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

Joel Robinson

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

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

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

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

Billbergia, Metrics, approved for $3.5 billion Sydney skyscrapers

International developer&nbsp;<a href="https://www.apartments.com.au/developers/spg-land">SPG Land</a> is preparing to re-launch its long-awaited $1.5 billion <a href="https://www.apartments.com.au/new-apartments/paradiso-place-surfers-paradise-103-ferny-avenue-surfers-paradise-qld-4217">Paradiso Place</a> development at Budds Beach, bringing a new price point to the Surfers Paradise apartment market.

The developer will release one-bedroom apartments from $825,000 and two-bedroom apartments from $1.24 million in the three-tower development.

According to Urbis, the starting price for the two-bedroom apartments is more than $400,000 below the weighted average sale price for comparable two-bedroom apartments in Surfers Paradise during 2025, which was pinned at $1.7 million.

&nbsp;

Urbis reported quarterly average sale prices for new two-bedroom, two-bathroom apartments ranged from around $1.2 million to $1.7 million throughout 2025, peaking in the December quarter.

[smartcode_project:default project_id=106566 project_image_fid=185853]

Paradiso Place is now moving into its formal sales campaign, with a limited early-release opportunity available ahead of the public launch.

The development will comprise 845 apartments across three towers rising 40, 41 and 44 storeys from a 1.15-hectare site spanning an entire city block. The towers will sit above a new retail precinct.

"Paradiso Place represents a rare opportunity in today's market, offering premium apartments at a price point that is significantly more competitive than anything else currently available," SPG Land Sales Director Brad McMahon said.

"When you look at comparable new developments across Surfers Paradise, Main Beach and the Southern Beaches precinct, buyers are typically paying hundreds of thousands more for a similar product.

"The scale of this project and the developer-builder construction model allows us to unlock efficiencies that smaller developments simply cannot achieve. We are passing those benefits directly to buyers, while still delivering a five-star residential experience with an unmatched lifestyle."

[smartcode_project:default project_id=106566 project_image_fid=374280]

Each of the three towers designed by Rothelowman will have its own podium, connected by an elevated skybridge network to create a beachside village for residents. The resident amenity has been designed to rival a five-star hotel, with private dining rooms, resident lounges and entertainment spaces.

McMahon said the pricing strategy was a deliberate response to the current market.

"What Paradiso Place offers is a unique balance, genuine value within a premium market. Buyers are not compromising on quality, design or amenity, they are gaining access to it at a more competitive price point at a time when prices across the Gold Coast continue to reach new highs."

[smartcode_project:default project_id=106566 project_image_fid=362498]

Located around 100 metres from the beach and within walking distance of the Surfers Paradise North light rail station, Paradiso Place occupies one of the Gold Coast's most tightly held beachfront precincts.

Construction is continuing to progress, with eight of the project's 112 foundation piles now complete. Excavation has also commenced on the first diaphragm wall panel, with the first concrete poured on 15 June, marking a key milestone in the project's early works program.

[smartcode_project_cta:default project_id=106566]

SPG Land launches $1.5 billion Paradiso Place at attractive price point

Luxury developer-builder <a href="https://www.apartments.com.au/developers/lowe-living">Lowe Living</a> has achieved a new Victorian benchmark for an off-the-plan apartment, with the sale of two penthouses at its ultra-exclusive Maison Savoy development in Brighton.

The two penthouses achieved a combined sale rate of $49,926 per sqm. Both transactions eclipsed the previous identified Victorian off-the-plan price-per-square-metre benchmark, set by the 449 sqm apartment at Como Toorak, which sold at $46,659 per sqm.

[smartcode_project:default project_id=140818 project_image_fid=366473]

<a href="https://www.apartments.com.au/new-apartments/maison-savoy-brighton-150-esplanade-brighton-vic-3186">Maison Savoy</a>, Lowe Living's redevelopment of the former Brighton Savoy Hotel on absolute beachfront land at 150 The Esplanade, Brighton, has gained significant momentum since launching just eight weeks ago. Around 30 per cent of the project's 19 residences have already been secured, generating approximately $45 million in sales.

"Securing two of the three penthouse sales at this stage, within eight weeks of launching to market speaks to the confidence our clients place in Lowe Living," Lowe Living co-founder Emma Lowe said.

"They know we'll be with them through every stage of the journey, and that assurance is something we've worked hard to earn and never take for granted."

[smartcode_project:default project_id=140818 project_image_fid=366474]

Lowe said Maison Savoy was conceived as a genuine alternative to a prestige Brighton home, combining house-scale proportions with the convenience, security and lock-up-and-leave appeal of apartment living.

Lowe Living co-founder Tim Lowe said the early sales success demonstrated the resilience of Melbourne's prestige market and highlighted the growing demand for house-sized apartments among ultra-high-net-worth buyers.

"The Melbourne market has definitely been tested in recent years, with interest rates and global economic factors all creating a period of uncertainty across the real estate sector. The sales success at Maison Savoy however demonstrates that confidence remains exceptionally strong at the top end of the market.

"The prestige market is being driven by long-term lifestyle decisions rather than short-term market sentiment, which continues to create a level of certainty that befits an absolute beachfront property in a blue-chip location like Brighton.

"Brighton's fundamentals remain among the strongest in Melbourne, with limited new supply, enduring demand from an overwhelmingly local owner-occupier market, and a rare combination of beachfront amenity and proximity to the CBD."

[smartcode_project:default project_id=140818 project_image_fid=374378]

According to Cotality, Brighton remains one of Melbourne's most tightly held prestige suburbs, with an average ownership tenure of 15.3 years for houses and 12.3 years for units, while more than 73 per cent of homes are owner-occupied.

Tim Lowe said selling two of the project's three penthouses so early in the campaign was an uncommon result.

"This sales result is a reflection of quality and understanding the local market. It's incredibly rare to transact the penthouses so early in a sales campaign in any project so to have sold two of the three penthouses at Maison Savoy so soon after launch, all in-house without any external sales agency appointed, is reflective of our careful consideration of our buyers' needs and lifestyle.

"This is knowledge that is accumulated not just from data and demographic analysis, but via a deeply embedded understanding of how this type of buyer wants to live and feel in their home. We pride ourselves on getting to know our clients personally, and over the last 10 years we have been able to refine our product offering by talking one-on-one with our clients about their design and floorplan preferences.

"Being a fully integrated developer-builder with an in-house design and sales team allows us to lead every part of the process and ensure the highest quality of product and service at every touchpoint. It's a really important part of our DNA and the recent sales success at Maison Savoy indicates that our clients and purchasers are resonating with this point of difference.

"It reinforces that demand remains strong for thoughtfully designed residences that offer rarity, lifestyle and long-term value in tightly held locations, which ultimately validates Maison Savoy's positioning as creating a new benchmark for house-scale, wellness-led apartment living on Brighton's beachfront."

&nbsp;

[smartcode_project:default project_id=140818 project_image_fid=366480]

The residences at Maison Savoy start from 295 sqm, with most enjoying uninterrupted views across Port Phillip Bay. The project sits moments from the Brighton Bathing Boxes, Royal Brighton Yacht Club, Middle Brighton Baths and Church Street's retail and dining precinct.

A key feature of the development is its private residents-only bathhouse, curated by the founder of Aurora Spa &amp; Bathhouse and modelled on traditional European bathing rituals and the award-winning Sorrento bathhouse.

The wellness offering includes a hydrotherapy pool, salt room, sauna, steam room, cold plunge pool, foot activation zone and a Vichy rainfall bed, one of only a handful in Australia. Residents will also have access to a Technogym studio, lounge spaces and a dedicated concierge service offering everything from morning coffee delivery and restaurant bookings to dry cleaning and home coordination.

"Wellness-led design has become a defining factor for luxury buyers," Emma Lowe said.

"Purchasers increasingly value homes that enhance wellbeing through thoughtful design, private amenity, privacy and liveability."

The penthouse purchasers are now undertaking a bespoke customisation process curated personally by architect Pete Kennon and the Lowe Living team, one of the developer's signature service offerings.

Construction on the $160 million transformation of the former Brighton Savoy Hotel site commenced last month, with completion expected in early 2028. The project has secured funding from NAB alongside development partner Monark.

Just one penthouse remains available, along with a limited number of two and three-bedroom residences starting from $3.75 million.

Lowe Living currently has eight projects on the market across Melbourne and recently celebrated its 10th anniversary, having grown a $1 billion development pipeline alongside a $350 million construction pipeline.

&nbsp;

[smartcode_project_cta:default project_id=140818]

Lowe Living set new Melbourne off the plan apartment record

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>
Online bank ING Direct is Australia’s biggest second-tier lender for owner-occupier mortgages and the Bank of Queensland has the biggest investor mortgage book, according to September figures released by the prudential authority APRA.
The second tier comprises banks that fall outside the big four banks and their subsidiaries, namely Commonwealth Bank (and its subsidiary Bankwest), Westpac (including subsidiaries Bank of Melbourne and St George), ANZ and NAB.
The latest figures show that ING Direct, the Australian subsidiary of the Dutch banking giant ING, has an owner-occupier mortgage book of $28 billion and an investor loan book of over $9 billion.
Bank of Queensland has an investor mortgage book of $9.6 billion and an owner-occupier mortgage book valued at $11.6 billion.
Both banks have passed on the full November 2 RBA rate cut to their borrowers, with ING Direct’s Mortgage Simplifier product reducing to a rate of 6.87%, effective November 7, while the Bank of Queensland will reduce its standard variable rate home loan to 7.61% on November 11.
Another small lender, Rabobank, which specialises in rural loans, will reduce the variable base rate on its rural loans by 0.25% per annum.
 
Second-tier lenders (ranked by size of owner occupier mortgage book)
<table border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td width="205" valign="top">
 
</td>
<td width="205" valign="top">
Owner occupier mortgage book
</td>
<td width="205" valign="top">
Investor mortgage book
</td>
</tr>
<tr>
<td width="205" valign="top">
ING Direct
</td>
<td width="205" valign="top">
$28 billion
</td>
<td width="205" valign="top">
$9.4 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Suncorp
</td>
<td width="205" valign="top">
$21 billion
</td>
<td width="205" valign="top">
$8.2 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Bendigo and Adelaide Bank
</td>
<td width="205" valign="top">
$13 billion
</td>
<td width="205" valign="top">
$8.3 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Bank of Queensland
</td>
<td width="205" valign="top">
$11.6 billion
</td>
<td width="205" valign="top">
$9.6 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Citibank
</td>
<td width="205" valign="top">
$4.7 billion
</td>
<td width="205" valign="top">
$2.4 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
AMP Bank
</td>
<td width="205" valign="top">
$4.6 billion
</td>
<td width="205" valign="top">
$1.7 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
ME Bank
</td>
<td width="205" valign="top">
$4.5 billion
</td>
<td width="205" valign="top">
$1.1 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
HSBC
</td>
<td width="205" valign="top">
$3.4 billion
</td>
<td width="205" valign="top">
$3.8 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
MECU Limited
</td>
<td width="205" valign="top">
$1.5 billion
</td>
<td width="205" valign="top">
$0.3 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Macquarie Bank
</td>
<td width="205" valign="top">
$1.4 billion
</td>
<td width="205" valign="top">
$0.7 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Bank of China
</td>
<td width="205" valign="top">
$0.3 billion
</td>
<td width="205" valign="top">
$129 million
</td>
</tr>
<tr>
<td width="205" valign="top">
Bank of Cyprus
</td>
<td width="205" valign="top">
$0.2 billion
</td>
<td width="205" valign="top">
$ 35 million
</td>
</tr>
<tr>
<td width="205" valign="top">
Rabobank
</td>
<td width="205" valign="top">
$0.2 billion
</td>
<td width="205" valign="top">
$16 million
</td>
</tr>
<tr>
<td width="205" valign="top">
Beirut Hellenic Bank
</td>
<td width="205" valign="top">
$120 million
</td>
<td width="205" valign="top">
$0.24 billion
</td>
</tr>
<tr>
<td width="205" valign="top">
Investec
</td>
<td width="205" valign="top">
$25 million
</td>
<td width="205" valign="top">
-
</td>
</tr>
</tbody></table>
Source: APRA
 
 
 
 
</body></html>

lschlesinger-FZcF9M3vE6

ING Direct the biggest of the small

<html><body>
Both Westpac and the Housing Industry Association believe further rate cuts are needed to stimulate new home lending following another “lacklustre” result in September. 
Housing finance to owner-occupiers increased by 2.2% September, but only 1% of this growth came from new mortgage lending with rest the result of borrowers refinancing their mortgages to take advantage of cheaper rates. 
The September result was slightly above market expectations (1.5%) but not as strong as that anticipated by Westpac, which had forecast mortgage growth of 3% over September. 
For the year to date, new lending is down by 3.8%. 
Westpac senior economist Andrew Hanlan says the RBA's November rate cut will provide some relief to the sector, with the bank sticking with its forecast of further 0.75% cut in rates still to come over the next 12 months. 
“New lending is only a little above that prevailing over the second half of the 1990s,” he says. 
Hanlan says the mix of finance was disappointing” from a new supply, construction perspective”. 
“Finance to owner-occupiers for the construction of new dwellings edged lower in the month, down 0.2%, to be 5.7% lower for the year to date,” he says.
HIA acting chief economist Andrew Harvey remains hopeful the fall in the number of loans for the construction or purchase of new homes is “merely a blip in an overall trajectory of a return to growth in new home lending”. 
“At least today’s fall in new home lending is not of an overly large magnitude, and once we see the positive impact of the Melbourne Cup day rate cut flow though we should see lending begin to gain ground. “Moreover, if the RBA fires up with a second rate cut in December, or at latest early 2012, which is warranted given domestic and global economic conditions, then the prospect of a return to decent levels of new home building is good,” he adds. 
 
“The sector faces a number of headwinds: interest rates, stretched affordability and household's desire to pay down debt. These factors are offsetting the positives of rising household incomes, relatively low unemployment and a shortage of housing stock.” 
By state, owner-occupier finance for the year to date reveals some divergences. 
There were signs of strength in WA, with mortgage lending to owner-occupiers up 9.1% over the nine months to September. 
However, NSW (1%) and South Australia (2.2%) are broadly flat for the year while mortgage lending has weakened in Queensland (down 9.5% for the year), Victoria (down 4%) and Tasmania (down 5%). 
Finance to investors was up 1.9% in the month, rebounding 8% since April, but still down 4.2% for the year to date. 
“While rents are strengthening, established house prices have tended to trend modestly lower since mid-2010,” says Hanlan.
<a target="_blank" href="https://www.propertyobserver.com.au/economy/one-rate-cut-not-enough-to-help-economy-but-watch-employment-data-macquarie/2011110952285">Macquarie Investment Management agrees that more rate cuts are needed.</a>
 
 
 
 
 
 
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More rate cuts needed following lacklustre mortgage lending figures: HIA

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First-home buyers have emerged from hibernation becoming a dominant segment of the housing finance enquiry market, according to mortgage broker Loan Market.
First-time buyer enquiry levels were at their highest in almost two years after activity plummeted following the cessation of the federal government boost in 2009 and a sequence of interest rate rises during 2010.
The segment, who seem poised to spend, represented 51% of loan enquiries to Loan Market during October, according to Loan Market chief operating officer Dean Rushton.
“We’re finally starting to see signs of optimism and more confidence from that segment of the market. And predicted further rate cuts from the RBA would help to build that confidence,” Rushton says.
Tasmania had the highest number of enquiries followed by Queensland, Victoria, the Australian Capital Territory, South Australia, Western Australia and the Northern Territory.
“After a few years of hibernation, first-home buyers are back and are now the dominant section of the market for enquiry,” Rushton says.
Rushton notes the end of stamp duty concessions for first-home buyers in New South Wales from the end of 2011 year has boosted activity in that state.
“The softer real estate market is another encouragement for first-time buyers if they are in a position to be active in the market,” he adds.
<a href="https://www.propertyobserver.com.au/news/one-in-10-buyers-choosing-to-rent-to-invest/2011070750728" target="_blank">One in 10 first-time buyers are choosing to make their first real estate purchase an investment property</a>. 
For advice on buying your first investment property, download our free e-book.
 
 
</body></html>

jchancellor-FAypfDUnLy

First-home buyer lending enquiries at two-year high: Loan Market

<html><body>
Scott Pape, the financial adviser, broadcaster and author of The Barefoot Investor, has explained why he is keeping his home loan variable despite the fact that the banks are currently offering lower fixed rates. He says he envisages 2012 will be the time to “tart yourself around to the banks” to get a better deal next year.
“One reason is that having the security of locking in your rate comes at a cost: (usually) fixed repayments, and a hefty break fee if you want to walk.
“Banks behave in their own best interests,” he told subscribers to <a href="https://www.barefootinvestor.com/" target="_blank">his website</a>.
“A smarter strategy may be to wait and watch what happens with the unfolding debt crisis.
“We could see official interest rates come down, and cautious consumers continue to slow their borrowing (building approvals dropped 13.9% in September), causing banks to scramble for our business next year,” Pape wrote.
“That’s when I’ll be looking to lock in my rate.”
Pape, whose early days were as an investment adviser with EL&amp;C Baillieu, says until then he will make extra repayments: the quarter per cent cut this week translates into an (average) $50 a month cut, or $41,000 saved in interest over the life of a loan.
Pape recently noted that since Wayne Swan banned exit fees, the banks had found another way to stop their customers from switching to get a better deal.
“Fixed-rate deals give them that power.”
But he noted there’d be a $600 establishment fee at the start, “and if interest rates drop lower than your fixed rate they will slug you with a ‘break fee’ representing the difference between the two rates, multiplied by the length of time left on your fixed contract – which can add up to thousands of dollars.”
“If you’re really struggling, locking in your rates can give you the security of fixed repayments, but for everyone else it’s too much of a gamble.”
 
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Scott Pape, the barefoot investor, suggests staying variable

<html><body>
The NSW Valuer-General has determined that the land tax threshold for the 2012 land tax year is $396,000. Every investment property above that level will be billed land tax. It follows a 1.766% increase in values, which given three-year rolling averaging will result in a 0.2% increase in the land tax threshold for the 2011 land tax year of $387,000.
During the 2011 land tax year there had been a 2.9% rise in the 2011 threshold for property taxes from $376,000, when overall land values in NSW, including industrial and commercial as well as residential, rose an average of 5.42%.
The low 0.2% increase in the threshold might cause some NSW investors to creep into the tax-paying category if they were sitting just below the current threshold and have shown some value appreciation resilience in the yet-to-be released individual valuations.
NSW Valuer-General Philip Western will issue individual new valuations later this year that will form the basis of tax assessments sent out by the NSW Office of State Revenue early next year. The State Government bases individual assessments on rolling three-year averaging of land valuations to take account of changing property values.
The state government collects about $2 billion in land tax a year. Non-residential properties account for about 60% of land tax revenue.
In the current year an investor owning a property with a land value of $470,000 (with the 2011 threshold of $387,000) property tax is levied on the difference of $83,000 at 1.6¢ on the dollar, plus $100, so the tax payable is $1,428.
The principal place of residence is exempt from land tax. Land tax is a tax levied on the owners of land in NSW as at midnight on December 31 of each year. Land tax applies to land regardless of whether or not income is earned from the land. The land tax assessment is calculated on the combined value of all the taxable land you own above the threshold.
The value of taxable land does not include any structures or improvements on the land such as a house.
There has been a threshold since 2005. From the 2007 tax year onwards the threshold is the average of three years - the current year and two prior years.
<table cellpadding="0" border="1"><tbody>
<tr>
<td>
Year
</td>
<td>
Indexed amount
</td>
</tr>
<tr>
<td>
For the 2010 land tax year
</td>
<td>
$380,000
</td>
</tr>
<tr>
<td>
For the 2011 land tax year
</td>
<td>
$401,000
</td>
</tr>
<tr>
<td>
For the 2012 land tax year
</td>
<td>
$408,000
</td>
</tr>
<tr>
<td>
Average
</td>
<td>
$396,000
</td>
</tr>
</tbody></table>
 The Valuer General says the $408,000 figure was arrived at through a specific formula as required under the Land Tax Management Act.
“Put simply it is the 2011 land tax year indexed amount ($401,000) times the average change in land values from 1 July 2010 to 1 July 2011 – in this case 1.766%,” he notes.
For advice on buying your first investment property, download our free e-book.
</body></html>

NSW land tax threshold increases 0.2% after a 1.77% across-the-board gain

<html><body>
Migrants and the over-50 are set to become favoured home lending customers of ANZ.
In its 2011 annual results presentation ANZ says it is looking to form deeper relationship with five customer segments namely: “affluent, migrant, young money, over-50s and ANZ staff”.
Migrants and over 50s appear to be a particular focus of the bank, with <stockticker>ANZ</stockticker> committing to providing more specialist migrant teams and more bankers to focus on retirees.
First-home owners are notably absent from its list of desired customers.
The annual results revealed that first-home owners comprised just 9% of the bank’s $170 billion mortgage portfolio and only 8% of new lending in the 2011 financial year.
Owner-occupier mortgages make up just under two-thirds (64%) of its mortgage book.
NSW and the ACT (27%) and Victoria (28%) account for more than half of its mortgage portfolio, with just under one in five borrowers coming from Queensland.
The bank revealed a 12% rise in underlying profit for the 2011 to $5.6 billion.
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ANZ to focus on migrant and over-50 home loan customers

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The number of first-home buyer market entering the market is up 40% compared with a year ago, with NSW leading the charge, according to mortgage broker AFG. 
The AFG Mortgage Index for October shows that first-home buyers comprised 16.4% of all loans processed by AFG brokers – a 40% increase for this buyer category compared with October 2010, when they comprised 11.8% of the mortgage market. 
The number of first-home buyers who took out loans in October was the greatest number entering the market since September 2009 –when the full First Home Owner Boost Scheme, introduced to support the housing market following the GFC – came to an end. 
First-home buyers were particularly active in NSW, where they represented 21.1% of home loans in October. This buyer segment was also well-represented in Queensland (17.9%) and Western Australia (17.3%). 
The decision by the NSW state government to end first-home buyer stamp duty exemptions and concessions for the purchase of established on January 1, 2012 has most likely contributed to the pick-up in numbers as first-home buyers look to beat the deadline. 
From January 1 the NSW government’s <a href="https://www.osr.nsw.gov.au/benefits/first_home/faqs/fhplus1/">First Home Plus scheme</a>, which provides stamp duty exemptions on homes valued up to $500,000 and concessions on duty for homes valued between $500,000 and $600,000, will come to an end to be replaced by the <a href="https://www.osr.nsw.gov.au/benefits/first_home/faqs/new_home/">First Home - New Home Scheme</a>, which provides stamp duty exemptions and concessions for new homes or vacant land intended to be used as the site for a new home.
The November interest rate cut is expected to encourage more first-time home buyers over the coming months, with Real Estate Institute of Australia acting president Pamela Bennett calling it particurlarly good news for this sector of the market.
RateCity CEO Damian Smith says for first-home buyers who haven’t yet entered the market, “lower rates will turn the clock back to 2010 and have an appreciable impact on affordability”. 
BIS Shrapnel chief economist Frank Gelber expects first-home buyers to return to the market in growing numbers following the rate cut and to drive the market over the next year.
Percentage of borrowers fixing their home loans
<img style="border-style: initial; border-color: initial;" src="/images/stories/afgnovember3.gif">
Source: AFG
In line with mortgage broking franchise <a href="/news">Mortgage Choice</a> recording sales of fixed-rate mortgages at a three and half year high in October, AFG also recorded a big jump in fixed-rate mortgages, with sales of the products rising from 16.6% of all loans arranged in September to 20.4% in October, the highest proportion since March 2008.
In July 2011, fixed-rate mortgages comprised only 7.9% of home loans arranged by AFG brokers.
Mark Hewitt, general manager of sales and operations at AFG says: “Buyers are reaping the benefits of one of the most competitive mortgage markets we’ve seen in years. Discounted fixed rate loans appealed to all buyer types, but especially first home buyers and those looking to refinance. 
“We have been slightly surprised with the popularity of fixed rates given it has been generally predicted variable rates would decrease and we would now expect the proportion of fixed rate loans to fall, following the cut in variable rates announced this week,” Hewitt says. 
The October index also showed a growing desire among borrowers to use lenders outside the major banks and Hewitt is hopeful the rate cut will drive further support for a recovery of the second tier lending market. 
Non-majors have seized more market share than at any time over the past 12 months, comprising 21.1% of all home loans. 
Their products are of particular appeal to first-home buyers, where almost 30% of the market is held by non-majors, as well as buyers looking to refinance, where non-majors account for a 21.2% market share.
The percentage of investment loans fell slightly to 35.6% compared with 37.7% in October with investors especially active in NSW (39.2%) and Vic (38.9%) with lower levels of activity in QLD (32.9%), WA (32.2%) and SA (29.8%). 
AFG brokers account for one in 10 mortgages arranged in Australia.
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NSW leads revival of first-home buyer market - and the fix is on: AFG

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Do you get a fair return on your savings? And what returns do the major banks earn over and above the interest rate they pay you on your cash? Indeed, why do the banks “cap” the returns on your savings accounts at all? These are all interesting questions that I will use to prime today’s column.
We have become so conditioned to being subject to a fixed cap on our savings rates — either via a term deposit or through variable rates that adjust in line with the RBA’s target cash rate — that the notion of not having an interest rate cap seems positively odd.
But imagine if a bank turned around to you and said, “Instead of fixing your 12-month term deposit rate at, say, 5%, we are going to target giving you a 5% return, and if we can earn more on our lending and investing activities, we will pay you more. In this way, when the bank does well, you do well”.
Today the banks are implicitly saying the opposite: namely, “We will pay you 5% per annum fixed, and everything we earn above that we are keeping 100% for ourselves and our shareholders”.
To get to the bottom of this you need to first understand your relationship with the banks. When you put your money on deposit you are actually lending to them. In fact, legally and economically, you are a senior-ranking “creditor”. You are in the same position as the bank is when it lends money to you to buy a home. It is funny how nobody thinks of savings like this!
Yet on almost all your “at-call “or “transactional” savings accounts, you get little if any return (i.e., the banks usually pay zero interest rates). However, the longer you are willing to commit to lend to, or finance, the banks, the higher the interest rate they will normally offer you. Now this makes sense. The price of money ordinarily rises with the term of the loan.
What then do the banks actually do with your money? At its most basic level, they take the cash you lent them, which, formally, is a “liability” the bank must repay you, and use that money to make new loans to small businesses, corporations, and households. Roughly 60% of your money will be invested in residential and investment property loans. The remaining 40% will be lent to businesses, from SMEs to large companies.
The bank then generates two forms of return over and above the (much lower) interest rate it pays you. First, it charges businesses and households substantially higher rates than those which you earn on your savings accounts.
According to RBA data, the average “discounted” home loan rate following Tuesday’s cut should be around 6.8% per annum. In comparison, the average bank pays a 0% interest rate on your transaction account. If we take the average “bonus” savings account, the typical bank is paying you about 5.2%.
In this case, therefore, the spread between the interest rate the bank earns on its home loans and the interest rate it pays you on your cash is about 1.6% per annum.
Remember, however, that 40% of your money is being lent to businesses. Again using RBA data adjusted for Tuesday’s cut, the average small business pays a 9.7% per annum interest rate on its bank loans. If the small business offers up a home as security for the loan, the interest rate will be just under 9%.
So when it comes to small business lending, the interest rate the banks earn (or “spread”) beyond that which they pay you in your “bonus” savings account are between 3.6% and 4.5% per annum.
What about the rates the banks charge on personal loans and credit cards? According to the RBA, the average personal loan rate is around 15% per annum, while the average “discounted” credit card rate is 13.2%.
Once again, the banks are earning substantial interest rates beyond what they pay on your savings. In fact, multiples more in the case of personal loans and credit cards, even after accounting for loan losses.
All told, the RBA estimates that the average net interest rate the major banks generate beyond the interest they pay on their funding is about 2.4% per annum.
Regional banks earn a materially lower 1.6% per annum spread, or “net interest margin”. Why do they do worse? They pay higher rates to the people that fund them. So why do they have to pay more than the majors? Because their “credit ratings” are lower. This means their perceived risk is higher.
(As an aside, I have previously argued that the risk of catastrophic loss in a simple, “narrow” bank like a “regional” is less than that associated with a much more complex conglomerate like the majors, which are stretched across Australian and foreign operations, and all manner of other activities, including funds management, and proprietary trading.)
The average 2.4% interest rate the majors generate above their cost of funds is then boosted significantly further by “non-interest income”, which mainly refers to “fees”.
 
<hr class="system-pagebreak">
 
That’s the easy part. The much more complex aspect of the business of banking is that these enterprises take the cash (or “equity”) they get from their shareholders and use it to make loans to businesses and home owners that are worth multiples of that equity. That is, they are highly “leveraged”.
More specifically, they borrow for the relatively short term from people like you and me, and from institutional investors (roughly 50% of their money comes from mums and dads, 40% from institutions and 10% from shareholders), and then lend that money out for up to 30 years as home loans.
This begs the question: what happens if I want my money back? If, for example, I have put $100 in my savings account, and the bank has used that money to offer 30-year home loans, how can the bank possibly repay me my money?
The short answer is it can’t. The business of banking is based on what is known in the jargon as an “asset-liability mismatch". Every once in a while mums and dads decide they don't trust the bank anymore, and rush to withdraw their cash en masse. At the same time, the institutional investors that lend the banks the other 40% of their funding for terms ordinarily less than five years may also refuse to roll over these loans.
Under the law, if you do not have a reasonable expectation of meeting your current liabilities (e.g., repaying your depositors), you are, by definition, trading insolvent. So if there were ever a “run” on a retail bank, with large volumes of depositors asking for their money back, the bank would be legally insolvent in the absence of some other support from taxpayers.
In order to address this flaw at the heart of banking, which every few decades tends to lead to banking crises (in the 1890s around 90% of all private banks in Australia failed), governments have developed a number of safeguards.
The first protection was to create a taxpayer bank that was explicitly established to lend to the banks, and thus supply them with so-called “liquidity”, during crises. This is known as the Reserve Bank of Australia, and a self-described part of its mandate is to serve as a “lender of last resort” to the banking system.
A second, more recent, protection was to supply a minimum taxpayer guarantee of retail deposits. That is, if the bank fails, the government will guarantee that a minimum dollar sum will be repaid to you.
A third protection used during the global financial crisis (for the first time) was to have Australian taxpayers guarantee the banks’ institutional debts. That is, the government told the banks’ institutional lenders that if the banks ever defaulted on these loans, taxpayers would step in and pick up the tab.
If you think through this carefully, you start wondering about what is a fair distribution of returns between banks and their creditors (i.e., you and me). You ask yourself the question, "With all this taxpayer support, should I be expecting more bang for my buck on my savings?"
We have learnt today that ignoring all the fees banks produce on their products, they are able, on average, to generate net interest rates of around 2.4% per annum beyond what they pay their funders: viz., savers and their institutional lenders.
In thinking about the question of fairness, I will leave you with one chart. It was recently published by the Reserve Bank of Australia, and it shows the major banks’ “returns on equity”. In the last half-year, these annualised at close to a 20% rate. 
Regional banks manage to attract shareholders with much lower, early-teen, returns on equity. We need more give, and less take.
<img src="/images/stories/nov3.gif">
Christopher Joye is a leading financial economist. The above article is not investment advice.
 
 
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chrisjoye-JYhJsTrNRC

More give, less take from banks

<html><body>
By the reaction in the media, yesterday's rate cut by the Reserve Bank is the greatest thing since, well, the last rate cut 31 months ago. It's going to boost <a href="https://www.smh.com.au/business/retail-likes-rate-cut-20111101-1mtvg">retail</a>, <a href="https://smh.domain.com.au/boost-for-home-owners-as-banks-pass-on-rate-cut-20111101-1mtzj">housing</a> and even <a href="https://www.news.com.au/money/interest-rates/christmas-cheer-over-latest-rates-cut/story-e6frfmn0-1226183081358">Christmas</a>. Truly a miracle.
Yet all this reaction, and that on TV and radio yesterday and this morning, completely misses several important points.
The first is that the rate cut will cause the banks to cut their deposit rates, meaning savers will have less income, especially those who depend on fixed income from bank term deposits, such as pensioners and superannuants.
Secondly, the cut will, if it sparks a halt to the current slide in housing prices across all capital cities (they fell 1.2% in the September quarter, according to the Australian Bureau of Statistics and 2.2% in the 12 months to the same quarter), then house prices will start rising, thereby ending the small improvement in housing affordability we are currently witnessing.
But more importantly, the group of people who will get relief from the lower cost of their housing and other loans is much smaller than you thought.
If only our pundits in the Fairfax and News Limited press, plus the ABC, had read the Reserve Bank's Financial Stability reports, such as the <a href="https://www.rba.gov.au/publications/fsr/2011/sep/pdf/house-bus-bal-sheet.pdf">second one for 2011</a> released in late September they would have found something to their interest, and changed their reporting yesterday and today.
Put simply, many Australians are deleveraging and saving more. The higher savings are well known, but not too many of our pundits have bothered to think about how that is being achieved; it is not just a case of saving more money in their accounts ($12 billion extra in September)
Australian mortgagees are repaying more than the minimum on their housing loans, and credit card holders are also repaying their credit card loans faster than they have to. As the RBA explained in the September Stability Review:
"Contributing to the slower pace of debt accumulation, some households are saving more by choosing to pay down their debt more quickly than required.
"Net repayments on credit cards have picked up in recent months. Many housing loan borrowers have continued to make substantial excess principal repayments, even as higher interest rates have raised required interest -- and thus total -- repayments.
"The average excess repayment is currently equivalent to around three-quarters of the scheduled total (principal plus interest) repayment. Consistent with this tendency to pay debt ahead of schedule, surveys have shown that a high share of households consider repaying debt to be the wisest place for savings.
"Households that make excess repayments on their home loans generally build up buffers that they can draw down in the future if required. This should be regarded as a positive development for the resilience of the sector. These shifts in saving and borrowing behaviour have in part been enabled by a favourable labour market and solid income growth.
"Growth in gross income therefore outpaced the impact of higher interest payments, such that growth in real disposable income per household (after interest payments) also strengthened, to 3.3 per cent over the year to the June quarter, up from 2.3 per cent over the year to the December 2010 quarter.
"This increases the resilience of households to shocks, relative to countries where it is less common to do so. As well as providing a cushion against changes in borrowers’ financial circumstances, excess repayments increase the distance between the remaining loan balance and a property value that could be lower in the future, making negative equity positions less likely."
These trends are also ignored by the same writers when they warble on about the rising level of mortgage stress. Mortgage stress has always been with us, no matter the state of interest rates; some people who have lost jobs, seen pay cut or are starting out on the home buying treadmill feel it more than others.
But how can mortgage stress be a problem when a large proportion of people with mortgages are paying off those mortgages faster than they can? In other words, they are paying back more than the minimum, which is always recommended by advisers because it builds up buffers and reduces the principal faster than it would normally be reduced.
The fact that Australians with mortgages are repaying their loans faster is also ignored by the doom and gloomers who predict a nasty fall in property prices and a re-run of what we have seen overseas. They include Professor Steve Keen.
And finally, the most desperate piece of marketing came from Fairfax property website Domain, which sent <a href="https://view.email.domain.com.au/?j=fe6815757367057d7610&amp;m=fecb15717d62067f&amp;ls=fde511727c6000787d137970&amp;l=fe9c157177600c7c77&amp;s=fe281c7574640379771177&amp;jb=ffcf14&amp;ju=fe2715797c61017b741672&amp;r=0">this email</a> to registered users yesterday afternoon:
<a target="_blank" href="https://view.email.domain.com.au/?j=fe6815757367057d7610&amp;m=fecb15717d62067f&amp;ls=fde511727c6000787d137970&amp;l=fe9c157177600c7c77&amp;s=fe281c7574640379771177&amp;jb=ffcf14&amp;ju=fe2715797c61017b741672&amp;r=0"><img src="/images/stories/dyernov3.jpg"></a>
"This fall in rates will be greatly appreciated by households as it will put an extra $60 into their pockets each month," said Domain property expert Carolyn Boyd. Talk about desperation.
The reality is that most mortgage holders will simply leave their payments unchanged and effectively repay their loan by an extra $60 a month or whatever the saving is on their mortgage.
This article originally appeared on <a target="_blank" href="https://www.crikey.com.au/">Crikey</a>.
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The great mortgage stress myth: We're paying off our homes faster

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Federal Treasurer and Acting Prime Minister Wayne Swan has launched a vitriolic attack on NAB, labelling the bank “greedy” and saying it has “kicked working families in the guts” after it did not pass on the full 25-basis-point rate cut to borrowers today.
The bank will pass on 20 basis points rather than 25 basis points, blaming increased costs of funding for the decision.
“It is a greedy decision and one not justified in my view by the fundamentals,” says Swan, who before yesterday’s RBA announcement said banks would have no excuse for not passing on the full rate cut.
The attack comes despite the fact NAB has offered the lowest standard variable rate of the major banks for over two years and will continue to be the cheapest lender of the big four when it cuts its rate from 7.67% to 7.47% on Monday next week.
The five basis points the bank will not pass on to borrowers will boost its earnings by an estimated $65 million. Last week NAB announced its annual profit for the 2011 financial year was $5.2 billion.
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