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Why your home loan is rising

©News.com.au, 2008-01-13

EVERYONE seems to be talking about sub-prime and the global credit crisis. Now Australia's banks are blaming it on the rising cost of home loans. There are two million subprime mortgages at risk over the next two years in the US, according to recent figures. But we'll get to that shortly. Five of our biggest banks, National Australia Bank, Commonwealth Bank and ANZ followed by Westpac and St George have in the past fortnight raised their variable home loan rates without being prompted by the central bank. Usually if the Reserve Bank of Australia lifts interest rates - the cost of borrowing money - the banks will pass that on to customers. But now they are doing so before the RBA and they've all pointed the finger at the global credit crisis. Full story >>>

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Slipping off the property ladder

©News.com.au, 2007-12-04

ALTHOUGH the Reserve Bank of Australia held off on raising the official cash rate in December, the big banks have warned they might look to raise home loan rates regardless – a move which could push borrowers who are already on the brink of mortgage stress into default. Failing to meet home loan repayments could see you lose your house. The mechanics of repossession vary from state to state. Basically your bank or lender has the right to seize and sell your house if you fall behind in repayments; fail to make up the repayments within a specified time frame after receiving default notices; and don’t have a defence for doing so. In September the House of Representatives Economics Committee released a report on home loan practices and how to deal with people in financial difficulty. In the report, the RBA estimated there were 5.3 million outstanding housing loans in Australia, with about 11,800, or 0.22 per cent of those in arrears by more than 90 days. It’s the low-doc and non-conforming borrowers who are getting into trouble, with around 7 per cent of low-doc home loans in arrears, and about 0.95 per cent of non-conforming loans. The RBA said some of the non-bank new entrants to the housing loan market seemed to be quicker off the mark to seek repossession than traditional lenders. In the year to August, there were 5605 applications to New South Wales courts and 2775 to Victorian courts for property repossession. Full story >>>

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Rate decision a relief: real estate body

©TheAge - reproduced with permission, 2007-09-05

Home owners will be relieved the Reserve Bank has left interest rates unchanged at 6.5 per cent, the Real Estate Institute of South Australia says. Full story >>>

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London property faces slowdown

©News.com.au, 2007-08-27

FEARS are growing that the fallout from the US sub-prime mortgage meltdown will hit house prices in central London, one of the world's hottest high-end property markets. Prices for prime homes in the most expensive streets of the capital have risen about 50 per cent in the past two years as a financial services boom has enriched bankers and other professionals in the City of London. But the global market turmoil unleashed by the US sub-prime collapse is threatening activity levels at banks in the City, and London property agents are warning that high-end residential prices could suffer as result. "If there is a downturn in City profits and employment levels, you couldn't be surprised if central London prices fall," said Liam Bailey, head of research at Knight Frank, the property consultancy. Full story >>>

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Delinquencies from low-doc loans hit record

©News.com.au, 2007-08-27

DELINQUENCIES in the Australian non-conforming home loan sector are at record high levels and are likely to increase as a result of an interest rate rise in August, a global ratings agency says. But Moody's Investors Service noted that the overall level of defaults and personal bankruptcy was still relatively low, and that Australia's non-conforming loan sector does not resemble the troubled US sub-prime sector. Moody's found that during the second quarter of calendar 2007, average non-conforming residential mortgage backed security delinquencies greater than 90 days past due rose to about 6.5 per cent, from 5.97 per cent in the 2006 first half and 4.63 in 2005. "Delinquency rates have trended upwards for the past 18 months as a result of rising interest rates, riskier trends in mortgage origination, and high levels of household indebtedness," Moody's analyst Ilya Serov said. Full story >>>

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Aussie John's cure for housing crisis

©News.com.au, 2007-08-23

FIRST-home buyers would receive almost $25,000 in tax breaks over five years – on top of the existing $7000 grant – under a plan to stem the housing affordability crisis. Aussie Home Loans boss John Symond said yesterday he had presented Prime Minister John Howard with a solution to the problem because years of political buck passing had led to inaction at all levels of government. Mr Symond's plan would give first-home buyers a tax deduction of up to $4725 a year for five years on annual home loan interest repayments of $15,000. That equates to a $400 monthly saving, reducing loan repayments from $1900 to $1500 on a $300,000 loan. The maximum benefit would be available for new homes or units worth $200,000 to $500,000. Full story >>>

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ANZ in price-fixing probe

©News.com.au, 2007-08-21

THE competition watchdog has targeted ANZ over alleged price-fixing in relation to a small number of home loans originated by a Queensland mortgage broker. But the bank fought back last night, saying the Federal Court proceedings, lodged yesterday, were "ill-conceived and misplaced in law", and would be vigorously defended. The case by the Australian Competition and Consumer Commission concerns the way ANZ interacted with the mortgage broker, Mortgage Refunds. According to the bank, MR offered what the broker described as a "refund" of $1000 on ANZ products. ANZ withdrew its accreditation of MR in March 2004, believing that the refund breached its accreditation agreement by offering inducements to prospective borrowers. Full story >>>

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Auction clearances rebound

©News.com.au, 2007-08-20

HOMEBUYERS have shrugged off concerns about global financial markets to push weekend clearance rates close to levels not seen since the housing boom of 2003. And this month's interest rate rise appears to have had little impact on the auction market, according to Michael McNamara, general manager of researcher Australian Property Monitors. Full story >>>

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ATO crackdown on property investors

©News.com.au, 2007-08-17

THE purchase of all investment properties and shares nationwide over the past year will be scrutinised as part of a major tax office crackdown involving data-matching more than 220 million electronic transactions across the economy. The Australian Tax Office has revealed it will cross-reference every investment property transaction with revenue and land titles records in each state. The share market dealings of investors will also be examined, with the tax office having access to data from the Australian Stock Exchange and the nation's three largest share registries. The ATO has already written to rental landlords to warn them to declare the right amount of income from their investments. Full story >>>

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RAMS caught up in the storm

©News.com.au, 2007-08-17

HOME lender RAMS is caught in the eye of an intensifying global financial storm, with its share price collapsing as it searches for billions of dollars in funding. But the boss of the nation's biggest non-bank mortgage lender told The Australian last night that its customers had no cause for concern, and the business was not under threat. "Yes, RAMS has some short-term funding issues to address, but that in no way affects our ability to continue to operate," chief executive Greg Kolivos said. "It's business as usual as far as we're concerned." RAMS listed on the Australian Stock Exchange on July 27 in an $885 million float, enabling founder John Kinghorn to reap more than $600 million in cash by reducing his holding from 93 per cent to 20 per cent. Full story >>>

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