Home / Real Estate 1 min ago Neil Young joins Hawaii homeowners selling to Californian digiterati RELATED ARTICLES Aug 5 2015 at 3:54 PM | Updated Aug 5 2015 at 8:47 PM Banks in new push into residential property | SAVE ARTICLE PRINT REPRINTS & PERMISSIONS Major banks are offering refunds on lenders' mortgage insurance and other incentives to encourage lowerrisk home buyers. Graham Tidy Major banks, which have been clamping down on investors in residential property, are offering mortgage brokers a new range of incentives to encourage lower-risk residential home buyers. Bank of Melbourne and St Georges Bank, which are part of the Westpac Group, are among those offering refunds on lenders' mortgage insurance, $2000 cash back for refinancing and fixed- rate decreases on owner-occupier home loans by up to 0.3 per cent. "We remain focused on helping owner-occupiers," a spokesman for Bank of Melbourne claims in a letter to brokers advising of the new rates. Chris Foster-Ramsay, managing director of Capital Home Loans, said: "As the lending landscape changes there will be more and more competition for the owner-occupier market." A clamp-down on investment lending by the majors is creating some of the most competitive conditions for borrowers since the beginning of the global financial crisis in 2008, according to mortgage brokers and real estate agents. by Duncan Hughes Advertisement search the AFR STREET TALK NEWS BUSINESS MARKETS REAL ESTATE OPINION TECHNOLOGY PERSONAL FINANCE LEADERSHIP LIFESTYLE ALL TODAY'S PAPER VIDEOS INFOGRAPHICS MARKETS DATA LOGIN SUBSCRIBE
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Home / Real Estate
1 min ago
Neil Young joins Hawaiihomeowners selling to Californiandigiterati
RELATED ARTICLES
Aug 5 2015 at 3:54 PM | Updated Aug 5 2015 at 8:47 PM
Banks in new push into residential property
|SAVE ARTICLE PRINT REPRINTS & PERMISSIONS
Major banks are offering refunds on lenders' mortgage insurance and other incentives to encourage lowerriskhome buyers. Graham Tidy
Major banks, which have been clamping down on investors in
residential property, are offering mortgage brokers a new range
of incentives to encourage lower-risk residential home buyers.
Bank of Melbourne and St Georges Bank, which are part of the
Westpac Group, are among those offering refunds on lenders'
mortgage insurance, $2000 cash back for refinancing and fixed-
rate decreases on owner-occupier home loans by up to 0.3 per cent.
"We remain focused on helping owner-occupiers," a spokesman for Bank of
Melbourne claims in a letter to brokers advising of the new rates.
Chris Foster-Ramsay, managing director of Capital Home Loans, said: "As the lending
landscape changes there will be more and more competition for the owner-occupier
market."
A clamp-down on investment lending by the majors is creating some of the most
competitive conditions for borrowers since the beginning of the global financial crisis
in 2008, according to mortgage brokers and real estate agents.
by Duncan Hughes
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Serviceability is the lenders' assessment of the borrowers' capacity to afford the loan
and takes into account possibly higher future interest rates. It is usually assessed by a
review of income and fixed commitments over the life of the loan and potential rental
income.
Westpac, Bank of Melbourne, St George and Bank of South Australia recently reduced
loan-to-value ratios – the proportion of money available for a loan compared to the
value of the property – from 95 per cent to 80 per cent, leading many borrowers to
switch banks in a bid to raise more money, brokers say.
"Other major banks (ANZ, National Australia Bank and Commonwealth Bank of
Australia) are being inundated by new investment applications," Chris Foster-
Ramsay, managing director of Capital Home Loans, said.
Delays are being caused by the volume of
new work and brokers being unfamiliar
with alternative banks' system and
policies, which means credit assessment
teams have to rework applications, often
requiring additional documentation,
brokers say.
"Average mum and dad investors that
have just bought a new property at
auction are also being caught up in the
delays when it comes to getting a 'yay' or
'nay' on their loan application," Mr
Foster-Ramsay said.
Investors buying off-the-plan for
investment, particularly those with small
deposits, are being particularly hard hit,
brokers say.
They say loan applications that until
recently took a couple of days to process
take four or five days now for initial
assessment.
The squeeze on lending is being driven
by Australian Prudential Regulation
Authority's tightening of liquidity levels,
in line with rising international
standards, and its efforts to keep a lid on
speculative property investment, with all
its risks.
Investment property specialists, such as
Cherie Barber, who in addition to having
a $16 million personal portfolio runs
renovation seminars and appears on television, said interest, volume and spending
was the highest in her 24 years in the industry.
"There is huge interest in unrenovated property because people see it as a way of
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Funding timebomb set for property investors
Mortgage brokers and some property developers are concernedinvestors could struggle to find finance for the remaining 90 per centof purchase prices as banks are suddenly toughening up lendingcriteria.
|SAVE ARTICLE PRINT REPRINTS & PERMISSIONS
Mortgage brokers estimate there are 90,000 apartments being constructed in Australia that have been sold offtheplan but not yet settled. Louise Kennerley
by Duncan Hughes and Clancy Yeates
Banks' attempts to cool the over-heating property market has created a potential
funding time-bomb for thousands of investors who have committed to buy off-the-
plan apartments but have yet to secure finance to fulfil their contracts.
Mortgage brokers estimate there are 90,000 apartments being constructed in
Australia that have been sold off-the-plan but not yet settled. The purchasers of about
20 per cent of these, or 18,000, have paid a deposit of just 10 per cent of the full
purchase price, according to analysis of statistics from CoreLogic RP Data.
Mortgage brokers and some property developers are concerned these investors could
struggle to find finance for the remaining 90 per cent purchase price as banks are
suddenly toughening up lending criteria for investors.
"This is causing alarm across the industry," said Tim Brown, chief executive of the
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Mortgage and Financing Association.
"Many of these are first-time buyers who will not be able to fulfil their finance
obligation under the contract and will lose their deposit as many of the banks will not
finance any investment loan over 80 per cent and in some cases will not lend on
investment at all," Mr Brown said.
Bank are under pressure from the Australian Prudential Regulation Authority and the
Reserve Bank of Australia to cool the amount of investment activity that has heated
up the property market. On Friday Commonwealth Bank of Australia followed ANZ
Banking Group by lifting its standard variable interest rate for investor loans by 0.27
of a percentage point to 5.72 per cent.
OTHER BANKS YET TO FOLLOW
Bank of America Merrill Lynch's Andrew Hill said National Australia Bank and
Westpac Banking Corp are both likely to follow ANZ and CBA. Should this
happen the big four combined would enjoy an extra $850 million in annual profits, Mr
Hill estimated.
Buying off-the-plan apartments has been
a successful investment strategy for
many investors in a rising property
market. In Melbourne it has been actively
encouraged through the waiver of stamp
duty, equal to 5.5 per cent of the
purchase price.
As little as 10 per cent of the purchase
price is required to secure an apartment
and buyers typically arrange finance for
the rest as the apartment nears
completion – often years later. While
people can arrange finance ahead of
settlement, banks typically reserve the
right to change terms. Many investors
are set to discover that finance has
suddenly become both more expensive
and harder to get.
In the last fortnight Westpac and its
subsidiary banks including Bank of
Melbourne and Bank SA said it now
requires minimum deposits of 20 per
cent, up from 10 per cent. NAB and ANZ
have lifted their minimum deposit
amounts from about 5 per cent to 10 per
cent. CBA has said it will not take the tax
breaks borrowers receive from negative
gearing into account when a borrower
needs to borrow more than 90 per cent of
the property's purchase price.
RELATED QUOTES
ANZ BANK FPO (ANZ)
$30.15 0.45 1.47%
volume 6437767 value 195173559.1
5 YEARS 1 DAY
General banking, mortgage and instalmentlending, life insurance, property development,leasing, hire purchase and general finance,international and investment banking, investmentand portfolio management and advisory services,nominee and custodian serv
http://www.anz.com.au/
Banks (401010)
ASIC 005357522
ASX Announcements
10/8/15 ANZ International Tech and DigitalBusiness Advisory Panel
Jul 26 2015 at 3:18 PM | Updated Jul 26 2015 at 7:59 PM
Westpac tightens lending for foreign property investors
|SAVE ARTICLE PRINT REPRINTS & PERMISSIONS
Mortgage brokers claim Westpace's clampdown is targeting the lucrative Chinese market, which that has beenspending billions on residential property, particularly in Melbourne and Sydney. Paul Jeffers
Westpac Group is clamping down on lending to overseas
property investors wanting to buy residential property in the
nation's popular residential markets.
The bank, which recently announced a reduction in loan-to-value
ratios on investment loans to 80 per cent, has described the move
as another measure to limit annual investment lending growth to
a maximum of 10 per cent, as mandated by the Australian Prudential Regulation
Authority.
The bank's broker distribution division is writing to mortgage brokers identified as
having a "higher percentage" of property lending to people not resident in Australia.
The letter does not identify the lending benchmark that triggers the review.
AUSTRALIAN ADDRESS REQUIRED
"As a result, all future home lending applications that you submit to Westpac must
contain a primary application that has an Australian residential address," a leaked
by Duncan Hughes
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