CIMB Bank joins our panel

I’m delighted to announce the added lending partner, CIMB Bank-Singapore who joins our panel today.

CIMB Bank are aggressive for Australian business and we look forward to working with them for our Australian property purchasers. As part of our accreditation, they have also announced the addition of Brisbane properties together with Melbourne, Sydney and Perth.

If you’re purchasing an Australian property, talk to an Australian expert. We’ll not only source the best mortgage deal but we’ll find a lender that will approve you.

David Moss

Managing Director

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Banks get tough on interest-only loans

More major and non-major banks are bringing in tougher conditions on interest-only loans thanks to increased regulatory pressure.

Amongst the big four, Westpac decided to reduce the maximum allowable interest-only term to 10 years from 3 October, a spokesperson told Australian Broker. Previously, this term could be extended up to 15 years.

Additionally, the bank will also no longer offer the 12-year fixed rate investment property loan and its low documentation equivalent.

Commonwealth Bank brought in tougher conditions for those seeking to switch to an interest-only loan back in July.

“Commonwealth Bank constantly reviews and monitors its suite of home loan products and services to ensure we are maintaining our prudent lending standards and meeting our customers’ financial needs,” a spokesperson told Australian Broker.

“As part of our commitment to responsible lending, whenever a customer applies or seeks to make changes to their loan, we always enquire into their needs and objectives. Customers who switch to interest-only as the repayment option must advise us of the reason.”

Agencies such as the Australian Prudential Regulation Authority (APRA), the Reserve Bank of Australia (RBA) and the Australian Securities and Investments Commission (ASIC) have been placing increased pressure on all banks.

Martin North, principle of Digital Finance Analytics, told the Australian Financial Review that lenders were offering more selective discounts instead of slashing rates.

“Earlier in the year there was a load of rate cutting going on, and a reduction in discounts from advertised rates – this is now reversing as loans are being repriced up, allowing for greater selective discounts.”

The non-majors are also following suit with Bendigo Bank and Adelaide Bank reducing the maximum interest-only period from 10 years to seven.

As a result of this pressure, the value of new interest-only loan approvals has dropped from around $44b in June 2015 to $28.1b by March this year, according to a review of interest-only home loans by ASIC. This figure then bounced back to $35.5b in the second quarter.

Market share for interest-only loans from June 2015 to June 2016 also dropped from 46% to 36%.

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A Chan- Singapore

Hi David, I just wanted to say thank you for all your help in arranging my financing for my purchase. Shelley has just advised me that the purchase has now settled. It was a real pleasure working with you and I will recommend you to all my friends who are also looking at buying property in Australia. Hopefully, we’ll also be able to work on another property soon.

 

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Email server issue

Due to server related issue, we have experienced email issues on the 22nd-23rd September. We suspect some emails have not been delivered. We hope to have the situation resolved shortly. In the event you have not had a response, please call us and we will immediately rectify. Apologies for this. David Moss GM

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RBA downplays property bubble fears in latest meeting minutes

Capital city land prices continue to climb

The cost of vacant land has continued to increase in capital cities over the past year providing the impetus for growth in the cost of established housing stock.

The median price of vacant land sales nationally as at June 2016 was recorded at $212,000.  The median price has actually decreased by -2.3% over the past 12 months.  Although nationally median prices are lower there has been a divergence between price growth across the capital city and regional markets.

As at June 2016, the median vacant land sales price was recorded at $270,350 across the combined capital cities and $164,250 for the combined regional areas.  Over the past year, combined capital city selling prices have increased by 8.1% while combined regional area sales prices have fallen by -1.9%.  The median selling price for combined capital city vacant land is now 65% higher than median prices in regional areas, the largest differential since September 2003.

The median size of residential land sales as at June 2016 was recorded at 450sqm within the combined capital cities compared to 812sqm across the combined regional areas.  The median land size has held reasonably steady (+0.4%) over the year across the capital cities and is 11.5% higher across the combined regional areas.  The chart shows that capital city vacant land sizes may have reached a low point having remained at around current levels for some time.  Meanwhile, regional market land sizes have increased a little over the past year and are substantially larger than those within the capital cities.

Based on the selling prices of vacant land and the size of the lots, the rate per square metre of vacant land as at June 2016 was recorded at $584 across the combined capital cities and $177 across the combined regional areas.  The rate per square metre for vacant last sold has increased by 4.3% over the year across the combined capital cities and has fallen by -17.0% across the combined regional areas.  On a rate per square metre basis, capital city vacant land is now 231% more expensive than land outside of the capital cities which is the largest differential on record.

The cost of vacant land in Sydney is significantly higher than in all other capital cities.  It is also noticeable how strong the increases in land prices have been in Sydney and Melbourne over the past year, with rises in excess of the rise in home values.  Each city except Hobart currently shows a median lot size below 500sqm.  Interestingly, median lot sizes have increased over the past year in a number of capital cities including Sydney and Melbourne where median land prices have increased significantly.  On a rate per square metre basis, housing costs have increased across each capital city over the past year.  Again Sydney and Melbourne have recorded the greatest increases over the period.

The cost of housing in the combined capital cities has increased over the past year and this data shows that a significant driver of the increase has been the cost to purchase land.  It is no wonder median house prices in Sydney are hovering around $900,000 when new vacant land (most of which is on the outskirts of the city) has a median price in excess of $422,000.  An increase in the amount of developable land, as well as lower fees and charges applied to land development, as well as more competition amongst developers would likely reduce land costs and potentially slow the escalation in housing costs, particularly in Sydney and Melbourne.

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RBA loses credibility as housing boom continues