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MFAA Prosper : Mortgage and Finance Brief 13
Mortgage & Finance brief 43 PETER BEVERLEY, A MEMBER OF THE MFAA NSW/ACT BROKERS committee and Principal of The Home Loan Company, says NSW brokers need to write as much business as they can while the going is good. “There was a lot of activity as first homebuyers rushed to make use of the stamp duty concessions available to them before the cut off on 31 December,” he says. Australian Property Monitors (APM) data for the three months to the end of September showed that, while there have been small falls in property prices in most areas, there have been some significant rises in rental returns. Sydney house prices fell 1.2% in the period, unit prices rose 1.9%, while house rentals rose 3.1% and units a hefty 4.5%. Gross rental yields were in the 5-6% range across the state. The largest rise in property prices occurred in the Murray (17.9%) and Murrumbidgee (15.9%) regions, while unit prices fell 15.8% in the Illawarra and 17.3% in Richmond-Tweed. The sale of houses and units in NSW totalled 92,926 in 2011 (at the time of writing), well below the 136,309 in 2010 and the 164,072 in 2009. Beverley is recommending consumers fix their home loan rate. At the moment, fixed- rate loans are averaging around 5.99% – lower than the average variable rate. “Lower fixed rates are an indication that the banks see interest rates coming down due to their margins and the bad news from Europe,” Beverley says. “But despite the bad news, and partly due to falling interest rates, I believe that 2012 will be a better year than last year. “Another trend worth noting is the move away from the big four banks. Six months ago, 90% came from the big banks. Now it is down to 82%, with small banks like ING, Citibank and Suncorp making inroads. “Of course one of the biggest challenges facing brokers is dealing with the new national consumer protection legislation, which makes no-doc loans a thing of the past. Things are changing and there is now a lot more paper work to deal with. Brokers will have to work harder to verify income.” Ray Slack, Chair of the MFAA’s NSW Equipment and Commercial Finance Committee and Director of Macarthur Finance and Capital, reports that commercial property brokers are currently falling over themselves to write business. “Generally with the lending values that apply on commercial, the property rental is adequate to service the debt,” he says. “Brokers are looking at ways to suggest various structures to clients, particularly with commercial property investment through self- managed superannuation funds.” Slack sees little difference in the challenges facing brokers in the other states, although he believes that the activity is more buoyant in NSW. “The main issue is providing a good rate for the client,” he says. “Typically commercial property investment borrowing is higher than in residential and the lenders are creating a greater return on commercial debt. “The market is, however, more competitive now there is more liquidity and we would expect to see even more competition for deals.” ••• rePorT Busy times for nsW brokers By dAvid WeST Mortgage & Finance Brief reviews the challenges facing NSW brokers, including interest rates, changes to legislation and good returns on investment. crunch $5.08b the value of housing loan commitments in NSW in September 2011. This is nearly 35% of the total national value ($14.59 billion). $311,200 the average loan size for all owner occupied housing commitments in NSW in September 2011. This is 9% higher than the national average ($284,400). Source: Australian Bureau of Statistics Housing Finance, September 2011 Another trend worth noting is the move away from the big four banks. illuSTrATioNThiNkSToCk
Mortgage and Finance Brief 12
Mortgage and Finance Brief 14