<a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> has lodged plans for a $750 million, three-tower mixed-use precinct that would complete the long-running redevelopment of Carlton's former Carlton United Breweries site.

The proposal at <a href="https://www.apartments.com.au/new-apartments/185-195-queensberry-street-carlton-vic-3053">46-78 Bouverie Street and 185-195 Queensberry Street</a> spans a 6,468 sqm site, the last remaining undeveloped parcels within the former brewery's 2007 masterplan.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the development will comprise two purpose-built student accommodation towers and a third build-to-sell apartment tower above a shared commercial podium and basement.

Across the three towers, SP Setia is proposing 606 build-to-sell apartments and 1,499 student accommodation units containing 2,009 beds.

The apartments will sit in the tallest tower, which will rise nearly 200m and 55 storeys. It will become&nbsp;one of the more substantial new build-to-sell apartment projects at the northern edge of Melbourne's CBD.

The apartment mix is weighted toward smaller inner-city product, with 188 studios, 206 one-bedroom apartments, 192 two-bedroom apartments and 20 three-bedroom apartments

<img alt="First look: SP Setia plans three-tower finale for Carlton’s former CUB precinct" data-entity-type="file" data-entity-uuid="8271bc87-1b0a-41b7-ac73-a425ee375261" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/3_2.png?VersionId=G4lw23o90B1boX4k4dj7rdz2ZEajS9wy" />

Part of the precinct will be a large-scale&nbsp;3,684 sqm supermarket and a further 2,198 sqm of speciality retail, creating close to 5,900 sqm of new commercial space within the precinct.

But one of the biggest components of the proposal is what sits between the buildings.

Around 4,650 sqm, or roughly 72 per cent of the site, will be publicly accessible open space, incorporating plazas, pedestrian connections, landscaped laneways and retail spill-out areas.

The ground plane is intended to finally complete pedestrian connections envisaged when the CUB masterplan was first approved nearly two decades ago, stitching together Victoria Street, Queensberry Street, Bouverie Street and Swanston Street through the former brewery precinct.

Urbis said the development would "complete the CUB precinct", with the public realm providing important north-south and east-west connections through what is currently the final undeveloped portion of the masterplanned site.

SP Setia is also exploring a new linear park within the Bouverie Street road reserve, with the concept to be developed further with the City of Melbourne through the planning process.

The proposal is being pursued through the Victorian Government's Development Facilitation Program under Clause 53.23 for significant residential development with affordable housing.

The planning report acknowledges the proposed heights exceed those contemplated under the original Comprehensive Development Plan and masterplan, but argues the built-form context has changed considerably over the past two decades.

Urbis said the three towers would instead create a stepped transition between Carlton and the Hoddle Grid, rising progressively from the 94.1-metre Tower One along the Queensberry Street edge to the 199.44-metre Tower Three closer to the established CBD-scale buildings to the south.

<img alt="SP Setia" data-entity-type="file" data-entity-uuid="e885a07a-592c-40fc-bf82-e6dbaf32da54" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.52.24%E2%80%AFAM.png?VersionId=7s_ErUkSKAdY1mAWp3GRZgMNCGtwhk5m" />

SP Setia plans to deliver the development across three stages.

Stage One would deliver the basement, podium and retail areas for the entire precinct alongside the first student tower. Tower Two would follow in Stage Two, before the 606-apartment Tower Three is delivered as the final stage.

If approved and delivered, the project would close out a redevelopment process that has been underway since the former brewery masterplan was approved in 2007, adding more than 2,600 student beds and apartments to a precinct already home to Swanston Central, the Barak Building, RMIT Design Hub and several large student accommodation developments.

&nbsp;

&nbsp;

Joel Robinson

SP Setia plans three-tower finale for Carlton’s former CUB precinct

Melbourne developer Lowe Living is seeking to add to its growing bayside apartment pipeline, filing plans for a boutique eight-residence development in tightly held Middle Park.

Lowe Living, which has built much of its development portfolio across Melbourne's affluent bayside and south-east suburbs, is behind the plans for the 730 sqm site at <a href="https://www.apartments.com.au/new-apartments/123-125-erskine-street-middle-park-vic-3206">123-125 Erskine Street</a>, just off Armstrong Street and within the Armstrong Street Neighbourhood Activity Centre.

The developer is seeking approval for a five-storey residential building above two basement levels, with just eight large-format apartments and 18 car spaces.

“This is a deliberately very different proposition for us,"&nbsp;Tim Lowe, Co-Founder of Lowe Living, said.

"Eight residences is exceptionally boutique, but that's precisely what this site calls for.

“There is a strong community in Middle Park and the surrounding suburbs who have spent decades building a life here. They no longer want the maintenance of a large period home, but they aren't prepared to compromise on space, quality or location. We think there is a real opportunity to capture that hyper local market. A site like this rarely comes to market.”

<img alt="Lowe " data-entity-type="file" data-entity-uuid="875fe572-0f14-4d90-9e11-55b28dd07731" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.42.49%E2%80%AFAM.png?VersionId=GDNQRv9BfpR9r1zkZ5UDyUM4ZvpIksut" />

The low-density proposal has been designed by Cera Stribley and is being progressed through the Victorian Government's Great Design Fast Track pathway, having already secured eligibility from the Minister for Planning.

The Office of the Victorian Government Architect supported its eligibility after finding the proposal demonstrated consistency with the program's seven design principles, while the project's financial feasibility has also been independently confirmed by Invest Victoria.

The project is targeting the downsizer market, with the planning documents describing the homes as larger-format residences and noting the two penthouses could otherwise have been configured as four separate apartments.

<img alt="Lowe 2" data-entity-type="file" data-entity-uuid="60ab0987-2da6-4175-adac-315dcf6053c6" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.15%E2%80%AFAM.png?VersionId=bOCPH0B2MFwlmaRW.TTCF9TzyifgVoQI" />

The site has dual frontage to Erskine Street and Canterbury Place and currently comprises a collection of commercial buildings used as offices, including a former heritage bakehouse, a former stable, a later gabled addition and a central courtyard.

It sits within the Commercial 1 Zone and the Armstrong Street Commercial Precinct heritage overlay, with the existing property classified as a contributory heritage place.

Heritage has subsequently played a significant role in Cera Stribley's design.

The front section of the former bakehouse facing Erskine Street will be retained, including its return walls, street-facing hipped roof and chimneys, while the Erskine Street façade and part of the western return wall of the former stable will also be incorporated into the new development.

Levels four and five will be set back five metres from the retained stable façade, while bricks removed through demolition are proposed to be salvaged and reused within the new building where possible.

<img alt="Lowe 3" data-entity-type="file" data-entity-uuid="e97927a9-a2de-4a0f-83b6-65451238abfa" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-08-21%20at%208.43.06%E2%80%AFAM.png?VersionId=VR44AChLrX9q1XPB9GvVQV.ALXXbe4gC" />

Rather than presenting as a single five-storey building to Erskine Street, Cera Stribley has broken the development into a series of distinct forms.

A three-storey infill element will sit between the retained bakehouse and stable façades, with the upper levels recessed behind the heritage fabric. Canterbury Place will similarly feature two three-storey podium forms, separated by a central pedestrian accessway, before the upper two levels step back from the street.

A pedestrian through-link will run through the centre of the project between Erskine Street and Canterbury Place, creating entrances from both sides of the site and introducing landscaping and communal areas through the ground plane.

Landscape architect Acre has designed planting across the ground level, private terraces and upper levels, including a feature canopy tree at level three and integrated planting and arbours across the level four terraces. Five existing Erskine Street trees are proposed to be retained.

Sustainability is also a significant component of the Great Design Fast Track application. The apartments are targeting an average eight-star NatHERS rating, with no residence below 6.5 stars, while the project has achieved a 75 per cent BESS score. Seven of the eight apartments are designed for cross-ventilation, with the remaining residence using mechanically assisted natural ventilation.

The plans also incorporate an 8kWp rooftop solar system, a 5,000-litre rainwater tank and infrastructure allowing future electric vehicle charging for every residence.

Lowe has a strong portfolio across Melbourne's blue-chip suburbs. They recently launched <a href="https://www.apartments.com.au/new-apartments/jardin-house-by-lowe-living-camberwell-335-camberwell-road-camberwell-vic-3124">Jardin House by Lowe Living</a> in Camberwell, their first development in the Stonnington LGA.

Lowe Living unveils Middle Park apartment development

Article summary

<ul data-end="888" data-start="289">
	<li data-end="442" data-section-id="8tsh6o" data-start="289">DVB Projects is preparing to launch its second Gold Coast apartment development, with demolition now underway at 137 Old Burleigh Road, Broadbeach.</li>
	<li data-end="573" data-section-id="1nyxl3e" data-start="443">The 34-level tower will comprise just 49 ultra-luxury residences, including half-floor, full-floor and penthouse apartments.</li>
	<li data-end="717" data-section-id="oiyimj" data-start="574">The launch follows strong demand at DVB's nearby Sea Glass project, which is more than 50 per cent sold and currently under construction.</li>
	<li data-end="888" data-section-id="epk9o9" data-start="718">The development adds to the transformation of Old Burleigh Road, with premium beachfront apartment projects continuing to reshape the tightly held Broadbeach strip.</li>
</ul>

<a href="https://www.apartments.com.au/developers/dvb-projects">DVB Projects</a> is preparing to launch its second Gold Coast apartment development, with demolition now underway on the Broadbeach site as the Sydney developer moves closer to bringing the ultra-luxury project to market.

The 34-level tower at <a href="https://www.apartments.com.au/new-apartments/137-old-burleigh-road-broadbeach-qld-4218">137 Old Burleigh Road</a> will comprise just 49 residences, ranging from half-floor apartments through to full-floor homes and a penthouse. The launch follows the strong sales performance of DVB's nearby Sea Glass development. More than half of the apartments at Sea Glass, on the other side of Broadbeach, have been snapped up, well ahead of its late 2027 completion

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="2944b4be-c84e-4b54-8dc1-c712e76704c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E02_Exterior_Street%20Level%20Entrance.jpg?VersionId=YoNig7pRdrE3HCue7sUj78LzJteeQf3H" />

The start of demolition at 137 Old Burleigh Road signals DVB Projects’ underlying confidence in the Gold Coast’s luxury beachside apartment sector.

“We see the Gold Coast as one of the most compelling lifestyle markets in Australia, particularly at the premium end where demand continues to deepen,” said Dean Brown, Managing Director of DVB.&nbsp;

“This project has been carefully designed to respond to that demand - delivering large-format residences with a level of quality, privacy and amenity that is still relatively rare in the apartment market on the beachside."

Brown says the site itself is "exceptional."

"Old Burleigh Road is one of the most tightly held beachfront strips, and opportunities to deliver a project of this scale and calibre in this location are extremely limited.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="398f377a-c037-455e-9250-0c5e0d84c35b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/I12_FF%20Balcony.jpg?VersionId=NwOiRWGMubR1c8wthuEfggklcja7al9." />

The project will comprise 40 half-floor residences of approximately 260 sqm, alongside eight full-floor residences spanning around 524 sqm.

A single penthouse will crown the building, featuring a private pool, barbecue area, indoor gym and dedicated entertaining spaces.

Residents will have access to a resort-style suite of amenities, including a 20-metre pool with daybeds, a gymnasium, hot and cold plunge pools, a sauna, and private residents’ lounge and dining facilities.

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="d1642bb0-9a66-4427-a022-dfc0988c6287" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/A02_Pool%20to%20View.jpg?VersionId=c0IXPyn_Gp_Kn3XCwzMrqIVkAdCEwVXP" />

Sales agent Todd Matheson, of <a href="https://www.apartments.com.au/project-marketer/pezet-matheson">Pezet Matheson</a>, which is marketing both 137 Old Burleigh Road and Sea Glass, said 137 Old Burleigh Road would address a clear gap in the market for genuine luxury products.

“There are very few opportunities on the Gold Coast where buyers can secure a residence of this size and quality in a new building,” Matheson said.

“What we’re seeing is a growing cohort of downsizers and interstate buyers who still want space - they’re not willing to compromise on living area, entertaining or finishes.

“This project has been designed with that buyer in mind. It offers the scale of a home, combined with the convenience and security of apartment living, in one of the coast’s most desirable positions.”

<img alt="DVB Projects to commence demolition on $320m Broadbeach luxury tower" data-entity-type="file" data-entity-uuid="59aae0ca-5639-4320-8aca-d0bf60f48e43" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/E01_Exterior%20Hero.jpg?VersionId=DS8Zfy2WtgUEtdfe0TEUuf1W1GfcZq8S" />

Located on a 1,156 sqm site one block from the beachfront, the development will replace an ageing walk-up building and is expected to contribute to the ongoing transformation of the Old Burleigh Road strip into one of the Gold Coast’s most prestigious residential corridors.

With the development moving into the delivery phase, 137 Old Burleigh Road is slated to hit the market later this year.

[smartcode_project_cta:default project_id=145141]

DVB Projects to launch second Broadbeach apartment tower as demolition commences

<a data-end="327" data-is-only-node="" data-start="250" href="https://www.apartments.com.au/developers/norus-projects" rel="noopener" target="_new">Norus Developments</a> has lodged plans for a new apartment development in Clayton that would add further momentum to the suburb's emerging Green Street corridor.

Plans have been lodged for the consolidated site at <a href="https://www.apartments.com.au/new-apartments/1359-1365-centre-road-clayton-vic-3168">1359-1365 Centre Road</a>, where Norus is seeking approval for 218 apartments across a 12-storey apartment building designed by <a href="https://www.apartments.com.au/architects/life-architecture-and-urban-design">Life Architecture</a>.

The proposal sits within the Clayton Major Activity Centre at the threshold of the planned Green Street corridor, a landscaped pedestrian connection intended to improve links through the precinct towards Clayton Railway Station.

The development would replace the site's existing collection of low-scale residential and commercial buildings with a single consolidated building, introducing significantly greater housing density to this part of Centre Road.

A retail tenancy is proposed at ground level to activate the Centre Road frontage, accompanied by transparent street interfaces and landscaping intended to create a more pedestrian-focused edge to the development.

<img alt="First look: Norus Developments plans landscape-led apartment project for Clayton’s emerging Green Street" data-entity-type="file" data-entity-uuid="0a5a763a-d9e9-4253-af2f-88008de27ebf" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Clayton%20a.png?VersionId=S2WJJbat1XVkZwB9SnYtygirXgWHiklX" />

The building has been designed with stepped massing and upper-level setbacks to manage its transition towards surrounding residential properties. The planning report describes the approach as one that integrates the building into the landscape rather than treating landscaping as a secondary element.

"A strong landscape and public realm strategy underpins the proposal," Urbis states in the planning report.

"Public benefits include an affordable housing contribution, a new pocket park, generous landscaped setbacks, deep soil planting and integrated Water Sensitive Urban Design."

The report adds that these elements are intended to create "a permeable, pedestrian-focused ground plane that enhances walkability, supports urban cooling and reinforces the emerging Green Street character."

Biophilic and passive design principles extend through the residential levels, with planting, daylight, natural ventilation and views towards landscaped areas forming part of the amenity strategy.

Parking would be concentrated away from the public realm, with 145 car spaces proposed from the rear laneway rather than dominating the Centre Road frontage.

The proposal follows an extensive pre-application process with the City of Monash. Three formal meetings were held between the project team and Council from December 2025 to March 2026, with the scheme evolving through several concept iterations before the current design was lodged.

The project arrives as Clayton prepares for substantial change around its established activity centre and the wider Suburban Rail Loop precinct. Its position on Centre Road places the development within an existing concentration of shops, services and public transport, while the Green Street connection is intended to strengthen pedestrian access towards Clayton Railway Station.

First look: Norus plans landscape-led apartment project for Clayton’s emerging Green Street

<a href="https://www.apartments.com.au/developers/gardner-vaughan-group">Gardner Vaughan Group</a> has officially commenced construction on Bronze on Chevron, celebrating the sod turning of its first-ever Gold Coast development and marking a significant milestone in the company's continued expansion across South East Queensland.&nbsp;

Following the successful delivery of premium residential developments throughout Brisbane and the Sunshine Coast, <a href="https://www.apartments.com.au/new-apartments/bronze-on-chevron-8-mawarra-street-chevron-island-qld-4217">Bronze on Chevron</a> represents Gardner Vaughan Group's entry into the Gold Coast market. Bronze will deliver 119 one, two, three and four-bedroom apartments above two ground-level retail tenancies.

[smartcode_project:default project_id=107520 project_image_fid=367193]

The recent sod turning ceremony was attended by Deputy Mayor Mark Hammel, President of the Surfers Paradise Surf Life Saving Club, Cassandra Sedgman, project consultants, purchasers, project partners and invited guests to celebrate the commencement of construction.&nbsp;

Gardner Vaughan Group Chief Executive Officer Simon Betteridge said Bronze on Chevron represented an exciting new chapter for the business.&nbsp;

"We've spent almost four decades building homes that respond to the way people want to live, and we're excited to bring that experience to <a href="https://www.apartments.com.au/developments/chevron-island-qld-4217">Chevron Island</a>," Betteridge said.

"Bronze on Chevron is particularly significant because it marks Gardner Vaughan Group's first development on the Gold Coast following many successful projects across Brisbane and the Sunshine Coast."

[smartcode_project:default project_id=107520 project_image_fid=367183]

Betteridge said the ground breaking is a proud moment for the&nbsp;team and their purchasers, who can now see their future homes beginning to take shape.&nbsp;

"As both developer and builder, we're able to oversee every aspect of the project from design through to construction, ensuring the quality and attention to detail Gardner Vaughan Group has become renowned for."&nbsp;

Designed by acclaimed architectural practice <a href="https://www.apartments.com.au/architects/cottee-parker-architects">Cottee Parker</a>, Bronze on Chevron has been thoughtfully designed to complement Chevron Island's evolving streetscape while embracing its relaxed coastal lifestyle.

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029.&nbsp;

[smartcode_project_cta:default project_id=107520]

The development will offer generous residences with refined interiors, premium finishes and resort-style amenities, with completion anticipated in early 2029

Gardner Vaughan Group breaks ground on first Gold Coast development, Bronze on Chevron

National Australia Bank (NAB) has brought forward the timing of the first RBA cash rate cut by three months.

NAB is now expecting a cut in February, in line with ANZ and Westpac, having initially thought a cut wouldn't come until May.

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB changed its call following the August monthly inflation figures that were released at the end of September, showing it had dropped to 2.7 per cent.

"The risk has been skewed to a first cut earlier in 2025, and today’s change acknowledges the balance of risks has likely shifted sufficiently for the RBA to feel comfortable cutting a little sooner than we earlier expected," NAB noted in its latest update.

They added that the cadence of the cuts may be faster than its central profile.

"Domestic inflation pressures are cooling, but only gradually, and we continue to expect the conditions for a cut will not be in place this year.

NAB believes the easing cycle will end at 3.1 per cent by early 2026, which is five cuts from the current 4.35 per cent cash rate.&nbsp;

CBA also thinks 3.1 per cent will mark the end of the cutting cycle, while Westpac is forecasting 3.35 per cent, and ANZ is the most pessimistic at 3.6 per cent, which would be just three interest rate cuts.

<h2>What would a rate cut in February look like for borrowers?</h2>

According to&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2vK2ujS77CHs9VRvSSXzLC" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.IVvjJ-2BPT0A8C3VxtqKc6e3bj5hBuw27WFEYqovsYs7kPsgFulYrdOzeP8gI7CybJOya3_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20hPXdLlPP9yD7DvFFDBM5yrTqxvcCiMfAsW1onD-2FcriL628eYdhNQE7bwzYrxcOYnmaYfRhGl-2FEHQ6eK2uQcLxs6Cbu6Dx0bYvpi5A6enmxMWU5TkcRYrP6Z8GbXZYtc5qSoKu6eWFBQR9K7fsjXwHMmby3D3X6Yx-2BxcDcdRruTG" target="_blank">Canstar</a>, if there is a cut in February, a borrower with a $600,000 loan today and 25 years remaining would see their monthly repayments drop by $92.&nbsp;

<table border="1" cellpadding="0" cellspacing="0">
	<tbody>
		<tr>
			<td colspan="3">
			Impact of 0.25% pt cut in February 2025
			</td>
		</tr>
		<tr>
			<td>
			Current loan size
			</td>
			<td>
			Drop in monthly repayment
			</td>
			<td>
			New monthly repayment
			</td>
		</tr>
		<tr>
			<td>
			$600,000
			</td>
			<td>
			-$92
			</td>
			<td>
			$3,907
			</td>
		</tr>
		<tr>
			<td>
			$750,000
			</td>
			<td>
			-$114
			</td>
			<td>
			$4,884
			</td>
		</tr>
		<tr>
			<td>
			$1M
			</td>
			<td>
			-$153
			</td>
			<td>
			$6,512
			</td>
		</tr>
		<tr>
			<td colspan="3">
			Source:&nbsp;<a data-saferedirecturl="https://www.google.com/url?q=https://link.mediaoutreach.meltwater.com/ls/click?upn%3Du001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL&amp;source=gmail&amp;ust=1727774368149000&amp;usg=AOvVaw2qVnp6oqATgqDUi2Frm22q" href="https://link.mediaoutreach.meltwater.com/ls/click?upn=u001.xWMOP9hChsvn-2BC9O-2FebBihXIZ4cEzbiuENdxm-2Bx3-2FYEEgYMhZlKWNj5Zzy1YZ56RuASD_RgrM7qq-2BfK-2FtAHeRBLv5Qrb-2Bii5fzjLeKcP4w-2FkNgJPXygpiRhVUan3WV3QEggcf617UC8Z60RjQJZAqx7PiO7FtVJQSn0D46Zc3iTVP0kAhTTzG51cPpa5hrqz1OkSA-2BiXAxUajQ686MTtiseWBIdMdknd83aB7cOVgXlVTeHCGf3-2BcMHwfvI8TYlkUovqEhn4dj0KXf2eJGpb9-2BBv20v2akwr6-2BqLyRrlEgkJ4J-2BCCyY0x189xEHZA4Ylf8c7ChBqNIkhmftZzoFuZKFn43pw3oJVg2o1gumrpdA-2B7MB-2FBtmL2rFCI-2FXORATQHySCLVOMg7Vywv-2BqnnQUAtDz6XkvpwxdHFXh70VwKazzhJsICilEYOvP4ju0sIfi5g6TL" target="_blank">www.canstar.com.au</a>. Starting rate is the RBA existing average owner-occupier variable rate of 6.36%. Assumes banks pass the cash rate cut on in full the month after the meeting.
			</td>
		</tr>
	</tbody>
</table>

Canstar Data Insights Director, Sally Tindall, says if core inflation continues to track in the right direction, or unemployment starts to accelerate significantly, we could well see a cash rate cut as early as February of next year.

“All four big banks now believe the RBA will be ready to cut the cash rate in just over four months’ time, if not before, in the case of CBA.

“However, the outlook for both inflation and unemployment is still highly uncertain. A couple of wobbly sets of inflation data could see the RBA holding for longer, particularly if unemployment remains relatively steady."

&nbsp;

Commonwealth Bank, the nation's largest lender, still thinks the first cut will come in December.

NAB bring forward first RBA cut to February 2025

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The purchase of a new   investment property that has just settled, like moving into your new home, is an exciting time. Yet gaining the most in tax deductions is often overlooked by ignoring the process of obtaining a quantity surveyor’s report. 
This article illustrates the importance of obtaining a quantity surveyor’s report shortly after settlement. 
For illustration, assume you have held an investment property for one full financial year. Your rental income and expenses may be as follows: 
Gross rental income: $25,000 
Less expenses 
Agents’ fees: $2,000
Insurance: $570
Interest: $32,000
Council rates: $,2500
Body corporate: $3,500
Water charges: $655 
Total expenses: $41,225 
Net cash deficit: $16,225 
So on a simple basis the tax savings on a cash basis is about $5,110.87 if you are on the 31.5% tax bracket, including the Medicare levy. 
Now if a quantity surveyor’s report is undertaken then the tax savings will increase to the investor, using the example above. 
Net cashflow deficit: $1,6225
Add
Depreciation – plant and equipment: $6,500
Qualifying building allowance: $3,500
So total deductions available: $26,225
For the same investor on a tax bracket of 31.5% the tax savings translate into $8,260.87 ( a net benefit of  $3,150).
Fees for obtaining a quantity surveyors report are tax deductible, and the exercise is usually done once only by the investor while he holds the property.
Now if you do a major renovation to an investment property it is common to ask  whether it is worth obtaining a quantity surveyor’s report.
The short answer is yes, as a quantity surveyor’s report is recognised by the ATO and is useful in the event of a tax audit.
A taxpayer making his own estimate is at risk of having is figures disallowed by the ATO.
So for peace of mind retaining a quantity surveyor to prepare a report on an investment property is worthwhile, and the tax savings generated over the life of the property are substantial.
 
Henry A. Ohana CPA is a tax accountant and agent specialising in rental property investors, residential and commercial at <a target="_blank" href="https://www.boutiqueaccounting.com.au/">Boutique Accounting</a>.
 
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hohana-X8ppunVgZ6

Use a quantity surveyor’s report to make the most of your depreciation claims

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In August 2003 the then federal treasurer Peter Costello gave an interview on 3AW with Derryn Hinch, and the subject was housing affordability, stamp duty, GST and the first-home owners’ scheme.
In part of the interview Derryn Hinch asked why the states had not, as he put it, backed off a bit on things like stamp duty: "That’s what I thought was going to happen.”
This was Peter Costello’s reply, which I think is worth posting in full: “yes, yes, no, what has surprised us is that the principal reason why house prices went up was that interest rates came down. As interest rates came down, we are now at 30-year lows, and you know, we have been running our economic policy to get low interest rates. As interest rates came down, because they were lower, people could afford to buy more expensive properties. And what that did is that it kicked a whole lot of houses that were previously being taxed at moderate stamp duty rates, $6,000 into higher brackets and they are now being taxed at $16,000 or $17,000 for the average house under stamp duty. We weren’t expecting that the states would take this enormous windfall out of stamp duty, but they did. In fact, we introduced, we the Commonwealth government introduced the first-home owners’ scheme, to give a grant of $7,000 to people who are buying their first home. We pointed out to the states that this would bring new people into the market, there would be more house purchases, that the States as a consequence would get more stamp duty and would they please look at that to try and relieve some stamp duty for those first-home buyers. But none of them did.”
Hinch: “Yeah, and are not expected to?”
Costello: “Well, you know, so we have a situation now, this is the frustrating thing, we have a first-home owners’ scheme whereby you’re given $7,000 to buy your first home and the stamp duty is $16,000. So what do they do with their first-home owners’ grant? Go and try and pay off some of their state stamp duty. It is a pretty frustrating merry-go-round out there.”
END.
My point, without favouritism to Costello, even if it appears to be a long quote is that this debate has now been running on for almost a decade. It is an area that various tax reviews have looked at; it is an area that many other government and industry reports have also examined.
And with such a sort fall in housing supply upon us and with housing now less affordable than ever, do you think the debate has been resolved, or even started a move out of the too hard basket?
However having said that, clearly incentives in the housing market are not only confined to stamp duty and to government policy and I will continue this general topic later and look at what and how incentives are used directly by developers. I think it’s an area that is far more clear cut, but an important part of project marketing.
Peter Chittenden is managing director for residential of <a target="_blank" href="https://www.colliers.com.au/Colliers%20Corporate/Residential.aspx">Colliers International</a>
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pchittenden-eLqUUC8TWW

Stamp duty debate has been running for almost a decade

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Property-related taxes remain the largest source of revenue for local and state governments. Despite the deteriorating property market conditions in 2010-11 income from property taxes rose to new highs over the 2010-11 financial year.
Over the 2010-11 financial year, state and local governments received more than $33 billion in taxes from property-related channels, which was a record amount. Property-related taxes accounted for 47.3% of all state and local government tax revenue, down from 48.2% over the previous financial year. Despite the softer housing market conditions and ongoing weakness in the commercial property sector, total property related tax revenue increased by 4.6% over the year. This was following a record increase of 14.3% over the 2009-10 financial year.
It is somewhat surprising to see that the total value of property related taxation revenue increased over the year, especially when you consider that the nation's largest asset class (residential property) recorded weaker conditions. Our data shows that the total value of residential property transactions in 2010-11 fell by 17% compared with the previous financial year. Data also shows that over the financial year capital city home values fell by 1.4% and transaction volumes for homes were 20% lower than over the previous year. So how did state and local government possibly lift revenue?
Click to enlarge
<a href="/images/stories/rpapril231.gif" rel="shadowbox" title="Click to enlarge"><img src="/images/stories/rpapril231thumb.gif"></a>
Firstly, it is important to note that the second graph highlights the different categories of tax revenue, their total value and their proportion of all state and local government property related tax revenue. Of each category of taxation there are really three big ticket areas: municipal rates, stamp duty on conveyances and land taxes. These three categories accounted for 93% of property tax revenue last financial year. Over the financial year, all three categories rose with municipal rates rising by the greatest amount (6.9%) followed by land taxes (4.1%) and a relatively minor increase in stamp duty on conveyances (0.3%).
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/rpapril232.jpg"><img src="/images/stories/rpapril232thumb.jpg"></a>
Given that both property values and transaction volumes have fallen, it is clear that stamp duty revenue has felt the effects of the soft housing market conditions. In fact, stamp duty has only risen over the year due to increases in the two most populous states (New South Wales and Victoria). In each other state stamp duty revenue has fallen, and in 2010-11 it was 14.1% lower than its record level of $14.3 billion in 2007-08.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/rpapril233.gif"><img src="/images/stories/rpapril233thumb.gif"></a>
Increases in land tax charges and council rates have been the main drivers of growth in tax revenue over the last financial year. Considering that since the end of the 2010-11 financial year property values and transaction volumes have continued to fall, we would expect that in order to grow tax revenue state and local governments may be looking to again increase land tax and municipal rates as there is likely to be limited (if any) growth in stamp duty revenue.
Across each state and territory there were quite varied results in terms of changes to taxation revenue relating to property. The Australian Capital Territory (14.2%) and Victoria (10.7%) recorded the largest increases in property tax collection. On the other hand, the amount of property related tax collected fell over the year in: Western Australia and the Northern Territory (both -9.6%) and in Tasmania (-1.9%).
Across the land tax and municipal rates categories, the amount of land tax collected rose by the greatest amount in Victoria (18.7%) and Australian Capital Territory (12.5%) and fell by the greatest amount in Tasmania (-17.6%) and Western Australia (-0.6%). Municipal rate collection rose by the greatest amount in Queensland (8.6%) and Victoria (8.3%) and recorded the lowest increases in the Northern Territory (3.6%) and New South Wales (4.2%).
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/rpapril234.gif"><img src="/images/stories/rpapril234thumb.gif"></a>
Overall, we would expect that the rate of growth in property related tax revenues to remain fairly limited over the coming year. Property tax is clearly the most important source of revenue for state and local governments and as a result it is likely that these governments will look to make adjustments to grow revenue. Most notably, we already know that rates have increased over the year and some changes have been made to land tax calculations. CPI data from the ABS shows that over the first two quarters of the 2011-12 financial year, the property rates and charges housing sub-category has increased by 5.2% across the capital cities. We have also seen stamp duty concessions on the principal place of residence removed by the previous Labor Government in Queensland which was obviously an attempt to capture more revenue.
Considering the soft market conditions over the financial year to date, look for state and local governments to look for other ways to compensate the falls in property related taxes. Potentially this means higher rates of stamp duty or charging a greater amount of land tax / municipal rates.
Cameron Kusher is senior research analyst at <a href="https://www.rpdata.com.au/" target="_blank">RP Data</a>.
This article originally appeared on <a href="https://www.smartcompany.com.au/index.php" target="_blank">SmartCompany</a>.
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ckusher-ujnxiKuFQs

Property taxes continue to grow even as house prices slide: Cameron Kusher

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The RBA helpfully published the latest major bank net interest margins (NIMs) in its Statement of Monetary Policy, which, I should note, I have only glanced at reluctantly (more on this later). What stands out is that ANZ has the widest margin between the cost of its funding and the price of its products. This is not news in and of itself – it has been the case for several years.
So what will ANZ do when it makes its now controversial independent interest rate decision on the second Friday of the month? On the two previous occasions it unilaterally jacked up rates (in February and April), and ANZ only increased them by six basis points. Following the April increase, its standard variable rate loan was actually on par with CBA's, but higher than NAB's.
We know ANZ’s overall NIMs are much wider than Commonwealth Bank’s (see the chart below), although this probably reflects more corporate lending and relatively greater offshore banking exposures. Thus the wider NIM also compensates it for taking on higher risk.
<img src="/images/stories/may7.gif">
ANZ has copped flak for its attempts to decouple from the RBA, and by waiting until this Friday it will likely be the last bank not to pass on the full 50-basis-point cut. There is a subtle margin play here. By not announcing its rate decisions until the second Friday of the month, and then delaying, typically, the actual change in its rates another week (i.e., the change does not normally take effect for another seven days), ANZ can benefit from lower short-term funding costs while waiting as long as possible to reduce its product prices. That is, it can lock in wider margins for longer.
If I were ANZ I would want to win back some PR points after the beatings I have copped following the February and April announcements. So I would pass on more than any other major bank, probably around 41 to 43 basis points if I had to pick a number. A 42-basis-point pass-through would give me a one basis point lower SVR loan than CBA, which enables me to argue that I am the second cheapest major.
Because it has passed on more of the RBA's cut than any other major, this should, in principle, be positive for the brand. And it will be the last bank to report doing so. The beauty for ANZ is that it can then chisel back a few basis points of margin if it needs to over the coming months based on its independent pricing model. Assuming unchanged RBA rates, I would make these variations so small as to not warrant material media attention (i.e., a basis point or two here and there). But, collectively, they mean a great deal to ANZ's bottom line.
Christopher Joye is a leading financial economist and a director of <a href="https://www.ybr.com.au/savings/index.cfm" target="_blank">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
 
 
 
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chrisjoye-JYhJsTrNRC

The wisdom behind ANZ's rate cut delay: Christopher Joye

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The cut in interest rates last week was a good story for mortgage holders, but now what for savers? With the cash rate at 3.75%, what do Australia’s retirees and near-retiring workers do? The 0.5% rate cut is money saved for mortgage holders, but it’s less income for those relying on cash deposits, term deposits and fixed-income products. And in this country savers outnumber mortgage holders by almost three to one.
Savers have some thinking to do, especially if we have a minor recession and the Reserve Bank cuts the cash rate again to kick start economic activity.
The banks are in the process of adjusting down their mortgage rates, which will take effect over the next few weeks, pushing down their cash and term deposit rates, which will happen immediately.
For those in retirement or close to it, shares and property carry liquidity and market risk that they’d rather not take on.
For this large cohort of people, the choices come down to putting your money in a transaction account, a designated high-interest savings account or a term deposit.
Let’s start with the last one. As the banks cut their deposit rates, you’ll notice more movement in some types of term deposit than others.
The average 12-month TD rate at banks will drop to around 5.25% and the 30- and 60-day TD rates will on average drop to around 5% or less.
Right now the sweet spot is going to be the 90- and 180-day term deposits, which will settle at at around 5.3 to 5.5% in the next two weeks.
Banks have a need of intermediate funding right now, so they will bid for your money by making offers on 90- and 180-day term deposits as attractive as they can.
However, it’s always worth looking around for alternative deposit opportunities, such as something like Yellow Brick Road’s Smarter Money trust, which is returning about 6% after fees. Your goal should be to have a spread of investments to diversify your risk.
If you’re not comfortable with shutting your money away for a set term, you’ll either be looking at keeping your money in a transaction account, where you normally get zero per cent, or an online savings account where the 12-month average return is around 4.5%, perhaps over 5%.
I make two points about these options. Firstly, earning zero per cent in a transaction account is not smart because with inflation running at around 2.5%, you’re going backwards.
Secondly, when investigating “bonus interest” offers at an online savings account, the institution may offer you between 5.5% and 6%, but the rate will apply for three or four months, at which point it drops to around 4.5%.
There are going to be some good deals out there in the next month. Your job is to be informed not only about the market, but also about your own needs.
Mark Bouris is executive chairman of <a href="https://www.ybr.com.au/" target="_blank">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance. He runs a <a target="_blank" href="https://twitter.com/#!/markbouris">Q&amp;A session on Twitter</a> every Monday afternoon at 4pm for small business owners using the hashtag #bizQandA.
 
 
 
 
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mbouris-tauSvXGAM2

Rate cut good for borrowers, but savers have some thinking to do

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Lower RBA inflation forecasting has prompted Bill Evans, the Westpac chief economist, to conclude today’s RBA statement of monetary policy (SoMP) makes the prospect of earlier rates cuts than he’d anticipated.
“The case for another rate cut has already been made, and every board meeting through the course of this year must be seen to be very much alive,” Evans says.
“We had expected that the 50 bp cut would be in two tranches in August and November.
“This RBA statement now indicates to us that these cuts can be expected earlier by the end of the September quarter, being concentrated in that July–September window.”
Savanth Sebastian, an economist at CommSec noted the door had been left open for further rate cuts with CommSec pencilling in a quarter per cent rate cut in August.
"However the focus on inflation has now shifted from prices to cost pressures," Savanth Sebastian noted adding that subdued wage costs and/or an improvement in productivity will ensure that the Reserve Bank has scope to comfortably cut rates further in coming months, if it is deemed necessary to stimulate activity.
Evans says the monetary policy statements make it quite clear that the case for another rate cut has already been made.
“In the February SoMP the Bank forecast underlying inflation in the year to December 2012 at 2.5%.
“That has now been reduced to 2%.
“Forecasts to December 2013 appear to be broadly unchanged with 2.5% being replaced by 2–3%.
“The forecast for June 2014 has been reduced from 2.5–3% to 2–3%.
“We find these forecast revisions significant since it is very rare that a central bank would forecast inflation at the bottom of the band over the course of the current year.
“On our figuring the bank is assuming a print for underlying inflation in the second quarter of 0.7% falling to an average of 0.5% in the third and fourth quarters.
“The other significant development is that there is no longer concern that inflation will necessarily reach the top half of the 2 to 3% band in the year to June 2014.”
“The bank’s decision to forecast that underlying inflation (excluding carbon price) will remain at the bottom of the 2 to 3% band over the course of 2012 is a very strong signal that it retains an easing bias.
“Since 2005 when the Bank began producing inflation and growth forecasts there have only been two SoMPs when it has forecast inflation to be at the bottom or below the band over the next year or so.
“That was in May and August 2009 in the aftermath of the global financial crisis,” Evans says.
“Admittedly, the cash rate had bottomed out by then but cuts totalling 425bps had been rapidly delivered as the economy lost momentum.
“In this current episode the bank's growth forecasts are more upbeat but in recognising that inflation will remain at the bottom of the band (despite trend growth) the signal is clear that there is ample scope for further monetary easing,” Evans says.
 
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jchancellor-FAypfDUnLy

Next RBA rate cut could be as early as July after inflation forecast revision: Bill Evans

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Westpac has lowered its home loan rates by 0.37 of a percentage point, less than the Reserve Bank of Australia’s supersized official 50-basis-point cash rate reduction on Tuesday.
Westpac's new mortgage rate will be 7.09%.
The cut is less than <a target="_blank" href="/news">Commonwealth Bank</a>, but more than <a target="_blank" href="https://www.propertyobserver.com.au/overseas/nab-first-of-big-four-banks-to-cut-rates-with-032-percentage-point-cut/2012050254522">NAB</a>. ANZ customers will have to wait until next Friday to learn what the bank will do.
 
 
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Westpac cuts standard variable rate by 0.37 percentage points

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I often speak with investors, and the question about how much deposit should they put into a property purchase and how much cash they should keep as a buffer often comes up in the discussions. What many investors fail to realise is the contribution that mortgage insurance can make to the creation of wealth. Most just see it as another expense.
So what is mortgage insurance and why and when should you consider using it?
Mortgage insurance is a one-off charge that is paid by the property purchasers who borrow more than 80% of the purchase price in the case of full-doc loans and 60% in many cases on low-doc loans.
It can be the valuable tool that can help you achieve your goals much sooner.
Consider the comment I often hear from property investors: “Why would you want to incur an extra cost?” As a result most try to avoid paying mortgage insurance, which they view as an impost by the lender.
What some investors fail to recognise is that in some instance it can be a very valuable tool that gives them more leverage and enables them to grow their asset base faster.
For example, two investors have the same $100,000 to use a deposit but each approaches mortgage insurance slightly differently:
Investor one wants to avoid paying mortgage insurance and takes a conservative approach purchasing a property for $400,000. With a loan at an 80% LVR or $320,000 the $100,000 covers the 20% or $80,000 deposit + $20,000 to cover stamp duty, legals, etc.
Investor two take a different approach and is happy to gear up to 90% and pay the mortgage insurance costs.  This allows for the purchase of two properties at $300,000 each. Now the $100,000 deposit covers the 10% or $60,000 deposit + $30,000 to cover stamp duty, legal etc, and leaves the investor a buffer of $10,000 in cash. To be fair it has cost 1.22% of the loan amount of $540,000 or $6,588 in mortgage insurance to secure the extra funds. This is explained in the table below.
However, if in the first year of ownership those properties go up by 5% the mortgage insurance has allowed the investor to purchase an additional $200,000 in property that has now increased in value by an additional $10,000, which is more than enough to offset the cost of the initial premium.
So how does lenders mortgage insurance (LMI) work? Firstly is should not be mistaken for mortgage protection Insurance, which covers the loan repayments on your mortgage in the event of death, sickness, unemployment or disability. LMI protects the lender against a loss should you default on your loan. For example if the security property is required to be sold as a result of the default, the net proceeds of the sale may not always cover the full balance outstanding on the loan. In this case, the lender is entitled to make an insurance claim for the reimbursement of any shortfall, calculated in accordance with the terms of the insurance policy. The mortgage insurance companies will then generally pursue the borrower to recover these funds.
With a normal 80% lend, it is fairly unlikely that there will be shortfall after the sale of the property and as a result most lenders will take on this risk. However as the loan-to-value ratio (LVR) rises, the borrower is required to contribute less deposit. The possibility of the property being sold at mortgagee sale and the proceeds not being enough to cover the loan also rises. As a result the lenders look to avoid this risk by insuring the loan against this possibility.
As the risk is now taken by the Mortgage Insurance company they also look to match the insurance premium to the level of risk. As a result mortgage insurance is charged on a sliding scale so for example if your loan to value ratio (LVR) is 84% you will pay less mortgage insurance than if you are borrowing 95%.
For example on a $300,000 loan you could expect something like the following scale.
<table style="width: 470px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="205" valign="top">
LVR Band
</td>
<td width="205" valign="top">
Premium as a percentage
</td>
<td width="205" valign="top">
Approximate Cost
</td>
</tr>
<tr>
<td width="205" valign="top">
80.01% to 82%
</td>
<td width="205" valign="top">
0.41%
</td>
<td width="205" valign="top">
$1,230
</td>
</tr>
<tr>
<td width="205" valign="top">
82.01% to 84%
</td>
<td width="205" valign="top">
0.61%
</td>
<td width="205" valign="top">
$1,830
</td>
</tr>
<tr>
<td width="205" valign="top">
86.01% to 88%
</td>
<td width="205" valign="top">
0.91%
</td>
<td width="205" valign="top">
$2,730
</td>
</tr>
<tr>
<td width="205" valign="top">
88.01% to 90%
</td>
<td width="205" valign="top">
1.22%
</td>
<td width="205" valign="top">
$3,660
</td>
</tr>
<tr>
<td width="205" valign="top">
90.01% to 92%
</td>
<td width="205" valign="top">
1.68%
</td>
<td width="205" valign="top">
$5,040
</td>
</tr>
<tr>
<td width="205" valign="top">
92.01% to 94%
</td>
<td width="205" valign="top">
1.89%
</td>
<td width="205" valign="top">
$5,670
</td>
</tr>
<tr>
<td width="205" valign="top">
94.01% to 95%
</td>
<td width="205" valign="top">
2.10%
</td>
<td width="205" valign="top">
$6,300
</td>
</tr>
</tbody></table>
 
Also because the frequency of defaults can vary depending on the lender it is also worth noting that the amount charged can vary significantly from lender to lender, even given the same loan-to-value ratio, so it can pay to shop around.
Some lenders also pay a part of the mortgage insurance costs to a point and some, like Westpac, CBA and ING, have their own mortgage insurance for some loans. Some lenders even switch between mortgage insurers depending on who has the lower cost premium. So if you are going to go down this track it is important to speak with your mortgage broker about which lender is best for you circumstance.
So while at first glance mortgage insurance can appear to be an unnecessary expense charged by the lenders. The plain fact is that avoidance of LMI at all costs can be a false economy, which ultimately curbs the acquisition of further growth assets. If you are truly treating your property investing as a business it can be seen as just another cost of doing business. So if you are one of those investors who have resented LMI in the past, take another look. It could prove to be a valuable tool that can help you achieve your goals much sooner than you thought.
Albertus Waldron is finance strategist and partner at<a target="_blank" href="https://www.chan-naylor.com.au/"> Chan &amp; Naylor</a>
 
 
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awaldron-dVhPXocinv

How buying lenders mortgage insurance can allow you to grow your property assets faster

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CUA, the customer-owned financial institution, will cut its variable home loan to 6.47% from Wednesday, May 9.
It represents a cut of just 25 basis points from its 6.72% rate, but is still a 50 basis point discount to the current average of the major banks after two of the big four (<a target="_blank" href="https://www.propertyobserver.com.au/overseas/nab-first-of-big-four-banks-to-cut-rates-with-032-percentage-point-cut/2012050254522">NAB </a>and <a target="_blank" href="/news">Commonwealth Bank</a>) have made their announcements, CUA notes. 
The CUA claim will need to be adjusted after tomorrow's <a target="_blank" href="/news">Westpac announcement</a> and then again after ANZ makes its move next Friday.
CUA also announced it will cut its three-year fixed rate to 5.89%.
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CUA drops rates by 25 basis points but still much cheaper than the big banks

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Hysterical housing doomsayers got very excited by the delay of Genworth Australia’s IPO on the back of a modest first-quarter loss. It was said by some that this might be the “canary in the coalmine” and presage deep gloom for Australia’s much-maligned housing market.
To compound matters, Moody’s Australia, which has occasionally expressed reservations about local housing valuations, promptly placed the company on “ratings watch negative”.
Unfortunately for those salivating at the prospect of an Aussie housing blow up, Genworth’s first-quarter results merely reveal a company prudently building internal reserves and cleaning up a backlog of claims. They show that the share of Genworth’s bad loans actually declined between December 2011 and March 2012. I will say that again: delinquencies fel l— they did not rise — after a spike following the first quarter east coast floods (and a double-hike in lending rates at the end of the preceding year).
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The results highlight that this is an Australian business with virtually no debt and significant capital above and beyond that which is required by its regulator, APRA. In recognition of this, Standard &amp; Poor’s yesterday announced that it was actually “affirming our financial strength and issuer credit ratings on Genworth Australia at 'AA-'” with a “stable” outlook.
Moody’s move nevertheless has broader ramifications for Australia’s financial system. As Sydney University’s Dr Elvis Jarnecic explained in a thoughtful column earlier in the week, the two duopoly lenders mortgage loss insurers (LMIs) in Australia, QBE LMI and Genworth Australia, are, relatively speaking, better capitalized than the major banks. They have stand-alone S&amp;P ratings of “AA-“ in comparison to the majors’ single “A” stand-alone ratings, and possess arguably significantly lower catastrophic risk. (Recall that the four majors alone amongst all banks get a “two notch” ratings upgrade to “AA-“ because S&amp;P assume they will get a taxpayer bailout in a crisis.) And in contrast to the majors, they have one business, focused on one relatively easy-to-understand industry: housing.
More importantly in the case of Genworth Australia, it effectively has no leverage, with incredibly low circa 4% gearing that has been mostly generated by APRA requirements that Genworth Australia issue bonds. In a recent report, S&amp;P assessed that Genworth Australia had about $3.3 billion of total capital excluding its bonds, and tier one capital well in excess of what is mandated by APRA. The only real link to Genworth Australia’s struggling parent is through reinsurance contracts that cover excess losses. However, in giving Genworth its coveted AA- rating, S&amp;P assumes the parent’s reinsurance is of zero value. And the parent only provides a minority of Genworth Australia’s reinsurance with at least 13 other reinsurers used. After reviewing the March quarter results, S&amp;P concluded:
“As at March 31, 2012, the company's A$2 billion of total shareholders’ equity translated to a very strong risk-based Standard &amp; Poor's capital model score at the 'AA' category level, and a regulatory multiple of 1.53x. We expect low credit growth in the Australian mortgage market to allow the company to build up excess capital over the year to maintain its very strong capital metrics and increase capacity to issue dividends to shareholders.”
Now contrast this with a major bank. The banks are typically geared 15 to 20 times their shareholders’ equity. They face the risk of retail depositors withdrawing their money via a “bank run”. They deal with the periodic hazard of wholesale funders not “rolling over” their institutional bonds.
So they confront two tremendous funding risks that are simply not problems for the Aussie LMIs. Yet to make the banks’ business models even more precarious, they run large “asset-liability mismatches”, which basically means that the average life of their funding (i.e., retail deposits and wholesale bonds) is significantly less than the average life of the loans they make (e.g., home loans). Unless they can guarantee access to future liquidity, they risk trading insolvent. This is exactly why the RBA lends to the banks, and has developed a generous “committed liquidity facility” to assist them comply with the new global banking regulations known as “BASEL III”.
Beyond these structural funding vulnerabilities, the major banks also take on a much more diverse (yet correlated) array of credit risks. Whereas the LMIs only supply insurance for the purposes of protecting defaults against secured, full recourse home loans, the major banks also lend to unsecured individuals, small businesses, corporate borrowers, and commercial real estate owners. These four categories of credit have historically had much higher default rates than fully secured, residential home loans, as the banks themselves have been keen to point out.
Some argue that this gives a bank the benefit of more “diversified” earnings. This is true during the “good times”. But the only reason diversification is regarded as being valuable from a risk perspective is because it is assumed to afford protection during the “bad times”.
Contextualised against Australia’s two LMIs, the major banks’ exposures to personal, corporate, and commercial property credits have historically generated much more pro-cyclical and volatile earnings, and amplified the risk of catastrophic loss.
This assessment was clearly borne out during the 1991 recession and the more recent GFC where the vast bulk of major bank losses crystallized in their non-housing credit portfolios.
So what did Genworth Australia’s first-quarter financial results actually reveal? Was it a harbinger of housing Armageddon? As it turned out, the 90-day default rate across its 1.4 million insured home loans actually declined slightly from an already low 0.55% to 0.54% between the December and March quarters. This compares to the Australia-wide 90 day default rate of 0.6% documented by the RBA at the end of December 2011.
As a general observation, Genworth Australia’s lower-than-industry-average default rate is somewhat surprising giving LMI is normally only applied to borrowers with loan-to-value ratios greater than 80%. Having said that, Genworth Australia’s average LVR is only around 63%, in part because one of its main insurance activities is covering entire loan portfolios that comprise many lower LVR borrowers.
The modest first-quarter loss of -$21 million was primarily driven by a very conservative increase in reserves (+$53 million) in anticipation of faster foreclosures by banks cleaning up a backlog of aged arrears. This was reflected by a doubling in paid claims in Q1 to $69 million from $32 million in Q4 despite the fact that delinquencies declined over this period. S&amp;P comments:
“Genworth Australia reported a loss ratio of 154% for the first quarter of 2012--significantly exceeding the prior quarter's loss ratio of 46%...The company cited reserve strengthening...for the spike in the loss ratio, driven by actions by lenders--in partnership with Genworth Australia--accelerating claims to address aged arrears in late 2011. This resulted in an above-average volume of claims processed in the first quarter of 2012, which was compounded by continued pressure from regions and sub-segments of the book that we previously highlighted as weaknesses. Many of the aged arrears were concentrated in tourism-reliant parts of Queensland…that have been negatively affected by the strong Australian dollar. In addition, Genworth Australia cited ongoing stress from sub-segments of the 2007 and 2008 books--small business owners and self-employed borrowers--which were written at the peak of the origination and property cycles. The impact of the significant reserve strengthening on bottom line results was largely offset by strong investment earnings.”
Looking ahead, we believe this should be a cyclically favourable environment for the two Australian LMIs: stabilising house prices, a large decline in interest rates and, therefore, material improvements in affordability, historically low unemployment, and (likely) declining default rates.
On this note, a blogger for the Sydney Morning Herald dismissed the RBA’s recent report of a 0.1% decline in Australia’s 90 day default rate in the final quarter of 2011, which, incidentally, was also confirmed by Genworth’s data. He seemed confused by the seemingly small 0.1% number. In isolation, this self-evidently sounds tiny. But relative to the previous level of 0.7%, this actually represents a 14% decline in delinquencies.
We believe housing conditions will continue to improve as the year passes, and 2012 will be another very profitable one for Australia’s LMIs. Moody’s may downgrade Genworth, but if it does so one would think it will also be downgrading QBE LMI and the major banks.
 
Christopher Joye is a leading financial economist and a director of <a target="_blank" href="https://www.ybr.com.au/savings/index.cfm">Yellow Brick Road Funds Management</a> and Rismark. The author may have an economic interest in any of the items discussed in this article. These are the author’s personal views and do not represent the opinions of any other individual or institution. This material is not intended to provide, and should not be relied upon for, investment advice or recommendations.
 
 
 
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