Posts Tagged ‘home loan’

Nov

23

2010

Top NSW suburbs for real estate revealed

Author: nobelfinance

Property investors that are looking for good price growth need to buy in the inner city, a new report has found.

The latest property report by PRDnationwide found that seven out of the top ten New South Wales suburbs recording the most growth in sales activity are located within a 20 kilometre radius of Sydney CBD.

Oatlands, 23km north of Sydney, topped the list recording 160 per cent growth in property sales between 2009 and 2010.

Sylvania Waters came a close second recording 156.3 per cent growth in sales activity, with 41 houses sold over the year – up from 16 the year before.

“The areas experiencing the greatest growth in sales offer a high degree of amenity and are well serviced by transport corridors,” PRDnationwide managing director Jim Midgley said.

“The New South Wales suburbs experiencing the highest growth in sales activity are typically situated in areas with easy access to the Sydney CBD through major road networks or train lines,” he said.

“These areas have a propensity for strong price growth as demand increases for properties nestled along major transport corridors.”

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Nov

1

2010

Finance brokers account for almost 50% of all mortgages

Author: nobelfinance

Leading industry analysts have predicted third party brokers could claim up to 60% of the mortgage origination market within five years.

Speaking at the LIXI 2010 conference in Sydney, Fujitsu Consulting general manager Martin North, Mortgage Industry Analyst Tony Crossley and NextGen.Net sales director Michael Murphy all predicted imminent improvements in broker market power.

The JP Morgan/Fujitsu Australian Mortgage Industry Report report released in September measured broker market share at just under 40%. However, North thinks the next five years will see major bank market share dominance sink, while brokers will rise.

“I think we will see 60 per cent [of housing loans] funded by the majors, so that’s 40 per cent from elsewhere,” North said. “I think that mortgage brokers will have well north of 40 per cent of the market – it could be close to 50 per cent – because if you look at the consumer research, they are doing the right thing by consumers, and with the new regulatory environment in place that will only improve.”

Murphy from NextGen.Net agreed major banks would shrink to 60% of the market, and that third party market share could reach 60%.

“Any shift in funding away from the four majors would almost automatically imply through brokers or an alliance channel – there’s a fairly strict correlation between those two – so if you accept the premise [that major banks will fund only 60% of the market within five years] it wouldn’t surprise me if mortgage brokers increased up to 60%.

“I think there is every chance, because I do think over time there will be a levelling out on the revenue and the cost side of that relationship, so it will become a more palatable and more supported relationship over time – I really believe that.”

Crossley was more muted in his predictions. “It’s been essentially flat for some significant period, and it will require a different market for that to take off to the levels we’ve seen overseas, and I’m not sure it will get that far.”

However, he acknowledged the role brokers will play in increasing market competition with the four majors. “A lot of the rhetoric underestimates the impact of the broker – they do actually promote competition from their little office,” he said. ”They will draw out price comparisons and product comparisons, so it’s actually a very effective way of generating a market.”

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Oct

22

2010

Australian RMBS arrears register Q1 increase

Author: nobelfinance

Continuing RBA monetary policy tightening in the first and second quarters of 2010 has impacted arrears performance

The RBA increased the cash rate target by 25 basis points during March with two further consecutive rises of 25 basis points each during April and May. This has taken the cash rate to a current rate of 4.5 per cent from a low of 3.0 per cent between April and early October 2009.

Fitch Ratings has seen arrears performance during Q1 2010 start to  deteriorate on the back of the rising cash rate, which has flowed through to home loan lenders’ lending rates.

Fitch’s Dinkum Index, which tracks arrears across all Fitch rated residential mortgage backed securities (RMBS), has seen an increase in its prime index during the first quarter with 30+ day arrears increasing from 1.19 per cent to 1.38 percent.

The increase was mainly attributable to 30-59 day delinquencies which rose from 0.52 per cent to 0.65 per cent with almost no change in the 90+ day arrears, which remained at 0.49 per cent.

All low doc loans evidenced an increase in the 30+ day delinquencies, which jumped from 4.82 per cent to 5.53 per cent; most of this increase was attributable to the 90+ delinquencies which rose 0.31 per cent to 2.67 per cent.

The deterioration in later stage arrears for low doc loans could be explained by Christmas credit spending rolling over into the New Year and successive rate rises in the last quarter of 2009.

Non-conforming low doc loan arrears remain persistently high with 30+ day arrears increasing from 16.5 per cent at Q409 to 17.7 per cent at Q1 10, while conforming low doc arrears also rose, but at much lower levels, from 2.8 per cent at Q409 to 3.6 per cent at Q1 10.

The RBA have held rates steady at 4.50 per cent since May 2010, after 6 rate increases since October 2009.

With decreasing unemployment, and a strengthening economy, the RBA is expected to increase rates further during 2010, putting continued upward pressure on borrower’s ability to service debt.

Fitch anticipates an increase in arrears for both conforming and low doc borrowers during the remainder of 2010 as compounding interest rate rises impact borrowers and flow through to rises in Fitch’s Dinkum Indexes.

David Carrol, Director Fitch Ratings

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Oct

14

2010

Are Australian higher interest rates hurting you ?

Author: nobelfinance

Despite the RBA’s decision to keep rates on hold last month, 50 per cent of consumers are already sacrificing a range of everyday necessities to accommodate higher interest rates.

According to the latest Bankwest/MFAA Home Finance Index, 50 per cent of Australians are forgoing eating out to deal with the burden of higher rates, while 47 per cent are reducing costs at home or taking lunch to work and 42 per cent are going on cheaper holidays or not taking a break at all.

The Index found the number of borrowers feeling ‘worse off’ than 12 months ago has been steadily increasing since November 2009.

Those who are most concerned and affected by the state of the economy are the over 60s, unemployed, low income earners, students and those involved in home duties.

“With interest rates higher than last year, many mortgage holders seem to be holding back on their spending.  Home buyers are opting for practical strategies such as packed lunches, shopping during the sales, and buying in bulk to balance their household budgets. There is a clear move to more thrifty spending for many Australian households,” Bankwest retail chief executive Vittoria Shortt said.

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Sep

7

2010

Rates stable, but hikes expected before year end

Author: nobelfinance

Australia’s leading economists still expect a number of hikes before year end as the government seeks to keep inflation in check

THIS MONTH the RBA decided against lifting the cash rate but the question home owners are asking is for how long?

The latest inflation figures have shown that the Consumer Price Index (CPI) rose by 0.6 per cent in the June quarter, lifting the annual rate to 3.1 per cent -just outside the RBA’s target of 2 to 3 per cent.

In its monetary policy statement this month the RBA board said growth trend factors, coupled with close to target inflation and

an uncertain global outlook, influenced its decision to leave the cash rate unchanged for the third month running – good news for now.

What also bodes well for home owners is the slowing of house price growth and lower levels of lending activity – a clear indication that previous rate rises have taken effect.

RP Data senior research analyst Tim Lawless has welcomed the RBA’s decision to keep

rates on hold, saying the slowdown in market conditions has prompted the rate halt.

“Month-to-month capital gains in Australia’s capital city housing markets had been trending downwards since January and slipped into the negatives with a result of-0.7 per cent in June,” Mr Lawless said earlier this month.

“The slowdown in Australia’s capital city housing markets, together with a moderate CPI figure, which was below market expectations, would have been an important consideration by the RBA to keep rates on hold,” he said.

But while rates remain on hold for now economists warn that home buyers can expect to see further increases in the future.

AMP chief economist Shane Oliver said despite a similar prediction, the RBA still retains a clear tightening bias and will continue to keep inflation within target levels.

“The RBA will continue bearing down on the economy,” Mr Oliver said.

Mr Oliver added that high export prices coupled with improved business investment, consumer spending and solid employment recovery will see rates reach “near top” levels of 5.5 percent by end of 2011.

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