven-year tenure.

She assumes the role at a time where all the bank economists are of the view that inflation is now under control and interest rates have peaked or close to peaking.

Commonwealth Bank of Australia (CBA) economist Stephen Wu - CBA’s view that the current cash rate of 4.1 per cent is likely the apex of the cycle

Westpac chief economist Bill Evans the current cash rate of 4.1% looks to be “sustained for the remainder of the cycle”

ANZ economist  Adam Boyton is if the view that  the cash rate should have an extended pause

The NAB Group economics team bekieved there will be a final cash rate hike forward to November from December, to a peak of 4.35 per cent.

Source 

Mortgage business

Time to buy property in Sydney?

Auction activity is buzzing with Sydneys busiest week since early April

Sydney and Melbourne, have recorded their busiest end to winter in over 10 years, with listings up around 20%.

CoreLogic’s Property Market Indicator for the week ending 17 September 2023 has revealed a rise of 2.6 per cent in Sydney’s  auction activity (2,334)

Clearance rate was only  70.1% - not bad when compared to  60.1% 2022 (not as good as in past)

According to PropTracks senior economist Angus Moore, new listings increased year on year since August 2022 - with new listings on realestate.com.au up 20.5 per cent nationally in August and up 4.1 per cent compared to the same time last year. 

He said that they are expecting this activity is likely to continue increasing over the spring selling season, reaching the “typical peak in October and November”.

Home prices nationally have continued to recover, posting their eighth consecutive month of growth in August reaching their previous peak 

Is it time to buy? 

A unit or a house? 

Inspired from mortgage business 

A 10X return - the power of leverage

Imagine buying a property worth $1m with a $100k investment and getting a 10X return! 

With leverage, a 7% return per annum  or more per annum can become a 24% return per annum over 10 years. 

💥100k can give you $1m 

That's a huge difference! 

On the above assumption of property increasing by 7pc pa , a $100k investment with 90% gearing can give you $1m - a 10X return! 

💥The investment 

- a 10% deposit of $100k for a $1m property 

- a shortfall of circa $1500 per month 

(on a $1m property at 6% interest, giving a net rent of $30k pa. 

The risk - if property goes down in 10 years  - you lose more than your initial investment …. So you are making a call that property will either increase or decrease in 10 years) 

#investment #realestate #leverage  

Vote here 

#Leverage is the one word that can transform your investment game!