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The battle to take control of Wizard Home Loans, as reported a few weeks ago by Marquette Turner, is over. Despite expectations that National Australia Bank would take control of the brand and franchise network, the race has been won by Aussie Home Loans.


GE Money has offloaded its Australia and New Zealand mortgage offshoot for an undisclosed amount, but it is likely to be considerably less than the $400 million AUD it paid for it, given the drastic changes in the economic climate.

As part of the deal, the Commonwealth Bank of Australia (CBA) will sell its 33% ownership of Wizard to Aussie Home Loans, whilst at the same time acquiring up to $4 billion AUD of mortgages originated by Wizard, dealing another blow to NAB’s expansion efforts.

The deal suggests that the non-bank sector still has some life in it yet.

The sale of Wizard to Aussie Home Loans is expected to be completed by the end of February 2009, around the same time that CBA will take hold of the first $2 billion AUD of loans by the end of February 2009. CBA remains in discussions with GE Money over acquiring the additional $2 billion of loans.

Simon Turner

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The Reserve Bank of Australia (RBA) has cut its key interest rate for the third month in a row as it attempts to prevent Australia’s economy stalling. The central bank trimmed three-quarters of a percentage point – or 75 basis points – off its key cash rate, reducing it to 5.25%, the lowest level since December 2003.

For a typical 25-year, $250,000 home loan, today’s cut if passed on in full by lenders will save the borrower $112.63 a month in payments or some $33,791 over the life of the loan.The move, announced after today’s monthly board meeting by the RBA, exceeded economists’ predictions of a 50 basis-points cut. Today’s cut brings the RBA’s cuts to 2 percentage points since the central bank reversed course in September, retreating from a 12-year high rate of 7.25%.

The RBA will be hoping that the big commercial banks will repeat last month’s feat of passing on the entire official rate cut to borrowers. Lower lending costs help spur the economy by encouraging more individuals and businesses to purchase houses or make other investments, stoking demand that in turn prompts more orders.

Almost all the latest economic figures point to a sharp slowdown in demand as the effects of the global financial crisis spread to Australia. Falling commodity prices are already dimming the outlook for the mining and export sectors. Retail sales shrank 1.1% last month from September, the largest drop since April 2005, as consumers start to pull back on spending.

House prices, another measure of the economy’s health, fell 1.8% in the September quarter, the sharpest slowdown since the 1970s, according to some reports.

Housing is becoming more and more attractive as an asset class as the year progresses. Opportunistic investors are in for a feast – especially those from abroad in countries with exchange rate advantages (United States, United Kingdom and the countries of the European Union using the Euro) – exciting times!

Michael Marquette

Marquette Turner’s real estate radar® hones-in on property news to keep your finger on the pulse, and with interest rate cuts on the cards, our news couldn’t be more timely!

A report conducted by the Real Estate Institute of Australia in June 2008 has showed that housing affordability has fallen across every Australian State and Territory for the first time since March 2004.

The figures, which consider both rental and home loan affordability, shows that:

  • New South Wales as the least affordable Australian State in which to own a home
  • Home loan holders in New South Wales are having to use 42.6% of their income to meet payments
  • The average monthly loan repayment has risen 7.5% in the last quarter to $2301.
  • Tenant’s have had to face tightening vacancy rates
  • Tenant’s are having to use 25% of their income (up 0.3% from the final quarter) to meet their rental payments.
  • Tasmania is the least affordable State in which to rent, with 29.2% of the median family income having to be used to pay the rent.

What Next?

After nine months lows in the housing market, there are signs that the Australian mood is settling.

Housing Industry Association data shows that:

  • New home sales rebounded by 4% in June
  • Unit sales increased by 15.5%.
  • Detached house sales increased by 2.6%

Whilst auction clearance rates remain jittery, Marquette Turner Luxury Homes continues to maintain that the choice of auction’s when selling property at this time is more of a gamble than it is a strategy. In terms of consumer interest in real estate, however, we have noticed a jump in the level of inquiries in the last week or so.

Looking ahead for the rest of the year, a typically more effervescent period for property sales anyway, a combination of easing inflationary pressures and interest rate cuts should certainly put a spring in the step of many Australians.

Simon Turner

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