Good news again for the property market, with data from the Australian Bureau of Statistics recording another increase in Housing Finance figures. Some economists say Australians are starting to make the most of interest rate cuts. We look at the ABS Statistics, and look at the importance of credit file education to a possible new buyer’s market.

By Graham Doessel, Founder and CEO of MyCRA Credit Rating Repairs and www.fixmybadcredit.com.au.

Figures released today by the Australian Bureau of Statistics on September 2012 Housing Finance figures show owner occupied housing commitments rose 0.9% from August to 46,395, up from an upwardly revised 45,983 in August.

An increase of 1.0% was predicted by economists.

CommSec chief economist Craig James (featured in The Australian today) says the ABS data suggests home loan value could be on the rise.

“The data shows that loan value is rising at a faster rate than the actual number of loans,” he said.

“That suggests that there’s increased confidence by borrowers, or that home prices are edging a little higher.”

Here is an excerpt from the ABS release:

SEPTEMBER KEY POINTS

VALUE OF DWELLING COMMITMENTS

September 2012 compared with August 2012:

 The trend estimate for the total value of dwelling finance commitments excluding alterations and additions rose 0.7%. Investment housing commitments rose 1.1% and owner occupied housing commitments rose 0.5%.
 In seasonally adjusted terms, the total value of dwelling finance commitments excluding alterations and additions rose 3.8%, with investment housing commitments rising 8.6%.

NUMBER OF DWELLING COMMITMENTS

September 2012 compared with August 2012:

 In trend terms, the number of commitments for owner occupied housing finance rose 0.5%.
 In trend terms, the number of commitments for the purchase of new dwellings rose 3.0%, the number of commitments for the purchase of established dwellings rose 0.5%, while the number of commitments for the construction of dwellings fell 0.3%.
 In original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 19.3% in September 2012 from 18.6% in August 2012.

Over the past six months, the Reserve Bank of Australia has shaved a full percentage point from the key interest rate. As a result, standard variable mortgage rates have on average come down by 55 basis points to 6.85 per cent.

This seems to finally be making an impact on Housing Finance, with both August and September data showing a recorded increase in commitment numbers.

The ABS reports that in original terms, the number of first home buyer commitments as a percentage of total owner occupied housing finance commitments rose to 19.3% in September 2012 from 18.6% in August 2012. Between September 2012 and August 2012, the average loan size for first home buyers rose $400 to $289,300.

As more buyers enter the market, we feel it is worthwhile to ramp up our education efforts around credit history. Many people do not know what a credit file is – many more don’t know the process for being listed with bad credit, and more again assume that if there was something amiss with their credit file, that they would somehow be informed. They don’t realise that the onus is on them to check their credit history on a regular basis (at least once per year) just to make sure that errors have not been made on the credit file. Errors can happen to anyone – from all walks of life.

People may believe their credit history is clean, but creditors can and do make mistakes with credit reports, and often it is not until people apply for finance that they have any idea they have bad credit. At this time the process of investigation and complaint can be stressful and can sometimes mean the prospective borrower misses out on the home loan while the discrepancy is addressed.

The process of clearing an unfair credit listing can sometimes be very time consuming – especially if the creditor has not cooperated with requests to supply documentation in a timely fashion, or the matter has to be referred to a third party for investigation.

So the message is, if people are thinking about buying a home in the near future – they should grab a copy of their credit file, and make sure it has the “all clear” before they apply for finance, and before they get their hearts set on any particular home. This is free for all credit active Australians once every year and we encourage any home buyer to request a copy of their credit report. It takes 10 working days or for a fee to the credit reporting agency, it can be sent urgently. But what it does is give peace of mind – not only to the Purchaser, but to the Broker or Bank Manager, and in some cases a clear credit file can help get the deal over the line with the Agent and Seller.

If there are any inconsistencies or out and out errors on the credit file, the advantage to getting those removed is generally thousands and thousands of dollars in interest saved. A clear credit file allows purchasers to capitalise on those interest rate cuts with the mainstream lender of their choice rather than being forced into the non-conforming sector at much higher interest rates.

To find out more about the benefits of using a credit rating repairer to dispute credit listings, see our recent post How Do I Fix My Bad Credit? Or contact a Credit Repair Advisor at MyCRA Credit Rating Repairs on 1300 667 218 or visit the main site for more information www.mycra.com.au.

Image: Idea go/ www.FreeDigitalPhotos.net