By Paul Bennion, Managing Director of DEPPRO
The latest ABS housing finance figures reveals a big surge in the number of home loan borrowers taking out fixed loans.
Figures for July 2017 show that fixed interest rates as a percentage all dwellings financed for the month surged to 18.7% which was the highest proportion of all loans since May 2013.
The housing finance figures also reveal that since the third quarter of 2016 the proportion of fixed home loans has steadily been on the rise when it reached a low of 11.2% during September 2016.
This surge in the number of fixed home loans is further underlined by the fact that during July 2017 there were 10,194 dwellings financed through fixed loans compared to 6,969 during July 2017 - a rise of 46.2% in the number of fixed loans over the past year.
Fixed loans have become more popular during 2017 due the growing expectation that the Reserve Bank may increase official interest rates over the coming year.
At the same time, the big four banks have been launching new and competitive fixed interest rates .
In particular, property investors have been attracted to these fixed rates because lenders have increased variable interest rates for investors over the past year due new policy settings imposed by APRA.
Another factor encouraging property investors to take out low fixed rates has been a growing trend by the big banks to reduce interest only terms for investors from 15 years to 10 years.
In this environment of tighter lending regulations, enhancing cash flow is a key issue for property investors throughout Australia.
Property investors will now be forced to examine other ways of boosting their cash flow over the coming year through tax benefits associated with property, such as depreciation.
It is critical that property investors boot their income by ensuring that they claim all their legitimate tax benefits relating to property investment such as depreciation allowances.
It is estimated that only one in five residential investors make use of the tax depreciation entitlements which are available to all investors on all investment properties.
Investors often fail to understand that the tax benefits from depreciation can be just as important as rental income and that tax benefits obtained through depreciation can be equivalent to 60% of the total purchase price of the property. Investors fail to understand that the tax benefits from depreciation can be just as important as rental income.
Property investors who have a portfolio of investment properties should also realise that they can claim tax depreciation benefits retrospectively if they have not done so in the past. DEPPRO has been able to assist property investors who have several investment properties achieve tax benefits of over $100,000 by claiming depreciation allowances for previous financial years.
Click the link below and complete the details to ensure your client receives a higher return on their cashflow - www.deppro.com.au or call 1300 888 489