Welcome to Home Building Like a Boss, the podcast dedicated to helping first home buyers in Perth  build their dream home with ease and excitement.  I'm Jamie, your host and go to building broker.  Are you ready to feel empowered, in control and excited about your building journey? I'll help guide you with expert advice, insider tips and tricks and real life stories to help you navigate the confusing world of home building.

Tune in as I take you on the journey to building your home like a boss. 

Hello and welcome back to another episode of the podcast. This week I have Tanya joining me again and we're going to chat about the finance updates that are happening at the moment in the finance world and challenges that she's coming across generally and how we can kind of help you with some, I guess, solutions or ways around those challenges that's happening in the market at the moment.

So welcome back, Tanya. Thank you. It's been a while since I've sat in this chair. It's been a while since I've sat in this chair. We haven't done, well, I mean, I dropped off the podcast recording for a bit. We also haven't done one for a little while, so it's nice to be able to record a few episodes and get them back out.

Hey, lots of things have happened. Lots of things have happened. Yeah. So why don't you start off by telling us a little bit on the updates in the finance world recently? Absolutely. Absolutely. So the cash rate has been held again at 4. 35. So that's good. So no movement in rates, but keep in mind, even though the cash rate hasn't changed, banks can still like increase or decrease their interest rates. 

So, just keep an eye out on that, but at the moment, nothing's moved overnight. That's good. Fixed rates are as low as 5. 89 at the moment. Wow. No one's fixing the interest rates that I'm finding, but if you do want the certainty of like budgeting and knowing how much your payments are going to be, then fixing your rate at 5.

89 is really good. What are the rough variable rates compared to fixed rates at the moment? They start from around 6. 14. Okay. Yeah. Yeah. So it just depends on like your priorities, but you have a little bit of a saving if you go fixed. Yeah. And you're locking that in for a year or two. So that is handy.

Also valuations  are coming in really high for our people or our clients. Yep. That, um, we're building and now they have their keys. So they're getting a little bit shocked at how much their property's grown in value. Yes. Perks of building opposed to going established. Yeah. Cause yeah, the established market you're paying, I mean, you're competing with people.

So you're paying prices that are not necessarily, I guess. It's the value of the house, but what people are willing to pay for versus when you build, you pay the current price of today that it costs to build the house. And then when you move in and you get it valued, you have the value of the house of 12 to 18 months later.

And it's sort of like Uber Eats, how you're paying more just for the convenience for it to be like instant. So, that's also why established costs so much more than, than building. Yeah, because you don't have to wait, whereas building, it's cheaper, but the trade off is that you wait 12 to 15 months to go through the whole process.

Yeah. Yeah. So, that's a, that's a perk. Definitely. And with the interest rates, so I know, so they've been held, what was that?  time. Yep. Yep. And how is that, I guess, good in the sense for people who like they're borrowing capacities and things like that? Well, it's good because that means that their borrowing wouldn't have gone down because the interest rates haven't gone down unless that particular bank, because banks can still increase or decrease at any time.

So unless. That's happened to the bank that you might have already been pre qualified for. Your borrowing power shouldn't have changed. Which is great. Yes. Yes. Very handy, especially if you're saving. Yeah. You're still saving. Yeah. Cause I guess that's one of the challenge that we experienced what six to 12 months ago.

Every time the rates went up. Borrowing capacity went down by about 10, 000 to 15, 000 each time. So that was really tricky because you would sign up for a house and land package and then you would come sort out finance and it would be like, Oh, sorry, you can only borrow like 20, 000 less than what I initially told you.

Huge difference. Such a huge difference.  And now what do you see as some of the challenges in the market at the moment that you're experiencing with some of your clients in the finance world? Well, it would be definitely taking too much time to save. Yeah. If interest rates do go up, then the borrowing is going to be less, so that would be challenge number one.

Yeah. You can't out save the market. Yeah. It's moving too quickly. Yeah. But thankfully, because the rates have been not really moving that much, the borrowing capacity stuff is kind of, I haven't had much issues with it, but it can still happen at any time. So I still like to explain it to people that it could potentially happen.

Yeah. We obviously don't know that it's going to happen until the RBA meets on the first, what, Tuesday of every month? I think it's every. Two months. Every two months. Cool. Yeah. Yeah. Also some of my clients, not any that are with you, Jamie, but some of my other clients are signing up to Builders that are really cheap.

And even though I kind of explained to them what cheap usually means, they still sign up because it fits within their budget. Um, and they might already be on a very tight budget, but then what we're finding is they're getting price rises as soon as their finance settles. And I have to try and get them a personal loan to pay that price rise off because we can't include it into finance.

And it's just so stressful. It is so sneaky and it's so.  Um, like obviously clients, budgets are tight, prices are going up. People are trying to get a house for the cheapest price, but the cheapest price is always the worst deal. It comes with a catch. It comes with a catch. It's never as good as what it seems.

And there's always things that you need to think about, which is your timeframes, price and your quality. If you go for something price driven and cheap, you're going to lose out on your quality or your timeframes or sneakily enough. Builders are going to wait until you got formal finance and settle. You literally can't get out of it.

Then they're going to price rise you 4. 9 percent just under the 5 percent mark of the contract, which legally they can price increase you up to 5 percent and you have no leg to stand on to terminate out of the HIL MBA building contract.  Very true. Yeah. And you just literally sell you the dream and you literally have to come up with the money cash, pull it out of your ass, find a personal loan, like where, where to build is expect clients to find this money, but they don't care.

But then, and I have like experiences in probably in the last couple of months, I've had people come to me and they've gone, which is absolutely fine gone to pick another build up because the quote came in. 30 grand cheaper, but those builders have huge admin times, weights in construction and hasn't happened yet, but I would forecast a price increase once their settlement goes through.

And then they're going to have to find the money. Whereas we're being transparent and honest and upfront about the right pricing now. So they don't have a price increase later. And they don't go ahead because they've gone for the cheapest price. Yeah. So it's a bit of a struggle, um, especially for first time buyers, cause they don't understand the process.

I didn't understand that that could even be a thing when I was building my home, but thankfully my builder didn't give me a price increase back then. Yeah. So you just have to educate yourself. Yep. On it. And just because it's not on the news or it's not as loud as it was 18 months ago with price increases and time frames and delays, it's still happening.

Builders are just, it's just a lot quieter now because, I don't know, it's not the news anymore. Yeah. They're onto the new topic. Yeah.  Very true. The third thing would be squeezing into the scheme. Yes. That is tough. 600, 000 does not get you something decent. It doesn't get a lot anymore. Yep. So it's really difficult.

Hopefully that in the next couple of weeks they increase it. Once the new financial year kicks in, but we haven't heard that they are. Yeah. So it might just stay as 600, 000. Yeah. Which, yeah, it won't really help us with house and land packages, people going under the scheme. Yeah. People are going to have, well, yeah, you've either got to go smaller block, cheaper block, cheaper area.

And. Drop the spec or the size of the house to fit under 600k. I don't even think it's worth doing that I'd rather just pay that little bit of mortgage insurance To get it across and have a house actually do want to be in not live in a shoebox. Yeah That's something they have to think about. Yeah So you could either stay under the scheme for 600k or you could go over and you add lenders mortgage insurance onto your loan Yeah Yeah.

And roughly what is it like 10 to 15 grand of lenders mortgage insurance? That's like the difference. It would be, I would say around 24, 000. 24. Yeah. Depends on how much deposit the client saves. Yeah. But if it's the minimal amount of deposit, then I'd say 24, 000. Yeah. Um, but people can add that onto their loan versus paying it up front.

I have most people add it to the loan. Yeah. Because I paid up front. Yeah. Paying it up front seems like, I mean, you've just got to find more money. Then you're in the trap of, I'm going to save more. And then you get. Outbid by the market again. Yeah. Yeah. So we can just add it onto the loan and you can get a house that you actually want to be in instead of squeezing into the scheme for 600, 000.

Yeah. Which is, it's just not happening anymore. No, definitely not worth it. No. Okay, cool. Well, I think that's it for today's episode. Do you have anything else that you wanted to add? No, short and sweet. Just wanted, yeah, finance updates and challenges happening in the market.  Cool. Thank you for joining us and we'll be back with another episode.

Thanks. 

Thank you so much for tuning in to the Home Building Like a Boss podcast.  I hope you enjoyed today's episode and learned something new. Remember, you've got this and I've got your back. Until next time, stay inspired, stay informed, and stay confident on your building journey. I can't wait to chat with you on the next episode. 

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