Mortgage Relief Fund: What Is an Equity Only Mortgage?
With the natural disaster that has happened in Queensland, Victoria and northern Western Australia, the amount of stress and the need for money to rebuild damaged homes or buy the necessities of life are ever more critical and urgent. However, early access to superannuation is more of a “medium-term assistance” measure as people need to demonstrate they are in longer-term distress including, for example, has been on Centrelink benefits for 26 weeks. At this early stage of the flood disaster, it is unlikely that people will meet some of the longer-term criteria for the early release of superannuation.
Here is how the Fed and Mr. Bernanke affect interest rates. They affect rates by lowering or raising the Federal Funds rate. There is a direct affect on short term interest rates like the prime rate and any kind of T-Bill rates of less than 5 years. Almost every bank mirrors the Fed with the prime rate they publish. In other words, as the Fed moves the Fed Funds Rate, banks move the prime rate. The prime rate right now is 3% higher than the Fed Funds Rate. So if the Fed raises the Fed Funds rate from its current level of 5.25% to 6.0%, then the prime rate would move from 8.25% to 9.0%. Most 2nd mortgages are based upon the prime rate, so as it moves so does the cost of credit to homeowners. Also, your credit cards are usually following the Fed when they move rates. You will find the least expensive credit cards when the Fed Fund rates are at their lowest.
Both “e & f” are criteria designed to allow judgment in really extreme and severe circumstances. Yesterday evening, Assistance Treasurer Bill Shorten has ruled out the exercise of the above two judgment, as there are many government programs out there currently that are designed to provide assistance for immediate and short term. Members who are in distress because of the recent floods should first access government assistance packages and any insurance cover, including that offered by their super funds. Such government assistance programs are designed to provide immediate assistance. Early access to super is more of a medium to longer term assistance measure.
In a recent report released, it was stated that a weakening U.S. economy is setting the stage for lower interest rates. This was according to a UCLA Anderson Forecast. The forecast predicts real gross domestic product will rise no more than 2.7 percent next year, reflecting the weak housing market. As a result, the prediction is that the Federal Reserve Board will cut interest rates to stimulate business, says Edward Leamer, director of the UCLA Anderson Forecast. Leamer says he sees the Federal Funds rate falling to 4.5 percent by the fourth quarter of next year. Leamer also thinks housing starts will bottom out at an annual rate of 1.4 million in the second quarter of next year. As builders seek to sell inventory, new-home prices will fall to a low in the third quarter of 2007, down 10 percent from current levels, he says.
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In order to gain access to super fund under extreme circumstances (again the conditions are very restrictive), people must get permission from the Australian Prudential Regulatory Authority (“APRA”) and from their super fund to withdraw money on these grounds. APRA will only allow people to access money to cover a mortgage if the loan payment is overdue and the lender has written that it plans to foreclose. What The Officials & Experts Say
In the medium term (in a couple of months time) it is predicted that some scheme members would be able to apply for early access to their super over the medium term if they have been out of work for a long time or if they encountered severe difficulties with mortgage repayments. The Assistant Treasurer’s department said that experience from other disasters, such as the Victorian bushfires, was that only very limited early access to super was granted, as other forms of assistance were more appropriate at this time.
Learn more about Obama Mortgage Relief Plan Qualifications.
