There are more interesting articles, commentaries and analyst reports on the Web every week than anyone could read in a month.
Each Saturday morning I like to share some of the ones I’ve read during the week.
The weekend will be over before you know it, so enjoy some weekend reading…and please forward to your friends by clicking the social link buttons.
A ‘broken property market’: Bank of Mum and Dad funding a third of first-homes
While the dream of a first home appears to drift further and further away – a new ‘bank’ seems to be paying the price – The Bank of Mum and Dad.
An article on Domain.com.au looks at the growing number of parents sacrificing their own finances and help their kids buy a property.
One in three first-home buyers are getting financial assistance from their parents to help them get on the property ladder, new research shows.
But experts warn this could be fuelling inequality in the housing market and making property prices even more unaffordable.
First-home buyers are increasingly tapping into the bank of Mum and Dad, with 29 per cent being provided help from their family in the form of cash hand outs, rent-free accommodation and guarantor loans, a survey by comparison website Mozo found.
On average, a first-home buyer borrowed more than $64,000 — and 67 per cent of parents were not expecting it to be paid back.
First-time buyers in NSW were borrowing the most from their parents, followed by Victoria and South Australia, which ranked equally.
The ACT and Northern Territory first-home buyers borrowed the least from their parents.
Some parents were even putting their own retirement plans on the line, with one in 10 parents saying they’d delayed retirement to assist their children buy a home.
The requirement for parent assistance “points to a broken property market for younger generations,” Mozo director Kirsty Lamont said.
“We’re seeing the Bank of Mum and Dad playing a huge part in helping children take their first step towards acquiring a home,” she said.
Some parents had even taken on expensive methods of helping their children buy, including buying on behalf of their child, at an average cost of more than $230,000 — and buying the property as a partner with a $155,762 price tag.
“For younger generations aspiring to own their own home, the sheer luck of family assistance can be a deal breaker as to whether or not they have the opportunity to purchase their own property,” Ms Lamont said.
First Home Buyers Australia co-founder Taj Singh said a third of first-time buyers they speak to are “getting some sort of financial assistance, whether that be getting a non-repayable cash gift, loaned funds or a guarantee”.
“A lot of the buyers I have dealt with don’t have any issues servicing a loan so they are able to purchase a home that they otherwise couldn’t because of the deposit hurdle,” he said.
He said parent help was becoming more common, but it wasn’t a good sign for those who don’t have access to the funds and are required to continue saving.
Read the full article here
Jobs market still improving
When is comes to Australia’s job market, there’s plenty to be happy about.
Anecdotally, having spoken to a few mortgage brokers, the word is that mortgage lending has been slowing through August and beyond.
So I’ll just add that as a brief addendum to yesterday’s post.
While on the subject of leading indicators, ANZ reported that job advertisements jumped again b+2 per cent in August to 181,435.
That now makes it six monthly gains on the bounce.
Total advertisements have ripped +13.2 per cent higher since the beginning of the year
And they not sit at the highest level in six years.
This should keep monthly hiring tracking at a rate of about +15,000 to +20,000 per month for a good while to come.
Read the full article here
‘LIAR LOANS’: UBS thinks there could be problems with $500 billion worth of Australian mortgages
There have been many reports claiming some alarming issues when it comes to home loans.
And it would seem things are not settling anytime soon.
An article on Business Insider looks into the statistics behind Australia’s mortgages.
The UBS banking team has released its annual survey on factual inaccuracies in Australian mortgage applications, and the results aren’t pretty.
It shows that in 2017, only 67% of respondents said that their mortgage application was “completely factual and accurate”.
That means one third of mortgage applications contained factual inaccuracies — the highest level in the three-year history of the report.
The analysts referred to such discrepancies as “liar loans” — a phrase made popular in the US during the global financial crisis to describe loans approved with poor documentation.
The report is based on a survey in July and August this year of 907 respondents across Australia who had taken out a mortgage within the last 12 months.
Analysts Jonathon Mott, Rachel Bentvelzen and George Tharenou then set out a comparative report based on their findings from 2015 and 2016.
“Given the rising level of misstatement over multiple years we estimate there are now approximately $500 billion of factually inaccurate mortgages on the banks’ books,” the analysts said.
Broken down by lending channel, there was a notable rise in factual inaccuracies for borrowers who used a mortgage broker, as opposed to negotiating directly with the bank.
When using a mortgage broker, 39% of respondents said their application contained inaccuracies — up from 32% in the prior year.
That was materially higher than the 25% for bank mortgages (up from 22% in 2016), and it didn’t escape the attentions of UBS.
“While the significant level of mortgage misrepresentation is a concern, we are more concerned that a substantial number of applicants continue to state that their mortgage consultant suggested they misrepresent their documentation,” they said.
Turning to an analysis of inaccurate applications by major bank, the results showed that ANZ led the way with 45% of applications misstated:
The number of incorrect applications at ANZ was “statistically significant” compared to the 2017 industry average, the analysts said.
For respondents who reported factual inaccuracies, the most common form of misrepresentation was an understatement of living costs:
There were also notable differences in the type of inaccuries, depending on whether applicants used a broker or negotiated with the bank directly.
For example, when using a broker 18% of respondents said that they overstated their income, compared to 6% via the bank network.
So what does it mean for Australian banks and the economy more broadly?
The UBS team argued that the survey reflects a level of complacency in Australia, following 26 years of economic growth and steadily rising house prices.
Read the full article here
Finally things are looking up for first home buyers
It’s safe to say the market has been tough for first home buyers lately.
But could things be looking up?
According to a an article on News.com.au the market could be turning around in favour of first home buyers.
A BATTLE has been won in the war for the soul of Australia.
Landlording seems to be on the retreat.
Each month, banks gather together all their information on what loans are going to whom and for what.
This is sent to the good people at the Bureau of Statistics, who publish it shortly after.
The latest publication is clear as day.
The amount of lending going towards investor housing is finally in retreat, and the amount going to owner occupation is shooting up, as this next graph shows
For a long time, first home buyers where being locked out of the market.
The share of first home buyers fell below 13 per cent.
But now, as the market is getting unlocked, they’re surging back.
First home buyers are suddenly up to 16.6 per cent of the market, the highest level in about four years.
It is still a way off the average 22 per cent level that applied in the 1990s, but it seems finally young people are clawing their way back in.
One factor is house prices.
They have eased a lot in Perth as the mining boom ended.
More recently, even in Sydney the pressure has finally come off.
The government can take some credit for that latter move.
It forced banks to offer higher interest rates to investors and anyone who was just paying off the interest.
As you can see in the next graph, a big gap has opened up between the interest rate you pay as an owner-occupier and the interest rate you pay as an investor.
The gap is even bigger if you have an interest-only mortgage.
Graph showing differences in home loan rates. Source: Banks’ websites, RBA Source: Supplied
To be clear, these changes are made by the prudential regulator, which is independent, so our Treasurer Scott Morrison can’t take all the credit.
Fiddling with the rules around bank lending is part of what they call prudential regulation.
You can see the word prudent sitting in the name and that’s exactly what this is.
Giving different lenders different interest rates makes speculating on property less attractive.
That not only makes the market more accessible to first home buyers, but also, by reducing the amount of hot money that can move in and out, makes the market a touch safer and slightly less prone to a crash.
The only question is why banks themselves didn’t do it, and a long time ago.
Read the full article here
The Art Of Networking And Why It’s Essential To Doing Business
In the world of business one of the most important things is finding a way to stand out and be remembered.
But it order to do that – one needs to know how to network.
This article from The Huffington Post looks at the art of networking as well as giving the ultimate do’s and don’ts.
Building a network that really works for your business is about having a continuous audit of the ways people you know connect and create opportunity.
While most people agree with the cliché ‘it’s not what you know, it’s who you know’, it carries a lot more weight today as innovative collaborations can appear seemingly out of nowhere.
Janine Garner, entrepreneur and Fortune 500 mentor and author, told HuffPost Australia networking still matters – but it’s the network leaders build around themselves that matters more.
“Building a network that works is both an art and a science.
It is an art in that it requires basic human skills in communication, connection, authenticity and the ability to be ‘in the present’ and engaged with people and conversation,” Garner said.
“Building a network strategically requires an ongoing analysis and audit of the people within the network and a sustained curiosity around the levels of diversity and connectivity within the group. It’s about seeing the lines that connect people and ideas to create opportunity.”
Sheree Rubinstein from One Roof told HuffPost Australia opportunities arise because people back people.
Sheree Rubinstein’s Networking Dos and Don’ts
- Networking is about striking up a conversation and conversations require people to listen. Take a genuine interest in others and ask them questions. Think about how you can help them not just about what you need from them.
- Don’t over promise and under deliver. If you say you are going to do something (such as making an introduction) then stand by your word.
- Nurture a relationship over time. If you meet someone at a networking event follow up with an email. Check in with that person regularly. Invite them along to events with you.
- Don’t shy away from contacting someone for a meeting or coffee. Most of the time people will say yes.
- Don’t burn bridges easily as people talk. Always approach networking and meeting people with integrity and respect to others.
- View networking as long term opportunities not quick gains.
Click here for the full article
Weekend video: Humans In 1000 Years
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