Dark Horse Financial

Case Study: $650k unsecured lending to fund the growth of an allied health business ($300k line of credit + $350k term loan) Like many in the allied health sector, our client had experienced demand for their services that exceeded their capacity and had embarked on a multiyear growth plan to capitalise on this opportunity. Growing headcount to over 200 heads in a short period of time and implementing the systems and support for this amount of headcount growth placed an enormous demand on capital. While there was significant interest from major banks to support our client at the end of their growth journey, none were prepared to support them through the growth phase and all wanted to play it safe. Looking beyond the short-term #cashflow challenge it was clear our client’s business was well run, they were tracking very well to forecast and had moved through the investment intensive phase of their growth plan. Turning to non-bank lenders we secured a $300k line of #credit and an additional $350k in term lending to support our client through this last period of their plan. All of it unsecured. With the solutions funded in a fraction of the time a bank would have provided, our client is well supported and a significantly bigger business for implementing their plans. This case study reflects the circumstances of a number of clients in the allied health sector we’re assisting at the moment and these solutions cross over well to other industries seeking to grow their business but lacking support from banks. Jeff Suter

Housing Affordability Declines (again) Here’s what you need to know 👇 - Increased Housing Costs: Housing affordability has significantly declined in Australia, as highlighted by the ANZ CoreLogic Housing Affordability Report from April 2024. - Rental Market Impact: The proportion of income required for making rent payments has reached a historic high of 32.2%. Low-income earners are especially impacted, with rent consuming over half of their income. - Mortgage Affordability Issues: Sharp increases in mortgage rates have smashed borrowing capacity. With the median income, buying a median-priced unit or house requires an unfeasibly high percentage of income to mortgage repayments. - Regional Disparities: There are significant differences in affordability across regions, with places like Adelaide and regional Queensland facing high rent-to-income ratios, Darwin and Canberra are ‘relatively’ more affordable. - Strategies for Current Homeowner? Grind it out, refi, restructure or consolidate debts. Hit the link in the comments to the full article and recommendations 👊 Jeff Suter 

Private sector credit growth analysis for March was released by Commbank's global economics and market research team on Tuesday. Home loan credit will face pressure from unemployment and inflation if the RBA raises rates as we expect them to later this year. Business owners needing access to credit are likely to face diminishing options if non-bank business lending standards continues to tighten. Jeff Suter

Inflation and Rate Rises Are Back on the Table (here’s what you need to know) Between May 2022 and December 2023, the RBA raised the cash rate by 425 basis points, but the average mortgage rates only increased by 320 basis points. The 105-point difference shows that only around 75% of the cash rate increase passed through to mortgage rates. This is much lower than previous tightening cycles, where the pass-through rates were near to 90%. The slowdown is primarily due to the higher-than-usual number of fixed-rate loans. More than half of these fixed-rate loans expired in late 2023 - the remainder will follow this year. Because of this the actual rates that mortgage holders will pay will increase in real terms. What does this mean? The average mortgage rates will rise as more fixed rates roll over to variable rates. Mortgage repayments are only going to take up more of a households’ disposable income. More insights: - Mortgage rates will continue to rise this year, which will affect how much prospective buyers will borrow (if they even borrow at all) - Most of those who had fixed-rate loans expire during this time have survived the rollover to higher rates. Although there is a real possibility that the rollover could shock borrowers. Get more insights click on the full article in the comments 👇 Jeff Suter

Why I’d be fixing my mortgage (I’m not crazy, hear me out)   To be more specific, refinancing to a split loan.   Hedging my bets and fixing a portion of my mortgage and leaving the rest variable.   While the newsreaders and politicians take aim at the RBA and call for lower rates, I worry inflation is not yet done.   More and more experts feel like this too.   It feels like there’s a big risk that if things don’t go perfectly inflation could spike Which means higher rates for home owners.   Key essential segments - like food - are going up (as shown in recent US data).   And while that’s not Australia, if the US puts up their rates the RBA could be forced to too.   The Red Sea incidents are making shipping more dangerous.    Longer routes that avoid the Houthis attacks mean goods takes longer to where they’re going.   That means more fuel and more cost.   More inflation.   Oil is going up.   Inflation.   Neither Israel nor Iran look like they’re going to back down from each other.   Neither does Russia nor Ukraine.   War is inflationary.   Builders keep going bust meaning fewer people to build all the homes we need.   Meaning housing shortages will continue and costs, like rents, are likely going to keep going up.   Which is, you guessed it, inflationary.   I get there’s lots of people waiting for rates to come down but even economists are saying now there will be no rate cuts until 2025 (if the risks don’t get worse).   I’m concerned that instead of rate cuts, homeowners will see rate rises and repayments up further than they are now.   If that’s not something you can afford and you need to hedge your bets, maybe a split loan is right for you too.   A split loan means a portion of your loan is fixed and portion is variable.   If rates go up the fixed portion stays where you fixed it and that lowers your monthly repayment compared to all of your loan is variable.   If rates go down your fixed portion will stay where you fixed but you’ll see your variable rate go down.   If you feel you need some security maybe a split loan is right for you. Jeff Suter

Jeff Suter and Jay Jones at the Accounting Business Expo Wednesday and Thursday. You’ll find us and our matching hairlines with the Home Loan Team Come say g’day 👋

Rates are important but the best home loan solution is often the lender that can settle your loan in the timeframe you require. We know, so you don't have to. Jeff Suter

Home Loan Case Study: Same loan, same bank - $8000 reduction in yearly interest (WITHOUT changing banks) You don’t always have to refinance your home loan to a new bank to get a better deal. The Home Loan Team review each loan, for all clients every 6 months. It’s part of the process. The client in question originally purchased their property for $650,000 at a 95% loan to value ratio (LVR). Their interest rate reflected the high LVR. But working for the client well after the loan had settled, the home loan team maintained contact and a relationship with the selling agent on the property. After time the agent advised the property would have increased in value. The home loan team ordered a new valuation which came back at $767,949 - this was equivalent to a new LVR of 78.7%. With a new LVR under 80% the home loan team requested the bank reconsider the rate and a reduction was approved that saved the home owner $8000 in interest a year. A great outcome without even needing to change banks. Sorted with good relationships and good process 👌 Jeff Suter

The CreditorWatch BRI report this January 2024 reveals a concerning dip in business order values. The value of B2B invoices has fallen to a record low, a 19% decrease from January last year. Trade defaults also keep rising, reflecting businesses lowered capacity to make payments. Check out our full summary in the link below 👇 Jeff Suter https://lnkd.in/gN7WVc8X

The ATO has seemingly lost patience with being a bank but simultaneously is now logging defaults for non-payment like a bank. More below 👇