Around 400 additional homes could be built at Southwark Grounds on Port Road, lifting total site capacity from 1300 to around 1700 dwellings.

A recently approved code amendment would allow apartment towers of up to 14 storeys in some areas of Renewal SA’s redevelopment of the former West End Brewery.

Renewal SA Acting Chief Executive Shane Wingard said he welcomed the code amendment, with the increase in heights and homes making a positive impact on the supply of high-quality, well-connected housing close to the city.

“By going higher across some parts of Southwark Grounds, we are adding a substantial number of very well-located homes with little impact on project delivery time or planned open space,” Mr Wingard said.

Since the project officially launched in 2025, Mr Wingard said more than 12,000 enquiries had been received about living at Southwark Grounds.

“The very strong early interest we’ve seen since homes were first released in the precinct reinforces our plans to create more housing opportunities,” he said.

The Southwark Grounds code amendment was launched in December last year, with community engagement undertaken over five weeks from January.

It proposed increasing maximum building heights from eight to 14 storeys on the eastern section of Southwark Grounds, and to 12 storeys across the remainder of the site, with minimum building heights ranging from two to four storeys.

The code amendment was implemented through an Early Commencement policy in late January, allowing developers to quickly explore the viability of increased height and housing yield while other planning processes continue.

One of the first developers delivering apartment sites have already finalised redesigns to increase the number of apartments following the code amendment.

Samaras’ development adjacent to the future Colonel Light Park is now planning to deliver 125 apartments across 11 storeys, significantly greater than original plans of around 50 apartments across four storeys.

The developer is also exploring the potential for additional affordable housing outcomes.

Most of the apartments at Southwark Grounds will be delivered within a master-planned precinct on a large parcel of land on the eastern portion of the site, covering around two-thirds of its 8.4 hectares.

Wingard said detailed precinct planning over the coming months may identify further opportunities to increase yield further that could see total apartment numbers at Southwark Grounds, exceed this number.

Affordable homes at Southwark Grounds will also see a net increase, with Renewal SA maintaining its commitment to a minimum of 20 per cent affordable housing across the development.

&nbsp;

&nbsp;

Civil works have begun across the site, with construction under way on the first new roads surrounding a townhouse precinct in the south‑west corner of Southwark Grounds. This includes Renewal SA’s 17 Founder’s Row homes, which are on track for completion by Christmas.

“We expect to have people living at Southwark Grounds by the end of the year, so delivering roads and public spaces for those residents is among our highest priorities.”

Construction of 40 townhouses off Anderson Street, known as West Village and being delivered by Contour, is forecast to begin in mid‑2026. Kolabb’s Anderson Lane development will follow shortly after, delivering a further 26 townhouses.

Southwark Grounds is a state government‑led urban renewal project now set to deliver around 1,700 homes over the next decade.

Homes will be supported by a supermarket, a range of retail and hospitality offerings anchored by a revitalised Walkerville Brew Tower, a childcare centre, car parking and well‑connected public spaces.

Joel Robinson

400 new homes planned for Adelaide's former West End Brewery site

Brisbane developer&nbsp;<a href="https://www.apartments.com.au/developers/cavcorp">Cavcorp</a> has lodged plans for a new mixed-use residential development at <a href="https://www.apartments.com.au/new-apartments/55-wyandra-street-teneriffe-qld-4005">55 Wyandra Street</a>, Teneriffe, anchored by an 85-metre public laneway designed to reconnect the suburb’s riverfront with the Gasworks precinct.

The buildings, known as Teneriffe House and Teneriffe Lane, would replace the existing Queensland Cotton head office site with a 15-storey residential tower transitioning to eight storeys toward Helen Street. The project has been designed by Plazibat Architects and lodged as a code assessable development application for 93 apartments across a 3,401 sqm mixed-use site within the Newstead and Teneriffe Waterfront neighbourhood plan.

Central to the scheme is the transformation of an existing service easement into a publicly accessible cross-block connection linking Wyandra and Helen Streets. Cavcorp says the new laneway will act as both a pedestrian shortcut and a landscaped civic space between the Teneriffe Riverwalk, ferry terminal, and Gasworks precinct.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="26e7f058-b065-4de8-b13d-a2b8cb64dfcc" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/bldg.png?VersionId=sELS0ZKYi361oYipUa1BIKfe_.DLZoFV" />

“The revised proposal delivers a legacy public-realm cross-block link, permanently secured for community use, transforming an existing private easement into a safe, high-quality pedestrian connection between the Teneriffe heritage riverwalk and the Gasworks–Long Island precinct,” the planning report states.

The laneway will sit beneath a large subtropical loggia integrated into the podium levels of the development. The design incorporates deep landscaping, water gardens, lobby spaces, business lounges, and ground-floor apartments to create what Cavcorp describes as a climate-responsive “urban verandah.”

The tower itself has been designed as a slender form with recessed floorplates and curved translucent corners inspired by contemporary Japanese architecture. The building height aligns with the Commercial Road precinct controls, which permit towers up to 15 storeys within proximity to Longland Street.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="a8a17d40-43b6-4718-b3fd-67676fcbb485" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/pers%202_1.png?VersionId=i3VwDtp5AmL_8InW7w4qRbDFEpb744Jt" />

The project will comprise a mix of larger-format apartments aimed at owner-occupiers, downsizers, and families. The proposed apartment mix includes 11 loggia apartments across the lower levels, 50 four-bedroom Sky-Terrace apartments from levels three to seven, and 32 Sky-Pool Homes occupying the upper tower levels. The Sky-Pool Homes will feature private thermal plunge pools integrated into oversized balconies.

According to the application, the apartments are intended to reinterpret the scale and character of Teneriffe’s woolstore conversions and Queensland homes within a vertical residential format.

“The sky-pool homes build on Cavcorp’s previous projects and introduce a distinct apartment typology to Teneriffe, informed by both local and international precedent and responding to an identified market demand for enhanced safety, space and amenity,” the planning submission notes.

A major focus of the proposal is its five-level wellness and lifestyle offering, extending from the basement through to the rooftop.

Amenities proposed include a rooftop Swim &amp; Racquet Club with a 25-metre Olympic lap pool and tennis court, coworking spaces and libraries, golf simulators, wine storage, concierge facilities, business lounges, pet wash areas, and rooftop longevity-focused wellness spaces with spas, outdoor fitness zones, and landscaped terraces.

<img alt="First Look: Cavcorp unveils Teneriffe House and Teneriffe Lane plans for landmark wellness tower in Teneriffe" data-entity-type="file" data-entity-uuid="944b352c-49b9-4247-a4c6-5967b4b69fda" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/amenity.png?VersionId=Ed_qKjAtMwFT.5gfl3jiA9QwdWxSMsaX" />

All parking will be concealed within basement levels accessed from Wyandra and Helen Streets. Cavcorp says the deep-basement engineering approach allows the entire ground plane to prioritise landscaping, pedestrian movement, and active frontage rather than vehicle infrastructure.

The development continues Cavcorp’s concentration in Newstead and Teneriffe, where the Brisbane developer has delivered a number of apartment projects including Lucent, Le Bain, and Luminare, as well as the Long Island Wellness Precinct nearby. Several of those projects have received national design and architecture awards, including recognition under Brisbane’s “Buildings that Breathe” program.

Cavcorp unveils wellness-focused Teneriffe House and Teneriffe Lane apartment buildings

Focus Group Investments has lodged plans for a new apartment development at <a href="https://www.apartments.com.au/new-apartments/64-70-hanover-street-fitzroy-vic-3065">64–70 Hanover Street</a> in Fitzroy, seeking to utilise the Victorian Government’s recently introduced Great Design Fast Track pathway to accelerate approvals for the project.

The proposal is among the latest developments to emerge through the state-led initiative, which was established to fast-track well-designed residential projects in activity centres and transport-connected inner-city locations. The pathway allows qualifying developments that meet elevated design and housing benchmarks to bypass traditional council planning timeframes and instead be assessed directly by the Department of Transport and Planning.

Designed by SJB, the development will comprise a mix of apartments above activated lower levels, with a strong focus on architectural articulation, landscaping, and communal amenity. The design response seeks to balance the industrial character of Richmond’s former warehouse precincts with a more contemporary residential form.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="abea51cc-d85b-479e-9aef-a589f3b37ca7" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/ground.png?VersionId=e1Kf8EyPWwyiVumtqQ4rM5S4GpOR3CCz" />

Proposed are 63 new dwellings, a wide ranging mix of studio, one-, two-, and three-bedroom apartments, and townhouses and duplexes. They will be spread across a part-three, part-eight storey building.

The Planning and Urban Context Report by Tract says the development is of an "exemplary architectural standard" and has been carefully crafted by SJB Architects.

"Dwellings&nbsp;will benefit from excellent access to natural light, cross-ventilation opportunities and extensive communal space," the report noted.

The architectural material highlights the project’s integration of landscaped elements and communal spaces throughout the building. The proposal also incorporates sustainability initiatives aligned with the Victorian Government’s push for higher-performing apartment developments under the fast-track program.

The Great Design Fast Track was unveiled by the Victorian Government in 2024 as part of a broader housing supply strategy aimed at accelerating the delivery of new homes. Projects assessed through the pathway must demonstrate high-quality architecture, sustainability outcomes, and housing diversity while being located close to public transport and existing infrastructure.

<img alt="First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Richmond apartments" data-entity-type="file" data-entity-uuid="afdbe834-8dc4-4a77-a943-ba07bc927348" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/site_11.png?VersionId=0J657j.TaChAZfp93wqJYBTqSsnREJx2" />

Focus Group, founder and led by Paul De Lutiis, is increasingly active across Melbourne’s inner suburbs, targeting well-connected urban renewal locations suited to medium and higher-density residential development. The Fitzroy proposal continues that strategy, leveraging the area’s strong transport links, established retail amenity, and proximity to the CBD.

Fitzroy has been one of the most popular spots for developers and buyers in recent years. The likes of PACE Development Group, SMA Projects, Crema Group and Chapter Group, currently selling projects in the suburb.

First look: Focus Group Investments taps Victoria’s Great Design Fast Track for Fitzroy apartments

The Gold Coast Planning Committee has supported the preliminary approval for the Benowa Gardens Urban Village project following an extensive community consultation and assessment process.

The proposal will now proceed to a full council vote on June 2.

The application sought approval for a masterplanned urban village on the existing Benowa Gardens Shopping Centre site, combining new housing, retail, dining, health and lifestyle amenities within a walkable, integrated precinct.&nbsp;

The proposed redevelopment includes around 413 apartments integrated above a revitalised mixed-use centre featuring a full-line supermarket of 4,000 sqm, 6,000 sqm of specialty retail and dining space across around 30 retailers, a 7,000 sqm health and wellness precinct, and roughly 9,630 sqm of office and medical suites.&nbsp;

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="fb36ae47-80bc-45f0-9914-31b0c7b6007d" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C4%201121%20FI.jpg?VersionId=6mRKk2uU4r67TmTt39DKGUlvFRbTVqWa" />

The broader masterplan also includes very significant traffic and transport improvements, wide pedestrian walkways, upgraded pedestrian and cycle connections, and enhanced public areas designed to create a more connected and walkable community environment.&nbsp;

Centre owner Patrick Lu said the milestone reflected months of detailed planning, technical assessment and ongoing communication with local residents, businesses, schools and stakeholders.

“We appreciate the time, consideration and care Council officers and the Planning Committee have given this proposal throughout the assessment process,” Lu said.

“We also sincerely thank the local community for engaging with us, sharing feedback and participating in the consultation process over many months.

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="32fd1fc3-d0e6-485f-ac57-9916c9bcb818" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/PR26576%20Ashmore%20Road%20C5%201121%20FI_2.jpg?VersionId=fz8qQKDBLQ7MyFRc856Zccfbh9nFwLOe" />

“We understand projects of this scale bring questions and concerns, which is why we have worked hard to listen carefully, provide information transparently and continue refining elements of the proposal where possible.

“Our vision has always been to create a well-designed, community-focused urban village that responds to the changing needs of the Gold Coast, while delivering improved amenity, housing diversity, healthcare access and local lifestyle benefits.

“This proposal is about creating a genuine live-work-play environment where residents can access everyday services, schools, healthcare, dining, shopping and green space within walking distance, while also supporting local jobs and economic activity.”

<img alt="$1b Benowa Gardens Urban Village moves to Full Council following Planning Committee support" data-entity-type="file" data-entity-uuid="50dfbd04-590e-4fc6-983b-766880947867" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Dining%20Day%20Time%20-%20High%20Resolution.jpg?VersionId=BP7ZoKJ0DdL_8iRkkC8VVx99moICV6kg" />

Lu said the proposal had evolved significantly through consultation and technical review, particularly around traffic, pedestrian and student safety and neighbourhood connectivity.&nbsp;

Melissa Griffin, Director at Urbis, said the recommendation recognised the strategic importance of delivering more housing and services within established urban areas already supported by infrastructure.

“This proposal represents the type of thoughtful, integrated growth that planning frameworks across South-East Queensland are encouraging,” Ms Griffin said.

“The project seeks to place housing, retail, healthcare and employment opportunities together in a highly accessible location close to schools, transport and existing services.

“Importantly, the process has involved significant technical assessment and community engagement to ensure local issues and feedback were properly considered throughout the planning pathway.”

$1 billion Benowa Gardens Urban Village heads to council vote following Planning Committee support

Surfers Paradise is officially set for its first new residential development with a 45-storey skybridge connecting the two towers.

John Camilleri’s Celestino Developments has been given the green light by the Gold Coast City Council to develop its major beachfront precinct across its huge 4,000 sqm oceanfront site at <a href="https://www.apartments.com.au/new-apartments/63-79-garfield-terrace-surfers-paradise-qld-4217">63–79 Garfield Terrace</a>, just five months after its <a href="https://www.apartments.com.au/news/qld/first-look-exclusive-billionaire-winx-breeder-s-bold-two-tower-surfers-paradise-play-with-45th-storey-skybridge">submission in late 2025</a>.

The approved scheme will deliver two towers rising 55 and 48 storeys, connected by a skybridge positioned on level 45 that will house a range of resident-only wellness and entertainment spaces.

In its notice of approval, the Gold Coast City Council said the&nbsp;proposed overall built form has been designed to complement the scale, intensity and protect the adjacent amenity and surrounding streets through the use of varied setbacks, site cover and architectural elements.

<img alt="First look exclusive: Billionaire Winx breeder’s bold two-tower Surfers Paradise play with 45th-storey skybridge" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-30%20at%209.53.48%E2%80%AFAM.png?VersionId=ADyPJ_TFbJvSU9wZFOiCBnlPtgF7VWqW" />

Designed by <a href="https://www.apartments.com.au/architects/dbi">DBI</a>, the development will comprise 275 apartments across the two towers, including a mix of two-, three-, and four-bedroom residences, as well as several penthouses. The apartments will sit above a landscaped podium featuring more than 90 metres of beachfront pool frontage, private resident lawns, lounges, and wellness spaces.

DBI said the design draws heavily from the movement and form of the coastal environment, with curving balcony lines and sculpted façades intended to soften the scale of the towers while maximising ocean outlooks and passive shading outcomes.

“The project occupies a rare, uninterrupted oceanfront site and has been shaped by a design philosophy that merges architectural elegance with environmental responsiveness and a carefully curated lifestyle experience,” DBI said in planning documents submitted to the Gold Coast City Council.

The most distinctive element of the approved project is the skybridge linking the two towers at level 45. The elevated communal space is planned to include executive lounges, formal dining areas, wellness facilities, and panoramic ocean-facing outlooks.

“The skybridge enhances the identity of the development, promotes social interaction, and delivers a lifestyle experience not found elsewhere on the Gold Coast,” DBI said.

At podium level, residents will have access to a suite of resort-style amenities, including resident lounges, private dining rooms, a yoga lawn, gymnasium, plunge pools, and treatment spaces. The beachfront pool has been designed with separate lap, lounge, and children’s areas extending across the width of the site.

The project will also introduce new food and beverage offerings along the Enderley Avenue and Oceanway frontages, contributing additional activation to the beachfront precinct.

First look: Winx billionaire’s beachfront Surfers Paradise apartment development greenlit

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>
Westpac announced a 0.10% increase to its standard variable home loan rate to 7.46% this evening. The ANZ lifted its variable interest rates for retail mortgages and small business lending by 0.06% to 7.36% following its independent February rate review mid-afternoon. 
ANZ and Westpac now have the highest variable mortgage rates of the big four. CBA's standard variable rate is 7.31%, and NAB's is 7.22%, as at 7pm Friday February 10.
The ANZ bank blamed the rates it has to pay on deposits and higher wholesale funding costs for increasing the variable rate following the RBA leaving rates unchanged earlier this week. 
ANZ CEO Australia Philip Chronican says the decision - effective February 17 - may leave some people "frustrated and even angry but believe Australia needs safe, well-run commercial banks that aren’t a burden on taxpayers and that can continue to lend".
The ANZ bank has reduced its three-year fixed-rate package mortgage by 0.15%.
The Westpac executive Jason Yetton said increasing interest rates was never an easy decision.
"<a href=""></a>However, our move today reflects the increase in costs of banks raising money.
"<a href=""></a>While we believe that reducing rates in November and December last year was the right thing to do for our customers and the economy, higher deposit costs and higher wholesale funding costs since then make today’s move necessary.
"Over the past four months intense competition for term deposits has increased their cost to us by around 0.30%, while wholesale funding costs have also risen significantly. For example, unsecured five year funding transactions raised overseas by banks to support lending in Australia are currently priced at around 2.30 percentage points over the benchmark bank bill rate. In June last year equivalent raisings were priced at or around 1.50 percentage points over the benchmark."
He added “it’s the money we raise from customer deposits and from wholesale funding that enables us to keep providing lending support to the economy. As the cost of the money we raise increases, at some point, we have to increase the price of the money we lend.
“We have 5 million depositors and they are benefiting as the interest rates we are offering for both online savings accounts and term deposits are among the most competitive we’ve ever offered and reflect our strong commitment to our Australian customers while lessening our reliance on overseas wholesale funding markets.”
Customers with an average mortgage of $250,000 will see their repayments increase by approximately $16 per month (principal and interest loan).The change in Westpac’s standardvariable home loan rate will become effective on 20 February 2012. It follows a 0.50% ($66 per month for a $250,000 mortgage) reduction in the variable home loan rate through cuts in Novemberand December last year.
In its February Monetary Policy Statement released earlier today, the RBA acknowledged the higher funding cost environment while noting “a general improvement in sentiment over the past month or so” in Europe.
“Over the past month, conditions have improved, with [debt] issuance picking up markedly, but spreads on bank debt are significantly higher than they were in the middle of last year.
“Indeed, some large corporates are now able to raise funds in the capital markets more cheaply than banks with a higher credit rating. These global developments have had an effect in Australia, where there has been a step-up in the banks’ overall cost of funding relative to the cash rate,” said the RBA.
Bill Evans, chief economist at Westpac, says the objective of the RBA statement is to emphasise that "without a significant deterioration in global financial conditions policy should remain unchanged".
"When you assess the various pieces of the Bank's description of the domestic economy – weak employment; rising unemployment rate; subdued retail spending; soft housing market; below trend growth outside mining; scaling back of public investment; building construction subdued; inflation to remain around the mid-point of the target range; policy at neutral, not stimulatory – we see a fairly clear case for policy to move into the stimulatory zone immediately.
"Of course our forecasts as contrasted with the Bank's forecasts clearly suggest that the qualitative descriptions provided in this statement are understating the need for a policy response," Evans says.
The CBA's Michael Workman came to a similar conclusion saying the EU’s debt problems "are still the major downside risk for growth and the major trigger for another RBA rate cut".
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lschlesinger-FZcF9M3vE6

Westpac joins ANZ in raising interest rates

<html><body>
Credit Union Australia (CUA) has cut its three-year fixed-rate home loan for the third time in the space of five months, taking it below that of the major banks. 
The move follows the RBA leaving rates on hold yesterday and speculation that the major banks might raise interest rates on standard variable mortgages this week. 
The mutual, one of the biggest in Australia, with 400,000 customers, will reduce its three-year fixed rate by 39 basis points from February 13, taking the interest rate from 6.34% to 5.95%. 
CUA says it now offers one of the lowest three-year fixed-rate home loans in the market – 43 basis points lower than the average of the big fours’ three-year fixed-rate home loans.
Click to enlarge
<a title="Click to enlarge" rel="shadowbox" href="/images/stories/cuachartlarge.gif"><img src="/images/stories/cuachart.gif"></a>
Based on an average loan size of $300,000 with a 30-year term, a three-year fixed-rate home loan from CUA at this rate could save borrowers $84 per month, or $3,024 over the three-year duration of the loan, compared with the average rate of the big four banks on the same product. 
“CUA is committed to offering customers the best deal we possibly can. Because our customer owned model enables us to focus entirely on our customers, not on shareholders, we have more flexibility to make rate decisions that are in their best interests,” says Jason Murray, CUA’s acting general manager for products and marketing.
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CUA cuts fixed-rate mortgages to undercut major banks

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RateCity CEO Damian Smith has downplayed the risk of banks raising mortgage rates, but he says anything is possible.
“It’s been an extraordinary last 48 hours. Twenty-four hours ago we were expecting banks to pass on 10 to 15 basis points of a 25-basis-point rate cut, now they’re pushing the line of a rate rise,” Smith tells Property Observer.
“Nothing surprises me anymore, but I would be surprised if they raised rates at time when lending growth is slow. The big issue is not funding cost but the slow lending market,” he says.
If banks do raise rates, Smith says they will be banking on “inertia from customers” and assuming that they won’t switch lenders.
“It’s up to customers to demand better and be ready to switch,” he says.
His comments follow speculation that the major banks could raise rates independent of the Reserve Bank in order to protect their profit margins on mortgages.
Borrowers should know by Friday whether their mortgage repayments will rise when ANZ makes its independent interest rate announcement.
Should ANZ push up its standard variable mortgage rate, the other banks are likely to follow suit.
Alan Mitchell, finance editor at the Australian Financial Review, says “conventional wisdom” dictates that ANZ will not raise rates after the RBA left them unchanged.
“To do so would be much more?provocative than the banks’ preferred strategy of simply not fully passing any RBA rate cut to its customers,” he says.
The banks were expected to pass on only part of an expected 25-basis-point interest rate cut yesterday – effectively increasing their net interest margins – but they and most economists were stumped by the RBA’s decision to keep rates on hold for another month.
<a href="https://www.propertyobserver.com.au/economy/rba-may-not-cut-rates-until-may-commonwealth-bank/2012020753285" target="_blank">Commonwealth Bank chief economist Michael Blythe speculated that the RBA could hold off on cutting rates again until May</a>.
ANZ head of Australian economics Katie Dean says the risks have risen that the cash rate will remain on hold “well into the second quarter”.
Westpac chief economist Bill Evans remains hopeful that the RBA will hope “adopt a more appropriate policy response over the course of the next few months beginning with a 25-basis-poing rate cut on March 6” but acknowledges that the bank “does not provide strong encouragement to expect a cut in March”. Yesterday the RBA noted an improving situation in Europe following the intervention of the European Central Bank in December, but a new report by Moody’s lists Australia alongside New Zealand, Korea, and Vietnam as the Asia-Pacific economies most at risk from a collapse in Europe and says further deterioration of the property market is a “menacing risk” facing the economy.
A fall in house prices would impact on foreign investor confidence in Australian property and make it more expensive for banks to raise money offshore, Moody’s has warned.
NAB released its quarterly results yesterday revealing unaudited cash earnings of $1.4 billion, but the bank highlighted “higher deposit and wholesale funding costs”.
“Higher deposit and wholesale funding costs, softening credit growth and fragile economic conditions continued to be key characteristics of the operating environment in most of the regions in which NAB operates,” said National Australia Bank Group chief executive Cameron Clyne.
The other major banks have beat a steady drum about rising wholesale funding costs while the Australian Bankers’ Association last week put out a statement on “how bank funding works and why banks are under funding cost pressures”.
After Westpac announced it would cut about 560 jobs last week, CEO Gail Kelly said that while a cataclysmic collapse in Europe was off the table risks remained elevated and  “if anything they are higher now than they were at any times during the entirety of GFC”.
Kelly also would not commit to pass on any future rate cuts. NAB has pledged to keep offering the lowest standard variable rate of the four major banks.
If ANZ raises its mortgage rates, NAB could also push up its rates and still continue to offer the lowest interest rate of the big four.
<table cellpadding="0" cellspacing="0" border="1" style="width: 470px;"><tbody>
<tr>
<td valign="top" colspan="2">
Standard Variable Rate p.a. 7 February 2012
</td>
</tr>
<tr>
<td valign="top">
NAB
</td>
<td valign="top">
7.22%
</td>
</tr>
<tr>
<td valign="top">
ANZ
</td>
<td valign="top">
7.30%
</td>
</tr>
<tr>
<td valign="top">
CBA
</td>
<td valign="top">
7.31%
</td>
</tr>
<tr>
<td valign="top">
WBC
</td>
<td valign="top">
7.36%
</td>
</tr>
</tbody></table>
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Banks unlikely to raise interest rates for home borrowers: RateCity’s Damian Smith

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With the Treasury expected to collect about $3.8 billion from stamp duty this year, nationwide home buyers are in agreement on the call to streamline the greatly disputed tax. State-based stamp duties are widely recognised as a drain on our nation’s productivity and an inefficient and unstable source of revenue for each state.
Currently, home buyers are perplexed by the lack of uniformity in stamp duty rates across the country. On a $400,000 home, first-home buyers in Victoria, South Australia and Tasmania are forking out more than $12,000 in charges while those in New South Wales, Queensland, Western Australia and the Northern Territory pay nothing at all. First-home buyers in the $700,000-plus bracket pay as little as $8,130 in NT compared with a hefty $34,860 charge for a standard purchase in NT. On the extreme end of the scale Victorian’s are forking out $41,530 for a property in this price range.
<img src="/images/stories/bennett1.jpg">
<img src="/images/stories/bennett2.gif">
To further complicate matters, we are seeing state governments pull back their concessions for first-home buyers. In Queensland, the government has just recently cut its $10,000 first-home buyers’ boost, the Northern Territory ended its $10,000 grant on new properties on New Year’s Eve last year, and South Australia is completely revoking its discount for buyers of established homes mid-2012.
Evidently, state governments are using the tax as a lever to adjust revenue levels. In late October 2011 the government cut back stamp duty payment deadlines from 90 to 30 days after settlement in a bid to bring forward revenue and help meet budget surplus targets for the year.
Further to this, given the level of activity in the housing sector has declined, removing concessions for first-home buyers is also likely to be an attempt to claw back revenue. If this is the case, it highlights the state’s dependence on a volatile and uncertain revenue base.
Stamp duty creates a barrier for those wanting to buy or sell property in a number of ways. The inconsistency of the tax across the country discriminates against those who move where the jobs are. It also discourages those who need to downsize, predominantly the elderly, which in turn affects first-home buyers looking to enter the market.
In the short term it is clear that the tax cannot simply be removed. However, in the interim, a range of reforms to make the current regime fairer could be introduced, including: the removal of GST on stamp duty (tax on tax) in non-residential transactions; limiting higher stamp duty rates for investors; and, most importantly, the indexation of duty rates so the proportion of tax paid does not increase.
We at the Real Estate Institute of Australia are calling for the removal of state-based property taxes and have been actively lobbying to key government bodies for increased harmonisation of the tax across the nation. As a result of our presentation at the 2011 October tax forum, Queensland and New South Wales governments have agreed to examine the harmonisation of payroll tax and possibly other taxes (stamp duty) and present a state tax reform plan to the federal government by the end of 2012.
Pamela Bennett is president of the <a href="https://www.reia.com.au/" target="_blank">Real Estate Institute of Australia.</a>
 
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pbennett-Zvm5u8EFas

Stamp duty hurting our national productivity

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Gerald Foley, managing director of National Mortgage Brokers, has backed Aussie Home Loans and Mortgage Choice’s requirement that their brokers be members of an industry body of their choosing. 
John Symond’s Aussie Home Loans and Mortgage Choice, the two most well-known mortgage broking brands, are currently awaiting a ruling from the ACCC about whether they can continue to <a target="_blank" href="/news">make membership of the Mortgage and Finance Association of Australia (MFAA) mandatory</a> rather than let brokers choose the MFAA or rival industry body the Finance Brokers Association of Australia (FBAA).
The FBAA claims such mandatory requirements are anti-competitive. 
“The current debate in the market seems to be confused around whether a retail aggregator, such as Mortgage Choice or Aussie, has the right to require their members to be members of an association,” Foley says. 
“To me it seems a reasonable position for a branded business to insist that all its members are following the same set of rules.” 
National Mortgage Brokers, which has about 300 brokers, is a member of both the MFAA and the FBAA, and Foley says it sees value in being a member of an industry association. 
“As far as our brokers are concerned, we encourage all our brokers to also be a member of one of the associations, however it is not mandatory. As most lenders, at least at this stage, still require association membership then most brokers have no option but to join,” he says. 
“I think as we all get more comfortable with licensing more lenders will start to relax their association membership requirements and rely on the aggregator and licence holder’s ability to manage their networks.” 
 
 
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Mandatory mortgage broker association membership reasonable: National Mortgage Brokers

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NAB has emerged as the big mortgage winner in 2011, with the bank growing its combined owner-occupier and investment mortgage book by an impressive 12% during the 2011 calendar year, according to official APRA figures.
The bank’s growth rate was also more than <a target="_blank" href="/news">double the national housing credit growth rate of 5.4% for 2011</a> calculated by the RBA (the lowest since the central bank began compiling figures in 1977).
During the year in which NAB kicked off its “Break-up” campaign on Valentine’s Day – encouraging Commonwealth Bank, Westpac and ANZ borrowers to switch to NAB – it grew its mortgage book by $19 billion to $177 billion, comprising $126 billion in owner-occupier mortgages and $52 billion in investment loans.
Year-on-year figures for major and second-tier lenders (owner-occupier and investment loans)
<table style="width: 470px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="187" valign="top">
 
</td>
<td width="94" valign="top">
Loan book December 2011
</td>
<td width="113" valign="top">
Loan book December 2010
</td>
<td width="114" valign="top">
Gain over the year
</td>
<td width="107" valign="top">
% change
</td>
</tr>
<tr>
<td width="187" valign="top">
Westpac
</td>
<td width="94" valign="top">
$285 billion
</td>
<td width="113" valign="top">
$268 billion
</td>
<td width="114" valign="top">
$17 billion
</td>
<td width="107" valign="top">
6.3%
</td>
</tr>
<tr>
<td width="187" valign="top">
CBA
</td>
<td width="94" valign="top">
$263 billion
</td>
<td width="113" valign="top">
$252 billion
</td>
<td width="114" valign="top">
$11 billion
</td>
<td width="107" valign="top">
4.3%
</td>
</tr>
<tr>
<td width="187" valign="top">
NAB
</td>
<td width="94" valign="top">
$177 billion
</td>
<td width="113" valign="top">
$158 billion
</td>
<td width="114" valign="top">
$19 billion
</td>
<td width="107" valign="top">
12%
</td>
</tr>
<tr>
<td width="187" valign="top">
ANZ
</td>
<td width="94" valign="top">
$163 billion
</td>
<td width="113" valign="top">
$153 billion
</td>
<td width="114" valign="top">
$10 billion
</td>
<td width="107" valign="top">
6.5%
</td>
</tr>
<tr>
<td width="187" valign="top">
Bankwest (owned by CBA)
</td>
<td width="94" valign="top">
$45 billion
</td>
<td width="113" valign="top">
$40 billion
</td>
<td width="114" valign="top">
$5 billion
</td>
<td width="107" valign="top">
12.5%
</td>
</tr>
<tr>
<td width="187" valign="top">
ING Direct
</td>
<td width="94" valign="top">
$37 billion
</td>
<td width="113" valign="top">
$36.5 billion
</td>
<td width="114" valign="top">
$0.5 billion
</td>
<td width="107" valign="top">
1.35%
</td>
</tr>
<tr>
<td width="187" valign="top">
Suncorp
</td>
<td width="94" valign="top">
$29 billion
</td>
<td width="113" valign="top">
$28 billion
</td>
<td width="114" valign="top">
$1 billion
</td>
<td width="107" valign="top">
3.5%
</td>
</tr>
<tr>
<td width="187" valign="top">
Bendigo and Adelaide
</td>
<td width="94" valign="top">
$22 billion
</td>
<td width="113" valign="top">
$19 billion
</td>
<td width="114" valign="top">
$3 billion
</td>
<td width="107" valign="top">
15.7%
</td>
</tr>
<tr>
<td width="187" valign="top">
Bank of Queensland
</td>
<td width="94" valign="top">
$21 billion
</td>
<td width="113" valign="top">
$17 billion
</td>
<td width="114" valign="top">
$4 billion
</td>
<td width="107" valign="top">
23.5%
</td>
</tr>
<tr>
<td width="187" valign="top">
HSBC
</td>
<td width="94" valign="top">
$7.3 billion
</td>
<td width="113" valign="top">
$6.8 billion
</td>
<td width="114" valign="top">
$0.5 billion
</td>
<td width="107" valign="top">
7.3%
</td>
</tr>
</tbody></table>
Source: APRA figures
When including the performance of its subsidiary Bankwest (growth of 12.5%) the Commonwealth Bank managed growth of 9.4%. As a stand-alone brand, the Commonwealth Bank managed growth of 4.3% for the year.
ANZ and Westpac (including St George and Bank of Melbourne) managed similar mortgage growth of 6.5% and 6.3%.
Using the same APRA figures but over a longer period and looking only at owner-occupier mortgages, The Weekend Australian shows the big four have grown their mortgage books by a combined $175 billion since the GFC (November 2008- December 2011), with Westpac showing the greatest growth (helped by the addition of St George’s $38 billion book) from $75 billion to $166 billion.
Federal Treasurer Wayne Swan disagrees that the major banks are increasing their market share.
“A lot of what you read from time to time in this area doesn't match up with the facts. We have powerful vested interests out there that are pushing their line all the time,” Swan said in an interview on the ABC’s Insiders program yesterday.
“Certainly the big four have a large market share, but these competition reforms are driving the capacity of the smaller lenders to get in there and to provide some vigorous competition and to give consumers a choice so that if they're unhappy with one of the big banks they can walk down the road and get a better deal,” he says.
Among the second-tier lenders, Bank Queensland was the star performer, recording mortgage growth of 23.5% over 2011, followed by Bendigo and Adelaide Bank (15.7%).
NAB has maintained the lowest standard variable interest rate of the big four banks – currently at 7.22% compared with ANZ’s 7.3%, Commonwealth Bank’s 7.31% and Westpac’s 7.36%.
It also currently has the lowest standard variable mortgage in the market through its online brand Ubank – currently at 6.14%, though only for those borrowers who are refinancing.
 
 
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Second-tier lenders and NAB big winners in 2011 mortgage wars

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Westpac says expectations of lower mortgage growth and the need to remove duplicate back-office roles as part of phase two of its post-St George merger are the reasons for its decision to axe about 560 jobs.
Peter Hanlon, Westpac financial services executive, says the job cuts will mostly be in mortgage processing and head office roles.
“We don’t see in the near to medium term a pick-up in housing or business credit growth,” he said following the announcement.
Hanlon estimates about one-third of those axed will be transferred to other roles, with up to 400 staff made redundant.
The move to cut jobs has been slammed by the Finance Sector Union, which has urged the government to intervene and stop the cuts. 
“Westpac can afford to keep every single one of these workers in their jobs and continue to make a multi-billion-dollar profit,” says FSU secretary Leon Carter.
In an interview on ABC radio today, Westpac CEO Gail Kelly refused to rule out further job cuts and would also not say how much of an expected February rate cut the bank would pass on to borrowers.
Her comments on higher funding costs suggest borrowers should brace themselves for the banking not matching any RBA move.
“These are complex matters and we won’t foreshadow and decision ahead of the time,” Kelly said, adding that the linkage between interest rate decisions and the cash rate had weakened.
However, she said the actions of the European Central Bank (ECB) in December that injected significant liquidity into the banking system had taken “the cataclysmic risk of the eurozone collapsing off the table”.
“[The actions of the ECB] have underpinned the banking system and the eurozone overall,” Kelly said.
However, she said hopes voiced a year ago that funding costs would be on the decline and returning to more normal levels had not happened,
“The troubles in the Eurozone means they have remained elevated. If anything they are higher now then they were at any times during the entirety of GFC and its more expensive to raise deposits,” she said.
Kelly said the bank had to safeguard net interest margins on its loans or else face the risk of potentially reducing the level of credit provided and “potentially landing up in a credit crunch”.
“We’re into a very much more slowing growth world – you only have to look at Europe to see that we are into several more years of much slower growth.
“This changed world brings with it higher levels of funding costs and changing consumer patterns and as banks we do need to adjust.”
She also defended the jobs cuts and said they were part of plans to simplify banking systems.
“This is the largest announcement we are likely to make this year …you can expect us to have a lower number of employees at the end of the year than we had at the beginning,” she said.
Kelly pointed out the bank was adding new roles at the same time as sacking staff, adding about 200 staff to its Bank of Melbourne operations, 50 new roles in financial advice, 50 new roles in institutional banking and has recently recruited 83 graduates.
The Property Council of Australian office report forecasts 7,000 financial services jobs to go in 2012.
ANZ axed about 130 positions earlier this month while the Royal Bank of Scotland plans to cut 170 jobs in Australia.
 
 
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Westpac cuts jobs as mortgage demand falls and won’t commit to passing on rate cuts

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AFG mortgage brokers arranged 4,736 home loans worth a combined $1.8 billion in January 2012, a 40% increase on January 2011, when brokers wrote 3,583 worth $1.3 billion. 
The aggregator says the January result marked a return to more normal trading levels after January 2011 was affected by the Queensland floods and other natural disasters. 
Not surprisingly, one of the biggest jumps in mortgage sales was recorded in Queensland, where brokers wrote 80.6% more mortgages in January 2012 than January 2011. 
The top performer was South Australian, where sales increased by 84.5% compared to a year ago. 
There were also significant uplifts in WA (+ 37.4%), Victoria (+25%) and NSW (+14.5%). 
In January WA also took over from NSW as the most popular state for first-home buyers, with almost one in five new mortgages (19.1%) in WA arranged for first-home buyers compared with 14% in NSW. 
NSW retained its position as the most popular state for property investors, with 40.2% of loans arranged for investment purposes, compared to 36.8% in Victoria, 34.9% in Queensland, 32.6% in Western Australia and 32.0% in South Australia. 
Major banks recovered some of the market share they lost in December, writing 79% of all mortgages in January, compared with 76% in December.  A year ago major banks wrote 81% of all AFG mortgages. 
Mark Hewitt, general manager of sales and operations, says: ‘While markets across the country have recovered from last year’s natural disasters, right now we have a strong sense that borrowers are playing wait and see on rates. 
“Will the RBA cut rates, and if so, how much of this will be passed on by lenders? 
“It seems that we are moving to a new paradigm where there is less and less linkage between the cash rate and mortgage rates. An RBA cash rate cut will not automatically translate into improved consumer confidence." 
The AFG Mortgage Index also shows that nearly one in five new borrowers (18.6%) opted for a fixed-rate home loan. This figure is close to the high water mark of 20.4% for fixed-rate products recorded last October.
 
 
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Mortgage sales up 40% in January year-on-year: AFG

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Demand for fixed-rate mortgages appears to have peaked, with Mortgage Choice recording a drop in the proportion of these loans written in January, the first decline since May 2011.
Mortgage Choice customer data shows fixed-rate products accounted for 21% of all new home loan approvals in January 2012, a fall from 24% in December 2011.
The mortgage broking franchise expects fixed-rate demand to fall further in February, should lenders pass on all or some of an RBA rate cut next week.
The likelihood of banks passing on a full RBA rate cut appears to be growing more remote by the day, with the Australian Bankers Association today putting out a statement attempting to explain how banks source their funding and highlighting that more than 20% of their funds comes from overseas.
“Australia’s banks have to raise an important proportion of their funding from overseas,” says Steven Münchenberg, chief executive of the ABA.
“The deep crisis in Europe means the cost of borrowing money in those international markets has risen to levels last seen during the global financial crisis… Because overseas prices are so high, there is greater demand for funds from depositors and investors in Australia.  This has driven up the price of this money as well.
“While the RBA has been cutting rates, banks have continued to pay high interest rates to depositors, benefitting Australian savers, but adding to the cost of bank funding,” he says.
The number of lenders cutting fixed rates has fallen sharply, with Westpac brands St George and Bank of Melbourne the last big lenders to trim fixed rates, doing so just before Christmas.
Despite the drop, <a target="_blank" href="/news">demand for fixed-rate mortgage</a> still stands well above both the six-month average of 19% and the 12-month average of 16%.
Demand for ongoing discount variable-rate mortgages (where the rate is discounted over the life of the loan in exchange for higher fees) jumped from 41% to 46% in January, an all-time Mortgage Choice high.
<img src="/images/stories/mcfeb2.gif">
“Our latest loan approval figures suggest borrowers taking out new loans at the start of this year were less concerned with locking in their loan’s interest rate than those who took out a new loan in late 2011,” says Mortgage Choice spokeswoman Belinda Williamson. 
“Interest rate cuts and generous discounting on variable rate loans could be the key drivers behind borrowers giving fixed rate loans the cold shoulder. The margin between fixed and variable has narrowed, with most variable rates now sitting only slightly higher than fixed rates,” she adds. 
According to Williamson, if the RBA cuts rates on February 7 and lenders pass on most of this rate cut, “some variable rates could very well fall below fixed rates”. 
“If this occurs, next month’s loan approval data may show a bigger shift towards variable rate loans.” 
Demand for basic variable loans fall slightly to 14% of all approvals in January, from 15% in December while standard variable loan demand dropped marginally to 15% from 16%. 
Line-of-credit loan popularity held steady at 3% and interest in introductory rate loans remained below 1%.
 
 
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Banks talk of withholding RBA cuts while fixed-rate mortgage demand falls

<html><body>
Mortgage lending remains in the doldrums, with the latest RBA figures showing only a 0.4% increase in housing credit provided during December on a seasonally adjusted basis. 
The December result matched the 0.4% increase in housing credit provided in November. 
For the calendar year, mortgage lending is up 5.4% compared with annual growth of 7.2% recorded in December 2010.
This is the lowest growth since records began in 1977. The previous lowest annualised growth for a calendar year was 7.2% recorded in December 1982.
Owner-occupier lending increased by 0.4% in December to be up 5.7% for the year, while loans to property investors increased by 0.3% to be up 4.8% for the year. 
On an annualised basis, mortgage lending declined every month of 2011. 
Economist and former Gillard government advisor Stephen Koukoulas tweeted: “Housing credit growth slumps to new 34 year low (since records were kept dating back to 1977)... the disappointing news continues.” 
Mortgage lending growth in 2011 (monthly and annual growth in %)
 
<table width="223" cellpadding="0" cellspacing="0" border="0"><tbody>
<tr>
<td valign="bottom" nowrap width="101">
 
Jan-2011
</td>
<td valign="bottom" nowrap width="59">
0.6
</td>
<td valign="bottom" nowrap width="63">
7.2
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Feb-2011
</td>
<td valign="bottom" nowrap width="59">
0.5
</td>
<td valign="bottom" nowrap width="63">
6.9
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Mar-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
6.5
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Apr-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
6.4
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
May-2011
</td>
<td valign="bottom" nowrap width="59">
0.5
</td>
<td valign="bottom" nowrap width="63">
6.2
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Jun-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
6.1
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Jul-2011
</td>
<td valign="bottom" nowrap width="59">
0.5
</td>
<td valign="bottom" nowrap width="63">
6.0
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Aug-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
5.9
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Sep-2011
</td>
<td valign="bottom" nowrap width="59">
0.5
</td>
<td valign="bottom" nowrap width="63">
5.8
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Oct-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
5.7
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Nov-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
5.6
</td>
</tr>
<tr>
<td valign="bottom" nowrap width="101">
Dec-2011
</td>
<td valign="bottom" nowrap width="59">
0.4
</td>
<td valign="bottom" nowrap width="63">
5.4
</td>
</tr>
</tbody></table>
Source: RBA
Mortgage lending has not grown by more than 1% per month since June 2007, when it increased by 1.3%.
Since then mortgage lending growth has varied between 0.4% and 0.8% per month.
Business lending rose by 0.3% over December to be up 1.4% for the year while personal credit declined by 0.1% over December to down 1% for the year.
Total credit provided to the private sector by financial intermediaries rose by 0.3% over December 2011 to be up 3.5% for the year.
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