Category: Lending Stats

The RBA Holds As Refinancing Goes Through The Roof!

The RBA held the cash rate again, while the ABS reported strong mortgage refinance, though lower credit growth, and lower building approvals. And Consumer Confidence moved slightly higher, but still in negative territory.

You can join my live show later today as I discuss the latest with Damien Klassen from Nucleus Wealth.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

The Lenders Who Are Making It Easier To Get A Loan…

There has been a spate of changes to lending rules as banks seek to make it easier to refinance and borrow. Question is, is this really in the interests of households?

Today’s post is brought to you by Ribbon Property Consultants.

If you are buying your home in Sydney’s contentious market, you do not need to stand alone. This is the time you need to have Edwin from Ribbon Property Consultants standing along side you.

Buying property, is both challenging and adversarial. The vendor has a professional on their side.

Emotions run high – price discovery and price transparency are hard to find – then there is the wasted time and financial investment you make.

Edwin understands your needs. So why not engage a licensed professional to stand alongside you. With RPC you know you have: experience, knowledge, and master negotiators, looking after your best interest.

Shoot Ribbon an email on info@ribbonproperty.com.au & use promo code: DFA-WTW/MARTIN to receive your 10% DISCOUNT OFFER.

The Mortgage Prisoners Debt Trap Escape Hatch – Maybe!

Lenders are selectively lower the hurdles to make mortgage loans and refinance existing borrowing. According to an AFR article, some are tweaking the serviceability buffers. So we look at the implications, given rates are expected to continue to rise.

http://www.martinnorth.com/

Go to the Walk The World Universe at https://walktheworld.com.au/

The Start Of The Interest Rate Wars: With Steve Mickenbecker

I discuss the state of play for interest rates as the RBA meets next week. Mortgage rates are rising, while some deposit rates are rising. But how will this play out ahead?

And importantly, what can households do not to combat rising rates and costs?

Steve Mickenbecker is in Canstar’s Group Executive Team, bringing more than 30 years of experience in the Australian financial services industry. As a financial commentator for Canstar, Steve enjoys sharing his expertise across topics such as home loans, superannuation, insurance, mortgages, banking, credit cards, investment, budgeting, money management and more.

https://www.canstar.com.au/team-members/steve-mickenbecker/

Go to the Walk The World Universe at https://walktheworld.com.au/

FINAL REMINDER: DFA Live 8pm Sydney Steve Keen TNL

Join us for a live discussion as I explore the intersection of politics and economics with Professor Steve Keen, who is running in the upcoming election as a Senate Candidate for TNL.

Affordable Housing

You can ask a question live.

Go to the Walk The World Universe at https://walktheworld.com.au/

The Bank Of Mum And Dad Is Getting Strangled!

We examine the role of the Bank of Mum and Dad, in the light of the latest data. As well as highlighting inter-generational issues, there are pressures on both parents and their kids. And if you do not have “wealthy” parents the chances of getting into the property market is diminished significantly.

Go to the Walk The World Universe at https://walktheworld.com.au/

Are Rate Rises A Certainty In Australia?

One of the key questions for country is whether interest rates, which have been rock bottom for a couple of years are set to rise. The RBA was saying not until 2024 but have slowly been changing their tune, and the Fed lifted rates last week, and markets now think 50 basis points hikes are on the cards in the US.

The truth is markets are banking on significant rate rises over the next year or two. The ASX 30 Day Interbank Cash Rate Futures Implied Yield Curve is at 2.675 per cent in August 2023, remembering the official cash rate is currently 0.1%. This would see mortgage rates up by as much as 3%, or close to 5%. That would be a horror for many borrowers.

But then again, we know already banks have been steadily lifting their fixed rate mortgages from ultra low 1.99 to closer to 3%, and the costs of funds as shown by Bond Yields is rising, making banks needing to hike rates to protect margins.

So the tussle between the markets and the bank are going to get interesting. And for the record, I am expecting some rate movements higher later in the year, but not as much as the markets are signalling. Nevertheless households were reminded by Phil Lowe recently they need to plan to hold buffers because rates may well rise, even if such rate hikes wont dampened inflation.

And by the way the third element in all this is employment and wages growth. If inflation continues to burn bright, unemployment may rise alongside, leading to the stagflation scenario. And that would be good for no-one.

Go to the Walk The World Universe at https://walktheworld.com.au/

Home Lending Flows Fall In August

The ABS released housing finance statistics today to the end of August 2018. The most striking observation is that lending flows for owner occupied buyers appear to be following the lead from the investment sector. Both were down. This is consistent with our household surveys.

Looking at the original first time buyer data, the number of new loans fell from 9,614 in July to 9,534 in August, a fall by 80, or 0.8%.  As a proportion of all loans written in the month, the share by first time buyers fell from 18% to 17.8%.

The number of non-first time buyers remained about the same. The average first time buyer loan fell just a little to $345,000. Looking at the DFA investor segment of first time buyers – which is not reported in the official data, there was a further fall.

Thus our overall first time buyer tracker reveals a further slide in activity. Perhaps more are wanting to catch a bargain in a few months, although our surveys suggested the main issue is the inability to get a loan in the now tighter lending environment.

Looking at the trend lending flows, the only segment of the market which was higher was a small rise in refinanced owner occupied loans.  These existing loans accounted for 20.5% of all loans written, up from 20.3%, and we see a rising trend since June 2017, from a low of 17.9%.  Total lending was $6.3 billion dollars, up $31 million from last month.

Investment loan flows fell 1.2% from last month accounting for $10 billion, down 120 million.  Owner occupied loans fell 0.6% in trend terms, down $81 million to $14.5 billion. 41% of loans, excluding refinanced loans were for investment purposes, the lowest for year,  from a high of 53% in January 2015.

Looking at the moving parts, only refinance, and owner occupied construction loans rose just a little, all other categories fell.

On these trends,remembering that credit growth begats home price growth, the reverse is also true.  Prices will fall further, the question remains how fast and how far? We will be revising our scenarios shortly.