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

Joel Robinson

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

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

Lowe Living unveils Middle Park apartment development

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

DVB Projects to launch second Broadbeach apartment tower as demolition commences

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

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

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

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

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

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

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

NAB bring forward first RBA cut to February 2025

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Home loan applications are up 23% for the first three weeks of January 2012 compared with January 2011, according to RateCity.com.au.
The mortgage comparison website recorded an increase in activity over the past six months and a 41% jump in applications in December 2011 compared with July 2011.
It is unclear though how much of this increased activity is due to borrowers taking out new home loans or existing home owners refinancing their mortgages, as RateCity.com.au is unable to provide a breakdown of home loan applicant types.
RateCity.com.au has attributed the increased activity to lower property prices, two successive interest rate cuts and “aggressive discounting by lenders eager to kick-start the borrowing market”.
It has also noted a return of first-home buyers to the market following RBA data showing that first-home buyers make up one in five (20%) of all mortgages for the first time in almost two years.
Damian Smith, RateCity's CEO, said the mortgage market is finally picking up the pace.
"This year, the mortgage market looks set to recover from the past two years of slower growth," Smith says.
"While we're yet to see the strong numbers of home buyers from five years ago, lenders are likely to see business improving this year as borrowers react to lower prices and interest rates."
Almost 51,000 home loans were financed in November, according to figures from the Australian Bureau of Statistics released last week.
"This is the biggest number of home loans financed recorded by the ABS for two years," says Smith. "The dollar value of these home loans was almost $15 billion in November alone."
According to RateCity.com.au, the lowest rate on a three-year fixed-rate loan is 5.95% offered by non-bank lender HomeStar Finance, which is funded by ING; Deutsche Bank and HSBC.
The lowest standard variable rate loan is offered by non-bank lender State Custodians at 6.22%. NAB’s Ubank is offering a refinancing standard variable loan at 6.14%.
 
 
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lschlesinger-FZcF9M3vE6

Mortgage applications up 23% in January: RateCity

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As we move into a new year, it is my feeling that interesting times are ahead for both the Australian residential property and mortgage markets. 
There is no doubt that as uncertainty continues in global economies many Australian home owners will continue to hurt financially. 
However, the prevailing economic conditions are also heavily influenced by decisions made by the Reserve Bank of Australia, which moved to cut the official cash rate by 50 basis points over November and December – decisions that will no doubt help stimulate the property and mortgage markets. 
Recent labour force data released by the Australian Bureau of Statistics has certainly fuelled speculation that the Reserve Bank will move in February (at least), with many pundits predicting a potential cut of 25 basis points – bringing the official cash rate down to 4%. 
Such downwards movement in rates is helping to improve purchase conditions and levels of confidence for many of those Australians who are in a position to buy yet spent 2011 sitting on the fence. And with the rental market continuing to tighten across the country, many buyers, including both previous renters and investors, are moving to take advantage of fortuitous purchase opportunities and lending conditions. 
Therefore, circumstances that are highly concerning for many are also helping to improve prospects for others.  Interesting times ahead. 
So how can borrowers best approach mortgage management in 2012?
When to fix? 
Understandably, many of those people looking to obtain finance to purchase a property will be waiting for the possibility of further rate cuts so as to secure the lowest fixed-rate home loan package. 
While there is certainly the potential for fixed rates to come down with further rate cuts, it is my suspicion that the rates offered by lenders across the board will eventually bounce back up at some stage over the course of the year. 
If this happens, it will occur with little warning and could be quite substantial – with prospective borrowers missing out on good mortgage packages, resulting in larger monthly repayments. 
As such, I would advise that those borrowers who wish to fix do so, as rates are coming down – a mortgage professional will be able to provide guidance as to the best product and associated rate for your personal situation. 
Choose your lender wisely 
I would encourage those borrowers who may usually prefer to do their banking with the big four to contemplate the mortgage offerings of second-tier lenders. As the major banks ponder whether or not to pass on rate cuts in full, the mortgage products of many second-tier lenders generally present good propositions, and are certainly worthy of consideration if suitable for your personal situation. 
This goes for current mortgage holders as well – don’t discount the value that refinancing with a second-tier lender could have if your current lender declines to pass on any future rate cuts (be it one of the big four banks or another second-tier company). 
Take care with valuations when refinancing 
With some property values declining in various areas of the country across 2011, investors may find that when refinancing in order to expand a property portfolio, a valuation shows their position is not as strong as they had thought.  As such, it is essential that investors ensure they have adequate equity prior to making further purchases, and ideally should consult with a mortgage professional to ascertain their true financial position. 
Despite concerning conditions in global financial markets, the year to come should certainly present some attractive mortgage opportunities to those Australians who are financially positioned to make a property purchase.  I would urge buyers to seek the advice of a mortgage professional so as to be able to take advantage of attractive interest rates and to ensure that you end up with the best home loan for your circumstances.
Charles Tarbey is chairman and owner of <a href="https://www.century21.com.au/" target="_blank">Century 21.</a>
 
 
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ctarbey-W47GL9jwxa

What's in store for borrowers in 2012

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Victorian’s mortgage comfort level has plummeted in the last three months, according to the latest ING Direct Financial Wellbeing Index. 
Over the last three months of 2011, the state’s borrowers have gone from being the most comfortable with their level of mortgage debt to being the least comfortable.
Victorian borrowers were the most confident in the September 2011 survey, leading the nation in comfort with their mortgage (5.6 out of a possible 7), household income (4.19) and personal savings (3.58). 
However, in the December 2011 survey, Victorian borrowers scored 5.3 out of seven – the lowest comfort level of all states despite having a relatively small median mortgage debt of just under $187,000. 
The index measures personal comfort level on a scale from 1 (“very uncomfortable”) to 7 (“very comfortable”).
<img src="/images/stories/comforting.gif">
Source: ING
“Victorians are falling behind financially,” says ING. “The fourth quarter of 2011 saw a significant plunge in Victoria’s household financial wellbeing as the state’s index score dropped to 101.4 down from 110.1 in the third quarter. 
“The state also recorded the nation’s lowest comfort ratings across five key indicators including comfort with long term debt, savings, ability to pay bills, income and investments. 
“In 2011 only 27% of Victorians gained ground with their personal finances – 36% fell behind (59% of low-income earners) with 77% blaming the increasing cost of household essentials. 
“One in four (25%) expect their personal finances to deteriorate further in 2012. 
“Higher taxes/levies and rising living costs are the chief financial concerns for 32% of Victorians, followed by fears of job losses (20%),” the report highlights. 
Further suggesting a gloomier outlook, a higher proportion of Victorians (40%) expect the economy to worsen in 2012 compared to a national average of 35%. 
Conversely Victorians feel more comfortable about their level of savings (up to 3.83 from 3.58), suggesting as shift towards deleveraging. 
About 41% of Victorians are making extra mortgage repayments compared with 36% of borrowers in NSW and the ACT. 
In contrast, mortgage holders in NSW and in the ACT are most comfortable about managing their mortgage repayments and other long-term debts, with the state achieved the nation’s top score for financial wellbeing of 109.1. 
NSW and ACT borrowers scored 5.9 out of 7 on the mortgage debt component of the index. Borrowers from NSW and the ACT have a median mortgage debt of $264,000. 
Only 21% of NSW households saw their financial situation deteriorate in 2011, compared with 32% nationally. 
One in three (31%) NSW households expect the economy to deteriorate in 2012, but 78% see their personal finances improving or holding steady this year. 
Including all six measures of financial wellbeing (mortgages, credit cards, savings, investments, household income and ability to pay bills), the state’s wellbeing index has improved from 108 to 109.1, and NSW and Western Australia have the joint highest overall comfort level of 4.4. 
According to ING, Western Australian borrowers are making the most effort to deleverage, with more than half (55%) making extra mortgage repayments.  The state has the smallest average mortgage debt of $159,000. 
Overall, the survey found that almost two-thirds of households (61%) are comfortable with their home loans with 41% ahead with their mortgages – though is down slightly from 46% in the third quarter. 
Although 35% of Australians expect the economy to deteriorate in 2012, only 22% of households believe their personal financial wellbeing will decline. 
The majority (75%) expect their financial position to improve or remain unchanged. 
One in four (27%) households hold less than $50,000 worth of assets, including equity in the family home (excludes superannuation savings). Over half (52%) have no investments at all outside their home and almost the same proportion (50%) have less than $17,000 in personal savings.
 
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Victorian mortgage confidence plummets: ING 

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The appeal of line-of-credit mortgages – traditionally popular among property investors – has declined to levels last seen May 1998, according to the latest ABS Housing Finance figures.
The November figures show that only 3.7% of home loans were revolving line of credit, with just 1,900 of these loans taken out over the month.
Line-of-credit loans peaked at 16.1% of all loans in June 2002, when more than 8,300 of these loans were taken up by borrowers.
The popularity of the products, which act like giant credit cards or bank overdrafts, dropped below 10% of all loans in 2006.
Their recent decline has matched Australian households increasing their savings and deleveraged their balance sheets in the response to the GFC and in the face of more economic uncertainty.
 
<table style="width: 470px;" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="214" valign="top">
 
</td>
<td width="219" valign="top">
Line of credit mortgages as % of total housing finance
</td>
<td width="183" valign="top">
Average loan size
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2002
</td>
<td width="219" valign="top">
12.4%
</td>
<td width="183" valign="top">
$155,000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2006
</td>
<td width="219" valign="top">
8.2%
</td>
<td width="183" valign="top">
$195,000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2007
</td>
<td width="219" valign="top">
5.8%
</td>
<td width="183" valign="top">
$253,000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2008
</td>
<td width="219" valign="top">
6.5%
</td>
<td width="183" valign="top">
$301.000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2009
</td>
<td width="219" valign="top">
5.6%
</td>
<td width="183" valign="top">
$288,000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2010
</td>
<td width="219" valign="top">
5.1%
</td>
<td width="183" valign="top">
$335,000
</td>
</tr>
<tr>
<td width="214" valign="top">
November 2011
</td>
<td width="219" valign="top">
3.7%
</td>
<td width="183" valign="top">
$318,000
</td>
</tr>
</tbody></table>
Source: ABS
“It’s certainly speaks to the shift in both the market and consumer behaviour to see the reduction of revolving lines of credit in the home loan market,” says Dean Rushton, chief operating officer of mortgage broker Loan Market.
Rushton says their popularity has declined because borrowers are choosing cheaper products that offer redraw facilities or offset accounts should they need extra money. 
“These products are often free of any additional fees,” he says.
“Line-of-credit home loans for residential finance that were more in favour during the early to mid-2000s appear to be headed for the mortgage museum as a result of the GFC,” he says.
“However, the key point here is consumers want to have the one-two punch of having access to additional funds paid and the forced discipline of reducing their loan amount.”
Rushton says the key disadvantage for a revolving credit line is that interest rates were generally 10 to 20 basis points higher.
He says with offset and redraw features borrowers can access an amount up to the amortised rate of their mortgage.
“This type of transaction ensures that borrows do not fall behind on their original repayment schedule,” he says.
Line-of-credit mortgages work in the same way as an overdraft account – they provide an approved limit of borrowings that investors can use piecemeal or all at once, depending on their needs.
Interest is accrued on how much of the loan is used and unlike other mortgages it does not have a fixed loan term.
The products have been popular among investors because they allow them to tap into the equity already built up in their portfolios and use this to fund further property purchases or renovations.
Line-of-credit loans were introduced into Australia in the early 1990s but only started growing in popularity in 1999.
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Investors shun line-of-credit loans in favour of cheaper alternatives

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Administrators of Refund Home Loans have reportedly issued two draft contracts for the sale of the business, with a third contract expected to be drafted soon.
A letter from Refund Home Loans administrator SV Partners has been sent to franchisees advising them of the draft contracts, said industry website Australian Brokernews.
SV Partners is currently awaiting response on any amendments required to the contracts and has told creditors it is in their best interests for the negotiations to run their full course.
"Whilst the terms of all three offers are different, we believe that all three offers will provide creditors and franchisees with a better result than if the company is wound up and a sale does not occur," the letter says.
Refund Home Loans, which was started by Wayne Ormond, was placed in administration in October last year and <a href="https://www.propertyobserver.com.au/showcase/wayne-ormond-s-refund-home-loans-owes-creditors-millions-as-relations-with-franchisees-turn-sour/2011111652384" target="_blank">owes 119 creditors a combined $9.7 million.</a>
Creditors include Refund Home Loans franchisees, law firm DLA Piper, mortgage broking training provider Intellitrain and WA-based Ourimbah Holdings Pty Ltd.
A sale before Christmas had been targeted.
Before its collapse Refund was valued by Deloitte at between $40 million and $50 million, but the company struggled to obtain additional lines of funding after expanding into real estate services and financial planning and was forced into administration by its lender.
Ormond said in December that while he had managed to raise $1.5 million from two investors before the collapse, he could not raise enough money after the share market collapsed and the business environment turned sour.
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Three offers on the table to buy Refund Home Loans

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The ACCC is investigating whether it is in the best interest of consumers for some mortgage broking groups and lenders to make it compulsory for their brokers to be members of industry body the Mortgage and Finance Association of Australia (MFAA).
Two of the industry’s biggest franchise groups, Aussie Home Loans and Mortgage Choice, require their brokers to be members of the MFAA rather than accept membership of rival industry body, the Finance Brokers Association of Australia (FBAA).
Membership of the MFAA is not a requirement of the National Consumer Credit Protection Act, the legislation introduced in 2010 that requires brokers to be licensed and sets out standards for conduct and compliance.
In 2008, before the introduction of compulsory licensing, the ACCC granted permission to Mortgage Choice, Aussie and others to enforce the requirement (known as third-line notifications) that their brokers be members of the MFAA.
However, it is now seeking industry comment and has written to about 70 industry participants including brokers, aggregators, banks and ASIC as part of its review of this decision.
In the letter written by the ACCC to industry stakeholders it says it could revoke these notifications at any time "if it determines that the conduct to which the notification relates no longer delivers a net benefit".
The FBAA claims to be an industry body run by brokers for brokers and says on its website that “all but one elected executive positions are held by practising finance brokers in their own right”.
It says enforcement of compulsory MFAA membership is anti-competitive.
“[These practices] restrict consumers’ ability to have the right of choice as to which broker they use and what lenders that broker is able to access,” said FBAA president Peter White in the organisation’s ­submission to the ACCC on the matter.
The MFAA has strong lender representation and has been accused in the past of having a strong leaning towards the major banks, counting the Commonwealth Bank and NAB as its “platinum industry partners”.
Mortgage Choice has said previously that it would defend its decision requiring compulsory membership. 
“While we appreciate MFAA membership is not a conditional requirement of NCCP, Mortgage Choice is committed to the MFAA and strongly believes in the need for an independent industry association,” the franchise group said last year.
A spokesperson told Property Observer today it was "waiting to hear from the ACCC regarding their decision".
 
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ACCC reviewing compulsory mortgage broker industry body membership

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I’m often asked where “effective lives” come from, and the short answer is the Commissioner of Taxation. The long answer is a lot more complicated than that.
For those uninitiated in how depreciation rates are calculated for plant and equipment assets, the effective life is important because it drives the depreciation rate. Take, for example, the addition of carpet to a rental property. As at the time of writing, the depreciation rate under the diminishing method is 20%. This is calculated by dividing 200 by an effective life of 10. The commissioner is responsible for giving us the effective life of carpet at 10 years.
Effective lives are determined by the commissioner through estimating the period if can be used by any entity for a taxable purpose (within an investment property), assuming it is:
<ul>
<li> subject to wear and tear at a reasonable rate; and</li>
<li>maintained in good order and condition. </li>
</ul>
The commissioner determines the effective life based on historical information and future expectations. He or she specifically considers things such as those mentioned below.
1. The physical life of the asset
This relates to the period a depreciating asset can be used by an entity for the relevant purpose. The case may be put that as long as the asset physically exists and is not physically exhausted, then it is able to be used. In this case we’re looking at the outer limit of an assets life through historical evidence.
2. Engineering and manufacturers specifications
The estimate of an effective life will not always remain the same. Changes in technology and the quality of manufacture will result in an increase or decline in the usable life of an asset. Manufactures specs are a good guide to how long something will last. Warranty periods can also give an indication of the evolution of an assets effective life over time. If ceiling fans that have always had a five-year warranty but newer models are coming out with 10 years, there’s a case to the argument for an increase in the effective life.
 3. The way the asset is used by an industry
We touched previously on the past experience of users in the first point, but it’s interesting to note that not all industries use their assets in the same way. A perfect example exists in the different effective life of carpets. For example:
Residential property = 10 years
Commercial offices = 8 years
Accommodation providers = 7 years
Restaurants, pubs and the like = 5 years
Perhaps the most entertaining example is the difference between the effective life of furniture in a pub depending on whether it exists in a dining area (eight years) or a drinking area (a mere five years!) Clearly the furniture gets a much harder time where booze is involved!
In all seriousness, this is where property owners need to engage an experienced tax depreciation quantity surveyor, as knowing the difference between these effective lives can result in significant increases in tax deductions.
4. Levels of repairs and industry standards
Some plant and equipment items could in theory be repaired on an ongoing basis in order that they continue operating indefinitely. However, the legislation states that an asset only need be maintained in reasonably good order and condition. The term reasonably considers that it is not always reasonable to continue spending money on an asset where it would make more economic sense to dispose of it a purchase a new one.
5. Obsolescence, abandonment and scrapping
Plant and equipment assets can become obsolete either through technological or commercial reasons. For example, something may become commercially obsolete because the asset produces goods that are no longer required or current. Technological obsolescence is something we’re all familiar with. Anyone with a mobile phone understands that over time tools become available that perform the same tasks faster, more efficiently, and with more relevance to the greater marketplace. However. an asset’s life does not necessarily end because something newer has come along. Obsolescence is only considered when it prevents the continued use of the asset for the purpose it was designed.
Quantity surveyors are able to “scrap” assets that have reached the point of obsolescence, or the end of their productive life. Say for example you have owned a property for some time and are undertaking renovations. Assets like old blinds, carpets, cooktops and the like will have a residual value that can be written off, as the assets are being thrown away and replaced. Scrapping is a practice that I will elaborate upon further in another article.
6. Market values, economics and financial analysis
Lease periods can be a good indicator of the effective life of an asset as it is unlikely that an asset would be leased for a period longer than it is useful. In the same way, an effective life should be no shorter than the period it can be leased for. If a company leases a crane for 10 years, it clearly believes (and have historical evidence/manufacturers specifications) that demonstrate that it will last the whole of that time. This can be expanded into a financial analysis. If, for example, a large manufacturing plant and equipment item costs a certain amount to purchase, there must be an expectation that it will serve its purpose preparing or producing a certain quantity of products for a certain number of years.
In evaluating market values for the determination of effective lives, it can be seen that depreciating assets with a market value will decline in value over time. For example, a brand-new lawn mower might be $400 today, however in four years’ time its value will be closer to $200.
In analysing the decline in value over time, you can get a sense of the time it takes for the majority of its value to depreciate away.
In conclusion, there is a significant amount of analysis and empirical evidence that can be used to estimate the effective life of an asset, and I hope that this explanation of some of the tools at the commissioner’s disposal sheds some light on where an effective life comes from.
 It’s also important to remember that property owners are able to determine their own effective lives based on these factors, however it is best to contact a quantity surveyor or similarly qualified expert before doing so.
For more information you can search for the relevant taxation legislation on effective lives, such as TR 2011/2 (as at the time of writing), where you can find more information about the determination of effective lives. This legislation is normally updated for the beginning of each financial year.
Mike Mortlock is director of <a target="_blank" href="https://www.mcgqs.com.au/">MCG Quantity Surveyors.</a>
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mmortlock-YX58RgDaQB

How to determine the effective life of a depreciating asset in your property

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If you trawl through CBA's covered bond promo materials there is some fascinating new data that confirms points about the housing market I've made here in the past. It also serves to highlight the quite misleading dissembling of the housing '”desctructionistas” (i.e., the Steve Keens of the world). 
The first extract of interest compares the default rates of CBA's first-time buyers with its overall portfolio. You can see from the chart below that until 2010 first timers actually had lower default rates than your average borrower. Recall the hyperbole that folks like Keen were pushing during the GFC, when he claimed that the major banks lending to first timers, combined with the government's-first time buyers' boost, would result in a mass of delinquencies? Sorry, that was just another mistruth.
<img src="/images/stories/jan181.gif">
<img src="/images/stories/jan182.gif">
In some respects, the parsimony of first timers makes intuitive sense: they are typically investing a larger share of their net worth and income in buying a home and servicing the repayments than older and wealthier buyers. While this brings with it some extra risk (e.g., via lower equity), it also tells us that many first timers on lower incomes are committing higher shares of their labour earnings to keeping a roof over their heads than older buyers. For some borrowers, this creates a better alignment of interests. For others, it may heighten the risk they default. What we can see from CBA's data is that first-time buyers don't seem to have a fundamentally higher probability of default than other borrowers, although there has been convergence since 2010. 
There are other explanations for this, of course: as I've argued before, our banks are very cautious in setting their lending criteria. It is possible that CBA is even more rigorous in its credit assessment when looking at first timers versus the rest of the borrowing population, which in turn helps to reduce credit risk. 
The second CBA chart looks at the losses realised on CBA's home loan portfolio in comparison with all non-home loan assets between 1983 and 2011. It portrays a familiar story: historically, the real  risk for Australian banks lies not in lending to people buying homes (as many pundits claim), but rather in <a target="_blank" href="https://www.propertyobserver.com.au/commercial/commercial-not-residential-property-in-a-price-bubble-christopher-joye/2011092851714">business borrowings and commercial property </a>(especially the latter). 
This is why, quite rationally, APRA makes it more expensive for banks to lend to businesses – via higher “risk-weightings” – than to people acquiring established homes. In short, the historical risk of doing so has been demonstrably higher, so APRA makes you hold more capital against these loans. 
Interestingly, we now have two clear case studies – the 1991 recession and the 2007-09 GFC – where residential lending has proven its vastly superior resilience relative to business credits. 
This is also why some major bankers' calls for APRA to change the risk-weightings to favour business lending would appear to be either ignorant or subversive.
<img src="/images/stories/jan183.gif">
As a final aside, it is gratifying to see that my good friends over at the CBA are using our “house price-to-income ratio” analysis in their covered bond promo materials, although I note that this is incorrectly labelled: this data comes from Rismark, not RP Data (see below). 
A related observation would be that using the ABS's free-standing, established house price index, which ignores the circa 25% of all homes that are apartments, semi-detached, and terraces (especially in metro areas) to mark-to-market a covered bond portfolio, is hazardous, to say the least. It opens CBA up to the criticism that it is not properly assessing the collateral values of the circa 80% of all assets that are being used to secure the covered bond. For example, what happens if the higher priced detached house market is outperforming the apartment, semi and terrace sectors, and thereby giving artificially positive marks to the CBA portfolio? There is no need for these valuation errors since there are freely available indices that cover all property types – and which more accurately measure price changes (according to the RBA) – that are currently being used by CBA's competitors, and indeed promoted by CBA's economists. A very odd oversight.
<img src="/images/stories/jan184.gif">
Christopher Joye is a leading financial economist and a director of Rismark International and Yellow Brick Road Funds Management. The above article is not investment advice.
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chrisjoye-JYhJsTrNRC

Housing crash talk due to envisaged first-home delinquencies just hyperbole: Christopher Joye

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After a year of keeping interest rates on hold, the Reserve Bank’s decision to cut the official cash rate not once, but twice at its final two meetings for 2011 is certainly a nice Christmas present for many property investors and home owners with a mortgage.  But a question that I seem to often get asked, as do many brokers in the Century 21 Home Loans network, surrounds how borrowers and potential buyers can ensure they are able to maximise the rate cut, beyond simply the immediate reduction passed on by their lender. 
In addressing this concern I would say that the relationship you have with your mortgage broker is probably more important than ever before, and now may present a good time to sit down with a professional to revisit your options.  A proficient mortgage professional will have a thorough understanding of a wide range of products currently available and should be able to advise you on the best course of action for your specific situation. 
Rate cuts – has your lender passed them on? 
With the recent spate of rate cuts and potentially more in the pipeline, first and foremost, it’s worth checking to ensure your lender is passing on the cuts or at to what extent.  Don’t be the borrower who is missing out on cuts. 
Reassess your mortgage 
With constantly varying lending criteria, fees and the like, mortgage holders may find that a combination of lowered interest rates and changing conditions have made alternative products more appropriate for their circumstances.  Your mortgage broker should be able to take you through a wide range of product options and clearly explain how the refinancing process works – ensuring you have the right information to make an informed mortgage decision. 
Increase the frequency of repayments
It is certainly tempting to capture monetary savings immediately by reducing your monthly repayments in line with the rate cuts, and for many people struggling with affordability concerns, this will be a necessity.  However, if possible, I would advise people to consider the option of maintaining current repayment levels and potentially even increasing the frequency of repayments (e.g. fortnightly rather than monthly).  This will most probably allow you to get your mortgage principal paid off more quickly, which will also likely reduce the interest you must pay over the long term. 
For many borrowers, alongside the prospect of making immediate savings, rate cuts can present an ideal opportunity to reassess your mortgage situation and identify how further savings can be made in the future.  Working with a professional mortgage broker who has a thorough understanding of your personal situation should position you to be able to make an informed decision and take full advantage of recent (and future potential) rate reductions.
Charles Tarbey is chairman and owner of <a href="https://www.century21.com.au/" target="_blank">Century 21.</a>
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Rate cuts an opportunity to reassess your mortgage

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Demand for fixed-rate home loans is spiking because the products have become much cheaper than variable-rate mortgages, according to UBS.
Traditionally borrowers take out a fixed-rate loan to give them certainty about future interest rate payments when interest rates are likely to rise, but according to UBS interest rate strategist Scott Haslem demand is being driven the low fixed rates on offer.
"It doesn't mean people think rates will rise and it doesn't even mean they don't expect them to fall again," he tells Business Day’s Peter Martin. 
“It's just that fixed rates have become better value – it's becoming cheaper to grab the bird in the hand." The most recent ABS housing finance data for November shows that <a target="_blank" href="/news">fixed-rate loan approvals reached 11.1%</a> (up from 10.6% in October) of all loans, their highest proportion since November 2008 at the height of the global financial crisis.
December data from mortgage brokers <a target="_blank" href="/news">Mortgage Choice</a> and <a target="_blank" href="/news">AFG</a> show an even greater uptake of fixed-rate borrowers (24% and 19% respectively), indicating that fixed-rate approvals will rise again when December ABS figures come out in February.
According to mortgage comparison RateCity.com.au, <a target="_blank" href="/news">about 70% of lenders cut their fixed rates last year</a> with the average three-year fixed rate falling to just 6.29% in December, and one-year fixed rates falling to 6.27%.
While the standard variable rate has also fallen mainly as a result of official RBA rate cuts in November and December, the average rate is 6.89%, more than half a percentage point higher than the average fixed rate.
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