A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.

The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.

The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.

The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.

Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.

"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.

"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."

<img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" />

Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.

Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.

Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.

"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.

"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."

Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.

Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.

Joel Robinson

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

The long-planned transformation of Brisbane's historic Shafston Estate has taken another major step, with Capella Hotel Group announced as the luxury hospitality partner behind what will become Brisbane's first branded residences.

The project, to be known as Capella Residences Brisbane, is being delivered by Verso Projects at the landmark Kangaroo Point riverfront estate, with completion targeted for 2029.

The announcement follows a series of planning changes to the project over recent years. The site was originally approved in 2023 for a 15-level, 37-apartment development designed by Rothelowman for Burgundy Group before Verso Projects took over the 10,070 sqm riverfront holding and lodged revised plans with Kerry Hill Architects to increase the development to a 25-level tower with 51 apartments.

The latest announcement confirms Capella Hotel Group will bring its branded residential offering to the project, marking just the second Capella Residences development globally after Seoul, and the group's first branded residential project in Australia.

The <a href="https://www.apartments.com.au/new-apartments/23-castlebar-street-kangaroo-point-qld-4169">Castlebar Street development</a> will centre around the restoration of the heritage-listed Shafston House, one of Brisbane's oldest residences, originally constructed in 1851 by Reverend Robert Creyke as a single-storey cottage known as Ravenscott.

<img alt="Capella" data-entity-type="file" data-entity-uuid="2b9f4ce5-638f-4d6b-8082-3ca7e4b75fca" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-09%20at%207.20.41%E2%80%AFAM.png?VersionId=f7aeqsW_DzOJI4FymWb3lD8NptSfsP7q" />

Capella said the project aligns with its focus on heritage-led developments, with the Brisbane estate combining the restored historic residence with a new luxury apartment tower and hospitality-inspired resident amenities.

Residents will have access to the Capella Living Room, a concierge-led communal space inspired by the group's luxury hotels, alongside landscaped gardens, six swimming pools, wellness and recreation facilities.

The broader estate will also include two riverfront homes, a six-berth private marina, porte cochère arrival experience, secure basement parking and a new section of public riverwalk along the Brisbane River frontage.

The heritage Postal Depot Building will also be retained and repurposed as a guest house, in line with the revised development plans.

The project represents another evolution for the site, which Kerry Hill Architects previously described as a rare opportunity to restore one of Brisbane's most significant heritage estates while creating a new benchmark for apartment living.

"The Shafston Estate provides a once-in-a-generation opportunity to restore one of Brisbane's finest heritage precincts and to reinstate residential use as a unique site perched on the edge of Kangaroo Point," Kerry Hill Architects said in its Urban Context Report accompanying the planning submission.

"The project will celebrate excellence in sub-tropical residential design, setting a new benchmark for vertical living in Brisbane."

Verso Projects, which now has an $8.5 billion development pipeline spanning more than 6,000 dwellings across apartments, townhouses, retail and commercial projects, said the partnership with Capella would elevate the development beyond a traditional residential project.

"We feel honoured to be restoring Shafston Estate to its former glory, elevating it to new heights of luxury and excellence underpinned by Capella's distinctive service ethos and design philosophy, and making it a standout landmark in Brisbane," Verso Projects CEO Steve Laffey said.

"By partnering with Capella, globally recognised for its refined approach to luxury hospitality and deep respect for cultural and historical context, we will elevate this project beyond a residential offering into a world-class destination."

Capella Hotel Group President Roland Fasel said Brisbane's emergence as a global city made it the right location for the company's Australian residential debut.

"Brisbane is a city on the cusp of something remarkable, and Capella Residences is our commitment to being part of that story," Fasel said.

"The Capella residential experience is more than luxury. It is about a sense of belonging to a place with deep meaning."

Private appointments have now opened for the project, with a display suite expected to open in late 2026 ahead of the planned 2029 completion.

Capella to launch Brisbane's first branded residences at Shafston House, Kangaroo Point

Lewis Land's latest apartment release within its <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan is targeting one of the Gold Coast's fastest-growing buyer groups, with almost a third of apartments at Solis priced below $1 million.

The seven-storey building at Biggera Waters will comprise 91 apartments, including 24 one-bedroom residences starting from $778,000, a price point Lewis Land says is aimed squarely at first home buyers struggling to enter the Gold Coast market.

<img alt="Harbour Shires" data-entity-type="file" data-entity-uuid="e7486e37-22f6-4c92-b212-9b0622070b8f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.34%E2%80%AFAM.png?VersionId=W8MJwJUCf6HkIyl_EVSksnd.QI6MZryY" />

<a href="https://www.apartments.com.au/developers/lewis-land-group">Lewis Land</a> Head of Development Michael Long said the developer deliberately allocated a significant proportion of the project to more affordable apartment types.

"First home buyers have been priced out of many parts of the Gold Coast, and we saw a clear opportunity to address this and play our part in a longer-term housing solution," Long said.

"That's why 24 of the 91 apartments being delivered at Solis have been designed and priced for the city's next generation of homeowners, quality one-bedroom apartments, half of which include an additional multipurpose room to maximise space and flexibility.

"This approach places 30 per cent of apartments in Solis under $1 million, and with close proximity to Harbour Town's future light rail extension connecting residents to the city's major employment and knowledge hubs, it's a win for buyers looking to secure their first property."

<img alt="Sores" data-entity-type="file" data-entity-uuid="550526d3-73ba-4710-9739-c5f4294a30ef" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.29%E2%80%AFAM.png?VersionId=cQQdXHt9wS0UXwZEm5Py5bH_3kAmzyhu" />

Designed by BDA Architecture, Solis will deliver a mix of one, two and three-bedroom apartments, with residences ranging up to 232 sqm. Apartments feature generous balconies and contemporary finishes, while residents will have access to Harbour Shores' lagoon pool, clubhouse, tennis court, gym, yoga studio and sauna.

The focus on first home buyers resonated with purchaser Holly Humphreys, who said she and her boyfriend spent more than a year searching for their first property before shifting their attention from houses to apartments.

"We fell in love with the first house we bid on and got our hopes up, but after repeated knockbacks we learned not to get too attached," Humphreys said.

"We offered at the high end of price guides, but sales kept going even higher. That's where we really struggled and we needed to re-evaluate our budget and our expectations. Standalone houses were off the table, and we pivoted to apartments and townhouses."

Humphreys said it was encouraging to see developers recognising the growing demand from first home buyers.

"There's a growing number of young buyers looking to enter the market earlier because they understand that getting in now can make a real difference as prices continue to rise," she said.

"It's fantastic to see a developer recognise this and then actively take measures to deliver an apartment with us in mind."

Solis is the first development planned within the second stage of the Harbour Shores masterplan, with early works expected to commence in September 2026.

[smartcode_project_cta:default project_id=113271]

Lewis Land targets first home buyers at latest Harbour Shores release, Solis

Luxury apartment developer Abadeen has recorded $19.25 million in apartment sales across two of its Lower North Shore developments in the lead-up to the end of the financial year, headlined by the sale of a $6.75 million penthouse at <a href="https://www.apartments.com.au/buildings/koyo-crows-nest-5-rodborough-avenue-crows-nest-nsw-2065">KOYO in Crows Nest.</a>

The transactions also included the sale of a newly completed three-bedroom apartment at <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences in Cremorne</a> for $6.35 million, with the residence selling shortly after the project's first public inspections following completion.

The sales come as completed, owner-occupier-focused apartments continue to attract strong demand across Sydney's Lower North Shore, particularly from buyers looking for certainty and immediate occupancy.

The penthouse at KOYO spans 491 sqm across a single level and was designed by architect Koichi Takada. The development is one of Abadeen's flagship boutique projects in Crows Nest.

[smartcode_project:default project_id=108800 project_image_fid=370093]

Abadeen Executive Chairman and Founder Justin Brown said buyer activity lifted noticeably in the lead-up to the end of the financial year.

"We saw a clear increase in enquiry levels, inspection numbers and buyer engagement across our completed projects leading into the end of the financial year," Brown said.

"Buyers have become far more decisive over the past six months. The combination of improving confidence, limited supply and the ability to physically inspect completed residences is creating strong competition for premium apartments in the best locations."

Brown says the&nbsp;response to Park Residences following completion has been particularly strong.

"Buyers want certainty and are responding positively to the opportunity to walk through a finished product, inspect the quality firsthand and move in immediately," Brown suggested.

"Projects such as Park Residences and KOYO demonstrate that when the product is exceptional and the location is irreplaceable, buyers are prepared to act quickly."

[smartcode_project:default project_id=114246 project_image_fid=370116]

Abadeen CEO Joe Tack said quality continued to differentiate projects in the current market.

"Today's buyers are incredibly discerning," Tack said.

"They are seeking larger floorplans, premium finishes, walkability, lifestyle amenity and confidence in the developer delivering the project. Well-designed boutique developments continue to outperform because they offer something genuinely difficult to replace.

"The enquiry we are seeing across our completed and recently completed Lower North Shore portfolio is very encouraging, and we expect this momentum to continue into spring."

The sales follow increased enquiry across Abadeen's Lower North Shore portfolio which also includes <a href="https://www.apartments.com.au/buildings/northcote-collective-naremburn-2-northcote-street-naremburn-nsw-2065">Northcote Collective in Naremburn</a> which also completed recently.

KOYO penthouse headlines Abadeen's $19.25 million EOFY sales flurry

The City of Sydney has approved plans for <a href="https://www.apartments.com.au/developers/billbergia">Billbergia Group</a> and Metrics Credit Partners’ $3.5 billion Castlereagh Place project in the heart of the Sydney CBD

The towers will be among the tallest in <a href="https://www.apartments.com.au/developments/sydney-nsw-2000">Sydney</a>'s CBD, with more floors than any other residential tower in the city.&nbsp;

The 6,000 sqm site was acquired by the joint venture partners in 2024. It is the largest amalgamated land parcel in the Sydney CBD and comprises eight individual sites fronting Castlereagh, Pitt and Liverpool Streets.&nbsp;

<a href="https://www.apartments.com.au/new-apartments/castlereagh-place-sydney-324-348-pitt-street-sydney-nsw-2000">Castlereagh Place</a> will transform an underutilised city block into a landmark mixed-use destination, anchored by two 82-storey towers comprising 607 luxury residences above an 8-level podium housing a 209-room luxury hotel. A 1,000 square metre civic park on ground level features a curated mix of food, beverage and retail.

The plans have been refined over the past year to rebalance the residential and hotel offering, and reconfigure the retail footprint to create a stronger, more dynamic dining experience.

A three-level flagship building on the prominent corner of Pitt and Liverpool Streets will be the gateway to the Castlereagh Place lifestyle precinct. Set to become a Sydney icon, the building is capable of housing multiple hospitality venues.

“Castlereagh Place is designed to be the City's next great urban oasis - an energetic mixed-use precinct that pulses with life, day and night,"&nbsp;said Joseph Kinsella, Group Director of Billbergia.

"It will bring the vibrancy of places like Barangaroo and Darling Quarter into a more accessible, central destination at the very heart of Sydney."

Kinsella said the project will build on&nbsp;Sydney’s growing laneway culture with the City’s largest network of new activated lanes - an expanded, next-generation take on precincts like Angel Place, Palings Lane and Ash Street in Wynyard.

[smartcode_project:default project_id=134477 project_image_fid=374401]

Castlereagh Place has been designed by architects <a href="https://www.apartments.com.au/architects/fjc-studio">fjcstudio</a> in collaboration with Trias Studio, Aileen Sage and Polly Harbison Design, joint winners of an international design competition in 2018.&nbsp;

Signature design elements from the original scheme remain unchanged, while the public domain has been significantly enhanced, delivering 60 per cent more open-to-sky space.

Pedestrian access will also be enhanced through new laneways linking Pitt, Liverpool and Castlereagh Streets, drawing people into a new civic park with outdoor seating, landscaping and integrated public art.

With activated laneways supported by strong hospitality offerings, Castlereagh Place is tipped to become a vibrant new dining destination in the heart of Sydney’s CBD.

It marks the largest undertaking to date for the Billbergia and Metrics Credit Partners partnership. Together they are developing other underutilised Sydney sites into mixed-use precincts, including the $2.2 billion Concord Central and the $1.3 billion Chatswood Grand Residences.

Metrics Managing Partner and Group CEO Andrew Lockhart said Castlereagh Place is a landmark project that will redefine Sydney’s skyline.

"As the tallest residential high-rise development, the revitalised site will offer panoramic views across the CBD and surrounds. We are excited to partner with Billbergia to reinvigorate an underutilised site and create a sophisticated and contemporary mixed-use offering situated in the heart of Sydney.”

Total apartments within the towers have increased to 607 dwellings, with a focus on larger floorplans. Aligned to growing market demand, Castlereagh Place now comprises 299 three-plus-bedroom apartments, 198 two-bedroom units and 110 one-bedroom configurations.

[smartcode_project:default project_id=134477 project_image_fid=374402]

Resident amenities will include an exclusive residents club containing a gym, rooftop pool, dining rooms, co-working spaces, library, golf simulator, games room, cinema room, and access to an exclusive concierge service. There will be around 500 basement car spaces below the towers.

The development will also include a state-of-the-art wellness centre, set to feature a bathhouse with magnesium pools, hot/cold plunge pools and premium amenities.

&nbsp;

According to fjcstudio, the towers will feature distinctive yet elegant architectural design reflecting Sydney’s geometry and urban character, with a network of through-site links and intimate public spaces activating the streetscape.

"Castlereagh Place is a city-making project of significant scale and ambition," said Richard Francis-Jones, Design Director at fjcstudio.

"It will create a rich urban complex of public open spaces, landscaped gardens, and vibrant laneways. Defining these new public spaces and the important streetscape of Castlereagh Street is a sequence of fine-grained, diverse retail and hotel architecture designed in collaboration with Aileen Sage, Polly Harbison Design and Trias.

“Rising above the tree-lined, human-scale streetscape are two slender residential towers that will transform the city skyline and look towards the Harbour, Hyde Park, and the Royal Botanic Garden.”

Demolition and early construction works have commenced onsite at Castlereagh Place.

[smartcode_project_cta:default project_id=134477]

Billbergia, Metrics, approved for $3.5 billion Sydney skyscrapers

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

<html><body>
There’s a distinct feeling of déjà vu in the air, with non-bank lending pioneers Mark Bouris and John Symond both launching campaigns urging borrowers to consider alternatives to the major banks following the interest rate increases of the last few days.
On Sunday night Aussie kicked off its new advertising campaign fronted for the first time in five years by chairman and founder John Symond.
In the new campaign, which runs with the tagline “It’s smart to ask”, Symond urges consumers and borrowers to question and challenge their current financial providers, specifically banks, in an effort to review and choose a financial product or service.


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<script type="text/javascript">brightcove.createExperiences();</script>The new ad kicks off with Symond asking: “Is your current home loan the right one for you today? It’s smart to ask, the fact is things are more competitive today, you can save thousands but you need to make the right choice.”
He then goes on to say: “You could ask your bank, but would they tell you if a competitor had a better product? We will.”
Yellow Brick Road’s Mark Bouris, who famously competed with John Symond when he built up non-bank lender Wizard in the late 1990s and early 2000s (until selling it to GE Money for $500 million in 2005), has also gone on the offensive against the major banks.
Speaking on Eddie Maguire’s Triple M breakfast radio show today, Bouris said the banks had given smaller lenders like Yellow Brick Road and others “such an opening”.
“If this was AFL or rugby league I would be kicking goals or scoring tries,” he said, perhaps harping back to the days when Wizard sponsored both the NSW State of Origin side and Collingwood Football Club.
“The bottom line is my interest rate is 6.83% and the banks’ is 7.36% and that over 25 or 30 years you could save $40,000.
“If that’s not the most compelling reason to shop around and look for a better deal, I don’t know what is.
“There are small banks, there are credit unions, there are non-bank lenders like my business, Yellow Brick Road, offering better deals then the big four banks,” he said.
Bouris says the problem is that all anyone ever talks about is the big four banks.
“We are all doing them a big favour by talking about the big four… There are other places to go to.”
Bouris says it’s no harder to get a loan from a credit union, building society or non-bank lender than it is from a major bank if you qualify for it.
Bouris admitted that funding costs for new lending had risen but said this game was about averaging and smoothing out your costs, not just passing them on to your customers.
<a target="_blank" href="https://www.propertyobserver.com.au/finance/our-banks-are-too-big-to-fail-too-few-to-be-competitive-mark-bouris-and-christopher-joye/2012020853307">Along with Yellow Brick Road director Christopher Joye</a>, Mark Bouris has taken his campaign against the major banks online and in the print media, warning that the financial system is more at risk by being reliant on four $50 billion banks. Bouris and Joye suggest Australia would be better off with 10 banks worth $20 billion, “each small enough to fail without causing widespread damage”.
Competition between Bouris and Symond for mortgage customers reached its zenith in about 2003 when Aussie was writing about $600 million a month in new mortgages and Wizard had a mortgage book worth about $6.5 billion and about 300 franchise offices.
Aussie Home Loans acquired the Wizard franchise network from GE Money in 2008 during the height of the GFC for an undisclosed sum believed to be a fraction of what GE spent on buying it from Bouris in 2005.
Just before Aussie acquired Wizard, the Commonwealth Bank acquired a third of Aussie for about $70 million.
In 2002 Aussie changed its business model from a non-bank lender offering Macquarie Bank-backed loans through its PUMA program to that of a mortgage broker offering a range of loans from different lenders including the major banks.
In 1995 Symond was the face of Aussie Home Loans, kicking off its famous “We’ll Save You” ad campaign with the question: “You work hard for your money, so why give it to the banks?”
“I want you to ring your bank and demand a better deal… If they won’t come to the party, ring us.”
Yellow Brick Road remains a non-bank lender and receives its wholesale funding from Gateway Credit Union.
 
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Mortgage wars Groundhog Day: Mark Bouris and John Symond turn back the clock as they take on the banks

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A surge in home loan traffic on financial products comparison website RateCity.com.au suggests that more borrowers will refinance their mortgage in the wake of banks pushing up their mortgage rates independently of the RBA. 
Home loans as a share of RateCity’s website traffic has increased by nearly 50% in the first two weeks of February compared with the whole month of January a spokesperson has told Property Observer. 
“Overall traffic to the site has increased by 25% comparing last four months [February 2012, January 2012, December 2011 and November 2011] to the four months prior – and this growth is obviously understated because of Christmas holidays,” she says.
The RBA cut interest rates in November 2011 and December 2011, with most lenders passing on the full rate cut to borrowers.
 The pick-up in home loan traffic follows a see-saw month for borrowers, beginning with expectations that the RBA would cut interest rates by 0.25% on February 7 and ending with the major banks stinging customers with rate rises. 
Yesterday <a target="_blank" href="/news">NAB became the last of the major banks to lift its rates</a> outside of the RBA cycle, lifting its variable mortgage rate by 0.09% following increases of 0.06% by<a target="_blank" href="/news"> ANZ, and 0.1% by Westpac</a> and the<a target="_blank" href="/news"> Commonwealth Bank</a>.
{module What do you intend to do given the current interest rate fluctuations?}
{module Have you changed lenders in the last six years?}
 
 
 
 
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More borrowers will refinance their mortgages in wake of bank rate rises: RateCity

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Before you purchase your next commercial property, you need to take some advice on which purchasing vehicle is right for you — because it's definitely not “one size fits all”.
The Australian Tax Office is quite happy for you to arrange your affairs so as to minimise the tax you pay. In other words, it is quite legal for you to avoid tax — you simply cannot evade it.
Income tax and capital gains tax are clearly two important issues to consider when arranging your property investments, and so, too, is GST.
But tax planning is not the only factor to consider. There are other commercial concerns that you should also address, depending on your circumstances. Apart from ensuring your overall flexibility, you also need to be able to:
<ul>
<li>admit partners down the track;</li>
<li>allow one or more individuals to sell out when desired;</li>
<li>cope with future tax changes;</li>
<li>handle a marriage breakdown;</li>
<li>cope with the death of one or more individuals;</li>
<li>pass on the investments to future generations; and</li>
<li>take advantage of the new superannuation provisions.</li>
</ul>
If you haven't already done so, you need to give careful thought to these matters in choosing the best investment "vehicle" for your next purchase.
From a tax viewpoint, which vehicle is best for you?
The simplest way to answer this question is to fully review the advantages and disadvantages of the commonly recommended tax structures and decide which best suit your circumstances. Those possible structures (investment vehicles) include:
<ul>
<li>Company</li>
<li>Fixed trust (commonly referred to as a unit trust)</li>
<li>Partnership, or joint venture</li>
</ul>
Depending upon your particular situation, there will be one vehicle better suited to your needs. And it is vital for you to determine that before you finalise the contract of sale for your next purchase.
You may prefer to obtain advice from your accountant. Alternatively, most competent legal firms will have a taxation division, which can provide you with that advice.
And this is always my preference — because there is then less chance of something being able to "slip through the cracks".
Generally, the discussion about the most appropriate investment vehicle takes only about  15 to 20 minutes with a tax adviser.
However, the real advantage comes from being able to dovetail the formation of that vehicle with the conveyancing aspects of the contract itself — because everything is now happening in-house.
Bottom line: You are able to leave that initial meeting with the comfort of knowing the transaction will now be documented in the most tax-effective manner.
Plus, it will also provide you with the greatest flexibility down the track; and you now have one fewer thing to follow up in the process.
Chris Lang is an advisor to commercial property investors and gives keynote speeches and regular seminars on the best way to invest in commercial property. He maintains a blog, <a target="_blank" title="Chris Lang's blog" href="https://his-best.biz/">his-best.biz</a>, which he updates regularly about the best way to get the most out of your commercial property investment.
 
 
 
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How to choose the right investment vehicle for your commercial property investment

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The NSW government’s decision to restrict first-home buyer stamp duty concessions to new homes or vacant land from January 1, 2012 helped drive a seasonally adjusted 3.8% increase in mortgage lending in December and a 7% increase in first-home buyer mortgages, according to December ABS housing finance data.
The number of commitments for owner-occupied housing finance rose 2.3% over December.
First-home buyer mortgages are up 38% since mid-2011, while finance to upgraders was broadly flat in the month and over the last six months.
Dylan Eades, economic analyst at ANZ, describes the headline number as “encouraging” but urges caution because it was “most likely boosted by the bring-forward of NSW activity ahead of the removal of the first-home buyer stamp duty concessions”. 
The end to the stamp duty concession also boosted NSW mortgage commitments, which rose by 6.1% in December and are 11% higher over the past two months. 
“Given that much of this growth has been driven by first home buyers, we are anticipating a mild retracement in NSW activity at the beginning of 2012,” says Eades.
New lending to owner-occupiers excluding refinancing rose 8.7% in the final quarter to be 4.6% higher through the year.
“Recall that it was a weak start to the 2011 year, on the back of the RBA's November 2010 rate hike and flood disruptions,” commented Westpac economist Andrew Hanlon. <img src="/images/stories/westpacfeb14.gif"> 
Hanlon also noted that NSW outperformed the market with mortgage commitments up 23% for the half year “as stamp duty changes to take effect from January 2012 triggered a bring-forward”.
Fixed-interest loans for investment purposes increased 7.5% during December to $7.1 billion following a 2.7% increase in November.
However, Hanlon says this type of financing can be volatile and notes that “the investor market was relatively subdued throughout 2011, with finance up just 1.8% for the year, against the backdrop of generally softer house prices”.
On a seasonally adjusted basis, demand for owner-occupier mortgages in Queensland was up 6.9% in the month, following a 2% rise, but still ended the 2011 year down by 1%. Victoria and WA reported a 1.3% gain, while SA and Tasmania reported falls.
Master Builders Australia describes the increase in housing finance in December as a positive sign but says it needs to be sustained.
“The key finance indicator released today by the ABS shows that demand for new dwellings is showing early signs of a pick-up in response to the interest rate cuts in November and December last year,” says Peter Jones, MBA chief economist.
“Loans for construction of dwellings and purchase of new dwellings, combined, were up 2.1% in December, and there was an encouraging lift in investment-related construction loans.”
“Finance commitments remain weak by historical standards, but the housing market is beginning to pick itself off the floor as the bring-forward effect of the government’s boost scheme fades and first-home buyers respond to lower interest rates and more affordable house prices.”
 
 
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First-home buyer mortgages up in December thanks to December NSW stamp duty deadline

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The National Australia Bank has increased its standard variable home loan interest rate by 0.09% to 7.31% pa.

It's still the lowest, albeit narrowly, of the major banks, <a target="_blank" href="/news">all of which</a> have now<a target="_blank" href="/news"> increased their interest rates </a>since last Tuesday’s Reserve Bank meeting. It takes effect February 20.

Lisa Gray, the group executive, says NAB has had the lowest rate of the major banks for 32 months and had committed to maintaining the lowest of the major banks through 2012. 

“These decisions are never taken lightly.

“We know that current economic uncertainty is impacting on our customers, which is why last week we made the commitment to maintain the lowest SVR of any of the major banks throughout 2012. 

“However, the state of the European and UK economies is having a serious impact on funding costs," she says.

“As recently as last week NAB acquired $1.5 billion of new funding on the domestic bond market at a premium that is around 70 basis points higher than the last equivalent issue just 8 months ago,” Gray says.
 
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jchancellor-FAypfDUnLy

NAB, the last and still narrowly the cheapest, puts up its standard variable rates by nine basis points

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CBA is the latest lender to announce an increase in its variable mortgage rates independently of the RBA, pushing up its residential variable home loan by 0.1 percentage points per year to 7.41% per annum from February 20 following Bendigo Bank lifting rates by 0.15% earlier in the day to 7.4%% effective February 21.
The decision follows ANZ and Westpac pushing up their interest rates by 0.06% and 0.1% and Bank of Queensland committing to keep its rates unchanged until at least the outcome of the next RBA meeting.
Here’s a rundown of the standard variable rates on offer from Australian banks, starting with the cheapest:
6.94%
The standard variable bank rate that Heritage Bank is currently charging its customers.
7.20%
The standard variable bank rate that BankWest is currently charging its customers.
7.22%
The standard variable bank rate that ING Direct is currently charging its customers
7.24%
The standard variable bank rate that HSBC is currently charging its customers.
7.30%
The standard variable bank rate that Bank of Melbourne/St.George is currently charging its customers.
7.31%
The standard variable rate that NAB will charge its customers from February 20 after lifting rates by 0.09%. 
7.33%
The standard variable bank rate that Suncorp is currently charging its customers.
7.36%
The new standard variable bank rate ANZ will charge its customers from February 17 after lifting rates by 0.06%.
7.36%
The standard variable bank rate Bank of Queensland will charge its customers until at least the next RBA meeting on March 6, the bank has pledged.
7.41%
The new standard variable bank rate the Commonwealth Bank will charge its customers from February 20 after lifting rates by 0.1%.
7.45%
The new standard variable bank rate Bendigo and Adelaide Bank will charge its customers from February 21 after lifting rates by 0.15%.
7.46%
The new standard variable bank rate Westpac will charge its customers from February 20 after lifting rates by 0.1%.
 
*All rates as announced on February 13.
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Standard variable mortgage guide as CommBank, NAB and Bendigo lift rates

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The decision to keep official interest rates on hold last week means the economy is looking strong in the opinion of the Reserve Bank economists.
While most of the metrics considered by the Reserve Bank – European sovereign debt, the US economy, Chinese growth – are out of our control, the consequence of changing interest rates impacts on everything we do.
When we wait for the RBA’s decision on the cash rate at the start of each month, we tend to convince ourselves that interest rates are the only thing that counts in a home loan. But a mortgage is not only about price; there are also features and service, either of which can be as important as price.
I’ve written recently about mortgage pricing, pointing out that the big four banks have 90% of all new mortgages, yet their mortgage rates are around one percentage point higher than many of the non-banks and credit unions’ home loans.
And when it comes to features there are lenders who still won’t let you pay fortnightly, won’t let you access 100% offset on the loan account and won’t allow redraws on your excess mortgage payments.
So, price and features differ in the mortgage market, but it’s service that may be the most important.
Borrowing to buy property is a long-term commitment and is the largest debt most people will ever take on. Most borrowers admit they need advice, guidance and management. They need service.
When I was young, loan managers at the banks formed relationships with the people they approved: they visited customers at their homes; they came over to say hello when they saw you at the club; they gave advice and they contacted you personally if the loan was in arrears.
I’m not claiming that this was a golden era of customer service: banks themselves thought it prudent for loan managers to stay close to borrowers, to know their customers, to be proactive when someone lost a job or there was a matrimonial break-up.
When the 1990s started and hundreds of bank branches were being shut down, we were sold on a new version of the bank-customer dynamic. We were told that relationships were inefficient and the new era was about transactions.
If you look at all the advances in banking in the past 25 years, most of them are concerned with transactions: ATMs, phone banking, internet banking, iPhone apps. And we love it.
But what about service?
Back in the ‘90s, my business offered mortgages about one percentage point lower than the banks’, and we worked on having the best standard variable rate mortgage in the market, with redraw facilities, weekly and fortnightly payments, etc.
But the interesting part was the service. Originally, some high-paid American banking consultants advised us to build an electronic, distributed banking model, which essentially meant no branches but lots of call centre and internet access.
Guess what? The borrowers wanted service. They wanted a branch on a high street, where a manager took an interest in their circumstances and was part of the community. They wanted advice, guidance and management.
We started building branches, we trained loan managers who became their own small business owners and we ensured that the mortgage was not simply a transaction or a product: it was a relationship in which both the lender and the borrower were invested.
By 2003, the non-bank lenders had taken 15% of the Australian mortgage market, from a standing start in 1995.
And it wasn’t only the non-banks proving that Australians wanted to talk to experts about their mortgages. We have also seen the rise of mortgage brokers since the mid-1990s as borrowers sought out an actual person to give guidance.
Brokers now account for around 43% of all new mortgages in this country.
So now, even in a time when technology is king, service is still at the centre of the proposition for Yellow Brick Road.
I think it’s OK for Australians to feel uncomfortable with the transaction-based mortgage approach and to start demanding that they deal with a loan manager they can see, a face they can recognise and an expert they can be guided by.
Service has not died out. Ask someone who’s really happy with their mortgage: nine times out of 10 they’ll have a relationship with their lender.
Good service with your mortgage is still available, but if you want it you have to make a choice.
Mark Bouris is executive chairman of <a target="_blank" href="https://www.ybr.com.au/">Yellow Brick Road</a>, a financial services company offering home loans, financial planning, accounting and tax, and insurance.
This article first appeared in News Ltd. newspapers
 
 
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Service counts when finding a mortgage broker: Mark Bouris

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Fairfax columnist Michael Pascoe described it as a “cute way” the big four banks have seemingly taken turns at being the first to move their mortgage rates by less than a Reserve Bank rate cut – or to increase their rates by more than an RBA rate rise or to just raise them outright.
“It’s so cute that a cynic might wonder if it's staged,” Pascoe added.
Property Observer charts the decision leaders:
<img src="/images/stories/dec2009.jpg">
Westpac raises its standard variable mortgage rate by 45 basis points after the RBA increased the cash rate by just 25. The other banks followed by lower amounts, so Westpac’s Gail Kelly copped most of the attention. Little did we know that Kelly had shown her confidence in the Sydney property market just a month earlier when she spent a record $8.95 million on her Terrey Hills acreage property, albeit without any mortgage.
 
<hr>
 
<img src="/images/stories/nov2010.jpg">
The Commonwealth Bank announced a 45-point hike after the RBA's Melbourne Cup Day 25-point increase.  The others followed a little later and a little lower, leaving then CBA chief executive Ralph Norris to cop most the attention.
 
<hr>
<img src="/images/stories/nov2011.jpg"> 
The National Australia Bank passed on just 20 points of the RBA's 25-basis point cut.
 
<hr>
<img src="/images/stories/feb2012.jpg"> 
ANZ led the way with a six-point increase last Friday afternoon, followed by Westpac's 10-point effort at sunset, which suggests Gail Kelly’s recent safari trip in South Africa has emboldened her.
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Big four taking turns on interest rate rises

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Recently released 2012 NSW land tax rates suggest unwary NSW landowners are at greater risk of becoming taxable for the first time and obliged to lodge registrations by the March 31 deadline.
Paul Anderson, a property law partner with TurksLegal, says this year’s 2.3% uplift in the tax-free threshold followed a six-year period of more modest rises around the 2% mark.
“This means many more landowners may find themselves with the nasty surprise of a land tax liability for the first time in 2012 as a thinning threshold leaves them more exposed.
“In contrast, the threshold rises from 2001 to 2004 were substantially higher, ranging from a low of 6.8% to a high of 21.5%.”
The 2012 tax-free threshold is $396,000 – up $9,000 on the year before and on trend with the low increases since 2006.
<a href="https://www.propertyobserver.com.au/tax/nsw-land-tax-threshold-increases-0.2-after-a-1.77-across-the-board-gain/2011110352183" target="_blank">It was released last October</a>, with the individual land tax assessments over the past month.
“While this reflects an overall softening in the property market, it’s no longer safe for landowners to assume the threshold will provide a secure buffer,” Anderson says.
“Given the resilience of property values in some parts of NSW, there’s no doubt that some landowners who were previously exempt may suddenly creep into the taxable category.
“First-time land taxpayers who fail to register on time may be subject to penalties and interest so it’s important to understand when their obligations are triggered,” Anderson says.
As a general rule NSW landowners are likely to have to pay land tax on any property they own other than their principal place of residence.
Exemptions also apply for land zoned rural or non-urban, which is primarily used for primary production, and land used primarily for boarding houses and low-cost accommodation within a five-kilometre radius from the Sydney GPO.
New taxpayers must lodge a registration form with the Office of State Revenue (OSR) by March 31, 2012.
The OSR will then issue them with a notice of assessment spelling out land tax liability for the year.
“If they were registered in a previous year, they will automatically receive an assessment between January and March,” Anderson says.
For 2012, the land tax rate is $100 plus 1.6% of the landowner’s total NSW land holdings as at the end of 2011, in excess of the $396,000 threshold.
High-value properties are subject to a higher rate of 2% on the portion of the property’s value exceeding a ‘premium’ threshold of $2,421,000.
“If you disagree with a land tax assessment, you can lodge an objection with the OSR but you will need to act fast and get it in within 60 days,” Anderson says.
“However, if you have no objections you should be aware you have the option of receiving a 1.5% by paying your full tax liability prior to the first instalment date.
“If you’re not sufficiently cashed up to take advantage of the discount, then your fallback is to pay in the usual way, in three instalments on the dates specified in your assessment,” Anderson adds.
TurksLegal is a law firm with offices in Sydney and Melbourne, established in 1981, and currently with 24 partners and over 100 staff.
Yearly increases in NSW land tax-free thresholds
 
<table cellpadding="0" cellspacing="0" border="0" style="width: 282px;"><tbody>
<tr>
<td valign="bottom" nowrap width="95">
Year
</td>
<td valign="bottom" nowrap width="88">
Index
</td>
<td valign="bottom" nowrap width="100">
Increase (%)
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="95">
2012
</td>
<td valign="bottom" nowrap width="88">
$396,000
</td>
<td valign="bottom" nowrap width="100">
2.3
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="95">
2011
</td>
<td valign="bottom" nowrap width="88">
$387,000
</td>
<td valign="bottom" nowrap width="100">
2.9
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="95">
2010
</td>
<td valign="bottom" nowrap width="88">
$376,000
</td>
<td valign="bottom" nowrap width="100">
2.2
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2009
</td>
<td valign="bottom" width="88">
$368,000
</td>
<td valign="bottom" nowrap width="100">
4.5
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2007
</td>
<td valign="bottom" width="88">
$352,000
</td>
<td valign="bottom" nowrap width="100">
0.0
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2006
</td>
<td valign="bottom" width="88">
$352,000
</td>
<td valign="bottom" nowrap width="100">
0.0
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="95">
2005
</td>
<td valign="bottom" colspan="2" width="188">
No threshold for land tax
 
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2004
</td>
<td valign="bottom" width="88">
$317,000
</td>
<td valign="bottom" nowrap width="100">
21.5
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2003
</td>
<td valign="bottom" width="88">
$261,000
</td>
<td valign="bottom" nowrap width="100">
18.6
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2002
</td>
<td valign="bottom" width="88">
$220,000
</td>
<td valign="bottom" nowrap width="100">
7.3
</td>
</tr>
<tr>
<td valign="bottom" width="95">
2001
</td>
<td valign="bottom" width="88">
$205,000
</td>
<td valign="bottom" nowrap width="100">
6.8
</td>
</tr>
</tbody></table>
 
 
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Complacent NSW landowners at risk of land tax shock

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So, ANZ has gone and done it, raising its standard variable home loan rate independently of the Reserve Bank. It is a significant development in banking, albeit a very small and tentative one.
ANZ had been expected, after the second rate review under its new policy of considering rate movements on the second Friday of every month, to either do nothing or add 10 to 15 basis points to its key home loan rate. Instead it added a modest six basis points to, deliberately one assumes, line its rate up with Westpac, which has had the most expensive standard variable home loan rate of the majors. 
That may help defuse or at least reduce the intensity of criticism that would have been harsher if ANZ had set a new benchmark. The bank could be accused of wimping it, given how noisy it has been about the funding pressures that have been intensifying for the major banks. Tactically, however, it was in an awkward position. This month was one of the handful where the RBA board meeting falls in the second week of the month – in the same week as the ANZ review. Most of the time ANZ would have 10 days to consider the RBA’s decision and probably at least a week to see how its main competitors had responded before it made its own decision. Instead, to the delight of the other majors, with the RBA sitting on its hands, ANZ not only had to make an independent decision but one that could leave it alone and exposed for nearly a month, drawing the ire of the federal treasurer and other bank critics in the meantime. It has tried to make itself as small a target as possible. It shouldn’t have had to. This morning, well before ANZ took its baby step into its brave new world of independent rate-setting, the RBA released its latest statement on monetary policy. In it it makes an unequivocal case for bank rate rises. It says the spreads on bank debt are now "significantly higher than they were in the middle of last year" and that there has been a "step-up in the banks’ overall cost of funding relative to the cash rate." In its more detailed commentary it noted increases in the spreads on term deposits, on wholesale funding and in the cost of the foreign exchange hedging the banks undertake when they borrow offshore – all the banks’ sources of funding have become more expensive relative to its own cash rate. ANZ should have cut and pasted those comments into its own announcement, just in case Wayne Swan et al missed them. The reality is that the spreads on their borrowings, whether term deposits or wholesale funds, have been blowing out and exerting pressure on their margins. The National Australia Bank quarterly update this week showed it had lost about nine basis points of margin relative to the second half of last year. As noted previously, the majors are almost certainly writing new home loans at an initial loss relative to their incremental cost of funds. ANZ and NAB are the two majors that have been growing their home loans books at rates above the overall system growth, with ANZ growing its share at a greater rate than NAB. That would be intensifying the funding pressure. ANZ could therefore have easily made the case for a rate increase of at least 10 basis points or more, although its new policy does give it the flexibility to move the rate, in either direction, regularly at its own discretion and therefore it has the ability to lift it with a series of movements, each small enough not to ignite real fury among its customers and the politicians. Today’s move was a small one for the customers concerned but a major leap for the bank and potential for the system as the banks try to signal and explain to customers that the RBA’s cash rate influences only a part of its funding rather than determining its actual cost relative to benchmark rates.
This article originally appeared on <a href="https://www.businessspectator.com.au/" target="_blank">Business Spectator</a>.
 
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