Wednesday, October 28, 2009
Funding costs to push rates higher: CBA
Brokers can play a critical role in informing their clients of the impact of the higher funding costs that are likely to push mortgage rates up further, according to CBA.
At a media briefing yesterday, Kathy Cummings, executive general manager of third-party banking, told journalists that the bank was working with its Diamond brokers to help them prepare clients for a rising rate environment.
CBA’s current initiatives to support borrowers will include a video presentation produced for CBA’s Diamond brokers in which Lyn Cobley, group treasurer, highlights the impact of today’s higher funding costs on both variable and fixed rate loans.
In the video, shown to journalists, Ms Cobley explains why the bank’s funding costs bear little relationship with the cash rate. She also reveals that while 58 per cent of the banks funds originated from deposits, a cut-throat market had also pushed up costs in this sector.
According to Ms Cobley, the remaining 48 per cent of funds were secured from institutional investors where costs had risen from less than 20 basis points in June 2007 to 112 basis points in June 09. She said that this is forecast to reach 136 basis points by June 2010.
Kathy Cummings explained to journalists that while the threat of recession in Australia has now receded, borrowers should be aware that the global financial crisis still grips the capital markets.
She believes that with a better understanding of the wholesale markets brokers will be well positioned to help their clients navigate the next phase in the rate cycle.
“Brokers have a major role to play in helping their clients borrow responsibly and that means keeping them informed about the realities of the current wholesale funding environment and how that could impact on their mortgage.”
At a media briefing yesterday, Kathy Cummings, executive general manager of third-party banking, told journalists that the bank was working with its Diamond brokers to help them prepare clients for a rising rate environment.
CBA’s current initiatives to support borrowers will include a video presentation produced for CBA’s Diamond brokers in which Lyn Cobley, group treasurer, highlights the impact of today’s higher funding costs on both variable and fixed rate loans.
In the video, shown to journalists, Ms Cobley explains why the bank’s funding costs bear little relationship with the cash rate. She also reveals that while 58 per cent of the banks funds originated from deposits, a cut-throat market had also pushed up costs in this sector.
According to Ms Cobley, the remaining 48 per cent of funds were secured from institutional investors where costs had risen from less than 20 basis points in June 2007 to 112 basis points in June 09. She said that this is forecast to reach 136 basis points by June 2010.
Kathy Cummings explained to journalists that while the threat of recession in Australia has now receded, borrowers should be aware that the global financial crisis still grips the capital markets.
She believes that with a better understanding of the wholesale markets brokers will be well positioned to help their clients navigate the next phase in the rate cycle.
“Brokers have a major role to play in helping their clients borrow responsibly and that means keeping them informed about the realities of the current wholesale funding environment and how that could impact on their mortgage.”
Melbourne property prices jump $30,000
The median price for a property in Melbourne has climbed $30,000 in the three months to September, to sit at $480,000.
According to the Real Estate Institute of Victoria’s (REIV) September Quarter Property Update, the median price of a house in Melbourne soared 6.7 per cent during the last quarter.
REIV chief executive officer Enzo Raimondo said that improved confidence in the Victorian economy combined with ongoing population increases had resulted in the new record quarterly median price.
“The recovery in the property market is widespread with record demand in the cities most prestigious suburbs as well as its most affordable ones,” Mr Raimondo said.
“Individual monthly results also show ongoing and sustained increases over the quarter which indicates demand will continue to push prices up through October, November and December.
“The improved confidence in the economy has revealed the underlying issue; a lack of supply, both for purchasers and renters. Unless there is a sustained increase in supply the REIV expects further pressure on prices.”
According to the property update, the Sydney suburb Surrey Hills recorded the largest increase, surging 24.6 per cent from $905,000 to $1,127,500.
Pascoe Vale also recorded very strong increase in demand, its median rose by 23.7 per cent from $485,000 to $600,000 over the quarter.
Strong demand for traditional detached homes in similar middle ring suburbs such as Thornbury, Highett, Doncaster East, Nunawading and Bentleigh East was also recorded.
According to the Real Estate Institute of Victoria’s (REIV) September Quarter Property Update, the median price of a house in Melbourne soared 6.7 per cent during the last quarter.
REIV chief executive officer Enzo Raimondo said that improved confidence in the Victorian economy combined with ongoing population increases had resulted in the new record quarterly median price.
“The recovery in the property market is widespread with record demand in the cities most prestigious suburbs as well as its most affordable ones,” Mr Raimondo said.
“Individual monthly results also show ongoing and sustained increases over the quarter which indicates demand will continue to push prices up through October, November and December.
“The improved confidence in the economy has revealed the underlying issue; a lack of supply, both for purchasers and renters. Unless there is a sustained increase in supply the REIV expects further pressure on prices.”
According to the property update, the Sydney suburb Surrey Hills recorded the largest increase, surging 24.6 per cent from $905,000 to $1,127,500.
Pascoe Vale also recorded very strong increase in demand, its median rose by 23.7 per cent from $485,000 to $600,000 over the quarter.
Strong demand for traditional detached homes in similar middle ring suburbs such as Thornbury, Highett, Doncaster East, Nunawading and Bentleigh East was also recorded.
Fewer FHBs seek finance
First home buyers have officially started to pare back, with mortgage brokers noticing a dramatic drop in the level of enquiries.
Mortgage Broker Loan Market Group has seen a 26 per cent drop in the number of enquiries from first home buyers since the grant was reduced.
Mr Rushton believes tougher lending criteria by the major banks has made it more difficult for some first time buyers to get into the market.
He also said the expanded grant scheme had been crucial in cushioning the Australian economy from the worst of the world’s economic woes.
“Overall, the expanded grant scheme provided a core foundation for the property market,” he said.
“It helped cushion it from the dramatic downturn some overseas property markets experienced.
“One of its greatest legacies was that it generated a lot of confidence in the market which should remain stable despite the inevitable upward movement in interest rates from near record lows.”
Mortgage Broker Loan Market Group has seen a 26 per cent drop in the number of enquiries from first home buyers since the grant was reduced.
Mr Rushton believes tougher lending criteria by the major banks has made it more difficult for some first time buyers to get into the market.
He also said the expanded grant scheme had been crucial in cushioning the Australian economy from the worst of the world’s economic woes.
“Overall, the expanded grant scheme provided a core foundation for the property market,” he said.
“It helped cushion it from the dramatic downturn some overseas property markets experienced.
“One of its greatest legacies was that it generated a lot of confidence in the market which should remain stable despite the inevitable upward movement in interest rates from near record lows.”
ANZ rated number one for customer satisfaction
ANZ has topped the majors in terms of customer banking satisfaction, a new poll from Roy Morgan has revealed.
According to the poll, ANZ ranked as the market leader at 74.3 per cent, slightly ahead of Westpac in second position at 72.3 per cent.
CBA posted the biggest improvement in customer satisfaction, gaining 2.7 percentage points for a score of 71.4 per cent.
Overall bank customer satisfaction has improved by half a percentage point to 73.2 percent in the last 12 months.
Building societies achieved the highest satisfaction rating with 87.9 per cent, followed by credit unions at 86 per cent.
According to the poll, ANZ ranked as the market leader at 74.3 per cent, slightly ahead of Westpac in second position at 72.3 per cent.
CBA posted the biggest improvement in customer satisfaction, gaining 2.7 percentage points for a score of 71.4 per cent.
Overall bank customer satisfaction has improved by half a percentage point to 73.2 percent in the last 12 months.
Building societies achieved the highest satisfaction rating with 87.9 per cent, followed by credit unions at 86 per cent.
Senate passes broker legislation
The National Consumer Credit Protection Act was finally passed through the senate yesterday following the six month reprieve won by banks and business groups earlier in the year to postpone its implementation.
The laws, which will cover mortgage brokers, margin loans and debentures, faced some staunch opposition with many industry members arguing they needed more time to prepare for the new regime.
Financial services minister Chris Bowden said the laws had been a long time coming, but was pleased a national set of rules was finally being implemented.
“As the fallout from economic and financial market chaos has reverberated around the world, it is clearer now than ever that Australia needed to adopt a national approach to consumer regulation, a system where consumer and credit providers alike can look to the one, national set of rules,” Mr Bowden said in a statement.
The laws will take effect from 1 July 2010, with state credit and broker laws staying in place until then.
Brokers can register with Australian Securities and Investment Commission (ASIC) from 1 April 2010, with responsible lending obligations for authorised deposit taking institutions (ADI) commencing on 1 January 2011.
The laws, which will cover mortgage brokers, margin loans and debentures, faced some staunch opposition with many industry members arguing they needed more time to prepare for the new regime.
Financial services minister Chris Bowden said the laws had been a long time coming, but was pleased a national set of rules was finally being implemented.
“As the fallout from economic and financial market chaos has reverberated around the world, it is clearer now than ever that Australia needed to adopt a national approach to consumer regulation, a system where consumer and credit providers alike can look to the one, national set of rules,” Mr Bowden said in a statement.
The laws will take effect from 1 July 2010, with state credit and broker laws staying in place until then.
Brokers can register with Australian Securities and Investment Commission (ASIC) from 1 April 2010, with responsible lending obligations for authorised deposit taking institutions (ADI) commencing on 1 January 2011.
Business confidence heightens threat of rate rise
Business confidence for the quarter has climbed again, soaring 20 points to the highs last seen in early 2002.
According to NAB’s September 2009 Quarterly Business Survey & Forecasts, business conditions have also improved for the quarter, rising 14 points.
On the back of this growing confidence, NAB believes the RBA will continue to raise rates by 25 basis points until the official cash rate hits 4.25 per cent in March 2010.
While the bank’s chief economist Alan Oster refuses to rule out a 50 basis point increase at the RBA’s November Board meeting in just under one weeks time, he said rates should only reach 4.75 per cent by late 2010 and 5.50 per cent in 2011.
According to NAB’s September 2009 Quarterly Business Survey & Forecasts, business conditions have also improved for the quarter, rising 14 points.
On the back of this growing confidence, NAB believes the RBA will continue to raise rates by 25 basis points until the official cash rate hits 4.25 per cent in March 2010.
While the bank’s chief economist Alan Oster refuses to rule out a 50 basis point increase at the RBA’s November Board meeting in just under one weeks time, he said rates should only reach 4.75 per cent by late 2010 and 5.50 per cent in 2011.
Tuesday, October 27, 2009
ANZ vows to toe interest rate line
ANZ Bank has promised to keep step with the Reserve Bank’s adjustment to the cash rate when the Board meets in November.
According to a report in Herald Sun, ANZ chief executive Mike Smith said the bank would not deviate from the RBA rate cycle until it becomes clear that Australia has come out the other end of the GFC.
"I'm concerned we're in a quite fragile stage of recovery (and) I'm reluctant to move above the Reserve Bank, right now, because I can't see how it would be in the best economic interests of Australia,” Mr Smith told the Herald Sun.
ANZ’s announcement will put pressure on the other majors to follow suit and shelve home loan rate increases.
According to a report in Herald Sun, ANZ chief executive Mike Smith said the bank would not deviate from the RBA rate cycle until it becomes clear that Australia has come out the other end of the GFC.
"I'm concerned we're in a quite fragile stage of recovery (and) I'm reluctant to move above the Reserve Bank, right now, because I can't see how it would be in the best economic interests of Australia,” Mr Smith told the Herald Sun.
ANZ’s announcement will put pressure on the other majors to follow suit and shelve home loan rate increases.
Branch closures a failure: Westpac
Westpac’s group executive Peter Hanlon has admitted the bank’s policy of shutting down branches was a big mistake.
According to Mr Hanlon, the bank’s decision to morph into automated services had increasingly frustrated its customers.
"Closing branches has been a complete failure. We have closed branches in places we simply should not have closed them. This is an admission we made a mistake," he said.
"Over the last 20 years we've taken away the capabilities of bank managers to get involved in any lending decisions, we've taken away their ability to hire their own people, we've even taken away their ability to sponsor the local bowls club.”
The bank is now attempting to correct the situation and as such, has hired 400 new bank managers this year and given them more autonomy.
"The bank managers now decide who they hire, when they open and close, they decide where their sponsorship dollars go, they decide on what to do with specific customer inquiries,” he said.
"I want us to be respected again. I want bank managers to be respected members of the local community and I think the work people like me have done over the last 20 years, while not on purpose, has engineered the drop in respect of the local branch manager.
"Australia is not a country of cookie-cutter towns and cookie-cutter suburbs, so why continue to have a cookie-cutter approach to banking?"
Mr Hanlon said the bank was committed to opening 200 branches in the coming years.
According to Mr Hanlon, the bank’s decision to morph into automated services had increasingly frustrated its customers.
"Closing branches has been a complete failure. We have closed branches in places we simply should not have closed them. This is an admission we made a mistake," he said.
"Over the last 20 years we've taken away the capabilities of bank managers to get involved in any lending decisions, we've taken away their ability to hire their own people, we've even taken away their ability to sponsor the local bowls club.”
The bank is now attempting to correct the situation and as such, has hired 400 new bank managers this year and given them more autonomy.
"The bank managers now decide who they hire, when they open and close, they decide where their sponsorship dollars go, they decide on what to do with specific customer inquiries,” he said.
"I want us to be respected again. I want bank managers to be respected members of the local community and I think the work people like me have done over the last 20 years, while not on purpose, has engineered the drop in respect of the local branch manager.
"Australia is not a country of cookie-cutter towns and cookie-cutter suburbs, so why continue to have a cookie-cutter approach to banking?"
Mr Hanlon said the bank was committed to opening 200 branches in the coming years.
Abandoning major banks could save borrowers $5.3b
Big four customers could save $5.3 billion on their home loans each year by switching to the cheapest provider.
According to Infochoice’s first quarterly cost-of-banking report, mortgage customers could save $3,186 a year in interest repayments by switching from the 5.78 per cent average variable rate for the four majors to the 4.92 per cent average rate for the lowest four mortgage facilities.
“The real anomaly is that, while the four major banks offer increasingly less competitive products, they continue to increase their market share,” Infochoice chief executive Shaun Cornelius said.
According to Mr Cornelius, there is no logical reason for customers to stay with one of the big four banks.
“The majors have trusted brands and there’s been a flight to perceived quality in the financial crisis, but Australia has always had a strong banking system, and the guarantee is in place,” he said.
According to Infochoice’s first quarterly cost-of-banking report, mortgage customers could save $3,186 a year in interest repayments by switching from the 5.78 per cent average variable rate for the four majors to the 4.92 per cent average rate for the lowest four mortgage facilities.
“The real anomaly is that, while the four major banks offer increasingly less competitive products, they continue to increase their market share,” Infochoice chief executive Shaun Cornelius said.
According to Mr Cornelius, there is no logical reason for customers to stay with one of the big four banks.
“The majors have trusted brands and there’s been a flight to perceived quality in the financial crisis, but Australia has always had a strong banking system, and the guarantee is in place,” he said.
Big four move fixed rates
The big four have started to move their fixed rate home loans once again on the back of increased funding costs.
Yesterday, NAB lifted its one- to five-year fixed rate home loan rates by 20-50 basis points. Westpac, CBA and ANZ have also raised rates on their suite of fixed rate loans in recent weeks.
Last month, CBA blamed rising funding costs for its 25 to 45 basis point rate increases.
According to the banks the impact of the GFC and a sustained lack of liquidity is likely to place increasing pressure on the cost of funds for the foreseeable future.
Yellow Brick Road chairman Mark Bouris has been lobbying for a wholesale funding rate tracker that would allow borrowers to track the cost of funds thus alerting them to any potential home loan rate increases ahead of time.
Yesterday, NAB lifted its one- to five-year fixed rate home loan rates by 20-50 basis points. Westpac, CBA and ANZ have also raised rates on their suite of fixed rate loans in recent weeks.
Last month, CBA blamed rising funding costs for its 25 to 45 basis point rate increases.
According to the banks the impact of the GFC and a sustained lack of liquidity is likely to place increasing pressure on the cost of funds for the foreseeable future.
Yellow Brick Road chairman Mark Bouris has been lobbying for a wholesale funding rate tracker that would allow borrowers to track the cost of funds thus alerting them to any potential home loan rate increases ahead of time.
MFAA reinstates 900 brokers
Nearly two thirds of the 1,500 brokers terminated by the MFAA have had their membership reinstated after obtaining their Certificate IV in Financial Services.
Early last month, the MFAA took a hard line with brokers that had failed to obtain the Certificate IV, terminating their membership.
However, the association said it would reinstate a membership if Certificate IV was attained within three months.
“The majority of members already had their certificate IV, but for one reason or another, they had failed to make this known to us. This was easily corrected and as such, their membership was reinstated without delay,” he said.
With just over a month remaining, Mr Naylor said he is doubtful that many of the remaining 600 brokers will strive to meet the MFAA’s requirements and obtain their Certificate IV.
“If they are serious about broking and their profession, they will complete what is the basic foundational qualification for mortgage and finance broking,” he said.
Early last month, the MFAA took a hard line with brokers that had failed to obtain the Certificate IV, terminating their membership.
However, the association said it would reinstate a membership if Certificate IV was attained within three months.
“The majority of members already had their certificate IV, but for one reason or another, they had failed to make this known to us. This was easily corrected and as such, their membership was reinstated without delay,” he said.
With just over a month remaining, Mr Naylor said he is doubtful that many of the remaining 600 brokers will strive to meet the MFAA’s requirements and obtain their Certificate IV.
“If they are serious about broking and their profession, they will complete what is the basic foundational qualification for mortgage and finance broking,” he said.
Congratulations On Your New Home!
A client bought a new home and the broker wanted to send flowers for the occasion. They arrived at the home and the owner read the card; it said "Rest in Peace".
The owner was angry and called the florist to complain. After he had told the florist of the obvious mistake and how angry he was, the florist said. "Sir, I'm really sorry for the mistake, but rather than getting angry you should imagine this: somewhere there is a funeral taking place today, and they have flowers with a note saying, "Congratulations on your new home".
The owner was angry and called the florist to complain. After he had told the florist of the obvious mistake and how angry he was, the florist said. "Sir, I'm really sorry for the mistake, but rather than getting angry you should imagine this: somewhere there is a funeral taking place today, and they have flowers with a note saying, "Congratulations on your new home".
Real estate advertising explained - Part 1
1. 1 1/2 BATHROOM - One bathroom, the toilet has own entrance.
2. 3 RECEPTION AREAS - Entrance hall, dining room and living room (sometimes with cabinet bar. - bar not included)
3. ARCHITECT DESIGNED - As a homework project in House Design 101.
4. ARTISTICALLY DECORATED - Full of stuff you can't use.
5. BRAND NEW DEVELOPMENT - Live with construction dust for a couple more years.
6. BREATHTAKING VIEW - Can see, and smell, rubbish dump from living room.
7. CLOSE TO BEACH - Impossible to park from November to January.
8. CLOSE TO HEALTH CENTRES - Wake up every now and then from the ambulance sirens.
9. CLOSE TO NATURE - Property has no services.
10. CLOSE TO SCHOOL - The lunch break din is deafening.
11. COMPACT - Tiny house.
12. CONTEMPORARY FEELING - House has no woodwork, needs cleaning. (Also see OLD WORLD CHARM)
13. CONVENIENT - Property located next to highway on-ramp.
14. COZY - No room larger than 3m x 2m.
15. DECEPTIVE APPEARANCE - House looks terrible.
16. DELIGHTFUL RURAL LOCATION - Property in flight path of major air force base.
17. DUET - Half a house.
18. DUET - Sing along with neighbour in the shower.
19. EASILY MAINTAINED - Requires at least two gardeners and live-in maid.
20. ENTERTAINMENT AREA - 1/2 conca-braai on cement paving in corner of backyard.
2. 3 RECEPTION AREAS - Entrance hall, dining room and living room (sometimes with cabinet bar. - bar not included)
3. ARCHITECT DESIGNED - As a homework project in House Design 101.
4. ARTISTICALLY DECORATED - Full of stuff you can't use.
5. BRAND NEW DEVELOPMENT - Live with construction dust for a couple more years.
6. BREATHTAKING VIEW - Can see, and smell, rubbish dump from living room.
7. CLOSE TO BEACH - Impossible to park from November to January.
8. CLOSE TO HEALTH CENTRES - Wake up every now and then from the ambulance sirens.
9. CLOSE TO NATURE - Property has no services.
10. CLOSE TO SCHOOL - The lunch break din is deafening.
11. COMPACT - Tiny house.
12. CONTEMPORARY FEELING - House has no woodwork, needs cleaning. (Also see OLD WORLD CHARM)
13. CONVENIENT - Property located next to highway on-ramp.
14. COZY - No room larger than 3m x 2m.
15. DECEPTIVE APPEARANCE - House looks terrible.
16. DELIGHTFUL RURAL LOCATION - Property in flight path of major air force base.
17. DUET - Half a house.
18. DUET - Sing along with neighbour in the shower.
19. EASILY MAINTAINED - Requires at least two gardeners and live-in maid.
20. ENTERTAINMENT AREA - 1/2 conca-braai on cement paving in corner of backyard.
Broker uses franchise to drum up good will
Mortgage Choice franchise owner and broker, Greg Campbell, has won the Franchise Council of Australia’s 2009 Franchisee Community Service Award.
Mr Campbell was awarded the top prize for his dedication to helping the local community and ongoing contribution to the children’s charity Camp Quality.
A Camp Quality volunteer for over 11 years, Mr Campbell has used his Mortgage Choice franchise to increase public awareness and raise funds for the charity.
“With the support of my customers and passionate team I’m able to make a small difference to a very worthwhile cause. It’s fantastic to have our contribution acknowledged at a national level by the franchising industry and my peers; I can only imagine what we could achieve if more small business operators got involved in a similar manner,” Mr Campbell said.
Mr Campbell was awarded the top prize for his dedication to helping the local community and ongoing contribution to the children’s charity Camp Quality.
A Camp Quality volunteer for over 11 years, Mr Campbell has used his Mortgage Choice franchise to increase public awareness and raise funds for the charity.
“With the support of my customers and passionate team I’m able to make a small difference to a very worthwhile cause. It’s fantastic to have our contribution acknowledged at a national level by the franchising industry and my peers; I can only imagine what we could achieve if more small business operators got involved in a similar manner,” Mr Campbell said.
Hermes MD fights ‘unjust’ mortgages
Luxury goods brand Hermes’ managing director Karin Upton Baker will face court this week after failing to repay more than $18 million in loan repayments.
In December 2006 Ms Upton Baker borrowed $5.8 million secured against her Elizabeth bay apartment and in June 2007, she borrowed $11.3 million against four apartments overlooking Bondi Beach.
According to the SMH, Ms Upton Baker, who is reported to earn $360,000 a year, will argue in court that the mortgages should be set aside because they are unjust.
Ms Upton Baker says that she was at a ''special disadvantage'' because she was pressured by her husband into signing the loans and did not earn enough to repay them. She also admitted she did not read the terms and conditions of her mortgages and that she falsely declared she had received financial and legal advice before she took out the loans.
Her lawyers will ask the court to order that she does not have to repay the loans or, if this is not possible, order that the lenders can recoup only their loan from the sale of the Bondi properties and cannot claw back more than this if the sales do not reach $11.3 million.
Ms Upton Baker has failed to make any repayments on her loans since July last year.
In December 2006 Ms Upton Baker borrowed $5.8 million secured against her Elizabeth bay apartment and in June 2007, she borrowed $11.3 million against four apartments overlooking Bondi Beach.
According to the SMH, Ms Upton Baker, who is reported to earn $360,000 a year, will argue in court that the mortgages should be set aside because they are unjust.
Ms Upton Baker says that she was at a ''special disadvantage'' because she was pressured by her husband into signing the loans and did not earn enough to repay them. She also admitted she did not read the terms and conditions of her mortgages and that she falsely declared she had received financial and legal advice before she took out the loans.
Her lawyers will ask the court to order that she does not have to repay the loans or, if this is not possible, order that the lenders can recoup only their loan from the sale of the Bondi properties and cannot claw back more than this if the sales do not reach $11.3 million.
Ms Upton Baker has failed to make any repayments on her loans since July last year.
Melbourne achieves best auction results of the year
While auction clearance rates remained relatively stable across the weekend, Melbourne managed to achieve its biggest weekend for the year as more than 950 properties went under the hammer.
Figures from Australian Property Monitors revealed that Melbourne recorded a 74.9 per cent auction clearance rate, in line with last week’s result of 76.4 per cent.
However it was the volume of stock that captured the market’s attention.
To date, 675 properties of the 950 listed for auction have not been accounted for. From the total listed, only 155 were confirmed as having sold under the hammer, with another 51 sold before auction.
In Sydney, the auction clearance rate remained relatively stagnate, achieving a 61.1 per cent rate, down from 64.7 per cent recorded the week before.
A five bedroom house in Burwood was the most expensive property sold over the weekend for $2.49 million; a three bedroom house in Mount Druitt was the cheapest property sold for $241,000.
More than 150 properties were sold in Sydney for a total value of $123.9 million.
Both Brisbane and Adelaide recorded less than impressive results, failing to achieve clearance rates above 60 per cent.
In Brisbane 10 properties were sold for a clearance rate of 33.3 per cent, while Adelaide faired a little better, selling 16 properties for a clearance rate of 67.1 per cent.
Figures from Australian Property Monitors revealed that Melbourne recorded a 74.9 per cent auction clearance rate, in line with last week’s result of 76.4 per cent.
However it was the volume of stock that captured the market’s attention.
To date, 675 properties of the 950 listed for auction have not been accounted for. From the total listed, only 155 were confirmed as having sold under the hammer, with another 51 sold before auction.
In Sydney, the auction clearance rate remained relatively stagnate, achieving a 61.1 per cent rate, down from 64.7 per cent recorded the week before.
A five bedroom house in Burwood was the most expensive property sold over the weekend for $2.49 million; a three bedroom house in Mount Druitt was the cheapest property sold for $241,000.
More than 150 properties were sold in Sydney for a total value of $123.9 million.
Both Brisbane and Adelaide recorded less than impressive results, failing to achieve clearance rates above 60 per cent.
In Brisbane 10 properties were sold for a clearance rate of 33.3 per cent, while Adelaide faired a little better, selling 16 properties for a clearance rate of 67.1 per cent.
NAB supports acknowledgement of funding costs
NAB’s chief executive Cameron Clyne has put his weight behind a proposal that would see banks publishing the benchmark cost-of-funds rate.
According to a report in The Australian, Mr Clyne said publishing the benchmark rate would help soothe the heated debate surrounding variable mortgage rate movements disconnected from the official cash rate.
"Bank funding is becoming more expensive -- the marginal cost is easing but the average cost is rising -- and it will also increase due to stronger regulatory standards on things like capital and liquidity," Mr Clyne told the paper.
According to Mr Clyne, the benchmark would be calculated from several key inputs such as the 90-day bank bill rate and other measures, and would help customers and brokers predict future interest rate movements now that banks were adjusting rates independently of Reserve Bank monetary policy.
According to a report in The Australian, Mr Clyne said publishing the benchmark rate would help soothe the heated debate surrounding variable mortgage rate movements disconnected from the official cash rate.
"Bank funding is becoming more expensive -- the marginal cost is easing but the average cost is rising -- and it will also increase due to stronger regulatory standards on things like capital and liquidity," Mr Clyne told the paper.
According to Mr Clyne, the benchmark would be calculated from several key inputs such as the 90-day bank bill rate and other measures, and would help customers and brokers predict future interest rate movements now that banks were adjusting rates independently of Reserve Bank monetary policy.
Economic recovery near as home sales surge in US
The United States has enjoyed a surprising surge in the sale of existing homes, climbing 9.4 per cent in September to an annualised rate of 5.57 million.
According to data from the National Association of Realtors, the surge represented the fifth straight month of gains, with sales now up 9.2 per cent from the levels recorded in September 2008.
The supply of unsold homes declined from 9.3 months’ supply in August to 7.8 in September, although median prices fell to $US174,900 ($190,000).
The Bureau of Economic Analysis is expected to use the data to confirm that the US economy is officially starting to emerge from the recession that began in December 2007.
The Bureau will this week report the economy’s pace of growth.
According to data from the National Association of Realtors, the surge represented the fifth straight month of gains, with sales now up 9.2 per cent from the levels recorded in September 2008.
The supply of unsold homes declined from 9.3 months’ supply in August to 7.8 in September, although median prices fell to $US174,900 ($190,000).
The Bureau of Economic Analysis is expected to use the data to confirm that the US economy is officially starting to emerge from the recession that began in December 2007.
The Bureau will this week report the economy’s pace of growth.
Big four to ramp up business lending
The big four banks are gearing up to lend more aggressively to medium and large businesses as the economy shows signs of recovery according to The Australian Financial Review.
The major lenders are seeking to take advantage of surplus capital and improving corporate growth prospects.
NAB’s group executive of business banking Joseph Healy said he expects corporate demand for credit to remain fairly stable next year, prompting a tightening in pricing and more competitive rates as the banks fight it out for the small pool of corporate borrowers.
Mr Healy also said the banks would compensate for tepid demand next year by growing their loan books through stealing additional market share from investment banks, regional’s and non-bank financial institutions.
Loans to non-financial companies rose in August for the first time in four months, according to the Australian Bureau of Statistics.
Total loans rose to $486 billion in August from $481 billion.
The major lenders are seeking to take advantage of surplus capital and improving corporate growth prospects.
NAB’s group executive of business banking Joseph Healy said he expects corporate demand for credit to remain fairly stable next year, prompting a tightening in pricing and more competitive rates as the banks fight it out for the small pool of corporate borrowers.
Mr Healy also said the banks would compensate for tepid demand next year by growing their loan books through stealing additional market share from investment banks, regional’s and non-bank financial institutions.
Loans to non-financial companies rose in August for the first time in four months, according to the Australian Bureau of Statistics.
Total loans rose to $486 billion in August from $481 billion.
FSBO Funny Real Estate Sign
In the US, the law says you must give full disclosure of any problems with a house when you sell it. Here's someone who followed that law to the letter.
Top 11 Signs You've Got a Mortgage Application from a Geek
11. Star Wars action figures are listed in the asset table.
10. Mortgage amount requested is a prime number.
9. Application returned with post-it notes showing where the UI could be improved.
8. Contact information consists of a Twitter user name and a Facebook page.
7. All the corners have been cut off the pages of the application.
6. Dollar amount written in hex.
5. At the bottom it's noted that all information enclosed is protected under the creative commons license.
4. Applicant suggests rolling 1d20 against AC instead of checking his credit score.
3. Home address listed as 127.0.0.1
2. It's printed on caffeinated paper.
1. There's already illegal copies of it on all the torrent sites.
10. Mortgage amount requested is a prime number.
9. Application returned with post-it notes showing where the UI could be improved.
8. Contact information consists of a Twitter user name and a Facebook page.
7. All the corners have been cut off the pages of the application.
6. Dollar amount written in hex.
5. At the bottom it's noted that all information enclosed is protected under the creative commons license.
4. Applicant suggests rolling 1d20 against AC instead of checking his credit score.
3. Home address listed as 127.0.0.1
2. It's printed on caffeinated paper.
1. There's already illegal copies of it on all the torrent sites.
Strong Aussie dollar bane for agents
The rising Aussie dollar, though perceived by many as a sign the economy is improving, leaves many real estate agents bashing their heads against the wall.
A rising dollar means overseas investors are less likely to spend their money on Australian property.
Colliers International director of residential Murray Wood said the rising dollar had blunted interest in the residential market from foreign investors.
“If overseas buyers are converting their currency into Australian dollars now, then their budgets for buying a house will have certainly changed,” Mr Wood said.
Jellis Craig agent Robert Ding agrees that overseas investors are more reluctant to purchase properties with the Aussie dollar sitting so high.
“I think the Asian buyers are more cautious. They are slowing down at the moment and they have stopped being aggressive and silly with their money,” he said.
“When the Australian dollar was sitting at 65 cents, things were different. The Australian dollar does affect their decision but they will still buy because of the security of the land in Australia; they love the freehold land,”
A rising dollar means overseas investors are less likely to spend their money on Australian property.
Colliers International director of residential Murray Wood said the rising dollar had blunted interest in the residential market from foreign investors.
“If overseas buyers are converting their currency into Australian dollars now, then their budgets for buying a house will have certainly changed,” Mr Wood said.
Jellis Craig agent Robert Ding agrees that overseas investors are more reluctant to purchase properties with the Aussie dollar sitting so high.
“I think the Asian buyers are more cautious. They are slowing down at the moment and they have stopped being aggressive and silly with their money,” he said.
“When the Australian dollar was sitting at 65 cents, things were different. The Australian dollar does affect their decision but they will still buy because of the security of the land in Australia; they love the freehold land,”
Banks may face higher costs
Banks may soon face higher costs thanks to the implementation of new liquidity rules, according to the Australian Prudential Regulation Authority (APRA).
Earlier this month APRA proposed some changes to the liquidity rules currently governing the industry after saying the existing rules were insufficient.
APRA executive general manager of policy, Charles Littrell, told a Senate estimates hearing yesterday the banks would have to develop new systems and reorganise their balance sheets to comply with the liquidity proposals.
Under the new proposals, banks could be forced to increase the number of liquid assets they hold as protection against short term loss of access to global capital markets.
They would have to have enough liquid assets to survive on their own for a month, rather than one week as it is currently stipulated.
Moreover, bank bills and mortgage backed securities would no longer qualify as liquid assets, only high quality assets such as government bonds would qualify.
Earlier this month APRA proposed some changes to the liquidity rules currently governing the industry after saying the existing rules were insufficient.
APRA executive general manager of policy, Charles Littrell, told a Senate estimates hearing yesterday the banks would have to develop new systems and reorganise their balance sheets to comply with the liquidity proposals.
Under the new proposals, banks could be forced to increase the number of liquid assets they hold as protection against short term loss of access to global capital markets.
They would have to have enough liquid assets to survive on their own for a month, rather than one week as it is currently stipulated.
Moreover, bank bills and mortgage backed securities would no longer qualify as liquid assets, only high quality assets such as government bonds would qualify.
Housing affordability slides
Housing affordability has deteriorated for the second consecutive quarter, according to the latest Housing Industry Association-CBA First Home Buyer Affordability Report.
According to the report, affordability slipped 3.3 per cent in the September quarter, but was still 35.7 per cent ahead of the same time last year.
HIA senior economist Ben Phillips said that the demand for homes had picked up during the quarter in a climate of record low interest rates, the first home buyers boost, and improving news on domestic and global economic prospects.
“Housing remains more affordable in 2009 than it was through most of the rest of the decade. However, the outlook for affordability is not a good one. Interest rates are on the way up, the first home buyers boost is being wound back, and progress in reducing the structural barriers to increasing new housing supply is slow,” Mr Phillips said.
“If we don’t succeed in significantly lifting the level of new home building over the next few years then there is a very real risk that we will return to the woeful affordability levels of 2007 and 2008.
“The necessary boost to the economy provided by a strengthening housing construction sector is under threat from increased regulation, a slow and increasingly restricted building approvals process, and the same debilitating problems related to land supply, new home taxation, and skilled labour shortages that afflicted the industry last cycle.”
According to the report, affordability slipped 3.3 per cent in the September quarter, but was still 35.7 per cent ahead of the same time last year.
HIA senior economist Ben Phillips said that the demand for homes had picked up during the quarter in a climate of record low interest rates, the first home buyers boost, and improving news on domestic and global economic prospects.
“Housing remains more affordable in 2009 than it was through most of the rest of the decade. However, the outlook for affordability is not a good one. Interest rates are on the way up, the first home buyers boost is being wound back, and progress in reducing the structural barriers to increasing new housing supply is slow,” Mr Phillips said.
“If we don’t succeed in significantly lifting the level of new home building over the next few years then there is a very real risk that we will return to the woeful affordability levels of 2007 and 2008.
“The necessary boost to the economy provided by a strengthening housing construction sector is under threat from increased regulation, a slow and increasingly restricted building approvals process, and the same debilitating problems related to land supply, new home taxation, and skilled labour shortages that afflicted the industry last cycle.”
Mortgage Choice unveils groundbreaking Google partnership
In a bid to enhance productivity, Mortgage Choice is transitioning its staff across to Google Apps – a suite of enterprise and collaboration tools.
According to the company’s chief information officer Neil Rose-Innes, the Google applications will offer Mortgage Choice franchisees a scalable IT platform that centralises a number of tools, including email, so that they can be used from any computer at any time.
“There are three main benefits associated with this transition,” Mr Rose-Innes told Mortgage Business.
“The Google apps will simplify the technology for our end users, which will ultimately improve productivity and efficiency.
“It also helps us reduce our costs by scaling back our reliance on IT support, and finally it can be used anywhere at anytime, which also enhances a franchisees productivity.”
Mortgage Choice has already transitioned more than 470 of its 1,000 staff across to Google Apps including Gmail, and Mr Rose-Innes said the aim is to have everyone operating off the same platform by the end of November.
According to Mr Rose-Innes, Mortgage Choice is the first big brand company in Australia to make the transition.
“We like to think we are sitting ahead of the bell curve,” he said.
According to the company’s chief information officer Neil Rose-Innes, the Google applications will offer Mortgage Choice franchisees a scalable IT platform that centralises a number of tools, including email, so that they can be used from any computer at any time.
“There are three main benefits associated with this transition,” Mr Rose-Innes told Mortgage Business.
“The Google apps will simplify the technology for our end users, which will ultimately improve productivity and efficiency.
“It also helps us reduce our costs by scaling back our reliance on IT support, and finally it can be used anywhere at anytime, which also enhances a franchisees productivity.”
Mortgage Choice has already transitioned more than 470 of its 1,000 staff across to Google Apps including Gmail, and Mr Rose-Innes said the aim is to have everyone operating off the same platform by the end of November.
According to Mr Rose-Innes, Mortgage Choice is the first big brand company in Australia to make the transition.
“We like to think we are sitting ahead of the bell curve,” he said.
Bumper selling weekend ahead: RP Data
Real estate agents are gearing up for a bumper selling weekend, with more than 1,670 auctions scheduled.
According to RP Data’s national research director Tim Lawless, the number of auctions is one of the highest on record, and if auction clearance rates are anything to go by, more than 70 per cent of the listed properties could be sold under the hammer.
Mr Lawless said the national weighted auction clearance average has been sitting above 70 per cent for the past 15 weeks.
“When clearance rates are high we can assume that there is a healthy level of optimism among buyers and that vendor expectations about the value of their property is aligned with buyer expectations,” he said.
Around Australia, clearance rates have more relativity to some markets than others. Melbourne and Sydney markets collectively represent 85 per cent of the nation’s auctions each week.
At the capital city level, auctions as a method of sale are most popular in Melbourne, where 29 per cent of homes advertised for sale are auction listings. This represents more than double the national average of 14 per cent.
At the other end of the spectrum, auctions in Perth and Hobart are the exception with less than 3 per cent of homes being sold under this method.
According to RP Data’s national research director Tim Lawless, the number of auctions is one of the highest on record, and if auction clearance rates are anything to go by, more than 70 per cent of the listed properties could be sold under the hammer.
Mr Lawless said the national weighted auction clearance average has been sitting above 70 per cent for the past 15 weeks.
“When clearance rates are high we can assume that there is a healthy level of optimism among buyers and that vendor expectations about the value of their property is aligned with buyer expectations,” he said.
Around Australia, clearance rates have more relativity to some markets than others. Melbourne and Sydney markets collectively represent 85 per cent of the nation’s auctions each week.
At the capital city level, auctions as a method of sale are most popular in Melbourne, where 29 per cent of homes advertised for sale are auction listings. This represents more than double the national average of 14 per cent.
At the other end of the spectrum, auctions in Perth and Hobart are the exception with less than 3 per cent of homes being sold under this method.
‘Lying’ agent’s appeal thrown out of court
A Perth real estate agent’s appeal to have his life-long ban from the real estate industry lifted has failed.
Michael Mavadaat, the principal of Aplecross-based Key Realty, was last year disqualified from practicing for lying, creating false documents and earning an ‘unjust’ commission.
According to a report on WAToday.com.au, Mr Mavadaat was found by the State Administrative Tribunal to have acted without valid authority, demanded and received an unjust $133,000 commission for a Subiaco property sale, created various fake documents, lied in an affadavit in a civil proceeding, made unauthorised use of funds in the firm's trust account and falsely claimed to hold a Bachelor of Science degree from the US.
Mr Mavadaat’s attempt to appeal the decision was thrown out of court this week after the court said it found it “difficult to see” how the tribunal could come to any other decision.
Michael Mavadaat, the principal of Aplecross-based Key Realty, was last year disqualified from practicing for lying, creating false documents and earning an ‘unjust’ commission.
According to a report on WAToday.com.au, Mr Mavadaat was found by the State Administrative Tribunal to have acted without valid authority, demanded and received an unjust $133,000 commission for a Subiaco property sale, created various fake documents, lied in an affadavit in a civil proceeding, made unauthorised use of funds in the firm's trust account and falsely claimed to hold a Bachelor of Science degree from the US.
Mr Mavadaat’s attempt to appeal the decision was thrown out of court this week after the court said it found it “difficult to see” how the tribunal could come to any other decision.
Refund Home Loans to defend ACCC claim
Refund Home Loans managing director Wayne Ormond has found himself in hot water after the Australian Competition and Consumer Commission (ACCC) accused him of breaching the Trade Practices Act (1974).
According to the ACCC, Mr Ormond and his company made false and misleading representations about having a special relationship with the ACCC.
It is alleged Mr Ormond made statements over a number of years to current and former franchisees to the effect that the ACCC advised Refund Home Loans about their conduct towards franchisees and approved action taken by Refund Home Loans in respect of franchisees and former franchisees with whom it was in dispute.
Mr Ormond told Mortgage Business that he strenuously denied the claims made by the ACCC and would vigorously defend the accusations in court.
“This complaint, by two of my ex-franchisees, was made two or three years ago. I certainly have no issues with my current franchisees and no complaints have been made recently,” he said.
The ACCC has commenced court proceedings against Mr Ormond and Refund Home Loans and a scheduling conference has been listed for 4 December 2009.
According to the ACCC, Mr Ormond and his company made false and misleading representations about having a special relationship with the ACCC.
It is alleged Mr Ormond made statements over a number of years to current and former franchisees to the effect that the ACCC advised Refund Home Loans about their conduct towards franchisees and approved action taken by Refund Home Loans in respect of franchisees and former franchisees with whom it was in dispute.
Mr Ormond told Mortgage Business that he strenuously denied the claims made by the ACCC and would vigorously defend the accusations in court.
“This complaint, by two of my ex-franchisees, was made two or three years ago. I certainly have no issues with my current franchisees and no complaints have been made recently,” he said.
The ACCC has commenced court proceedings against Mr Ormond and Refund Home Loans and a scheduling conference has been listed for 4 December 2009.
Access to wholesale funds challenging: KPMG
In a sign that access to affordable wholesale funds remains challenging for Australia’s smaller banks, the country’s regional banks recorded a slim combined net profit of just $494 million for the 2009 reporting year.
According to accounting firm KPMG, the profit was modest in comparison to recent years when double digit growth was common place.
“The regional banks came into 2009 expecting it to be a challenging year and they were right.
“The two largest regional banks were acquired by two major banks; the government guarantee helped in terms of deposits but disadvantaged the ‘regionals’ in relation to accessing wholesale markets; bad debt expense has increased markedly; interest margins have been squeezed, and securitisation markets – which prior to the GFC provided the ‘regionals’ with much of their funding – are effectively closed,” KPMG banking partner Martin McGrath said.
According to Mr McGrath, the regional banks have come through a tough year to achieve a better-than-expected result.
The outlook for the next year will now depend on access to funds at an attractive price.
“Access to the wholesale markets at a price that offers profitable growth remains a challenge,” Mr McGrath said.
“In this context, the differentiated pricing of the government guarantee remains a hurdle for the smaller regional banks.
“There may be an opportunity for the regional banks to increase scale through targeted acquisition. This could facilitate cost efficiencies and potentially assist in accessing funding markets.”
According to accounting firm KPMG, the profit was modest in comparison to recent years when double digit growth was common place.
“The regional banks came into 2009 expecting it to be a challenging year and they were right.
“The two largest regional banks were acquired by two major banks; the government guarantee helped in terms of deposits but disadvantaged the ‘regionals’ in relation to accessing wholesale markets; bad debt expense has increased markedly; interest margins have been squeezed, and securitisation markets – which prior to the GFC provided the ‘regionals’ with much of their funding – are effectively closed,” KPMG banking partner Martin McGrath said.
According to Mr McGrath, the regional banks have come through a tough year to achieve a better-than-expected result.
The outlook for the next year will now depend on access to funds at an attractive price.
“Access to the wholesale markets at a price that offers profitable growth remains a challenge,” Mr McGrath said.
“In this context, the differentiated pricing of the government guarantee remains a hurdle for the smaller regional banks.
“There may be an opportunity for the regional banks to increase scale through targeted acquisition. This could facilitate cost efficiencies and potentially assist in accessing funding markets.”
RESIMAC sells $230 million RMBS
In a sign that the wholesale funding market is thawing, RESIMAC has sold more than $230 million of residential mortgage backed securities (RMBS) to private investors.
The main class of bonds, which fetched $185.1 million, priced at 140 basis points more than the one month bank bill swap rate.
Fund managers said the deal attracted strong demand from private investors.
The Australian Office of Financial Management bought $56.4 million of the notes, while the remainder was sold between 11 other investors.
The main class of bonds, which fetched $185.1 million, priced at 140 basis points more than the one month bank bill swap rate.
Fund managers said the deal attracted strong demand from private investors.
The Australian Office of Financial Management bought $56.4 million of the notes, while the remainder was sold between 11 other investors.
Liberty cuts rates on all residential products
In contrast to market conditions that point to upward rate movements, Liberty Financial will today drop rates on all of its residential loan products.
The non-bank lender believes that the move will help inject competition into a broker market that is currently dominated by the big four banks.
“We are committed to offering real alternatives to business partners and customers,” Liberty Financial general manager of personal business Kendall Mahnken said.
“We are sharpening the pricing across the board for our residential loan products reflecting the recent run of positive economic data.
“With changes in all products and at all risk grades, our loans will continue to have the broadest solution set with some of the most competitive prices available.”
And according to Ms Mahnken, brokers can expect today’s announcement to be just the first of a number of initiatives from the non-bank lender.
“Liberty will announce further product enhancements over the next few weeks, covering all aspects of our residential loans,” Ms Mahnken said.
The non-bank lender believes that the move will help inject competition into a broker market that is currently dominated by the big four banks.
“We are committed to offering real alternatives to business partners and customers,” Liberty Financial general manager of personal business Kendall Mahnken said.
“We are sharpening the pricing across the board for our residential loan products reflecting the recent run of positive economic data.
“With changes in all products and at all risk grades, our loans will continue to have the broadest solution set with some of the most competitive prices available.”
And according to Ms Mahnken, brokers can expect today’s announcement to be just the first of a number of initiatives from the non-bank lender.
“Liberty will announce further product enhancements over the next few weeks, covering all aspects of our residential loans,” Ms Mahnken said.
The Search Is On!
We are starting our search for funny, amusing or just odd pictures and articles involving the mortage industry. Send us your funny stuff att: Justine, info@acphomeloans.com.au
Anyway here is our first pic... "Chase Mortgage Ad From 2005 Is Funny And Scary", from where else but the US - in hind sight, a mighty fine example of just one person's contribution to the recent GFC. "Thanks"
Anyway here is our first pic... "Chase Mortgage Ad From 2005 Is Funny And Scary", from where else but the US - in hind sight, a mighty fine example of just one person's contribution to the recent GFC. "Thanks"
Rate rises to create balance: Ray White
Wednesday, 21 October 2009
With another rate rise in November now all but certain, some real estate agents are worried that potential property buyers could be deterred from investing in the market.
However Ray White real estate chairman Brian White believes rising interest rates are positive as they help to restore balance in Australia’s residential real estate market and prevent a price explosion.
“There’s nothing worse than a market getting out of control and the residential market has been remarkably strong over the last four or five months,” Mr White said.
“A booming housing market produces very few long term benefits. Sure it’s great for sales over the short term but then comes the hangover and the pain.
“Lifting interest rates from near record lows now will help reduce the need for any draconian steps later and it will help create a well balanced market.”
According to Mr White, the gradual movement to more traditional interest rate levels will also help ensure house prices keep pace with inflation.
“We’ve lived for decades with interest rates much higher than they are now and I have little doubt we’ll be absorbing the latest interest rate rise and the other expected increases quite comfortably,” he said.
With another rate rise in November now all but certain, some real estate agents are worried that potential property buyers could be deterred from investing in the market.
However Ray White real estate chairman Brian White believes rising interest rates are positive as they help to restore balance in Australia’s residential real estate market and prevent a price explosion.
“There’s nothing worse than a market getting out of control and the residential market has been remarkably strong over the last four or five months,” Mr White said.
“A booming housing market produces very few long term benefits. Sure it’s great for sales over the short term but then comes the hangover and the pain.
“Lifting interest rates from near record lows now will help reduce the need for any draconian steps later and it will help create a well balanced market.”
According to Mr White, the gradual movement to more traditional interest rate levels will also help ensure house prices keep pace with inflation.
“We’ve lived for decades with interest rates much higher than they are now and I have little doubt we’ll be absorbing the latest interest rate rise and the other expected increases quite comfortably,” he said.
US commercial prices slide
Commercial property values in the United States dropped in August as job losses cut demand for office space.
According to figures from Moody’s / REAL Commercial Property Price Indices, prices fell 3 per cent from July to August, bringing the market’s decline to 41 per cent since its peak in October 2007.
Moreover, property price values are forecast to fall an additional 17 per cent though the fourth quarter of next year due to rising vacancy rates and the risk of forced sales, according to a report by Goldman Sachs Group.
Office vacancies are currently sitting at a five year high of 16.5 per cent.
According to figures from Moody’s / REAL Commercial Property Price Indices, prices fell 3 per cent from July to August, bringing the market’s decline to 41 per cent since its peak in October 2007.
Moreover, property price values are forecast to fall an additional 17 per cent though the fourth quarter of next year due to rising vacancy rates and the risk of forced sales, according to a report by Goldman Sachs Group.
Office vacancies are currently sitting at a five year high of 16.5 per cent.
NAB Broker launches new division
Wednesday, 21 October 2009
National Australia Bank (NAB) has created a new NAB Partnerships division that will be responsible for NAB Broker, the new aggregation arm of the business as well as mortgage management.
Speaking at the NAB Broker roundtable yesterday, newly appointed general manager of distribution for NAB Broker, John Flavell, said the new division, currently referred to as ‘New Co’, would create further lending opportunities for brokers.
“We want to ensure competition in the market and NAB Partnerships will help us achieve just that,” Mr Flavell said.
The ‘New Co’ arm of the business includes PLAN Australia, Choice and FAST and will be renamed at the end of the month once the acquisition of Challenger’s mortgage management business is formally completed.
According to Mr Flavell, NAB Broker is gearing up for a myriad of changes, many of which spell good news for their broker channel.
“It is a time of cautious optimism. Interest rates will rise and as they do, borrowers are more likely to look for advice,” he said.
NAB Broker is encouraging its broker channel to diversify their offering to include advice, with Mr Flavell telling Mortgage Business that advice-based broking was the way of the future.
“There are many benefits associated with advice-based broking, including improvements to a broker’s bottom line. Brokers will be able to make more revenue from each client while helping to meet their insurance and home loan needs.”
National Australia Bank (NAB) has created a new NAB Partnerships division that will be responsible for NAB Broker, the new aggregation arm of the business as well as mortgage management.
Speaking at the NAB Broker roundtable yesterday, newly appointed general manager of distribution for NAB Broker, John Flavell, said the new division, currently referred to as ‘New Co’, would create further lending opportunities for brokers.
“We want to ensure competition in the market and NAB Partnerships will help us achieve just that,” Mr Flavell said.
The ‘New Co’ arm of the business includes PLAN Australia, Choice and FAST and will be renamed at the end of the month once the acquisition of Challenger’s mortgage management business is formally completed.
According to Mr Flavell, NAB Broker is gearing up for a myriad of changes, many of which spell good news for their broker channel.
“It is a time of cautious optimism. Interest rates will rise and as they do, borrowers are more likely to look for advice,” he said.
NAB Broker is encouraging its broker channel to diversify their offering to include advice, with Mr Flavell telling Mortgage Business that advice-based broking was the way of the future.
“There are many benefits associated with advice-based broking, including improvements to a broker’s bottom line. Brokers will be able to make more revenue from each client while helping to meet their insurance and home loan needs.”
Interest rates to rise in November
The Reserve Bank of Australia (RBA) looks set to lift rates again in November.
According to the minutes of the monetary policy board meeting, released yesterday, the RBA agreed that the risks in leaving the official cash rate at its emergency low had increased.
“Keeping interest rates at very low levels for an extended period could threaten the achievement of the inflation target over the medium term,” the minutes read.
“More generally, very expansionary policy could result in the build-up of other imbalances in the economy, which would ultimately be detrimental to economic growth.”
The RBA minutes noted that there was a possibility that the strength in the domestic economy had been largely due to the greater than expected impact of the fiscal stimulus, which left open the attendant risk that activity might slow as that stimulus faded.
It was also likely that the appreciation of the exchange rate would act as a contractionary influence on activity and help contain inflation.
While these considerations weighed in favour of keeping the current cash rate on hold, the RBA said it was “possibly imprudent” to keep rates at their low for another month, fueling speculation that interest rates are set to increase again next month.
NAB chief economist Alan Oster said he expects rates to rise 25 basis points in November and another 25 basis points in December, taking the official cash rate to 3.75 per cent before the end of 2009.
According to the minutes of the monetary policy board meeting, released yesterday, the RBA agreed that the risks in leaving the official cash rate at its emergency low had increased.
“Keeping interest rates at very low levels for an extended period could threaten the achievement of the inflation target over the medium term,” the minutes read.
“More generally, very expansionary policy could result in the build-up of other imbalances in the economy, which would ultimately be detrimental to economic growth.”
The RBA minutes noted that there was a possibility that the strength in the domestic economy had been largely due to the greater than expected impact of the fiscal stimulus, which left open the attendant risk that activity might slow as that stimulus faded.
It was also likely that the appreciation of the exchange rate would act as a contractionary influence on activity and help contain inflation.
While these considerations weighed in favour of keeping the current cash rate on hold, the RBA said it was “possibly imprudent” to keep rates at their low for another month, fueling speculation that interest rates are set to increase again next month.
NAB chief economist Alan Oster said he expects rates to rise 25 basis points in November and another 25 basis points in December, taking the official cash rate to 3.75 per cent before the end of 2009.
APRA approves NAB / Challenger deal
Wednesday, 21 October 2009
NAB's acquisition of Challenger’s mortgage management business has been given the final go-ahead by the Australian Prudential Regulation Authority (APRA).
The bank regulator confirmed this week that it would not intervene in the acquisition, less than two weeks after the Australian Competition and Consumer Commission (ACCC) gave the deal its seal of approval.
NAB Broker’s head of strategy, marketing and operations Elyse Sainty welcomed APRA’s decision.
“This [was] the last hurdle we have to overcome. We are very happy that the deal has been given the green light by APRA because it means we can push ahead with our plans for the mortgage management business,” Ms Sainty told journalists at the NAB Broker roundtable yesterday.
Those plans involve re-branding the mortgage management business.
According to Ms Sainty, a name for the company has been decided upon and will be announced at the end of the month once the acquisition is formally complete.
The new company, which is currently referred to as the "New Co", includes aggregation groups PLAN Australia, Choice and FAST.
NAB's acquisition of Challenger’s mortgage management business has been given the final go-ahead by the Australian Prudential Regulation Authority (APRA).
The bank regulator confirmed this week that it would not intervene in the acquisition, less than two weeks after the Australian Competition and Consumer Commission (ACCC) gave the deal its seal of approval.
NAB Broker’s head of strategy, marketing and operations Elyse Sainty welcomed APRA’s decision.
“This [was] the last hurdle we have to overcome. We are very happy that the deal has been given the green light by APRA because it means we can push ahead with our plans for the mortgage management business,” Ms Sainty told journalists at the NAB Broker roundtable yesterday.
Those plans involve re-branding the mortgage management business.
According to Ms Sainty, a name for the company has been decided upon and will be announced at the end of the month once the acquisition is formally complete.
The new company, which is currently referred to as the "New Co", includes aggregation groups PLAN Australia, Choice and FAST.
No change to guarantee: Swan
The federal government has quashed rumours that it is set to overhaul its $110 billion bank funding guarantee.
The guarantee has come under attack in recent months as its existing price structure is believed to punish the smaller banks.
Federal treasurer Wayne Swan said the government would continue to monitor the program but ruled out making any substantial changes after announcing an extra $8 billion investment in mortgage securities.
Under the guarantee, smaller lenders with lower credit ratings are forced to pay higher costs than the big four banks.
Banks with a AA credit rating pay an annual fee of 0.7 per cent for the government guarantee, while those with an A rating pay 1 per cent and those with a BBB rating pay 1.5 per cent.
Bank of Queensland chief executive David Liddy said yesterday that the guarantee had cost the regional bank upwards of $10 million.
“It has been a competitive disadvantage to us in terms of access to the tune of about $10 million impact on our bottom line this year as a result of paying 80 basis points more than a major pays,” Mr Liddy told an investment conference in Sydney.
The guarantee has come under attack in recent months as its existing price structure is believed to punish the smaller banks.
Federal treasurer Wayne Swan said the government would continue to monitor the program but ruled out making any substantial changes after announcing an extra $8 billion investment in mortgage securities.
Under the guarantee, smaller lenders with lower credit ratings are forced to pay higher costs than the big four banks.
Banks with a AA credit rating pay an annual fee of 0.7 per cent for the government guarantee, while those with an A rating pay 1 per cent and those with a BBB rating pay 1.5 per cent.
Bank of Queensland chief executive David Liddy said yesterday that the guarantee had cost the regional bank upwards of $10 million.
“It has been a competitive disadvantage to us in terms of access to the tune of about $10 million impact on our bottom line this year as a result of paying 80 basis points more than a major pays,” Mr Liddy told an investment conference in Sydney.
Legislation delay gets broker approval
The majority of brokers agree that the decision to delay broker legislation was the right one, according to a recent straw poll.
Earlier this month, the Australian Securities and Investments Commission (ASIC) decided to push back the start date for the registration and licensing of brokers by six months.
Originally scheduled for 1 November, brokers will not be able to apply for an Australian Credit Licence until 1 April next year.
While the decision was disappointing for those brokers that were eagerly awaiting the implementation of the new regime, the majority believe it is the right thing to do, according to the results of a recent Mortgage Business straw poll.
Of the 460 respondents, 65.9 per cent believed delaying the licensing regime was the right decision by the ACCC while 28.9 per cent thought it was the wrong thing to do; 5.2 per cent were unsure.
Bernie Sutton of the Mortgage Guys told Mortgage Business that delaying the legislation was the right decision because none of the legal requirements had been identified.
“The industry does not even know what these laws will bring, so I believe it was premature for the government to put a timeframe on registration when the ramifications of the legislation is not clear,” he said.
“The legislation needs to be implemented in stages; it needs to be progressive so that the industry can be abreast of the changes ahead of time. This legislation has the potential to bring the industry to a halt, forcing brokers that are not up to speed with all the requirements out of mortgage broking.”
Early last month, the MFAA took a hard line with brokers that had failed to complete their Certificate IV in Financial Services, terminating 1,500 memberships.
At the same time, Mortgage Business found that one third of brokers were not ready for the new legislation.
Earlier this month, the Australian Securities and Investments Commission (ASIC) decided to push back the start date for the registration and licensing of brokers by six months.
Originally scheduled for 1 November, brokers will not be able to apply for an Australian Credit Licence until 1 April next year.
While the decision was disappointing for those brokers that were eagerly awaiting the implementation of the new regime, the majority believe it is the right thing to do, according to the results of a recent Mortgage Business straw poll.
Of the 460 respondents, 65.9 per cent believed delaying the licensing regime was the right decision by the ACCC while 28.9 per cent thought it was the wrong thing to do; 5.2 per cent were unsure.
Bernie Sutton of the Mortgage Guys told Mortgage Business that delaying the legislation was the right decision because none of the legal requirements had been identified.
“The industry does not even know what these laws will bring, so I believe it was premature for the government to put a timeframe on registration when the ramifications of the legislation is not clear,” he said.
“The legislation needs to be implemented in stages; it needs to be progressive so that the industry can be abreast of the changes ahead of time. This legislation has the potential to bring the industry to a halt, forcing brokers that are not up to speed with all the requirements out of mortgage broking.”
Early last month, the MFAA took a hard line with brokers that had failed to complete their Certificate IV in Financial Services, terminating 1,500 memberships.
At the same time, Mortgage Business found that one third of brokers were not ready for the new legislation.
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