NAB and ANZ announce interest rate rises

All of Australia’s big four banks have now announced interest rate increases for investor and owner-occupied home loans. Both NAB and ANZ announced on Friday that they would be raising interest rates, following the action taken earlier by Westpac and the Commonwealth Bank. For ANZ customers, they will be subject to a 0.18% interest rate rise that will come in to force on 20 November. The increase will mean the standard variable rate for owner-occupier home loans will move to 5.56%, while the standard variable rate for residential investment loans will move to 5.83%. ANZ chief executive officer Mark Whelan said the bank’s decision was a result of the changing capital requirements the major lenders have been forced to adhere to. “This decision reflects the significant additional cost of capital banks are now required to hold against home lending,” Whelan said. “Despite these additional costs, we are committed to working hard to keep lending rates as low as possible for customers and we’re pleased to have been able to maintain the lowest standard rate of the major banks for owner occupiers,” he said. For those who have a mortgage with NAB, the standard variable interest rate will rise by 0.17% from 12 November. This will see the bank’s standard variable interest rate move to 5.6%. NAB group executive for personal banking Gavin Slater also said the bank’s action had come in response to the tougher capital requirements. “Regulatory changes on capital requirements also increase the costs associated with providing home loans. In May this year, NAB took early steps to strengthen our capital position by raising $5.5 billion to begin to address expected changes in capital requirements,” Slater said. “We appreciate that price is important, but we also know that customers want us to provide the right help and advice, the right products, and deliver innovative digital capability,” he said.

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Auction market in Sydney takes a dive following rate increases

Due to the rise in interest rates by the nation’s major banks, buyers have become wary, resulting in a downward trend for the home auction market in Sydney. The city posted its lowest clearance rate for the year on Saturday, with the market tracking at its lowest levels since spring 2012, according to Domain.com.au. During the weekend, the result was at 64.4%, lower than the 65.1% recorded the previous weekend and considerably lower than last year’s 78.9% during the same period. Sydney’s market is headed toward record low clearance rates below 60% this spring. This comes as a surprising twist to some, as the rate tracked near 90% just five months ago. Westpac and the other banks who have recently announced that they would be raising their mortgage rates for owner-occupiers have inadvertently lowered buyer confidence. It is this buyers’ nervousness that is now driving the market, for better or worse. A large number of listings still define the spring market, with supply slowly catching up to demand. Exactly 796 auctions were scheduled for Saturday, compared to 870 the previous Saturday. Competition remains fierce between sellers as the next major auction event draws near. The Spring Super this Saturday is set to match or even top the all-time record of 1128 last March 28. Buyers—while fewer in number—will be treated to many more options to choose from, while sellers will be anxious to secure deals before the market dries up by the end of the year. The previous weekend revealed that higher-priced regions closer to the city continued to post healthy clearance rates. Outer western suburbs, on the other hand, had lower rates. The northwest area reported a distressing 27% clearance rate, with only nine of its 33 properties selling. Despite the fall in clearance rates, trend auction prices continued to climb. From the previous weekend’s $1,115,625, Saturday recorded a rise to $1,136,750. This is a 19.3% improvement from last year’s $952,625 for the same period.

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Survey suggests parents want to help kids with home purchases

Of the 2,500 people surveyed for RaboDirect’s 2015 Financial Health Barometer, 61% of respondents with children expressed their desire to help their kids financially in the future to purchase a home. Furthermore, more than half of those who participated in the survey were concerned about their children’s capability to buy a home in the future. Although a large number of Australian parents want to aid their children in buying their own homes, only 12% of respondents believed they would still be financially able to lend support to their children by the time they are ready to purchase. Parents are well-aware of the difficulty of getting into the current housing market, said Glenn Wealands, head of research and analytics for Rabobank. The average first-home buyer loan is now more than $360,000. Wealands also urged that “parents need to have an eye on their own situation”. Around a quarter of Baby Boomer respondents saw themselves retiring with a mortgage, which means they have to wisely consider their financial priorities. Parents should consider how exactly they want to help their children before coming up with a logical plan, Wealands stressed, concerned that parents might neglect their current financial situations.

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Experts weigh in on rate cut possibility as confidence drops

The nation’s central bank may cut rates before the year ends to prevent a possible recession, experts suggest. “Consumer confidence readings [in Australia] are now under close scrutiny, and any deterioration there will be the main channel for an interest-rate cut in coming months,” Michael Turner, fixed income strategist at RBC Capital Markets was quoted as saying in The Australian. “If the central bank starts feeling confidence has softened heading into Christmas, the probability of a December rate cut will rise.” Westpac was the first of the major banks to announce an increase in its variable mortgage rate by 0.2% for November. In the days following Westpac’s declaration, the nation’s three other major banks also announced increases to their variable rate mortgages. Notably, variable rate mortgages are the type of home loans held by most Australians. Meanwhile, there were indicators not long after the announcements that consumers were spending less freely. ANZ-Roy Morgan’s survey last week discovered that customer sentiment took a 2% weekly drop. The latest survey on Tuesday had little improvement, highlighting the concerns of customers over their personal finances after the rate hikes. “The lift in mortgage rates over the past week is essentially a quasi-tightening on the economy,” said Savanth Sebastian, CommSec brokerage economist. Sebastian added that a rate cut before the Christmas season would help improve consumer activity throughout the country. Australia’s mortgage rate hike came at a time when a sustained downturn in the prices of commodities is hurting the nation’s economy, as well as the economies of other resource-rich countries like Canada and Norway. Indeed, the central banks of these other nations are considering additional stimulus measures. In contrast, the US Federal Reserve plans to raise rates as the US economy looks to be recovering.

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Most affordable suburbs in Australia revealed

Western Australia suburbs have dominated the list of most affordable suburbs within capital cities to live in, according to research by finder.com.au. The study compared 4,675 suburbs across the country by their affordability of income remaining after mortgage repayments, based on median home prices from onthehouse.com.au, and the average incomes of households living in the surveyed areas, using Australian Tax Office income data. Seven Western Australia suburbs made it to the top ten of the list, with Brentwood at first place for the highest average annual net income remaining after mortgage repayments of $75,398. South Australia (with Vale Park) and Queensland (with Kenmore and Chapel Hill) were the only other states to make the top 10. Top 10 most affordable suburbs across Australia: capital cities

Area	State	Median house value	Annual mortgage repayments	Av. after-tax income per household		Income remaining
BRENTWOOD	WA	$827,500	$37,926		$113,324	$75,398
WILLAGEE	WA	$596,500	$27,339		$97,530	$70,191
COTTESLOE	WA	$1,842,000	$84,422		$153,834	$69,412
KENMORE	QLD	$618,500	$28,347		$97,619	$69,272
NORTH DANDALUP	WA	$336,500	$15,422		$84,167	$68,745
VALE PARK	SA	$612,000	$28,049		$94,868	$66,819
NORTH FREMANTLE	WA	$1,063,000	$48,719		$115,475	$66,756
CHAPEL HILL	QLD	$704,500	$32,289		$97,619	$65,330
ARDROSS	WA	$1,065,000	$48,811		$113,324	$64,513
WEST PERTH	WA	$863,500	$39,576		$102,464	$62,888

Top 10 most affordable suburbs across Australia: regional

Area	State	Median house value	Annual mortgage repayments	Av. after-tax income per household	Income remaining
ST ANDREWS	VIC	$702,000	$32,174	$160,370	$128,196
MORANBAH	QLD	$276,000	$12,650	$102,812	$90,162
DAMPIER	WA	$602,500	$27,614	$115,641	$88,027
MILLARS WELL	WA	$409,500	$18,768	$105,741	$86,973
BULGARRA	WA	$428,000	$19,616	$105,741	$86,125
BLACKWATER	QLD	$224,500	$10,289	$96,327	$86,038
NICKOL	WA	$432,000	$19,799	$105,741	$85,942
ROXBY DOWNS	SA	$351,000	$16,087	$101,997	$85,910
PEGS CREEK	WA	$457,500	$20,968	$105,741	$84,773
DYSART	QLD	$267,000	$12,237	$94,821	$82,584

In regional areas, St Andrews in Victoria had the highest remaining income after mortgage repayments, at $128,196. St Andrews also had the highest median house value of the regional suburbs, the report revealed. Australians need to factor in the ongoing costs of purchasing a home, and not just the property’s price, said Michelle Hutchison, money expert at finder.com.au. Hutchison shared her observations on the results of the study. “It was interesting to see a real mix of suburbs in these lists, where some suburbs were much more expensive in terms of median house prices while others were cheaper. What this shows is that in some suburbs Australians are living much more affordable lives than others, regardless of the home values. “The main finding was that it doesn’t matter the cost of housing in an area, what matters is how much it costs you to be able to afford living there. So borrowers need to do their research and find the lowest cost home loan, use an online calculator to work out the costs involved and how much money left over they will have after paying mortgage repayments.”

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Out of cycle interest rate rises could cause RBA to make a move

Moves by Australia’s major lenders to increase their home loan interest rates independently of the Reserve Bank of Australia could be an important factor at the central bank’s board meeting next week. According to an economist at one of the major banks, the interest rate rises could result in the RBA cutting the official cash rate below the 2% it sits at now. “Yes, it certainly increases the chances of a rate cut before Christmas,” Commsec economist Savanth Sebastian told Australian Broker. “If anything, the Reserve Bank will now discuss the merits of another rate cut to support growth,” Sebastian said. Sebastian told Australian Broker that the moves by the major lenders could indicate to the RBA that there has been a tightening of economic conditions and that some stimulus is needed. “The national environment still remains relatively patchy and it may be that the Reserve Bank provides a degree of stimulus in the lead up to Christmas,” Sebastian told Australian Broker. The RBA meets on Melbourne Cup Day next week and that meeting has been circled by some for a long time as the day the cash rate could drop. In early September, AMP chief economist Shane Oliver told Fairfax that Cup Day was the likely date the RBA would reduce the cash rate if they believed it needed to happen. “On balance, the RBA will be forced to cut interest rates again. The reason is the economy is continuing to run at a very sub-par pace,” he said. “I think if it’s going to come, it will probably be November.”

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Australia’s favourite banks revealed

Small, non-bank lenders with online facilities like ING DIRECT and Queenslanders Credit Union are the biggest winners in Mozo’s People’s Choice Banking Awards. Such banks received high marks for their service and trust. Notably, the event revealed an overall decrease in banking customer satisfaction levels, from last year’s 7.85 to 7.82. Mozo People’s Choice Banking Awards overall winners

Category	Winner	Score
Best Bank	ING DIRECT	9.05
Best Big 4 Bank	NAB	7.96
Best Credit Union	Queenslanders Credit Union	8.99
Best Building Society	Greater Building Society	8.72
Best Mutual Bank	Hume Bank	9.30

ING DIRECT won Best Bank for the sixth time in a row. Additionally, Greater Building Society took its third Best Building Society award, and NAB continued its five-year streak as the Best Big 4 Bank. Mozo’s list named transaction and savings accounts as its favourite product for the year, garnering scores of 8.19 and 8.11, respectively. High interest charging credit cards (7.10) and personal loans (7.19), on the other hand, were the least loved. “Interestingly, a family’s biggest debt burden, the home loan, had people feeling relatively happy (scoring 7.42) thanks to a low interest rate environment,” said Kirsty Lamont, Mozo director. Mozo People’s Choice Banking Awards product category winners

Category	Winner	Score
Best Savings Accounts	ING DIRECT	9.29
Best Bank Accounts	ING DIRECT	9.24
Best Home Loans	Queenslanders Credit Union	9.05
Best Credit Cards	Bendigo Bank	8.44
Best Personal Loans	Queenslanders Credit Union	8.85
Best Term Deposits	Bendigo Bank	7.89

Through the event, Mozo observed that women aged 18 to 24 who earn less than $35,000 yearly are the happiest with their bank, with a score of 8.35. Those aged 45 to 54 and those earning more than $180k, however, gave their banks the lowest scores (7.5 and 7.12, respectively). Lamont offered to explain the trend. “Interestingly, we’re happiest at the start of our banking life-cycle and over time we become less satisfied the older we get and the more money we have.”

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Survey says mortgage brokers becoming more popular as people look for home loans

Having your finances in order is becoming even more important, if the results of a recent survey of property investors are anything to go by. The results of the 2015 property investment Professionals of Australia (PIPA) Annual Investor Sentiment Survey were released this week, and nearly a third of the more than 1000 respondents said securing finance had been a difficult task in recent times. 32% of respondents said the changes to lending policies instituted by banks and other lenders after the Australian Prudential Regulation Authority’s investor lending crackdown had made it more difficult to get a home loan. That figure may explain why more than half of the respondents to the survey said they had used the services of a mortgage broker recently. 66% of respondents said the last home loan they had received had been arranged by using a mortgage broker. “mortgage brokers are an important source of finance advice for investors,” PIPA chair Ben Kingsley said. “They tend to better understand the investment lending landscape and offer great choice to investors,” Kinglsey said. With the results showing more people are turning to professionals such as mortgage brokers, they also show people want better regulation of the property industry. The survey found that a significant 67% of property investors believe Australia needs a more comprehensive education program for property investment and 91% believe that people who recommend property investment should be regulated and licensed. “Unlike other asset classes, property is not classified as a financial product by ASIC and the provision of property investment advice remains unregulated,” Kinglsey said. “PIPA is continuing to lobby the federal government to bring property investment advice into a regulatory framework and we remain dedicated to supporting a healthy, sustainable property investment industry where education and regulation support good outcomes for all involved.”

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Expert speculates interest rate cut before Christmas

The Reserve Bank of Australia (RBA) might have to cut interest rates before the year ends, said Peter Esho, chief market analyst for Invast. Esho shared his thoughts following the recent release of benign inflation data. With the current strong performance of the Australian dollar, Esho said that any move above US$0.73 would be a selling point. This is due to the likelihood of lower official rates expected later this year, which would force the Australian dollar to drop. The latest data from the Australian Bureau of Statistics indicated that the Consumer Price Index rose 0.5% over the third quarter of 2015, a 1.5% improvement from last year. The data was under the RBA’s core inflation target band of 2% to 3%, suggesting sluggish economic growth for the country. “The CPI read confirms that inflation is not only a secondary issue to growth, but also an opportunity to further stimulate demand in the economy. The RBA now has data on its side, and there is real downside risk to economic growth – and jobs – if it doesn’t move to cut interest rates,” Esho commented. “The lower currency has not caused any foreseeable inflationary pressures, which means the RBA can push further in jawboning. With China having rate cuts on the weekend, the door for the RBA is now well and truly open for more cuts, to drive down the currency, without worrying about runaway house prices.” Esho further stated that if the Aussie dollar does move to the US$.70 range—where there is resistance—the RBA will have to intervene and go another 25 basis points. “They need to maintain an element of surprise and even though the recent minutes didn’t indicate an imminent cut, a November cut is probably a higher chance than what the market is signally and I would be a seller of the Aussie dollar anywhere above the US73 cent range,” he remarked.

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Experts believe banks will raise rates, property prices to stay high

Eighty percent of the economists and experts who participated in the latest Reserve Bank Survey by finder.com.au are anticipating the cash rate to remain on hold at 2.0% at the Reserve Bank’s meeting on November 3. The experts mentioned that an immediate cash rate cut to counter the trend of major banks increasing their home loan rates is unlikely. Additionally, the experts noted that the property market’s recent cooling was too early to lead into a rate change. The survey also discovered that 30% of the participants foresaw a cash rate drop by the end of the year. Of those who answered as such, six further predicted a cash rate fall on Melbourne Cup next week and three participants supposed that the cash rate will drop around December instead. “Melbourne Cup day is traditionally a popular period to move rates. The cash rate has moved on Melbourne Cup day 10 times since 1991 when the modern adjustment cycle began – down four times, and up six. However, this is unlikely to be the case this year, with 80 percent of experts tipping rates to hold, despite out of cycle rate changes filtering the market,” said Michelle Hutchison, finder.com.au money expert. Although all four of the country’s biggest banks have increased their owner occupied home loans in recent weeks, the official cash rate is not expected to also increase just yet, a majority of the experts believe. 16 of the 30 experts say that the cash rate will not start to rise until past 2016. One in four experts thinks that the rise will occur instead by the fourth quarter of 2016. On how low the cash rate would drop until the increase, the opinions of the experts were split. 55% of the experts think the rate will not fall below the current 2.0% and 28% of the participants predict a low of 1.75%. Meanwhile, 17% of the experts believe that the cash rate could fall as low as 1.5% this cycle. The survey revealed that two in three experts (66%) expect prices to rise or remain high despite increases in home loan rates. Of those who expect price hikes, around 49% expect no change to property prices and 17% assumed that prices will only continue to increase. Thirty-four percent of the experts predicted a drop in property prices, with the majority of them disagreeing, citing that the market is not strong enough to adapt to the changes without matching the pace of its continued growth. Seventy-one percent of the experts predicted that out of cycle increases started by Westpac and the other major banks would inspire other lenders to try the same. St George and Macquarie Bank have pending rate rises, bringing the known total number of banks with rate increases to six. “Some lenders, however, have a tendency to keep their rate rises quiet, which can make it difficult for Australians to keep track of movements in the home loan market. It’s important for borrowers to ask the question when they are speaking to lenders or applying for a new loan to find out if they have recently made any announcements or are planning to. It’s safe to assume that more lenders will follow these banks’ leads by raising their rates too,” warned Hutchison. “However, some smaller lenders may use this opportunity to win over new borrowers, by not following the big banks’ lead at all, or not raising their rates by as much as the market average. Regardless, it’s a great time to compare rates to see if you can get a better deal – a small change to your interest rate can save you thousands of dollars over the life of your loan,” she added.

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Property prices still strong in some cities, despite cooling market

New forecasts by the National Australia Bank (NAB) have discovered that despite the national housing market losing steam, some individual states are posting respectable price growths. Alan Oster, chief economist for the NAB Group, noted that the overall national figures obscured some of the more positive individual performances across individual state markets. NAB Economics estimated that the average national house price growth would hit 9.1% over 2015, which is much higher than previously expected. Sydney and Melbourne are expected to be the leaders for this year’s house price growth, with growth forecasts for the two cities at 14.6% and 15.2%, respectively. NAB tipped modest gains for Brisbane this year, at 4.4%, while Adelaide’s values were expected to fall by 0.4%. NAB also estimated that Perth’s house values would drop by 4%. On what could be expected of next year, NAB warned that the situation for many states would not be as optimistic. Previously, NAB’s forecast was at 3% growth, but Oster exclaimed that it would most likely be closer to 2.3% instead. He said that this slow down would be largely the result of Sydney and Melbourne’s moderating price growth. Queensland was tipped to be the next leader in housing price growth next year, as the price increases among southern states begin to cool. Sydney prices were predicted to only increase by 1.2% next year, while Melbourne goes down by 3%. Brisbane was expected to enjoy the fastest house price growth for next year, at 4.5%, and there were expectations for Adelaide to improve by 2.4%. Perth’s prices were projected to remain weak next year, likely taking a drop of 1.2%. Oster noted that foreign buyers had been more active in the housing market for the September quarter, particularly in Victoria. Foreign buyers accounted for about 16% of total demand in new housing markets, and 9% in established housing markets. In Victoria, foreigners accounted for over one in four of all new property sales, and around one in seven of established homes sales.

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Inflation figures likely good news for investors and home owners ahead of RBA interest rate decision

The head of one of Australia’s peak real estate groups said there are signs that home owners and investors will continue to enjoy relatively low interest rates. According to Neville Sanders, president of the Real Estate Institute of Australia, the latest Consumer Price Index figures show that inflationary pressures remain within the threshold set by the Reserve Bank of Australia (RBA), which is likely to be good news for borrowers. “In the September quarter, the CPI rose by 0.5 per cent and an annual rate of 1.5 per cent,” Sanders said. “These figures are well below the RBA’s target zone of two to three per cent and should ease any pressure on the interest rate outlook,” he said. The board of the RBA is set to meet tomorrow to decide on the direction of Australia’s current official cash rate, with many having tipped that the meeting will result in a rate cut. Sanders said that possibility has increased in recent weeks with figures showing rents are increasing at a slow pace, while house price growth is moderating in a number of markets. “The impact of increased investor activity in the housing sector is flowing through to lower increases in rents,” Sanders said. “With inflation under control and a moderating housing market, home buyers can expect a stable outlook with the possibility of a further interest rate cut,” Sanders said.

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Queensland’s vacancy rate data suggests two distinct trends

Recent REIQ vacancy rate data for the month of September has revealed that the property market in Queensland is operating with two distinct trends. These include tight rates among areas in the southeast corner and steady but weaker rates in the regions. The market for rental properties from Gympie south to the Gold Coast and west to Toowoomba are overall at near record low levels. Indeed, some parts of the Sunshine Coast, according to the data, have posted less than 1% vacancy. Demand was rising in these parts with little inventory available, said Antonia Mercorella, CEO of REIQ. The market was very tight, she added, especially in Caloundra and Noosa. Both areas registered the lowest vacancy rates in the state: 0.9%. “We’re seeing strong demand for rental properties in these areas and while a small level of this demand is seasonal, it does mean good news for investors who have certainty around finding tenants for their properties,” she stated. On the other hand, Brisbane continued its long-term trend and posted a respectable vacancy rate of 2.8%. “We continue to see strong demand for dwellings in the Brisbane market and despite some commentators who suggest that we are facing a glut the data tells a different story,” Mercorella commented. Mercorella noted that new apartments in Brisbane are very popular with both investors and owner-occupiers, but the area’s vacancy rates softened marginally, from 3.0% to 3.3%. She then mentioned that local agents have resorted to offering rental incentives to secure tenants. She also underlined how the area’s supply affected rental pricing, but was keen to recognise consumer demand. “Asking rental prices are also said to be softening in response to the level of supply, however it is evident that the tenant demand is still there.” The Gold Coast’s vacancy rate dropped from 2.3% to 1.7%, while the greater Sunshine Coast dropped from 1.6% to 1.3%. The Fraser Coast slightly fell from 3.8% to 3.7%, reflecting a healthier investor market. Toowoomba’s vacancy rate dipped from 3.1% to 2.7%, indicating the region’s strength. Meanwhile, Gladstone’s rate increased from 5.2% to 7.1%, and Mercorella said that despite the market experiencing some difficulty, its planned new infrastructure could usher in recovery later on. Up north, Rockhampton improved from 6.0% to 4.5%, Mackay held steady at 9.1%, Townsville was up from 5.3% to 5.6% and Cairns dropped from 2.7% to 2.6%. Mercorella remains positive about Queensland’s market, which she believes is in a “relatively good position” compared to other states. “The southeast corner is driving growth and this will eventually cascade throughout the rest of the state,” she said.

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Employment and its link to the housing market

The close relationship between increased job opportunities and the housing market for a particular city was explored in new data released by CoreLogic RP Data. Data research analyst Cameron Kusher of CoreLogic RP Data gave his take on the data, believing that home ownership is “generally underpinned by secure employment”. “Low interest rates have been a key driver for recent growth in home values; however, growth in dwelling values has been narrowly based geographically whereas interest rates are the same across the country. Given this, there is clearly more to current housing conditions than low interest rates with employment the key driver,” Kusher said. In 2008, combined capital city home values fell by 6.1%, from March to December, stimulated further thanks to cuts in interest rates and the First Home Owners Grant Boost. Combined capital city home values started to rise since. When values started increasing across the board, Sydney and Melbourne consistently posted the strongest growth in home values. Perth, Canberra, and Darwin have also seen short periods of strong value growth. With capital growth values varying wildly among the states, CoreLogic concludes that there is more to capital growth performances than just the low interest rate. Between December 2008 and September 2015, most of the country’s employment growth was centred in Sydney and Melbourne, representing 66.9% of the nation’s employment growth. More importantly, the two cities have attracted the largest proportion of new full-time jobs, at 74.2%, with part-time jobs at 61.8%. Since 2008, the Northern Territory was the only region wherein its full-time employment growth rate has been relatively greater than its part-time employment growth. “Although the rate of full-time jobs growth was lower in Sydney, it along with the NT have been the only two regions that have recorded a greater total increase in full-time employment than part-time employment since over the past 12 months. It is an obvious statement but full-time employment growth would seem to be more important than part-time as it means the employee is working more and in most cases earning more money which is in turn more conducive to home ownership,” Kusher observed. Over the past 12 months to September 2015, both Sydney and Melbourne have continued to produce the largest proportion of jobs. Regions nearest to these two cities have noticeably improved in terms of employment. “While job creation isn’t necessarily the be all and end all of housing demand it is an important component to consider. It certainly goes some way to explaining why home value growth has been much stronger in Sydney and Melbourne over recent years than in other cities. The recent relative strength in job creation in Brisbane and Hobart may signal increasing housing demand in those cities over the coming year,” remarked Kusher.

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Housing growth loses steam for October, should cool further

Over the month of October, dwelling values among the capitals rose by 0.2%, according to CoreLogic RP Data’s Home Value Index report. This was up by 1.4% over the quarter and 10.1% more than the previous year’s growth. The annual rate of growth across the combined capitals index has been on a cool down since July, when the index was still increasing by 11.1% per annum. Tim Lawless, head of research for CoreLogic RP Data, said that there were a number of factors that contributed to this slowdown, and not just the rise in mortgage rates. “We are also seeing approximately a 30% premium on investment related mortgage rates, tighter lending standards and borrowers generally requiring a larger deposit,” he said. “Gross rental yields at record lows and affordability constraints are acting as a further disincentive, particularly in Sydney where the median unit price is equal to, or higher than the median house price in every other capital city. Additionally, new housing supply is moving through record levels which should help to ease the upwards trajectory of home values,” Lawless added. According to Lawless, the Sydney market has recorded a cumulative capital gain of 77.0% since the end of 2008. Melbourne’s values have moved a cumulative 66.6% higher over the same time frame. Based on the median selling price in late 2008, Sydney homeowners accumulated around $316,000 in gains from the housing market, versus the approximately $246,000 by Melbourne homeowners. “While the rate of growth is significant, it is important to remember that this growth is across two cycles; dwelling values were broadly tracking backwards during both the 2008 calendar year and between late 2010 through to mid-2012.” Hobart is the only capital city where the values of homes dropped since the end of 2008, remarked Lawless. The Home Value Index indicated that the city is down 0.4% (about $1,155) since then end of the global financial crisis. Lawless additionally pointed out that the slowdown in mining and resources infrastructure spending has affected the housing market, particularly in terms of demand, and its effects will linger for some time. He outlined several other symptoms that the market is only going to cool down further.

• Trending lower clearance rates, particularly in Sydney and Melbourne, where auction clearances were below 70% week to week
• Monthly mortgage-related activity was lower compared with the same period last year, based on CoreLogic RP Data’s valuation platforms
• Record levels of new housing supply entering the market, which could lead to reduced house price inflation over the coming year
• Listing numbers have increased much more than a year ago in Sydney; higher levels of stock gives more options to buyers, making it less urgent for buyers to close their transactions, while vendors vie for more competitive prices and better deals among themselves

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RBA leaves cash rate unchanged at 2.0%

During a meeting this week, the Reserve Bank of Australia (RBA) decided to keep the cash rate fixed at 2.0%. The RBA came to this conclusion after judging that “the prospects for an improvement in economic conditions had firmed a little over recent months”. The RBA also observed that current low inflation conditions could present an opportunity for further easing of policy, should they find an opportunity to lend support to demand. A statement by Glenn Stevens, governor of monetary policy decision for the RBA, revealed that the Federal Reserve in the United States is likely to start increasing its policy rate over the period ahead. Other major central banks, however, have continued to ease their monetary policies. Interest rates are expected to remain consistently low for the next one or two years, Steven remarked in the statement. This will encourage borrowing and spending activity. He highlighted that overall conditions are “quite accommodative” despite the recent changes in several lending rates for housing, which may have discouraged some borrowers. Steven reassured that supervisory measures are in place to help mitigate any risks that may come from the housing market. There have been fears of a housing bubble, particularly in Sydney and Melbourne, where dwelling prices continue to climb.

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RBA cash rate decision likely driven by lenders independent interest rate rises

Out of cycle interest rate increases by lenders likely played a major role in the decision by the Reserve Bank of Australia to leave the official cash interest rate on hold at yesterday’s board meeting according to the head of on mortgage broking firm. John Kolenda, managing director of 1300HomeLoan, said the monthly RBA decisions are becoming less and less relevant for borrowers. “The RBA’s decisions have rapidly become redundant in the current lending environment,” Kolenda said. “Westpac was the first to raise rates out of cycle and other lenders have followed suit with more increases likely in the months ahead,” he said. Kolenda said any move by the RBA to cut the official cash rate would likely be of no benefit to those with a mortgage. “Any future RBA cuts are likely to be negated by the actions of the banks which are adhering to the Australian Prudential Regulation Authority (APRA) new regularity requirements that will increase the cost of providing mortgages,” he said. “Further rate relief from the central bank may also not be passed on in full by lenders and we may see increases in rates across the board due to potentially increased funding costs and pressure on the major banks to meet the APRA requirements by mid-2016.” Kolenda said it’s likely borrowers will face higher interest rates in the near future, as banks adjust to both changing economic conditions and the increased cost of providing mortgages. “As we predicted earlier last month, we are likely to see increases of up to 50 basis points in out of cycle movements by many banks as they adjust their pricing to accommodate those additional costs,” he said.

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Sydney at possible risk of a housing bubble

Sydney’s property prices are considered “overvalued” after increasing by 30% since 2012, and they are now in danger of falling, according to a global property index by UBS Wealth Management. The international bank has ranked Sydney behind London and Hong Kong as a global financial centre at high risk of experiencing a housing bubble. The report highlighted a recent similar slowdown in China as a sign of things to come, as recent price increases in Sydney have been influenced by strong Asian demand. Increasingly worsening economic conditions on a local level and more stringent regulations in the lending market could also raise the risk of a “significant correction” sometime along the medium term, UBS noted. By placing third on the report, Sydney’s property prices were considered even more overvalued than those of Singapore, Vancouver, and San Francisco; cities whose volatile housing markets have worried overseas commentators for the past few years. Notably, Sydney’s score on the report was also higher than New York’s—a city infamous for its costly properties. Local analysts advised that reports like UBS’ should be taken with a grain of salt. Overseas commentators have been predicting a housing bubble to occur in Sydney for years, but they have yet to be proven, said BIS Shrapnel managing director Rob Mellor. Mellow remarked that affordability will be a main issue for properties in Sydney, but a correction in values is highly unlikely to happen since there is a shortage of housing. He believes the city’s housing market will be undersupplied for years to come.

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QPCU offers discount on three-year fixed rate home loan

QPCU has announced a new discount on its three-year fixed rate home loan, with the new rate coming into effect November 4. The discount offer is at 3.89% p.a., with a comparison rate of 4.50%. This new rate is valid for new lending as well as principal and interest loans of more than $150,000. On top of the discounted rate, the home loan product boasts additional features such as no monthly fees, no penalties for extra repayments, and free online redraws. Grant Devine, QPCU CEO, believes that the new fixed rate offer will present great value for members. “The rates we have announced today really are market-leading and show our commitment to providing better value than our competitors,” he said.

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10 things that can derail your mortgage application

Securing finance to purchase a property can be difficult, which is why it is essential to make sure your application is error free. Below is a list of guidelines to follow, or you may want to get the help of a local mortgage broker. 1.    Be honest about your financial position One common reason that mortgage applications get declined are missed bill payments.A potential borrower’s credit history is closely scrutinised by their chosen lender. Any overlooked bills can be particularly costly, says Belinda Williamson, spokesperson for Mortgage Choice. “Your credit history should be squeaky clean if you want a home loan,” she says. “Generally, a default is listed on your credit file after three months of missed payments on a debt commitment. What you consider one simple default, say, on a phone bill or utility bill, could hinder you from receiving a home loan approval for a good five years or more.” Williamson says that the easiest way to avoid this is to pay your bills “on time, every time.” She also recommends checking your credit file prior to application: this can be ordered from websites such as http://ift.tt/1aGbjpC. What if you’ve got problems in your past? Justin Doobov, managing director of independent mortgage broker Intelligent Finance, says that all is not lost. “If you have a default, let your broker know upfront and they can select a lender that is OK with it,” he says. “We settled a loan for a client who had a $40,000 default. We were able to explain the circumstances as to why it occurred and the lender approved the loan without question.” 2. Make sure you declare all your expenses Forgetting to mention that emergency credit card is also a common problem, and one that can derail an application, says Doobov. “I have seen some clients not disclose their five credit cards – or even expenses relating to their kids – when they come to us. Of course, when we get their bank statements we see all the payments to the various credit card companies, child care expenses and school fee payments for the kids. “If a lender sees this, it is likely they will decline the loan due to non-disclosure. It’s best to be honest up front and get an approval that will be honoured.” 3. Employment woes Lenders like borrowers who have a relatively stable recent employment record – at least six to twelve months or more in your job, receiving regular income. “If you are looking to change company at the same time you are looking to buy a property, seriously reconsider one or the other,” says Sheppard. “Stay in the same employment at least until you have the mortgage. If you are determined to change jobs, ensure you have enough money saved to cover mortgage repayments and lifestyle costs for a few months or even more, should it not work out.” 4. Paperwork snafus It’s a simple thing – but an important one. The paperwork that lenders require can be significant, and it is important to get it right: sending in your home loan application without the documentation required by the lender can result in the loan application going back and forth to the lender a number of times without result. At worst, not having the right paperwork to hand can derail purchases altogether. “If you only send in part of the information the bank asks for, you end up getting a conditional approval that has lots of conditions,” says Doobov. “The problem comes when you find a property and send in the remaining information. You could be at risk of the lender not liking something that they see and the lender then has an opportunity to decline your loan.” Using a mortgage broker to handle the paperwork is probably the quickest and simplest way to ensure you get it right: however, if you’re going it alone, be sure to read the lender’s instructions very carefully several times. Remember, if you’re putting in a joint application, you’ll need to provide evidence for each applicant. You should also make sure you send in documentation that the lender asks for, not substitutes: Aussie Home Loans often sees clients who repeatedly send in other documents than the ones requested, such as ATO Tax Assessment Notices in place of group certificates or bank statements showing pay being deposited in place of pay-slips. 5. Knowing your limits It’s all too easy to get caught up in enthusiastically hunting for property without knowing exactly how much you can borrow. Sheppard’s heard many stories of buyers finding their ideal home or investment, before heading to a lender to find they can’t borrow enough to pay for it. “This is even more of a serious situation when a buyer has made a successful offer at auction and suddenly can’t come up with the rest of the dollars, because they can lose part or all of their deposit,” she adds. You can avoid disappointment and/or losing your deposit by seeking out a loan pre-approval before looking for property. These are usually valid for three to six months. 6. Not knowing lending criteria Lenders and the mortgage insurers behind them work to a wide range of criteria when deciding whether to approve a home loan. They often have restrictions around property sizes, postcodes, high density buildings and an assortment of other aspects. For example, many lenders put restrictions on the maximum amount they will lend on properties in regional towns, meaning you may need to come up with a larger deposit. Do your best to make sure you know what rules you have to work by before heading out on the hunt – otherwise you could find extra conditions on your loan or your application denied altogether. The simplest way to do this is to seek out a home loan pre-approval before looking for property. However, not all pre-approvals are equal to others: Aussie Home Loans spokesperson Brooke Stoddart advises that you should ensure you get a ‘fully assessed’ pre-approval. “Some lenders issue an automated pre-approval without any assessment,” she comments. “This usually has a page of disclaimers and is pretty worthless.” 7. Not shopping around Simply not considering all your options in the first place could derail your application. Different lenders offer vastly different loan amounts: Lender A may lend you $330,000, while Lender B will offer $370,000 and Lender C may not approve your home loan at all. Therefore, it’s important to be proactive once you’ve done your figures and know what you can honestly afford: don’t limit your search to just one or two lenders. Sheppard warns that you shouldn’t just take the largest loan you can get, either. “Don’t be tempted to go with the one that will lend you the most, as you may quickly find out that you are stretched beyond your limits and need to sell up,” she says. “Make sure you are aware of what commitment you can comfortably manage, with interest rates at this level and a couple of percentage points higher, and know your budget back to front.” 8. Not getting the right loan structure “A mistake many people make is they look for the lender with the cheapest interest rate and then try and change their position to fit that lender’s policy,” says Doobov. “That’s like going to the $2 shop to buy a suit and then trying to tailor it to look and fit you better.” Doobov comments that it’s much wiser to map out the desired loan structure and features first, and then start shopping around for lenders that will approve the loan structure at a low rate. “This saves clients thousands of dollars, as they then have the right structured loan and it will cater for their needs now and well into the future,” he adds. Getting the right loan in the first place is particularly important for investors, who often need to make use of loan features like offset accounts and redraw facilities – and can save you from costly interest payments and refinances further down the track. 9. Dinky deposits Several years ago, it was more than possible to buy a house without having to put any money down. However, the days of 100% home loans are gone, and almost all lenders require a home loan applicant to have a genuine savings deposit of at least 5% of the purchase price. Sometimes a lender will require even more. While this may not be a problem for investors looking to leverage equity in their existing home, it can present problems for first-timers pulling together cash for an investment – especially when you factor in extra purchase costs  (see below), which you may or may not be able to work into your loan amount. The answer? Do your homework. Educate yourself about the market before you start looking for a property and get a handle on how much you really need before committing to a purchase  – and then add a buffer of at least 5% on top. This applies whether you’re using equity to fund the deposit or putting in hard-saved cash. 10. Purchase cost pain As mentioned above, there are a wide range of purchase costs in addition to your deposit, including (but not restricted to): lenders mortgage insurance, stamp duty, legal costs, application fees, solicitor fees and inspection fees. It’s easy to forget all the fees that mount up, and they can easily derail your cash flow projections, says Doobov. “You don’t want to find out on the day of settlement that you are $30,000 short,” he says. “Do a cash flow summary well before you exchange on a property to ensure that you have enough cash to fund the purchase and associated costs.” It might be a good idea to speak to friends, family, mortgage brokers or real estate agents, as they can help advise you about the costs you need to pay – and those that you don’t. They’ll also be able to give you an insight into ongoing costs, such as land rates, strata management costs, maintenance, insurance and property management. Read all you can about property investment in Your Investment Property magazine and its website, wwww.yipmag.com.au, too: you’ll find out lots about unexpected costs even in the articles that don’t directly address costs.

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Rental growth across capitals the lowest in twelve months

Weekly rents among the country’s capital cities rose by 0.3% over the twelve months to the end of November, the lowest annual growth rate for the period, according to a monthly report by CoreLogic RP Data.

Only Sydney and Melbourne were able to post increases of at least 2% in rental rates for the year. In Brisbane, Perth, and Darwin, the rates fell over the 12 months.

Other capitals enjoyed an increase of less than 1.5% over the year.

The report noted that the current combined capital city rental rates for houses was at $486 a week, and $464 a week for units.

Dwelling rates for the combined capital cities rose by 0.2% to $483 per week, but only increased by 0.3% over the past 12 months.

Cameron Kusher, research analyst for CoreLogic RP Data, remarked that the rental rate growth slowdown is expected to persist over the coming months as a result of the increased supply of housing and rental stock. Kusher also pointed out that slower migration rates have reduced rental demand.

Moreover, Kusher identified the construction boom across the capital cities, a slowing population growth, and the recent increased activity of investors adding properties to rental stock as other factors inducing the slower rental growth.

“Sydney and Melbourne, which have seen the largest ramp up in new housing supply and investor activity over recent year, continued to record rental rises over the past year however, each city is seeing a slowing in the pace of rental growth relative to 12 months ago,” he observed.

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Fixed rate demand bounces back

From a four-year low last October at 13.88%, fixed rate home loans now make up 17.39% of all loans written for the month of November, based on recent national home loan approval data from Mortgage Choice.

The return in fixed rate demand might be indirectly caused by the out-of-cycle rate hikes implemented by most of Australia’s lenders on their variable rate home loan products, suggested Mortgage Choice chief executive officer John Flavell.

“As a result of those rate hikes, an increasing number of new buyers are looking to fix at least part of their mortgage as they seek out security and surety around their mortgage repayments,” Flavell explained.

According to the report, NSW had the strongest demand for fixed rate home loans among the states. Demand for the product accounted for 24.59% of all loans written in NSW.
Following NSW, Western Australia’s fixed rate demand was at 16.81%, and Queensland was 15.83%.

On the other hand, Victoria and South Australia both had the lowest demand for fixed rate products, at 8.89% and 12.37% respectively.

Despite the improvement in fixed rate home loan demand in four of the five states, variable rate products still remain popular among consumers, accounting for 51.78% of all loans written throughout the month of November.

Flavell anticipates greater demand for fixed rate home loans in the near future.

“Australia’s lenders made it clear in October when they raised their rates that additional rate hikes could be on the cards. In order to avoid any future rate hikes and obtain some surety around their mortgage repayments, I believe we will see more Australians locking into a fixed rate home loan.”

He also added that while interest rates will likely rise in the months to come, the mortgage market is still very competitive as it is.

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Home News Big four banks fall behind other lenders in customer satisfaction Home loan help Big four banks fall behind other lenders in customer satisfaction

Australia’s big four continue to lag behind other lenders in terms of home loan customer satisfaction, according to new research.

The overall satisfaction level of the big four’s home loan customers in the six months to September 2015 was at 80%, while for the next seven major banks the overall was 85%.

The data, from Roy Morgan’s Single Source survey, discovered that ME Bank and ING Direct are the leaders in home loan customer satisfaction.

ME Bank’s home loan customers posted the highest satisfaction level, at 92.8%, while ING Direct took 92.7%. Bank SA could barely keep up as runner-up with 88.7%, and Bendigo Bank was not far behind at 87.6%.

Of the four big banks, CBA was the leader with 82.0%. Westpac followed with 80.8%, NAB was at 78.9%, and ANZ posted 77.5%. While they reduced their home loans rates over recent years, ANZ, CBA, and NAB all have home loan customer satisfaction levels lower than that of their non-home loan customers.

Westpac alone has home loan customers who are more satisfied than their other customers, at 80.8% versus 79.8%, respectively.

In terms of overall satisfaction, CBA took the lead among the big four with 82.5%, improving by 1.4% points in September—the biggest improvement of the four. NAB came next with 81.4%, rising 0.6%.

Both ANZ and Westpac, however, took hits to their overall satisfaction levels, down 0.3% and 1.0% points, respectively.

While CBA showed marked improvement over the last year, the lender still struggles against the average posted by the other banks outside of the big four, with an overall satisfaction level of 86.7% in the six months to September.

The big four all improved in satisfaction levels over the last year, by 0.5% points. The smaller banks, in comparison, improved even more. Teachers Mutual took the top spot at 95.3%, rising by 5.2% over the year. Next was Bendigo Bank at 89.9%, up 2.0% points and Bank SA was at 87.7%, up 4.3% points. Bank of Melbourne was at 87.0%, up 5.8% points.

The CBA once again leads the big four, this time in terms of main financial institution satisfaction in September, at 84.4%. The bank also displayed the biggest improvement over the last 12 months, by increasing up to 2.0% points.

“With signs beginning to emerge that home loan rates will rise, it will be of critical importance to track how mortgage customers feel about their bank as it is likely to adversely impact on key metrics such as satisfaction and advocacy,” observed Roy Morgan Research industry communications director Norman Morris.

“We have seen in the past that if increases in home loan rates are given a great deal of adverse publicity, then a decline in customer satisfaction inevitably follows,” he added.

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Testimonials

I needed a mortgage for London. A little tricky as I am self employed. They came up trumps and provided intelligent advise along the way. It would have been a great deal harder without David Docking’s invaluable advice and support liaising between the bank RM and I. In short, I would thoroughly recommend David and Partners to anyone.

– Justin White

I used David and Partners for my Aus property purchase and was easily able to arrange my home loan in Singapore with an Aussie bank. Experienced great service and saved a substantial amount of time to find the best deal for me!

– Jackie They

David is very easy to work with. Communication is responsive and he is able to understand my requirements to find a suitable product. The entire process was quick and fuss-free. Pleasure to have them as my mortgage broker. Highly recommended!

– Lecia Ang

We were looking to buy property in Australia and David &Partners provided us with the best mortgage deal we could possibly get, all managed from Singapore. I can only recommend their services. They were very efficient.

– Laurence Rassat

We were very pleased with the whole service David and Partners provided. They made the whole process quick and easy. Thank you!

– Matthew Campbell

David and Partners are the best powerhouse of knowledge available to meet the financial and investment needs of consumers in Singapore and South East Asia.

– Abhilash Tripathi

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London Property Finance

Are you looking at purchasing property in the UK?

Have you thought about how to finance?

David and Partners are mortgage experts who helps both expats and non-residents secure competitive financing arrangements.

If you are seeking finance for the United Kingdom, David and Partners has access to finance for central London and throughout the United Kingdom.

Finance packages commence at SGD$300,000 and can be in either Singapore Dollars or Pound Sterling.

Banks can lend up to 75% of purchase price depending on bank valuation and property location.

The UK market has traditionally been an attractive market for investors, both foreigners and expatriates looking to invest in growth markets or seeking higher return on their savings.

For latest rates please call us at 8693 2000

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New Zealand Property Finance

Are you looking at purchasing property in New Zealand?

Have you thought about how to finance?

David and Partners are mortgage experts who helps both expats and non-residents secure competitive financing arrangements.

New Zealand remains an attractive market for foreign buyers with limited government restrictions on buyers and an attractive tax environment for property investors.

We help clients who are looking to purchase or refinance New Zealand property with loans from $300,000 available in NZD$ or SGD$.

The North Island remains the most popular destination for buyers and banks however finance can be arranged for the South Island subject to valuation.

The New Zealand Dollar and Singapore dollar have tracked each other closely over the years which has made multi-currency loans an attractive option for buyers.

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Australia Property Loans

Are you looking at purchasing property in Australia?

Have you thought about how to finance?

Can I get finance?

David and Partners are mortgage experts who help both expats and non-residents secure competitive financing arrangements.

Australian property market offers sound and relatively easy investment options, with banks generally lending up to 80% of purchase price or valuation for buyers living outside Australia.

Foreign nations are eligible to purchase new properties with Foreign Investment Board approval these properties include:

• properties being sold off the plan,


• vacant land can also be purchased as long as property development commences within 24 months.


• foreigners are not eligible to purchase second hand property.


• For further information, please refer to the Foreign Investment Board’s website.

Finance packages for Australia offer a wide range of product features including;

• Singapore Dollar and Australian Dollar rates;


• Loan terms up to 30 years;


• Interest only and principal and interest loans;


• Fixed rates, and


• Full offset accounts

For latest interest rate options please do not hesitate to contact us.

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Overseas Property Loans

Are you looking to purchase or refinance property in Australia, New Zealand or the United Kingdom?

Have you thought about how to finance?

Can I get finance?

David and Partners are mortgage experts who helps both expats and non-residents secure competitive financing arrangements in Australia, NZ and United Kingdom

We’re accredited with a wide range of banks enabling you to compare options and select the most competitive loan package.

We take the head ache and the stress out of organizing your finance and make sure your get independent advice and the right finance package.

Loans are available for the purchase, refinance and/or construction of residential property.

Interest rate packages include interest only and principal and interest loans and can be either variable rate; fixed rate and / or multi-currency loans.

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Health Check: Can your home loan be better?

Check your home loan health

Mortgage rates change change constantly. While your current home loan package may still be great, new opportunities arise from time to time to lower your monthly payment or lock in a particularly attractive fixed rate.

Over the years, we have been able to assist many property owners in getting a better deal with no downsides. All it takes from you is a few minutes to fill in the form below. We’ll review the information and let you know whether any better deals are available that suit your profile.

Wonder whether your mortgage could be better? Fill out the short form below, and we will get back to you with a no-obligation, free update on your mortgage situation.

We respect your privacy and unless you indicate you wish to receive e-mail updates, will only be in touch once to share the possibilities with you.

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