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.
NAB PULLS A FAST ONE ON MORTGAGE CUSTOMERS
While interest rates remain on hold – one of the big found banks seems to be preparing a different tune.
A media release from hashching.com.au reveals the following...
The only big four bank to keep variable rates on hold in September also had the highest rates in the first three months of FY2019
This was supposed to “rebuild trust” with its customers, however, new data from HashChing has revealed that NAB had the least to gain from an increase – with its variable rates already the highest of the big four.
Home loan rates for each of the big four banks averaged across HashChing’s data from June, July, and August.
Westpac was significantly more competitive in the first three months of the fiscal year than the other big four banks.
Averaged over June, July, and August, NAB had the most expensive interest rates at 3.94%, 22 basis points above Westpac’s extremely competitive 3.72%. On a $500,000 home loan, this difference amounts to $24,000 over the life of a loan.
The data also showed that with new loans, Westpac was again the most competitive, this time with ANZ winning the title of ‘worst deal’ for the consumer.
At a full 26 basis points higher than Westpac, ANZ customers would spend an additional $27,000 over the life of a loan.
HashChing CEO Mandeep Sodhi said, “It’s not just ironic, it’s audacious for NAB to proudly claim they were rebuilding trust with Australians when in fact they had the highest rates to begin. It’s no wonder faith in the financial system has been eroded.
“Homeowners are stressed. It’s becoming harder than ever for Australians to refinance their loans.
The tightening lending restrictions, a cooling housing market, and out-of-cycle rate hikes have all had a significant impact.”
Mr Sodhi urged consumers to do their research and engage with a mortgage broker in order to navigate the rapidly changing market and get the best offer possible.
“What’s a fraction of a percent worth? Tens of thousands of dollars. That’s why it’s so crucial that homeowners have reputable brokers in their corner.
They do the hard work for them and help protect them from extensive losses.” nk to keep variable rates on hold in September also had the It seehighest rates in the first three months of FY2019
Press release courtesy of www.hashching.com.au
Housing finance was weaker in August
It seems things are only looking worse for housing finance.
Housing finance squeezed
Total housing finance was lower as expected back in August at $30.67 billion in seasonally adjusted terms, well down from the peak of above $34 billion a year earlier.
The Reserve Bank of Australia posted some useful insights on household finances, financial stress (or rather the lack of it), and the impact of tighter lending standards on loan sizes.
Read the full article here
The RBA suddenly seems more concerned about what’s happening in Sydney and Melbourne’s housing markets
When it comes to the Sydney and Melbourne property markets – is there reason to worry?
An article from Business Insider explains why the RBA appears to be showing concern.
The Reserve Bank of Australia (RBA) is monitoring the threat posed by tighter lending standards on the Australian economy, acknowledging they could become even more stringent following the conclusion of Australia’s Banking Royal Commission.
“Members observed that while the regulators had already overseen a tightening of lending standards, and a degree of tightening of lending standards had been implemented by banks in anticipation of the Commission’s findings, it was possible that banks could tighten lending conditions further given the issues raised in the report,” it said in the minutes of its October monetary policy meeting.
“Members noted that it would be important to monitor the future supply of credit to ensure that economic activity continued to be appropriately supported.”
Given that credit availability helps to grease the wheels of economic activity, the RBA is clearly not entirely confident that a more significant slowdown in credit growth may ensue in the period ahead.
The most noticeable impact from tightening lending standards for most Australians has been seen in the housing market, helping to slow, then reverse, strong price gains seen in prior years, particularly in Sydney and Melbourne.
That was not lost on Board members in October with the minutes noting that “housing prices had declined noticeably in Sydney and Melbourne”, an amplification of the view expressed a month earlier when it simply acknowledged that “price declines had followed significant growth over preceding years”.
It also added that “price declines had become more widespread in both cities” in recent months.
That suggests increased concern among policymakers about recent weakness in Australia’s largest housing markets, perhaps reflecting an acceleration in price declines reported by CoreLogic in September, along with continued declines in auction clearance rates in both cities.
Coupled with ongoing weakness in household incomes growth, the RBA expressed continued uncertainty as to whether the surge in household spending in the June quarter of this year would be sustained in the period ahead.
“Household consumption growth had picked up in the June quarter and had remained elevated over the preceding year in the face of the weak income growth reported in the national accounts,” the minutes said.
Read the full article here
The first time ever I bought my home
Times (and prices) have certainly changes for first home buyers – but are they better or worse?
In this article for Switzer, John McGrath compares the market from his own personal experience.
Young buyers looking for their first home in Sydney and Melbourne haven’t had it this good in years.
Interest rates remain at near record lows, with plenty of lenders (especially smaller ones) offering loan in the mid to late 3% range.
That’s half the long term average of 7-7.5%.
Stamp duty concessions are making first purchases cheaper in our most expensive markets.
There are fewer investors to compete with due to tighter lending restrictions and there’s also fewer Chinese investors, who have been dissuaded by arbitrary fees in both states.
Many first home buyers have the Bank of Mum and Dad to help them, so getting a loan approved is easier.
Meantime, the rest of the market is struggling to get finance under tougher lending policies.
On top of all this, prices are cooling in Sydney and Melbourne and a pipeline of new apartments (the typical product for first home buyers) is still working its way through.
This means more choice for young people and potentially a further softening in apartment prices as supply increases temporarily with every new build completed.
Let’s go over the government help currently available to first home buyers in NSW and Victoria.
1. Stamp duty concessions
In Victoria, there is no stamp duty on new or existing properties worth $600,000 or less, with a sliding scale of concessions up to $750,000.
In NSW, there is no stamp duty on new or existing properties worth up to $650,000, with a sliding scale of concessions up to $800,000.
2. First homeowner grants
In Victoria, a $10,000 grant is available to all metro area buyers, either building or buying a new home valued up to $750,000. If you live in regional Victoria, the grant is $20,000.
In NSW, buyers building their first home get $10,000 for properties worth up to $750,000. Buyers purchasing a new build or off-the-plan also get $10,000 for properties worth up to $600,000.
3. Savings assistance
The Federal Government’s First Home Super Saver Scheme allows young people to make voluntary contributions of up to $15,000 per year into their super ($30,000 total) to save for their first property.
These contributions are taxed at the usual super rate of just 15%.
That’s less than half the typical tax rate (32.5%) that someone earning $37,001 – $90,000 has to pay.
These funds, along with earnings achieved while they’re in super (the best of the basic low cost industry funds typically return around 8% per year), can later be withdrawn for a first home purchase (minus a small withdrawal tax calculated by taking the buyer’s marginal rate of income tax less a 30% offset).
In Sydney and Melbourne, it won’t make the difference between being able to buy and not but it will help with your deposit, which is often the biggest hurdle young buyers face.
This is a no-brainer – fill in a form and you’re likely to have several thousand in extra savings by the time you’re ready to buy.
4. HomesVic co-ownership scheme
In Victoria, eligible first homebuyers can co-purchase a new or existing property with the Victorian Government in a pilot scheme called HomesVic.
The Government has committed to purchasing up to 400 homes with an equity share of up to 25% in each.
Buyers need a deposit of just 5%.
Down the track when the property is sold, HomesVic receive its equity share back.
The scheme commenced in February and already, 250 people have been given provisional approval to buy and 50 of those have exchanged contracts.
Surge in first homebuyers
The latest Housing Finance figures from the Australian Bureau of Statistics show a surge in first homebuyers over the past year.
In the second half of 2017, following the introduction of stamp duty concessions in both states on July 1, first home buying soared.
In 2018, the cooling market is clearly propelling the trend and keeping first home buyer activity at the same consistently high level.
Month-to-month, the figures show a peak in first home purchases in November 2017 and May 2018 in both states.
We haven’t seen this level of activity since 2011 in NSW and 2009 in Victoria.
Read the full article here
The Block 2018: Kerrie and Spence’s apartment tops online listing views
With The Block only one week away from Auction – speculation is rising on who the winner will be?
This article from Domain.com.au looks at one rather surprising front-runner apartment.
While the ultimate winners of The Block 2018 are yet to be declared – at least until the auction at The Gatwick on October 27 – Kerrie and Spence’s apartment is winning in the popularity stakes.
A count of The Block listing views on Domain (as of October 13) shows that the South Australian’s apartment has had more than 240,000 since it was first listed on August 27.
The next closest has been the apartment of Queenslanders Norm and Jess, whose penthouse apartment has had just over 204,000 views.
The apartment of West Australians Courtney and Hans has had the least number of views, but has still managed to get more than 165,000 people checking it out online.
As an aside, their apartment is also being listed with the lowest price, starting at $2.2 million.
Not surprisingly, Kerrie and Spence’s apartment has also scored winning numbers on Domain’s Facebook and Instagram.
They share the lead with Bianca and Carla on Twitter.
While Courtney and Hans were the least popular in terms of online views, the couple have had the most popular apartment on Domain’s Pinterest account, edging ahead of Kerrie and Spence.
Kerrie and Spence’s agent, Hocking Stuart’s Emily Adams, said she’s not surprised by the popularity of the apartment at 1/34 Fitzroy Street, St Kilda, which has a price range of between $2.5 and $2.7 million.
“I think Kerrie and Spence’s apartment is sensational – it’s the best in The Block in my opinion,” Ms Adams said.
Ms Adams, who may be just a little biased on behalf of her clients, has been involved in three different series of The Block.
She said Kerrie and Spence’s apartment has been her all-time favourite of all the seasons she has worked on.
“It’s one of the largest apartments, with a large study and separate laundry, and all of the bedrooms are larger than the apartments above it,” Ms Adams said.
She said the couple’s kitchen was proving to be a big drawcard for buyers with a layout that was perfect for cooking and entertaining at the same time.
“It’s these key areas people seem to love,” Ms Adams said.
Hocking Stuart has so far had hundreds of enquiries for Kerrie and Spence’s apartment, with some potential buyers coming back for three of four inspections.
“We’re as prepared as we can be,” Ms Adams said. ”Come auction day it’s up to [the people who viewed the property] to put their hands up and bid.
The Gatwick apartments will go under the hammer on Saturday, October 27.
Read the full article here
Weekend video: The Time You Have (In JellyBeans)
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