by Cate Bakos, David Johnston and Mike Mortlock
Formerly The Property Planner, Buyer and Professor, our show rebranded in 2023 to The Property Trio.<br /><br />Residential property is the only asset class we live in, it is where we raise our families, and it is our most expensive investment, yet property advice remains unregulated. Our objective is to educate time-poor professionals through deep insights from our experts who have provided thousands of Australians with personalised advice and education spanning two decades. In a climate where we are overloaded with information and one size fits all recommendations from the media, well-meaning friends and family and so-called advisers, we will distill the raw truth from the ill-informed.<br /><br />So join the Property Planner, David Johnston, The Property Buyer, Cate Bakos and the Quantity Surveyor, Mike Mortlock as they take you on a journey of discovery through the maze of property, mortgage, and money decisions to empower you to create your ideal lifestyle!<br /><br /><br /><br /><b>Links to your hosts:</b><br /><a href="https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbUhiVHVnTzFRTXBXRk5pTjJEeVZFU2VRNHBHUXxBQ3Jtc0tseWJlS3dkaHRjNEVTcndvdW91OWd2bEowSkJnLTBfa0xpQUZKd25aQ0NVVTVTNGNBbHpsbF92bHBPX29ZUXJ0dVo0QXRPVllocDAyRFg5dE56VWJ4cWQ3MzRpemY3U0ZJZ3hMOEs1dUtNaXdGekQySQ&q=https%3A%2F%2Fwww.catebakos.com.au%2F&v=QiY1AcYIyDM" target="_blank" rel="noreferrer noopener">https://www.catebakos.com.au/</a><br /><a href="https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqbWtpMEU4WW8tY2h5WGljc3p1QVJ2N0h2cnluZ3xBQ3Jtc0tsMlJBdGxSVE5iYXcyMGtYZURXWW85RjNBcGYxVGRPNllBYUxzUTJFa0JJSi1fcHJ3UHVTeENfbjJ3T3E2bEx4VWNaT1NwbktHeVVkQS1xY0FscWhCSVlkTnJXYWlYWHN4bDd2cFF6ZVNyYU1OQ0p1SQ&q=https%3A%2F%2Fpropertyplanning.com.au%2F&v=QiY1AcYIyDM" target="_blank" rel="noreferrer noopener">https://propertyplanning.com.au/</a><br /><a href="https://www.youtube.com/redirect?event=video_description&redir_token=QUFFLUhqblpGc2k5bDhibnhrZFRjX2hHaDhOaklBcHlRQXxBQ3Jtc0ttc2RiU3RmM2tJa3k3OGtCVS00ejNyQ3hNY2JGXzZ2Z0xoQU9SUE41dG4xUXBfeFZVRnFtNFROYWd6ek5DUExpd3VsdDk4OU5kUXc3OEpQSGNVaFdxb1dMWG11ZlNtZl9aQ2FmYWFOWVM4aW1SQjluQQ&q=https%3A%2F%2Fwww.mcgqs.com.au%2F&v=QiY1AcYIyDM" target="_blank" rel="noreferrer noopener">https://www.mcgqs.com.au/</a><br /><br />
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April 22, 2025
<b>Got a question for the trio?</b> <a href="https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM" target="_blank" rel="noreferrer noopener">https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM</a><br /><br />In this episode, Cate and Dave dive into how life circumstances and interest rate changes directly impact borrowing capacity when borrowers are applying for a mortgage. Whether you're planning to start a family, waiting for a pay rise, or watching the RBA closely, this episode unpacks what it all means for your property plans.<br /><br />The episode begins by tackling a common question: how much do kids affect your borrowing power? Dave breaks it down with real figures. For a couple earning a combined $300,000, each child adds about $350 per month to living expenses under the Household Expenditure Measure (HEM), reducing borrowing capacity by roughly $35,000. But when you account for real-world costs—like childcare and private school fees—that impact can balloon to over $500,000 depending on your lifestyle choices. The takeaway? Kids can significantly reduce what lenders are willing to offer, especially if you're covering higher education costs. <br /><br />The conversation then turns to single parents, where Mike explains that HEM assumptions are more severe. Each child adds about $490/month to expenses, meaning a single applicant earning $150,000 may lose $60,000 in borrowing power per child. The financial pressure of being a solo breadwinner, combined with extra costs like babysitting or outsourcing household tasks, creates a tighter borrowing scenario compared to dual-income couples. <br /><br />Next, the Trio explore the effects of interest rate changes. The recent 0.25% RBA rate cut increased borrowing capacity by $20,000–$35,000 depending on income and household structure. Dave highlights that if further cuts come through—as expected—borrowing capacity could rise by as much as $150,000, opening access to higher-value properties and likely fueling further property price growth. <br /><br />Mike also dives into how income boosts translate into borrowing power. A $10,000 salary increase can add about $51,000 to your borrowing limit—roughly five times the pay rise. However, benefits taper off once you hit higher tax brackets. For couples, even if only one partner increases their income or returns to work, the gains can be substantial. <br /><br />Finally, Dave offers guidance for those considering waiting for a pay rise before buying. While higher income increases borrowing capacity, waiting too long in a rising market could mean missing out as property prices climb—potentially offsetting any gains from the salary bump. Whether you're starting a family, navigating single parenthood, feeling the challenges of lender servicing rules, or simply trying to get a better understanding of how banks assess incomes and assign borrowing capacity, this episode offers key insights to help you to navigate the lending steps more confidently and plan with clarity.<br /> <br /><b>.... and our gold nuggets! </b><br /><b></b><br /><b>Mike Mortlock's</b> gold nugget: "What are you prioritising?" Mike reflects on one Dave's comments about one of the most important things that a great, strategic mortgage broker will ask their client.<br /><br /><b>Cate Bakos's</b> gold nugget: Kids.... they are expensive. People are often hard on themselves when it comes to balancing building wealth and waiting it out while incomes are reduced while raising children. "Time with your kids is precious and they grow up really fast. Try to be kind to yourself." <br /><br /><b>David Johnston's</b> gold nugget: Borrowers should think about whether there is variability with their income. They should disclose this as clearly as possible with their strategic broker, because the...
April 14, 2025
<b>Got a question for the trio?</b> <a href="https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM" target="_blank" rel="noreferrer noopener">https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM</a><br /><br />This week, Mike and Cate tackle the data! Nationally, median dwelling values have strengthened, recording 0.4% for the month. But it is Darwin who's stolen the show with a full 100 basis points rise in March. Adelaide continues to impress, showing strong resilience. The Duo ponder the drivers behind the continued performance of the City of Churches and they also note that Hobart has been the only negative-performing capital city for the month.<br /><br />Cate highlights the difference between "all dwellings" vs "houses", and illustrates the importance of segmentation.<br /><br />Contrasting the long term performance of our two March extremes is interesting. Cate and Mike break down the past ten years' of dwelling values, noting that Hobart comes in at number three with a growth rate of 86.7%, whilst Darwin's ten year performance is negative at -1.0%.<br /><br />Regional performance is noteworthy too. Recent years have amplified regional growth, particularly following COVID. However, the top performers over the last twelve months are interesting. Central Highlands in QLD is home to a lot of mining towns, and the growth has the Duo questioning whether it's sustainable long-term.<br /><br /><b>"Why has regional Victoria done so much better than Melbourne?" </b> Cate walks the listeners through some of the challenges that Melbourne faced, and also some of the significant drivers over the COVID lockdown years throughout many different Victorian regions.<br /><br />Rents have almost normalised thanks to higher household formation rates and a slow-down on overseas migration. Most of our capital city house rental movement now sits within the target inflation band; a stark contrast from the heady past three years. <br /><br />Gross rental yields have been gradually increasing in some locations, particularly Melbourne, but Mike and Cate consider some locations around the country that currently deliver positive yield. Two include some parts of Darwin, regional NT, and some parts of regional WA. But as Cate eludes, reward and risk often go hand in hand.<br /><br />Total listings data is often intriguing when contrasted against "old listings". The data sourced from SQM suggests supply and demand is particularly imbalanced in Darwin this month. Old listings support the theory that buyers are purchasing 180-day+ stock aggressively. Like we saw for Perth in recent past years, could Darwin be exhibiting similar leading indicators for a surge?<br /><br />Unemployment remains tight and the most recent figures suggest the unemployment count is lower than anticipated. <br /><br />The last two weeks have been dominated by newsfeeds about Donald Trump's tariff controls, and markets have exhibited several shocks to say the least. Mike and Cate delve into some of the comments from our own RBA Governor, Michelle Bullock in response to questions about how Australia will fare. Specifically, the Duo cite some of Governor Bullock's remarks about inflation, interest rates and employment.<br /><br /><b>Show notes:</b> https://www.propertytrio.com.au/2025/04/14/ep-305-march-2025-market-update/
April 7, 2025
<b>Got a question for the trio?</b> <a href="https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM" target="_blank" rel="noreferrer noopener">https://forms.zohopublic.com/propertyplanningaustralia/form/GotaquestionforthePropertyTrio/formperma/zYCQAxzE_24CVlDafP1ozyzwtmB-8m1iCNtCTgDvHXM</a><br /><br />In this episode, Cate and Dave dive into a topic that’s top of mind for many aspiring homeowners and investors—how to increase borrowing capacity. Whether you’re buying your first property, refinancing, or growing a portfolio, understanding what affects your borrowing power can help you make smarter decisions. Being aware of how banks consider the various elements of each applicant's scenario will enable you to plan your future decisions alongside your strategic mortgage broker with more clarity.<br /><br /> In today's show, the Duo will cover:<br /><ul><li>How Lenders Assess Borrowing Capacity: Dave explains that borrowing capacity isn’t just about your income—it’s about how you structure your finances, manage debts, and work with a strategic mortgage broker. Income is assessed post-tax, with potential reductions (shading) applied to bonuses, rental income, and commissions. Even with online calculators, complexity with income means real results can differ widely.</li><li>Impact of Existing Debts: Lenders assess credit cards, personal loans, car leases, HECS, and child support (to name a few). Importantly, they apply a buffer rate of +3% on current and proposed loans to ensure you can cope with future rate rises.</li><li>Lender Policy: Every lender has different rules. Some are more generous with specific incomes or professions. Dave stresses that understanding lender policy requires an intimate understanding of the various lender's offerings and requirements—it’s complex and ever-changing. A good, strategic mortgage broker can tailor strategies across more than forty lenders to improve outcomes and enable their clients to reach their purchasing and money goal effectively. "The key is knowing where the levers are", says Dave.</li><li>Living Expenses: A major focus that Dave shares with us is the deep scrutiny on personal spending, especially since the Banking Royal Commission. Lenders no longer rely solely on HEM (Household Expenditure Measure); instead, they require detailed breakdowns across 15 expense categories—from groceries and utilities to insurance, childcare, and entertainment. Cate and Dave delve into these segments in detail in this show.</li><li>Practical Ways to Improve Capacity: Trimming even $500–$1,000 in monthly expenses can significantly boost how much you can borrow. Dave shares insights into how lenders assess discretionary vs non-discretionary expenses and what can realistically be cut if needed—highlighted by the now-famous "Wagyu and Shiraz" court ruling.</li><li>HEM Benchmarks: While no longer dominant, HEM (Household Expenditure Measure) still plays an important role. If your declared expenses are much higher, borrowing power can be significantly impacted. If they’re lower but justified, some lenders may accept your declared living expenses. Being familiar with the information that lenders scrutinise helps borrowers understand what influences lender's decisions around borrowing capacity.</li></ul>Understanding borrowing capacity is more than numbers—it’s strategy. Stay tuned for future episodes covering additional tactics to boost borrowing power and make the most of your financial potential.<br /><br /><b> .... and our gold nuggets! </b><br /><b></b><br /><b>Dave Johnston's </b>gold nugget: having a conversation with your strategic mortgage broker about your goals, timing and opportunities to improve your circumstances and to make your goals achievable. "One element you can control is reducing your living expenses."<br /><br /><b>Cate Bakos's</b> gold nugget: "I would implore anyone to identify a good mortgage...
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