So if you’re a first home buyer and you feel like you’re ready, here is a suggested list you may want to check off before you decide to pounce:

1. SPEAK TO A RANGE OF LENDERS FIRST: You need to determine what you can afford by speaking to a range of lenders before you start your property search.
2. ENSURE YOUR CREDIT PROFILE IS IN THE BEST POSSIBLE SHAPE: This can be done lowering any existing credit card limits and paying off, or paying down, any outstanding debts.
3. LOOK AT THE LOAN FEATURES AND SERVICE AS WELL AS RATE: A loan’s features should be determined by what suits your personal circumstances for the medium to long term – and what lifestyle you can afford, even if rates rise. You should also get a feel for the level of customer service and ongoing support you can expect from each lender, as well as asking if they can give you a realistic indication of how long it will take to process the actual loan application.
4. OBTAIN PRE-APPROVAL ON THE MOST APPROPRIATE LOAN: When you’ve narrowed down your search for the most appropriate home loan, obtain pre-approval so when you do go to purchase, you can confidently make an offer on the property or bid at auction knowing you are pre-approved for finance, subject to a valuation.  
5. FACTOR IN EVERY POSSIBLE EXPENSE TO YOUR INITIAL BUDGET: Investigate and allow for every possible property related expense you may need to pay when you purchase a property. This can include costs such as Lenders’ Mortgage Insurance, pest and building inspections on any prospective purchases; loan fees including valuations etc; solicitors or conveyancing costs; stamp duty, transfer duty, mortgage duty and any relevant home or personal insurances.

This was highlighted recently in the latest Genworth Homebuyer Confidence Index (HCI) which shed some light on how borrowers are managing their financial obligations – particularly in light of various media reports about mortgage stress.

Findings from the Genworth HCI released only this week found that despite higher rates of mortgage stress, the vast majority (85%) of borrowers who are experiencing mortgage stress say they are not actually behind on repayments.

Moreover, the Index found that borrowers are also becoming more conservative, with over 41% having overpaid their mortgage within the past 12 months.

The survey found that in relation to the reasons for mortgage stress, it showed the rising cost of living is the number one concern for an increasing proportion (72%) of home owners struggling with their mortgage.

To most, this would seem to indicate that although it is clear that mortgage stress is a real problem for some borrowers, it is other household costs that are actually creating the stress with their mortgage – rather than the mortgage itself creating the stress.

So with the current lull in interest rates set to continue and day-to-day speculation as to which way rates will go next, now is a good time to go through all of your costs, expenses, habits and lifestyle choices to determine how you can improve things on the financial front.

Gathering up all of your regular monthly, quarterly and annual bills is a good way to start.

That’s because if your mortgage repayments have largely been the same since last year – you need to have a close look at what direction all the other payments have been heading over the last twelve months and determine where you can reduce any of those bills.

Utilities, phone, internet, petrol, groceries and travel are seen by many these days as essential for modern living, so look at ways you can save money by either cutting down what you use or looking around at what various providers you can use.

Then there are all the insurances you may need – home and contents, mortgage, medical, car and life insurance. Prioritise what would be most important to you if you were not protected and make your decisions based on that.

You may well be surprised at what all of this can all do to improve your stress levels.

That’s still up for debate…but what is becoming more apparent is that an increasing number of people are exercising financial caution, whatever way the next rate decision goes.

And with day-to day-financial news dominating our TV screens, it’s not hard to see why.

So whether you ‘re an owner occupier, first home buyer or investor, every borrower should take some time now to evaluate their own financial position to protect themselves for whatever lays ahead.

Here are some simple strategies to consider:

OWNER OCCUPIERS: should review your budget to try and direct more funds towards your current mortgage repayments which will give you breathing space if rates rise – or if you need to carry out any necessary works on your property.

OWNER OCCUPIERS: should limit discretionary spending, particularly toward the end of the year period when budgets routinely blow out.

FIRST HOME BUYERS: should hold off on purchasing everything new to go with the new house and instead acquire household items as you can afford to pay for them – preferably in cash.  Don’t unnecessarily rack up additional debt.

FIRST HOME BUYERS: may want to consider taking in someone to rent a room and help you pay the mortgage. With rental demand still high and provided your living circumstances allow for it, this can be a viable option to help you meet budget shortfalls.

INVESTORS: shouldn’t take it for granted you will always have tenants to help you pay the mortgage. Have a plan B ready in case the property is untenanted for any period, such as having funds set aside to continue paying the mortgage or moving in yourself if your situation allows for it.

But that’s the last thing you should be doing.

If – and I use the term ‘if’ – the current slide in our sharemarket and currency puts our economy in the doldrums for any amount of time, as a property owner, one of the last things you would want to do now is panic and sell.

Why?

A buyer can spot a nervous seller at 100 feet and is likely to result in you getting far less than you would if you bunkered down to ride out the storm. 

No one is really prepared to say exactly how this current turn of events will manifest over the short to medium term for Australia but there is now certainly more talk that official interest rates may indeed be cut in September.

So that being said, if your repayments are likely to decrease, it makes sense to hold onto that property the loan is against because it’s now costing you less – and wait for things to calm down.

And that’s because the property market – like interest rates – is cyclical by nature.

An opportunity may even exist for some borrowers to keep their repayments at the same level they are currently at now (if rates do go down) and take the opportunity to pay more off their mortgage while they can.

Rather than being convinced it’s all doom and gloom, there may be some silver lining in that cloud.

And the report suggests this may not be so much due to rising property prices but more because the level of personal debt taken on by this group has encumbered their ability to save the necessary deposit to purchase their first home.

Which seems to suggest it’s a case of learning some harsh lessons about debt, before they can capably take on the long term responsibility of a property.

But during this same week, a leading social demographer has predicted that Generation Y will also be responsible for reinvigorating the housing market simply because they don’t have a mortgage and were not as materially affected by the GFC as their parents may have been.

So is there a link here?

Does this mean it will take younger people to learn a lesson from taking on too much personal debt to then prepare them to be able to create opportunities for themselves in the property market?

Certainly there is a lot to be said about being ready to be a property owner. And if a young person isn’t yet financially responsible enough to manage their discretionary spending, they will find it even more difficult to budget around mortgage repayments.

If it takes more time – they need to be given time.

And that’s where parents of Generation Y’s can really make the difference. It may mean they have to live at home for longer, it may mean helping them juggle their finances and it may even mean watching them stumble and learn a few harsh realities before they cotton on to what financial discipline is all about.

In the meantime, parents of Generation Y’s can ensure they set a good example and live within their means – for both their own sake and that of their children.

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So if there is nothing to write home about in tonight’s budget for the many borrowers who are coping with what is fast becoming a year set to make them rein in their belts even tighter, what we also don’t want to see down the track is any more examples of policy making on the run.

This was probably best exemplified by the recent Senate reaction to the Government’s plan to ban exit fees, in their apparent bid to encourage competition in the mortgage market.

In short – any large scale changes to the mortgage market in general need some level of pre-emptive consultation with industry before making announcements which have such propensity to affect a wide segment of the community.

What is most concerning is what the Federal Government can do to address long term affordability issues – particularly for the next generation preparing to enter the property market.

Because unless there are practical initiatives developed which can boost opportunities for first home buyers, it may dissuade Generation Z from even wanting to be part of the great Australian dream.

If I had my Christmas wishlist, what I would like to see is some well researched and collaborative long term measures which will encourage investors back into the safety of the residential backed securities market as well as more tangible levels of support which will preserve competition within the mortgage market.

I know this is not going to happen overnight, but I, like many others – hope it will happen.

Last Saturday saw Mr O’Farrell promise to fast-track the release of 10,000 Landcom land blocks in outer Sydney over the next four years for development, stating that: “Families looking to buy a home deserve a break.”

We hear you Mr O’Farrell.

And there are many such voters in other states, territories and around the nation looking for any initiatives which will give them the necessary hand up they need, be it financial or otherwise – to help them achieve what is still widely regarded as the great Australian dream of home ownership.

Property prices are still out of reach for many Australians and any news in relation to new grants, assistance and incentives that can benefit people still on the cusp of realising their dream can only be construed as a positive thing.

And the Federal Government and other levels of government are no doubt watching and listening to what each is doing, with a view to going one better.  So let the games begin.

Because while the First Home Owner’s Grant introduced back in 2000 certainly created many opportunities for young Australians to finally get a foothold in the property market and the increased First Home Owners Grant (which finished in 2009) also gave a much needed boost to the housing market and economy as well – it’s about time for more action.

Politics can be a dirty business, but not as dirty as voters can get when they feel like they’re being shut out of the property market.

According to Frank, buyers in and around that region are now feeling relatively confident with where interest rates are currently and as a result activity is strong within the first home buyer, upgrader and investor markets and there are some good opportunities on the market.

Rolling land releases in emerging areas such as Oran Park and Gregory Hill are continuing to attract first home buyers due to their convenient location and because surrounding public transport links allow buyers to still be within an hour’s commute of the Sydney CBD.

Frank says he is seeing more and more young families becoming attracted by the affordability of entry level homes in the area, particularly those priced between $250,000 to $320,000.

And he says existing borrowers looking to upgrade can also find themselves a home around the $450,000 mark which allows them to upgrade, but remain living within the area.

More investors are now coming back to the Campbelltown/Macarthur region, says Frank, a trend which he attributes to the tight rental market and strong returns for the area.

The locality is also known for its nearby industry but is also within easy reach of rural property so has added appeal for people who may be looking for a lifestyle property.

“There is already a strong sense of community and with more young families moving there, this will only get better over time,” he said.

Sure, borrowers at first glance look as if they’re getting off scot-free if they wish to change lenders in order to shop around and get a better deal, but there’s a significant and detrimental domino effect that will follow.

And one of the main issues is that there is still nothing tangible being done to support the non-banks who will, as a result of the regulations, watch the majors go to their Plan B.

The reality is that the big banks will have to recoup those fees somewhere – after all, there are shareholders to look after. So stay tuned for some restructuring and merchandising of lost costs across loans and other financial products.

Upfront fees would be the likely place to restructure those costs – and that’s where first home buyers will really feel the pinch.  After having saved hard for that deposit, they can watch to see it eroded through a potentially larger upfront fee.

It’s clear to see what we think here at Resi.

We’ve been structuring our loans for the past 25 years with low or no fees and rates significantly below that of the major banks and as a result, our customers stay loyal to us.

So we’ll be making our thoughts clear, so you can continue to reap the benefits.

And with 2011 almost here, there are already several trends beginning to emerge among borrowers including more demand for part-fixed mortgages, greater discipline with credit and a growing number of Gen Y’s staying in the parental home for longer in a bid to buy their own property

The demand for part fixed mortgages is no real surprise, haven risen in line with rising interest rates as one of a number of appealing options for borrowers who want to split their loan repayments between fixed and variable components in an effort to hedge whatever happens with official interest rates.

At the same time, credit over-use also seems to be waning somewhat as more borrowers understand the difference between good debt and bad debt and look at ways in which they can de-leverage their financial commitments and concentrate on their mortgage as their sole repayment.

Gen Y’s are also exercising more patience (with the assistance of their parents) by living in the parental home for longer as they look to save more for that all important deposit and have more choice with a wider range of lenders and loan options.

This in part has been driven by stricter lending criteria throughout the industry but also seems to be an encouraging sign that there has been a subtle multi-generational change of attitude in relation to borrowings and financial discipline.

And what of interest rate predictions for 2011?

There is fairly universal agreement that rates will continue to rise, but by how much is still under debate. The important thing therefore for both borrowers and potential home buyers is to be prepared for the unexpected, be patient and flexible and financially protect your personal situation.