For most people, their mortgage will be the largest debt they will have in their lifetime. Because there are no tax benefits on this type of debt, it’s worth considering paying it off (or at least partially down) quickly so can make the most of the opportunity to accumulate wealth outside the home.
So, here are a few tips which can help you get that mortgage down.
1. Get the right loan from the start
There are so many factors to consider when deciding which is the most appropriate loan. And the loan your friend has may not be the best loan for you. Just like the loan with the lowest advertised interest rate could cost you more in the long term.
2. Understand how to use your loan
Once you have gone to the effort of structuring your loan correctly, it’s important that you know how to get the most benefit out of it. For example, an ‘offset’ account may not help you pay your home loan quicker unless you have the discipline to use it as it should be used.
3. Increase your repayments – every dollar helps!
Whether it be a lump sum payment or increasing your monthly repayments, every extra dollar will result in a saving to your interest cost and thus will reduce the time to repay your mortgage. At a 2.5%pa interest rate, an additional $200 per month repayment on the average mortgage will save approx. $30,000 in interest costs. At a 4.5% interest rate, this increases to approximately $60,000 in interest costs
4. Work on your loan early
During the early years, a higher proportion of your loan repayments are going towards paying the interest expense, with a smaller portion reducing your principal owed. So, commiting to make larger additional/lump sum repayments during the initial years of your loan will repay a larger amount of the principal and so will save on the interest costs.
5. Ask your bank for a discount
You’ll be surprised with the reduction you may get on your interest rate if you just ask.
6. Better still use a pro-active mortgage broker
A great mortgage broker is invaluable. From recommending the best loan specifically for you, to explaining how to best utilize it to getting on the front foot and asking the financial institution for a discount. Our lending manager, Cameron Purdy was able to secure our client a further discount 18 months into her loan by simply getting on the front foot and negotiating with bank. It resulted in a saving of over $900 per month!
7. Build Wealth while accelerating your mortgage repayments
A ‘debt recycling’ strategy enables you to simultaneously pay off your home loan sooner, while building an investment portfolio.
So rather than wait until you pay off your loan before commencing the build up of your wealth/investments, you can start doing it now!
And while the investment portfolio is growing, the income it generates is directed towards the home loan acting as another source of repayments and accelerating the time taken to be mortgage free!
Debt recycling is an extremely effective strategy and while popular among many professionals, it is something all who have a mortgage should consider.
The latest statistics coming out of the Australian residential property market indicate we’re seeing a remarkable rebound, with approvals and finance applications soaring and prices likely to follow. For now, the real driver is free standing houses being bought by owner occupiers.
Record construction approvals
Approvals to construct new houses jumped 15.8% in December to a record high, with strength seen right across the country. CBA’s economics unit pointed out that compared to December 2019, housing approvals rose “an incredible 55%” – see chart 1.
Chart 1: Dwelling approvals were strong across the whole of Australia
While apartment approvals are nowhere near as impressive, being 19% below a year ago, they are still 44% above the low point reached in June last year when the market had been crushed by national COVID lockdowns and forecasts were for housing markets to collapse.
Residential propery prices expected to follow
While CoreLogic reports that national home prices have risen a relatively modest 1.5% compared to a year ago, with Sydney up 2% and Melbourne down 2.2%, those markets that have enjoyed less COVID disruption were stronger: Perth was up 3.7%, Brisbane 5.3% and Adelaide 6.7%.
However, given weekly auction clearance rates and loan applications tending to be a reasonable leading indicator for house prices, the outlook for prices, especially for free standing homes, appears to be very positive. Clearance rates have roared to a four-year high – see the chart 2 below – and the value of new housing loan commitments in December jumped 9% to hit a record high of $26 billion, putting it 31% higher than a year ago.
Chart 2: Auction clearance rates have hit a four year high
Chart 3: Owner occupier borrowing has shot up
UBS forecasts Australian house prices will rise by 10% in 2021, while CBA is calling for an 8% increase.
What we’re seeing is the culmination of various factors that, when combined, amount to a huge tailwind for the property market.
Interest rates: the Reserve Bank has cut cash rates to an all-time low of 0.1% and indicated they have no intention of raising them any time soon. Borrowers could have two to three more years of super low interest rates up their sleeve.
In addition, the big banks are benefiting from the Reserve Bank’s Term Funding Facility that enables them to borrow a total of $200 billion for home lending at the same rock bottom rate of 0.1%.
Banks have responded by offering fixed rate loans as low as 1.75%, with no fewer than 25 different loans currently below 2%. Not surprisingly, fixed rate loans now account for 40% of new loans, up from 15%.
Relaxed lending standards: In October last year the government announced the removal of the bank regulator’s responsible lending laws, which required banks to undertake thorough due diligence on a borrower’s capacity to repay a loan. The Treasurer said at the time the move was aimed at providing easier access to credit to help Australia’s recovery from its first recession in more than 30 years.
Stimulus spending: the stimulus packages announced in the wake of the COVID pandemic by the Australian government added up to 13% of GDP – newly created money shoved into the economy. That saw household savings jump to an almost 60-year high in June last year – see chart 4.
Chart 4: Household savings hit an almost 60-year high
A huge portion of those savings were bound to find their way into the economy through consumer spending, which we saw in the December quarter last year when the CBA Economics Unit said spending on their bank’s credit cards was 11% higher than the year before.
HomeBuilder Grant: the Federal Government also announced grants of $25,000 to qualifying borrowers who were either buying or renovating a home to live in. By the end of 2020, 75,000 applications had been received, blowing past the government’s forecast of 30,000. The scheme has been extended until March, although it’s been reduced to $15,000.
Stamp duty concessions: New South Wales and Victoria announced stamp duty concessions of between 25-50% on residential property purchases up to $1 million.
Job security: thanks largely to the stimulus juicing the economy, the NAB Business Survey shows business confidence and business conditions have rebounded to be well above their average for the last 30 years. That’s in turn prompted the labour participation rate to jump to a 35-year high and the underemployment rate to drop to its six-year average, while job vacancies are at the highest for at least 12 years.
Not as great for investors
While property prices are tipped to do well over the course of 2021, rental markets are not looking as promising for property investors.
Nationally, CoreLogic reports rental rates went up by just over 1% for the year to the end of January 2021. That means they failed to keep pace with property prices, meaning the yield on an investment property, already notoriously low in Australia, was even worse.
Rents in apartments were markedly worse, possibly reflecting a sharp fall in international students and immigrants. In Melbourne, unit rents dropped 8% over the past year while in Sydney it was 6%.
For those looking to buy a home, the market looks set to rise over this year.
While capital gain for investors is always attractive, there may well be risks in finding a tenant at current market rates.
Qualifying borrowers can still benefit from the federal government’s HomeBuilder grant until March.
For those looking to borrow to buy a home, rates are at all-time lows.
For those already with a mortgage, now is a great time to refinance.
Looking to buy a residential property or refinance your existing home?
Call Steward Wealth today on (03) 9975 7070 to find out how we can help you achieve a highly competitive home loan rate.
2021 is shaping up to be a year of strong economic growth, and, right now, the indicators are looking good for financial markets as well.
The government response to the COVID shutdowns was swift and big. In total, the federal government is spending $272 billion, equivalent to 14% of GDP, and the states $122 billion. All that newly created money has to go nowhere.
Early on, households saved a lot of the extra cash. The June quarter savings rate hit 19.8%, 8x higher than the year before and only 0.5% below the 60-year peak set in 1974. The Commonwealth Bank estimates households will have about $100 billion of savings, or 5% of GDP, that has been accrued between the start of COVID and December.
To that you can add $34 billion of super withdrawals so far, with Treasury estimating an eventual total of $44 billion.
After a record plunge to 76 in April, consumer confidence has now had 11 consecutive weekly gains to 108.
It now appears Australians are spending those gains. Commonwealth Bank reported credit card spending jumped 11% year on year in mid-November. Restaurants in New South Wales enjoyed seated dining numbers 55% higher than a year ago, while Queensland was a whopping 79% and even shellshocked Victoria was up 54%
Retailers have seen record spending in the Black Friday sales, prompting Gerry Harvey to say, “This is like the greatest boom I’ve ever seen in my lifetime”.
The US fiscal package injected 13% of GDP and pushed the personal savings rate to almost double what it was at the start of the year.
Low interest rates have ignited the US housing market, where prices are now 10% above the pre-GFC levels. Homeowners’ equity is at a record high and the increase in the pending sales index is parabolic.
More than 80% of stocks in the S&P 500 are trading above their 200-day moving average, a sign of positive market breadth that has only been seen twice in the past 20 years.
We are seeing 52-week highs in share markets across the world, from China, to Japan, to Europe, to Australia.
Global equities have seen a record inflow post the COVID vaccine announcements.
While the indicators are stacking up well, there are, of course, no guarantees that markets will play ball and they sure do have a way of wrong-footing us. However, it’s noteworthy that nothing in the economy was ‘broken’ going into the pandemic downturn; there was no particular sector on the cusp of being crushed by excessive debt and while valuations were not cheap, they were certainly defensible.
Now is not the time to be sitting on lots of cash.
When searching for a property loan the first thing people tend to look for is a low interest rate but getting the right features with your loan can be just as important. Most people have heard of an offset account, but do you really need one and, if so, are you getting the most out of it?
How does an offset account work?
An offset account is an everyday transaction account that you can deposit all your spare money into and is linked to your mortgage. When interest on your loan is calculated, the balance of this account is combined with your loan to ‘offset’ the amount charged. For instance, if your mortgage was $500,000 and you had a balance of $100,000 in your offset account, interest would be calculated based on a balance of $400,000. Over the life of your home loan, placing any additional savings into your offset account can significantly reduce the time taken to pay off your loan.
There are generally two types of offset account, partial and 100%, which, as the names imply, offset different proportions of the mortgage balance. Also, the majority of offset accounts are linked to variable home loans with only a small number of lenders offering this feature with a fixed rate.
Offset account vs redraw facility?
While each lender tends to label them differently, most lenders offer you the choice of loans. A ‘basic loan with a redraw facility’ allows you to make extra repayments towards your loan which you are then able to withdraw at any time. It is important to read the fine print as some redraw facilities limit the amount or frequency you are able to access these funds and some even charge a fee for the privilege.
‘Packaged loans’ generally include an offset account together with other features such as a credit card and provide more flexibility around making changes to your loan without additional cost, for example fixing your rate at a future date. This usually attracts a flat annual fee of between $200-$400 and some lenders even offer a reduced interest rate compared to their basic product.
If both an offset account and unlimited redraw facility allow you to make extra repayments, whilst maintaining access to the funds, then which one do you need?
Home loan offset accounts
If you are purchasing the property to live in, or a holiday house that you do not intend to rent out, then applying for a ‘basic’ loan with a redraw facility may be appropriate for you. It will save you any ongoing fees associated with a packaged loan and in some cases you may even receive a better rate.
An offset account becomes attractive if you prefer instant transaction access to the funds, including BPAY and EFT, rather than being limited to the terms of the redraw. This works well for people who receive higher levels of income who can pay their salary, and any commissions or bonuses, directly to the account offsetting interest whilst expenses are then periodically paid from the facility.
Remember that you generally receive a credit card with the packaged loan so cancelling your current one, and the annual fee often associated with it, could net the extra cost. A common strategy is to select a credit card that provides an interest free period on your purchases and use this to pay your everyday expenses. The credit card is then paid down in one monthly payment thus maximizing the balance of the offset account whilst not accumulating any interest on your expenses. This approach requires discipline to ensure credit card repayments are made on time and may not be for everyone.
Several lenders also offer the ability to have more than one, often up to 8-10, offset accounts linked to the same home loan. The cumulative balance of all offset accounts then acts to reduce the interest accrued. This can be a useful budgeting tool where you separate your income into different categories or ‘buckets’, helping you to save while still reducing interest and paying off your loan more quickly.
Investment loan offset accounts
Offset accounts attached to Investment loans are where the real benefits become apparent. Investment loans are lending for properties, or other investments, from which you draw an income usually in the form of rent. Due to the transaction capabilities of an offset account, it provides a great way to keep all your investment property-related income and expenses together in the same account.
The interest on the loan, and other related expenses, are generally tax deductible, which is one of the significant benefits of owning an investment property. If you access the extra repayments from a redraw facility, the redrawn amount is treated as a separate loan to you and would prevent you from claiming this as a tax deduction, unless you can demonstrate that you are using those funds for investment purposes. Issues can arise, for example, when you withdraw money to take the family on a holiday or buy a new car. If your extra repayments are accessed directly through an offset account, the ‘fund purpose’ test would not apply, and all interest accrued on the loan would continue to be deductible.
This benefit can be significant when you purchase a second property to move into and convert your current one to an investment. In most cases you would benefit from reducing the loan on the new owner-occupied property and maximise the investment loan for tax purposes. If you transferred extra repayments to the new loan from a redraw facility, those repayments would fail the ‘fund purpose’ test and would not be deductible. By accessing the funds from an offset account, you can therefore maximise your deductions. Its important to note that these examples can significantly vary depending on your personal circumstances and you should always consult an accountant for personal tax advice.
Finding the best rate combined with the most appropriate loan features can be a complex, time consuming task that Steward Wealth can help you with. Feel free to get in touch.
For fear of sounding like a real nerd, anyone even remotely interested in financial markets will appreciate how exciting it is to have an audience with three international central bankers. I got that opportunity, amongst other things, this week at the twentieth anniversary of UBS’s Greater China Conference, held in Shanghai over Monday and Tuesday.
It was my first time in China, and while suggesting Shanghai is representative of China is like saying the same thing about Sydney and Australia, I did come away with a changed impression and understanding of the country; but I’ll come back to that, first the exciting stuff.
‘The new normal for the global economy’
Full credit to UBS that they were able to get three rock star central bankers for this presentation: Dr Bill Dudley is the President of the New York Federal Reserve, Dr Raghuram Rajan was the 23rd Governor of the Reserve Bank of India and the former Chief Economist and Director of Research at the IMF, and Dr Min Zhu is a former Deputy Governor of the People’s Bank of China. One thing to bear in mind, however, while these guys are super smart and extraordinarily well connected, they don’t possess a working crystal ball and what they say is still a (very well informed) best guess.
Their respective views of the ‘new normal’ were extremely close to each other: an ongoing environment of slow growth, low unemployment and low inflation – in other words, no meaningful change from what we’ve experienced over much of the past 10 years. Given the similarity of their outlooks, I can only presume that, for now at least, they don’t see anything on the horizon that’s going to cause things to change much.
To me, the most interesting part of Dr Dudley’s message was his candid acknowledgement that if interest rates are as low as they are now when the next recession hits, there’s obviously not much room to cut them in order to support a recovery. While he acknowledged central banks do have other (read unconventional) tools at their disposal, such as quantitative easing, he argued monetary policy alone will not be sufficient to pull the economy out of recession and reiterated several times they will definitely need fiscal policy, so changes in government spending, to do some, if not a lot, of the heavy lifting.
That is an identical position to most central bankers, including Australia’s Dr Philip Lowe, who have collectively been saying that monetary policy is reaching the limits of what it can do and have been pleading with governments to open their wallets and spend. Dr Rajan also said that while unemployment is very low across the world, job dissatisfaction is relatively high because the quality of a lot of those jobs is poor, and this is something fiscal policy is far better placed to address than monetary policy.
Importantly, and as you’d expect, Dr Dudley also stuck with the Fed’s current script that they are in no hurry at all to raise rates, and will be happy to let inflation in the US run above its 2% target level before they increase from the current 1.75%. That sits well with the market’s current view of where interest rates are headed and is considerably more optimistic than UBS’s US Chief Economist, who spent 14 years at the Fed, and is forecasting three rate cuts this year in response to a weakening economy.
Dr Rajan gave his rundown of what he considers to be the five major influences on economies, none of which will surprise anyone:
Technological innovation, which is increasing productivity but is also changing the nature of jobs that are available to those without higher education
Demographics, which he sees as presenting threats and opportunities
The rise of emerging nations and the need to find ways of accommodating their growth and aspirations
Inequality, which underpins the rise of populist politics
Climate change, which he also sees as presenting threats and opportunities.
Dr Min commented that all technological change is disruptive to the extent that it usually means an existing system is changed in favour of the new, and he pointed to the possibilities that 5G brings with the ‘internet of things’. It took China five years to reach some 3.7 billion 4G devices and it’s targeting all of those to be switched to 5G within 2.5 years, bringing with it the benefits of bigger, faster, fatter pipes of data.
He also believes that ageing demographics and the gradual reduction in the proportion of working age people across the developed world, which is baked in and cannot be changed quickly given it takes 18 years to make a worker, has helped to usher in an era of lower growth (the formula for growth is very simple, it’s the number of workers times how much they produce. If the number of workers goes down, you have to improve productivity if growth is to be sustained). While most commentators refer disparagingly to Japan’s decades of low growth as an example of what must be avoided, he argued it’s a miracle Japan has managed to grow at all give its demographic challenges, and the fact it has is testimony to what fiscal spending can achieve.
As to whether China can sustain its growth rate, he reckons the key is to improve the productivity of the services sector, which is now 52% of GDP. China’s industrial sector’s productivity is world class, but services productivity is about 30% below world’s best practice. In his view the solution is simple: open China’s market to more international service companies so they can learn from them. Interestingly, we heard from Dr Weng Mingbo, the Deputy Secretary General of the Shanghai Municipal Government, that Shanghai had issued 1600 new licences to financial services firms in 2019.
When asked about inflation, they tacitly acknowledged that, the thing is, we don’t really know what causes inflation to rise and fall; all the old models have had to be rethought, so it could very well return at any time, though each indicated they don’t see that being the case. Dr Dudley said he’d been surprised that US wages growth hadn’t been stronger given unemployment is at 50-year lows (there goes the Phillips Curve?), but he expects it will happen at some point and that could underwrite higher inflation. Dr Rajan responded that for a long time many economists argued inflation was led by expectations, that is, if people expect prices will rise it becomes a kind of self-fulfilling prophecy. But, once again, Japan was referenced as dispelling that myth and could serve as a leading indicator.
Again, all three of the central bankers agreed that inflation is more of a mystery than we’d thought, and Dr Dudley said the Fed is giving thought to changing to targeting a range of, say, 1.5-2% per annum, or an average of 2% over the a cycle. Both would be subtle but significant changes, quietly admitting central banks cannot control inflation with any level of precision (again, the Japanese example was raised where the Bank of Japan has failed to reach every inflation target it’s set itself over the past 20 years despite throwing everything but the proverbial kitchen sink at it).
One final interesting point from Dr Dudley, he reminded us that everyone tends to presume the next recession will look just like the last one, but it rarely ever does.
The trade war
Frankly, there was less focus on the current trade war between China and the US than I’d expected. That’s not to say people were dismissive, but it certainly didn’t dominate conversations and my sense was it’s been going long enough that we’ve probably reached the point of fatigue. Several speakers, including the central bankers, mentioned the level of uncertainty created by President Trump’s unpredictability, where a random tweet could change the course of things without warning, and while we all know markets don’t like uncertainty, there comes a point where it becomes the status quo.
Those who attended last year’s conference said the Chinese message then was ‘we’ve got to work this trade war out’, whereas this year the only dedicated session, which included Madam Fu Ying, a former Vice Minister of Foreign Affairs, saw a more assertive Chinese stance. Madam Fu more or less said it’s pleasing the two governments are finding areas of agreement, as evidenced by the ‘Phase 1’ deal that’s just been signed, but if the US wants the benefits of leadership then it has to lead.
Dr Barry Naughton, Chair of Chinese Studies at the School of Global Policy and Strategy at UCLA, all but admitted the US had underestimated the ramifications of China’s rise when he used the analogy that when China was admitted into the World Trade Organization in 2001 it was like they had a pet baby tiger they could leave the kids to play with, and they’ve come back almost 20 years later to find they have a full grown tiger on their hands.
Madam Fu said the Chinese feel the US doesn’t want China to grow and the US needs to find ways to reassure them that’s not the case, meanwhile, Dr Naughton said the US feels confused because it appears China wants to supplant the US rather than work with them.
It was Dr Rajan that raised some interesting potential consequences that could arise if a resolution or compromise isn’t found: it’s conceivable there could be a split in key areas of technology where two distinct standards develop, one Chinese sponsored the other US. That potentially means countries could be forced to choose, which then becomes a question that carries both political and commercial significance, and if that’s about something as important as, say, 5G, there could be far reaching consequences. What if the US 5G standards are inferior to China’s or years behind, where does that leave a country like Australia?
Every presentation I listened to included references to climate change and explicit acknowledgement of the effects it’s already having, but also the necessity of addressing it and what the consequences might be from doing so. It was clear the Chinese government sees it as a really big deal, or at least they talk like they do, with climate change strategies incorporated into the government’s five-year plans.
One panel discussion included Dr Li Junfeng, the First Director General of the National Centre for Climate Change Strategy and International Cooperation, who took a reasonably pragmatic approach saying China appreciates the economic challenge of transitioning away from fossil fuels, nevertheless it has set a goal of 75% renewable energy by 2050, from about 24% currently (much of which is hydro).
In terms of practical steps China is taking, it has the most electric vehicles in the world and accounts for some 90% of global production and it’s the biggest producer of PV panels and is embracing wind power too. There were signs of the commitment to its climate change strategy around Shanghai, with lots of EV’s on the road (they don’t have to pay annual licence fees) and electric Vespa-style scooters just everywhere (I saw one, admittedly far more utilitarian in its styling than a Vespa, selling for about $300 brand new).
Possibly the biggest thing that struck me was the ‘can do-ness’ of China, thanks largely to the benefit of having an autocratic government that doesn’t have to worry about being re-elected. For example, the area on the far side of the river in the photo below, which is the iconic shot of the Pudong area of Shanghai, was rice fields 30 years ago. One of the delegates, who used to work in Hong Kong, told me he’d been at a conference in Shanghai around 1990 and a government official discussed their plans to turn those rice fields into a city over the following five years. He said he laughed at the suggestion, only to find five years later the area was covered in plain, rectangular skyscrapers. What you see in the photo is, in fact, the second generation of buildings on the site, and it is now Shanghai’s financial district, boasting, amongst other things, the second highest tower in the world.
Shanghai’s Pudong financial district – it was all rice paddies 30 years ago
While the Australian government frets about ‘picking winners’ to back, and consequently resorts to ‘letting the market decide’, the Chinese government picks industries it wants to lead the world in and backs them with the full resources of the State. Thus, years ago a struggling IT company called Huawei was picked as the Chinese 5G champion and now leads the world (yes, with all the attendant controversy). While climate change was probably the single most mentioned topic at the conference, with possibly the trade war second, the advent of 5G and the implications for tech industries would have been next.
Dr Chen, of the Shanghai Municipal Government, explained they had installed 14,000 5G stations around Shanghai in a single year, with plans to accelerate that. They had also built Tesla’s new mega-factory in 12 months and the first cars have been rolling off it recently. The next target is to establish Shanghai as one of the world’s leading financial centres, thus the 1,600 new licences mentioned before. Already, Shanghai’s stock market is the fourth biggest in the world at US$4 trillion, but Hong Kong is number five at US$3.9 trillion and Shenzhen is eighth at US$2.5 trillion. If you add them together, the Chinese markets are worth a combined US$10.4 trillion, which would put it second behind the US (which admittedly dwarfs it, for now, at US$33.7 trillion for the NASDAQ and NYSE combined).
Obviously there are dark sides to the Chinese government as well. It’s confronting not to be able to pick up your phone and Google something at will and watching the BBC or CNN news involves any story on China simply disappearing from the screen. The surveillance is frightening, and what’s happening to the Uighurs is simply appalling, and the Wall Street Journal reported this week that it estimates the Chinese government has given Huawei some US$75 billion worth of subsidies, tax breaks and benefits.
Clearly there’s no way western democratic companies can compete without significant state support as well, which involves overcoming the established neo-liberal doctrine that governments should keep out of the way of the market. No doubt this will continue to be an issue for a long time to come.
One final thing I learned: I went on a guided walk of Old Shanghai, a feature of which was seeing the 400-year-old home of Madam Goh, which was on 2,300 square metres of land. The buildings are in ruins and the government has been negotiating with Madam Goh’s family for years to buy it off them. Bear in mind, this part of Shanghai is so crowded I saw an ad to rent out 4 square metres of space for about A$265 per month! I said to the guide I’d have thought the Chinese government would have just said ‘We’re taking your land’, but she looked quite shocked at the suggestion and explained the government recognises her family owns the land and they need to compensate her accordingly. Like everything though, it’s a matter of reaching agreement as to what it’s worth.
There was, of course, plenty more covered at the conference, including plenty on the financial outlook for China. Overall, I came away with a stronger conviction that China’s influence on the world is only going to grow and western companies and governments need to take notice of what can be achieved with proper government support. I’m far from starry-eyed about how that growth has been achieved in terms of the consequences for personal liberties and the environmental effects, but from a pragmatic point of view the China story is a long, long way from over.