Welcome to the finance show with Joe . I'm Joe . That's just some schmo , it's true . And today we're just going to give you guys a general market update on what we're currently seeing in the market , what we're currently seeing in finance and what we're seeing in property .
Yeah yeah , this is a weird podcast because , like , mark was supposed to be asking me questions but he wanted me to do the intro , just to see how bad I could stuff this up . We could shoot it again . I could do the intro . No , no , no , I'm enjoying this . I'm enjoying this . So what are we seeing in the market right now ? What are we ?
seeing in the market . How's work going . How's work going ? What are you seeing ? I ?
haven since March . Going well huh , look , we're at a stage in our business where , like , we are hitting some serious numbers , where we're settling a serious amount of deals every single month and we're helping a lot of people .
I think month of May I'll have to double check my numbers , but I think just me on my own submitted $22 million in new loans , which is a huge amount for any broker .
I thought nobody had any money .
Nobody does .
That's the crazy thing , okay .
Now , the types of deals we're submitting or the types of loans we're submitting are very different to what we were saying three years ago .
Okay , I'm assuming less purchases .
Let me explain . It's such a weird dynamic of what we're seeing right now . It's it's the oddest thing in the world . Firstly , the banks are doing all that they can legally to loosen up their own lending laws . So previously , midwives , nurses , um , anyone that worked in a hospital but wasn't a doctor they weren't applicable for the Medeco loans .
Oh , okay , interesting , that seems weird . So Medeco loans are when you could purchase for up to 90% or 95% without lender's mortgage insurance . Now , lender's mortgage insurance doesn't protect you , the buyer . It protects the lender because your deposit's so small and they have to make sure that if you default , they're protected . Previously I said midwives and nurses .
They weren't allowed to be a part of this , but now they are .
Well , that's good , because if anyone's going to benefit from that , it's definitely the midwives and nurses . Their salaries are much smaller than the doctors , but you'd actually be surprised I know some of them do quite well .
Well , after COVID , so many of them are working overtime because nobody wants to get into the industry and a lot of the nurses are actually moving into cosmetics . They're moving into Botox and collagen , all those things .
Yeah , yeah , does that count , yeah ?
it does , because you're still a registered nurse .
Yeah no , that makes sense .
But at the end of the day , like you're seeing looser lending laws , so they're trying to re-engage the market , they're trying to increase their loan book size , stimulate it . That's exactly right . And you're seeing St George . I love St George . I love St George with all my heart .
As a bank , okay , but previously , when we were using them as one of our main lenders , it used to take five weeks for them to pick up an application . Just pick up an application . How long did it take us ? You guys wasn't long at all . So Michael's family loan , I think that was like . I think we submitted it on a Thursday .
We got it approved , like the next Wednesday .
Something like that .
Yeah , because we went to Macquarie first and they were just being annoying . They were being very annoying , unresponsive , yes , and then St George all of a sudden was just like bang , so they're hungry . So what we're seeing in the market ? First of all , to hit on , michael's first point was no one does have any money .
Yeah , that is correct , because we're seeing a lot of debt consolidation right now . What is debt ?
consolidation . So like I get what it means by the name consolidating debt in some capacity , but like what does it really mean ?
Okay , let's say I've got a home , yeah , and my home's worth $500,000 and my home loan is $300,000 . I have a credit card that I've maxed out because everything's expensive and my kids wanted a bunch of things . So I've maxed out a $5,000 credit card and the interest repayments on that are 21% Huge . On .
I maxed out a $5,000 credit card and the interest repayments on that are 21% Huge . On top of that I've got a car loan because I've recently given birth to a new kid .
Need a bigger car .
Need a bigger car and I need something that doesn't break down . I need something reliable . So I've got a car loan . And , last of all , I got a personal loan because I wanted to go on a holiday , because everything is too expensive and I just wanted to live a little . Okay , expensive and I just wanted to live a little . Okay , people do this all the time .
Let's say , in total in debt , that's about five . Let's say that's $50,000 . Car loan , credit card , personal loan Okay , but they're all in different interest rates . Well , when it's when it's not a home , the interest rates are often much higher . So , credit cards 21% . Personal loan you're looking anywhere between 15 and 20% .
And then car loan anywhere between 7% , if you come to it . It's simple , shameless plug 7% to 20% , depending on what your credit score is . So your payments can be so much over the next few years , or you could just roll it all up and debt consolidate it into your home loan .
So what we're seeing right now is number one people have opened so many personal loan accounts and so many credit cards because it's not as regulated as a home loan is and they needed quick access to money , is that ?
because they were in trouble or because they wanted to keep spending , or is it both Both ?
And something we're really starting to see and I really want to focus in on this is we're seeing a lot of gambling debts that we need to pay out .
So you and .
I have spoken about this before . I think Australia is the number one gambling country in the world per capita .
Oh , we love it .
We love it so much Like so much money is made on sports bets , so much money is made on TAB , like all these sports betting companies . Basically I'm regulated here it is . It's insane . So we're seeing like we're seeing so many people approach us and be like hey , I got into a little bit of trouble . What happened ? I had a sports bet account .
Well , most of the time , we can't actually refinance that .
Okay .
We need to like put you on a ban for at least three to six months and then we can refinance it afterwards . These are the things that we're seeing , so that's the first part of it . We're seeing a lot of debt consolidation , but on the other side , we are still seeing purchases .
We're still seeing people buy , but they're not buying in the traditional methods that we were seeing previously . We're not seeing people buy a property on their own . We're seeing siblings like yourself link up three siblings together to purchase one property .
Because that wasn't always the case . You weren't able to do that right for for a bit you were always able to do it , but it was just .
There wasn't a necessity to do it previously . There was not not really much incentive . Yeah , yeah because later on down the track , michael recently engaged . Okay , your sister I don't know if she's seeing anyone your brother , I'm staying out of that . One . Three different parties , but each person might end up getting married .
And then there's another person that's involved and then all of a sudden there's three siblings . Each person is only 33% share , but then how much does the wife own or how much does the husband own ? Like it just gets a bit muddy . But because of building approvals and we've discussed this , so we've discussed it at length .
Yeah , people have cash sitting aside and they're saying I need to do something , I need to get in the market now , otherwise I am going to miss out and do you reckon that that's that's happening , because people are buying properties that they can build , like townhouses or duplexes and stuff on , to try and mitigate these issues . Is that on the rise as well ?
100 . So , uh , the new south wales state government , for example , um , they're trying to increase low to medium density um , all across , and especially across near train stations . I think they , chris mince , is our state premier yeah , yeah he's made massive headway . He's like balmain like what are you guys doing ?
We need this land , we need to be able to build . We need developers to come in here because you're so close to the city .
It's too good .
It's great , it's a great location , but Nimbys .
And they've just caused so many issues .
Balmain's on the North Shore yeah , no , it's in the West Balmain's , like next to the Anzac Bridge . What were you thinking of ? I the Anzac .
Bridge . What were you thinking of ? I don't know what I was thinking of .
This guy hasn't had enough coffee today . I have not . We're seeing siblings group together to make purchases in Sydney . We're seeing single individuals who want to be investors purchasing in regional parts of Australia or interstate . So we're looking at Brisbane and Perth mainly because Melbourne's slightly on par with Sydney .
But you don't get as much growth in Melbourne as you do in Sydney .
Yeah , it's only slightly below Sydney , but that shouldn't confuse you into thinking that it's a cheap city .
Melbourne's super expensive .
It's just not Sydney expensive .
So what we're seeing our buyers approach us with . They come to us and they go hey , I've got this deposit , where can I buy it ? And I can have a positively geared property . They don't want to spend extra money . And we're seeing Perth and Brisbane , okay . So I've got on my notes here just a couple of properties that we've recently helped people buy .
So in Brisbane we had an $840,000 jewel ock property that had 7% rental yield . Sell for $840,000 . Jewel ock means that it's got a house , possibly with a granny flat on it . And then rental yield is the rental income divided by what the total property value is . Is the rental income divided by what the total property value is , 7% rental yield .
So 7% of $840,000 , which is going to be about $58,800 . I think I got that right for once . Yeah , somewhere around there . It's going to be about $58,000 to $59,000 . For rental income , that's really good because you're covering your debt . That's the big thing , isn't it . Yeah , you're covering your debt . That's the big thing , isn't it ?
Yeah , you're covering your debt that you're purchasing with and then that way , you could see your investment grow over time , especially Brisbane Brisbane's great because we've got the Olympics infrastructure . It's growing .
There's room to grow .
Yeah , great weather , it's too hot for me . You need one jacket a year , that's it , and that's for July and August , and then after that you're back in shorts .
I've got too many jackets . I can't commit to that . I'm a jacket man .
So we're seeing a lot of people go regional for Brisbane .
Yeah .
And then we're seeing people go for Perth because Perth we're seeing 8% rental yield . So you're looking at a $750,000 property , dual lock again , or jewel key , where you're getting two properties for the price of one , similar to a duplex , but sometimes subdivided , sometimes not . So you know , on a $750,000 property , $52,000 rental yield , it's good money .
Yeah , it's good money and people are taking advantage of this , and what we really like to see is these investors come to the market and we're able to help them , but they are struggling to be able to compete with the big dogs out there , because you've got a lot of people that they just built up value in their property and land from the 1980s to now .
Yeah , I mean , that's the big issue that everyone's facing , and it's not just renters or whatever , or first-time buyers .
It's other investors . You're even seeing private equity groups buy property now which is insane . I think that is the one that we really need to start focusing on as a government . But affordability is all the way down because interest rates are so high too .
Yeah .
I didn't mention this in the last episode , so we're talking about winners and losers of the Australian budget , and losers we didn't include people that were trying to participate in the first home guarantee . I've had it , I've mentioned it many times on this episode , what the first home guarantee is .
But to relay that information again , the first home guarantee is when you're purchasing a property your first property , of course , with a 5% deposit Now this scheme was brought in because property became so expensive .
Yes .
Rent became so expensive it became harder to save . Okay , you know what you save for a year and you get a 5% deposit . You're going to be able to buy a $500,000 property , a $600,000 property .
I think it was a maximum of $800,000 .
That's since increased . I think it's up to $950,000 now . I mean it would have to increase because property prices have . So that increased . I think in 2023 . Yeah , but they tested it first on Australian citizens , then they launched it to Australian permanent residents and then they allowed siblings to participate with each other .
But the price cap that's where I got confused with the siblings purchasing .
I think that is .
They price capped it at about $950,000 .
Okay .
But where I see the loser is there's income thresholds . So it's $125,000 for a single borrower and then for combined borrowers . So two people buying together it's $180,000 , I believe it's either $180,000 or $200,000 . No , it's $180,000 . That sounds more correct to me .
If you're purchasing a property and you're earning $125,000 a year owner-occupied , if you're purchasing a property and you're earning $125,000 a year owner-occupied , you've got a 5% deposit . You're going to be capped at about a $690,000 loan .
Okay , which is good in a sense , but not for Sydney . I was going to say you'd be hard-pressed to find an apartment in a decent location for that . You can find an apartment for it .
But where You're looking at the lower end of the market in ride paramata all along victoria road . So all along there you might be able to get something paramata wouldn't be too bad rides , not too bad .
I was thinking of going . Well , wasn't gonna buy and ride , but anyway , sorry to interrupt .
They're high density units , yeah and they don't Sorry to interrupt . They're high density units and they don't perform as well as land does .
Oh , no , no , no , it's not an investment . Well , it is an investment , but don't expect it to grow like a house will yeah , you're not getting huge capital gains , you're getting very minor capital gains , that's right .
So that's the first issue , Like there's such a price threshold . And then the second issue is if you've been earning that $125,000 and you go $125,001 , like that's how much you earned for the last year you are no longer applicable for the scheme .
Really , it's just that dollar will actually that will knock you out , and I think that that is an unfair way to be able to assess people .
They should do it like a uni essay . Way to be able to assess people . They should do it like a uni essay 10% each way .
Standard deviation yeah so oh man , I was not expecting standard deviation in today's episode , but in saying that , we're seeing many first-home buyers being disadvantaged , as both single borrowers and as couples , mainly in Sydney . So Melbourne , you could still find good property . Brisbane we always talk about Brisbane , and Perth and Adelaide .
Brisbane , of the big three cities in Australia right now , is the one with the most opportunities and the most chances for capital growth without it being stupid .
That's right .
Sydney and Melbourne have gone well into stupid territory . Not people want to live in darwin or adelaide and perth . Perth is weird . Perth is like perth is fine , but no one . No one is like I'm moving to perth . I've never heard anyone say that .
I've heard like four people say it and I know a lot of people nah really nah , but no . No , but they're like they . They met someone and they've that the partner was from perth and then that's why they moved over .
Yeah but that's because they met someone from perth who came to sydney and they're like maybe we'll go back to perth . It's always perth . People bring dragon sydney signers over weird ad lib .
So we not ad lib , but weird . Uh , story time from me . So I was in new york 2021 , and we're at an Australian cafe and there was an Australian waiter who had been working there for two weeks . He was from Perth . I go how old are you ? He goes I'm 19 . And I go . Okay , had you ever been to Sydney before ?
And he goes no , this is the first place I've ever visited and I moved here and I go . So you went from Perth , which is smaller than Wollongong , to New York City . It's really small in Wollongong . It's smaller than Wollongong or about the same size . Like I'm pretty sure Wollongong has a higher population than Perth . I did not know that .
Like 80% , 82% , certain you know how I like my weird statistics . That's a weird number to be Like I'm at 81% with that one , 81% certainty .
I'm about 81.5% . Sure you're wrong ? No , I'm just joking , I have no idea .
We've got 18 and a half going either way 18 .
and a half percent . So he moved to New York .
He moved to New York City .
I guess that's a typical American story where they're like from a small town I'm a small town girl moving to the big city .
But he's from Perth . It's not like he went from Arkansas , he went from Perth to New York . It's just like . That's like getting smacked in the face with a baseball bat . Yeah , that is just another level . That's like watching the movie Speed on repeat .
I don't know , man , like there's like Keanu Reeves is running around and Sandra Bullock and you know there's a bus that's going 99 miles an hour . It can't go under .
I'm pretty sure that movie was called the Bus that Couldn't Slow Down .
But what were we talking about ? Going back to everything , so first time buyers .
First time buyers . This episode's unhinged .
No , we're really noticing that they're at a massive disadvantage in Australia and they're not being able to access the property that they want .
Yeah , or even like the property that would be like with a reasonable level of sacrifice .
That's right .
The only stuff you can get . You have the privilege of being able to drive 90 minutes to the city .
That's right . So massive disadvantage there .
Um , we're seeing I I said it to you previously we're seeing people , uh , tap into well you know , join up with their siblings or join up with friends to purchase and then we're also seeing and this is the big one we're seeing , and I mentioned this before but the land bankers , the people that own property previously , are just getting equity out and just buying
whatever they can .
Yeah , and it's just going and going and going . They're churning it like crazy yeah people are terrified to go to auctions because it's not like they have no money . But they don't have the money that these land bankers have .
They have an insane backlog and it's this is the first time I've seen like late stage capitalism .
Yeah , if people were talking about it a couple of years ago , I feel like we can firmly say that we're like , we're there .
We're there so for our listeners . I just want to explain late stage capitalism . If we all started on like a fair like Even footing . Even footing all the same , like start line line , and then it was a hundred meter dash and somebody wins . No one's going to be like overly upset at the winner , okay .
Well , it's fair competition . It's fair competition . They were the fastest .
That's right . But now we're not seeing that . We're seeing people that purchased land from 50 years ago . That land has grown exponentially so they would have had a $100,000 mortgage . Now , all of a sudden they've got a $5 million property with a $100,000 mortgage . Yeah , and they didn't do anything .
They didn't do anything and it's just really disabling first-time buyers and by not increasing that income threshold , the first-time buyers are at a disadvantage . The land bankers they're refinancing , they're churning , they're making the money . They're fine . I don't mind as a business owner , because that keeps me busy .
Yeah .
Okay , and guess what ? I don't mind people acquiring more wealth . I don't mind people being able to purchase more . I don't hate that as well . I love initiative . Okay , I love people working hard initiative . You know using the tax system in their own benefit . You know really looking for places where they can find value and really increase their property portfolio .
What I don't like is when someone who is a first home buyer trying to make it and they can't because HEX is indexed at 7% or whatever it's indexed at now I think it's 4% this year , so HEX is going to be indexed at 4% . Their rent is $700 a week , or between $500 and $700 a week .
They might not have come from a wealthy household , so they don't have much in a house deposit . And then they're getting told hey , go work hard , but if you earn over $125,000 a year you can't be a part of this scheme . That's just what I don't like .
Like , give them a little bit of a leg up , a little bit of a better leg up . Yeah , it's . Yeah . I am not the economist of the two of us , so I wouldn't really know how to solve a lot of these things . I've seen things thrown around about capital gains , discounts and stuff like that , but I only kind of know what that means .
So capital gains discount is um ? Are you talking about negative gearing ?
there's negative yeah , negative gearing and stuff and that like again , I've just seen these phrases thrown around like I'm busy with my own shit . I'm not , I'm not just . It's too exhausting to keep up with all this stuff constantly .
It is , and that's that's the issue the young , the youth . They're disengaged and a lot of them want to get out of rent and control their own lives , like when you purchase your property . That's when you start controlling your life , because you don't have a landlord that's going to increase your rent by $50 .
Or be really weird on your inspection . That too .
You're not going to receive that . You can kind of control your own destiny and you also can have your property appreciated in value . But because we're approving less dwellings we've harped on about that before and because we're seeing less activity in the market , we're seeing a lot more property developers and builders go bankrupt Because of all these items .
We're just seeing people at a disadvantage and I just want to see activity return in the market for first-time buyers .
Yeah , and it's that wealth gap that's really starting to become apparent , because in America that wealth gap has already been pretty big for a while , like if there's ever been the closest thing to a true capitalist state , it's the US , and that's thanks to the Cold War , because there had to be an opposition to communism .
I've got a strange conspiracy theory . Yeah , okay , and this is like all the way strange , and we'll finish on this note yeah all right . Okay .
I strongly believe that Australia wants to push for a lower divorce rate and a lower breakup rate , so they're purposefully keeping property prices high so that people have to purchase as a nucleus , as a couple together , to be able to purchase a property .
I do know leaning to like helping that point is because fertility rates are dropping in the developed world across the board , not just Australia , hence why immigration numbers are up , because we're not having kids . But we're not having kids because no one can afford it .
I'm like bullish on that theory that the Australian government wants the family nucleuses to stay intact . They don't want people divorcing , they don't want people breaking up and they want people to be purchasing property at an earlier age and then getting married at an earlier age . And it's just a running . It's a theory I have . It's a running theory .
But none of the policies seem to be helping that . Because , yeah , like I said , the big reason why no one's doing any of those things because I can't afford any of those things yeah , engagement rings are expensive .
So , on that note , um , we hope you all enjoyed our market update . Uh , there's a lot of debt consolidation , there's a lot of investment opportunity , but there's also a lot of disadvantages right now . And our biggest thing is we want to help people . So if you need any help with your home loan or any help with your finances , contact us at wwwitsitbullcomau .
My name's joe that's some schmo . His name is michael and we'll see you on the next episode . See you , guys .