Brisbane-based developer <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co</a> has made a striking debut on the Gold Coast, officially unveiling its $250 million COMO development in Varsity Lakes, a lifestyle-driven residential project anchored by an extensive rooftop wellness and activity precinct.

Having recently launched to market, construction has already been fast-tracked by <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a>, ensuring momentum continues on what is set to become a landmark residential address for the growing Varsity Lakes community.

Located at 22 Lake Street, Varsity Lakes, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels, comprising one-, two- and three-bedroom residences designed for modern living. However, it is the project’s rooftop amenity offering that sets COMO apart.

[smartcode_project:default project_id=135546 project_image_fid=363510]

Designed as a dedicated wellness and recreation hub, the rooftop will feature a 25-metre lap pool, fully equipped gymnasium, and multiple pickleball and paddleball courts - amenities rarely seen in boutique apartment projects.

Residents will also have access to a sauna and plunge baths, while landscaped gardens and relaxation zones will provide tranquil spaces overlooking sweeping panoramic views across the Gold Coast skyline.

The rooftop precinct has been designed to function as the social and wellness heart of the development, encouraging residents to embrace an active, balanced lifestyle within their own building.

&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363512]

Red &amp; Co director David Laverty said the amenity offering was central to the project’s design from the outset.

“Amenities were at the forefront of our decisions,” Laverty said.

“Buyers today are looking for more than just an apartment - they want a lifestyle that promotes health, connection and balance.

“The rooftop at COMO has been designed to be the epicentre of that lifestyle, with a suite of wellness and recreation facilities that are quite unique for a boutique development of this scale.”

&nbsp;

[smartcode_project:default project_id=135546 project_image_fid=363514]

Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the residences prioritise liveability, featuring spacious layouts, 2.7-metre ceilings and high-quality finishes throughout.

The development sits beside Bond University, placing residents within walking distance of education, retail and dining options within the vibrant Varsity Lakes precinct, including Robina Town Centre, Varsity Lakes Train Station and a range of leading schools.

[smartcode_project:default project_id=135546 project_image_fid=363511]

Laverty said the location was a key driver behind Red &amp; Co’s decision to bring the project to the Gold Coast.

“<a href="https://www.apartments.com.au/developments/varsity-lakes-qld-4227">Varsity Lakes</a> was a clear choice for us to invest in as it’s a lifestyle hub that seamlessly blends lakeside living with urbanity,” he said.&nbsp;

“Como will capitalize on this great location, delivering a project that not only creates premium homes, but a lifestyle defined by community, wellbeing, and connectivity.”

Red &amp; Co has delivered more than 500 apartments and townhouses across 26 projects in Brisbane in recent years, with COMO marking the company’s first major Gold Coast development.

[smartcode_project_cta:default project_id=135546]

Joel Robinson

Red & Co unveils amenity-rich Como development in Varsity Lakes

Gold Coast developer&nbsp;<a href="https://www.apartments.com.au/developers/big-projects">Big Projects</a> has secured approval for its second Mermaid Beach project.

The developer, currently selling <a href="https://www.apartments.com.au/new-apartments/the-frederick-mermaid-beach-2265-gold-coast-highway-mermaid-beach-qld-4218">The Frederick in Nobby Beach</a>, has secured approval for its next project just 1.5 kilomnetres up the road.

The new development, dubbed&nbsp;<a href="https://www.apartments.com.au/new-apartments/glenelg-residences-2462-2472-gold-coast-highway-mermaid-beach-qld-4218">Glenelg Residences</a>, has been designed by BDA Architecture and&nbsp;will have just under 100 apartments across an 11-storey building&nbsp;at 2462–2472 Gold Coast Highway, on the corner of Glenelg Avenue just under 300m from the future Mermaid Beach Light Rail stop.

The apartments, a mix of two- and three-bedrooms, will sit above a retail-focused ground plane and under extensive rooftop resident amenities.

<img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screen%20Shot%202024-06-11%20at%209.55.04%20am.png?VersionId=z6NV4izeuvhBSSVlY6vK6TPO1LxrFeaG" />

BDA said in its planning submission that the project is intended to support the area’s transition toward higher-density, mixed-use living. “This project offers the opportunity to generate appropriate higher-intensity development within the future Light Rail corridor of <a href="https://www.apartments.com.au/developments/mermaid-beach-qld-4218">Mermaid Beach</a>,” the submission noted.

At ground level, Glenelg Residences will include eight retail tenancies designed to activate the street frontage, complemented by a basement bar offering an additional hospitality element. Above, residents will have access to a rooftop amenity deck featuring an infinity pool, hot and cold plunge spas, day beds, and barbecue facilities.

The architectural approach adopts a restrained material palette of brick, textured concrete, and integrated landscaping, with cantilevered concrete frames and cascading planting intended to soften the built form. BDA described the design as aiming to create “a memorable sculptural mid-rise mixed-use building” that responds to both its coastal setting and urban context.

<img alt="Exclusive: Big Projects plot Mermaid Beach apartment development, Glenelg Residences" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screen%20Shot%202024-06-11%20at%209.55.45%20am.png?VersionId=cpjIVBqcT_sujmo2UMWkVyLcQ7WGJHaQ" />

The approval comes as the City of Gold Coast continues to plan for significant population growth, with regional targets requiring more than 100,000 new high-density dwellings by 2046.

<section data-scroll-anchor="false" data-testid="conversation-turn-36" data-turn="assistant" data-turn-id="request-WEB:55d7c6ac-8e6d-4881-ad49-0ed9bf66d1cc-17" dir="auto">
Big Projects, led by Matthew and John Barrett, is part of a growing cohort of developers that deliver construction in-house, providing a high level of confidence to prospective purchasers.
</section>

[smartcode_project_cta:default project_id=150260]

Big Projects secures approval for Glenelg Residences in Mermaid Beach

Sherpa Group is ramping up its investment in the southern Gold Coast by lodging a development application for <a href="https://www.apartments.com.au/new-apartments/flourish-viver-87-griffith-street-coolangatta-qld-4225">Flourish Viveré</a>, a new $350 million project in Coolangatta.

The move comes after the group’s $27 million acquisition of the 2,029 sqm site on the corner of Griffith and Warner Street, last year.

They will develop 194 apartments across a 26-storey tower, which will become Sherpa’s largest project to date.

Viveré will be the next chapter in the Flourish story, following closely behind Amargo, Oasis, and the Avenues in Palm Beach, as well as Symphony in Brisbane, all designed to deliver affordable housing in lifestyle-rich locations, giving locals a real chance to secure a residence close to the beachfront.

The HAL Architect-designed project will offer a diverse range of residences, from one-, two, and three- bedroom apartments to the premium Canopy range to luxury penthouses.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c85f5a7e-a22f-4745-8def-400adb3c0b35" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.43%E2%80%AFAM.png?VersionId=OY.chur3BPExn1exQ2q8clHqWnW_CaBi" />

“The Gold Coast is undergoing a period of immense growth, with more people drawn to the incredible 
lifestyle that’s available, leading to strong growth in property prices,” said Christie Leet, founder of Sherpa 
Group.

“Our goal at Sherpa is to ensure locals are not priced out of the market in prime locations, which is why we 
created the Flourish collection.

“Flourish Vivere will form the next chapter in our portfolio, and we are so excited to be lodging the DA, marking our first project in Coolangatta.”

A signature of the Flourish developments is the communal rooftop. Flourish Vivere will showcase a private resident’s lounge, outdoor dining with barbecues and pizza ovens, heated pool, fully-equipped gym, and a wellness centre with sauna and steam room.

<img alt="Vivere" data-entity-type="file" data-entity-uuid="c09372cc-aae6-4458-af2e-f291bd19a5e5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-04-15%20at%209.53.49%E2%80%AFAM.png?VersionId=Sc_RLXl5jiff.tnadogXjQJ_WIpDjf3p" />

The project is strategically located to offer a walkable lifestyle, with the Strand shopping centre, cafes, restaurants, shops and the beach, all just a short stroll away.

“We have meticulously planned Vivere to build on the Flourish legacy, creating a truly special project,”&nbsp;Leet added.

“Wellness, lifestyle and community are at the forefront of every decision we make, and that has not 
changed for Vivere.”

With the DA now lodged with the Gold Coast City Council, Sherpa has moved quickly to secure LPS Group as the builder, offering buyers a level of certainty that is rarely seen in today’s market.

Sherpa has delivered 16 residential projects over the past seven years with a pipeline of $1 billion, with more under construction.

Sherpa takes Flourish brand to Coolangatta, lays plans for Flourish Vivere 

S&amp;S Projects is boosting its investment at Rainbow Bay to more than $1 billion after the prolific Gold Coast developer acquired a new site for $20.25 million and immediately laid plans for a new luxury apartment project in the sought-after precinct.

The site, which is the company’s fifth acquisition at Rainbow Bay in the past four years, will be home to the company’s largest project to date after delivering 3 sold-out projects and construction progresses on Radia worth a combined $215m. 
S&amp;S Projects is currently finalising plans for its latest strategic acquisition, a 1,518 sqm site located 209-213 Boundary Street in Coolangatta, with a development application expected to be lodged within weeks.

The luxury residential development will build on the company’s highly successful projects at Rainbow Bay, comprising Flow, Awaken, Esprit and Radia, with Radia currently under construction by Hutchinson Builders.

“We have been unflinching in our commitment to Rainbow Bay and the transformation we have helped drive in this incredible part of the Gold Coast, which is among the city’s most desirable residential locations,” said S&amp;S Projects founder and director Paul Gedoun.

“Our fifth project will reflect the best of what we have done so far to create a lifestyle precinct that is second to none.”

The latest development, which has yet to be named, is proposed to accommodate 88 luxury apartments in a design that will immerse residents in a unique wellness lifestyle that expands on the legacy of S&amp;S Project’s earlier developments at Rainbow Bay.

The development will feature an expansive rooftop garden and wellness centre with a resort- style pool, among a host of lifestyle amenities planned for residents.

“Rainbow Bay, with its beautiful, protected beach and alongside one of the world’s best surf breaks at Snapper Rocks, is the natural wellness heartland of the Gold Coast,” said Gedoun.

“We are taking every advantage to create a truly unique rooftop wellness experience with a natural feel for residents, offering stone features throughout and an underlying theme that emulates a botanical garden.”

The latest acquisition comes as S&amp;S Projects is at the completion of Esprit and construction continues on Radia, which are part of their significant portfolio undertaken by the company at Rainbow Bay since 2022.

The $215 million Radia, which comprises 38 apartments, is currently the flagship development by S&amp;S Projects at Rainbow Bay which is expected to be completed in 2027.

Jayde Pezet, of Pezet Matheson, which has managed sales and marketing for S&amp;S Projects across their Gold Coast portfolio, emphasised the developer’s commitment to continuous improvement and excellence.

“S&amp;S Projects continue to elevate the benchmark of luxury with each development," Pezet said.

“We have worked with S&amp;amp;S on their 4 other projects in Rainbow Bay and their approach reflects a team that is constantly learning, refining, and pushing the standard higher.

“Their hyper-local knowledge and deep expertise within the luxury property sector are what truly set them apart, allowing them to deliver projects that feel both globally sophisticated and authentically connected to their coastal environment”

S&amp;S Projects plans to officially launch its latest project at Rainbow Bay in the second half of this year.

“As we embark on our largest project yet, we have pulled out all stops to create another landmark development that truly reflects the relaxed southern Gold Coast lifestyle,” Gedoun added.

S&S buys $20m Rainbow Bay site for fifth beachside apartment project

Japandi, an emerging design trend that combines Scandinavian functionality with Japanese rustic minimalism, remains relatively untested in Australia’s residential development market.

As developers look to differentiate their projects and offer something distinct to buyers, Brisbane-based developer Lantona has embraced the hybrid style for its recently launched Toowong apartment project, <a href="https://www.apartments.com.au/new-apartments/koya-residences-6-josling-street-toowong-qld-4066">Koya Residences</a>, with early response to the design proving positive.

Lantona entrusted Red Door Architecture and interiors practice Luma Design Co with delivering the Japandi brief. The approach blends Japanese minimalism with Scandinavian functionality, emphasising warm, restrained interiors, natural materials and clean lines. Drawing on the Japanese concept of wabi-sabi (beauty in imperfection) and the Scandinavian principle of hygge (comfort and cosiness), it creates serene, uncluttered and sustainable living environments.

These design principles are expressed throughout the Josling Street development, both in its exterior form and across the 40 one-, two- and three-bedroom residences within.

[smartcode_project:default project_id=150787 project_image_fid=366229]

Koya reflects a deliberately scaled approach, with the five-storey form designed to align with the surrounding residential streetscape rather than dominate it.

“Koya is conceived as a building that sits comfortably within its surroundings. Every decision, from material selection to spatial planning, has been guided by long-term liveability and enduring relevance,” the developer said.

[smartcode_project:default project_id=150787 project_image_fid=366243]

Positioned within an established inner-west neighbourhood, the development sits near riverfront parklands and the Bicentennial Bikeway, while remaining within walking distance of Toowong Village and multiple public transport options connecting to the CBD, St Lucia and West End.

Lantona said the location was central to the project’s conception, pointing to Toowong’s balance of green space, transport access and proximity to major education institutions.

“<a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> combines river access, walkability, immediate CBD connection and a strong educational presence. That balance made it the obvious setting for Koya.”

[smartcode_project:default project_id=150787 project_image_fid=366230]

Communal amenity is concentrated on the rooftop, where a shared retreat will include a pool, dining areas and outdoor spaces oriented towards neighbourhood and city views. The design allows for both private use and small gatherings, extending the living environment beyond individual apartments.

Koya enters the market at a time when smaller-scale developments are becoming less common in established suburbs, with many recent projects in the suburb shooting for the sky.

In a nod of confidence,&nbsp;<a href="https://www.apartments.com.au/builders/brisbane-builders">Brisbane Builders</a>&nbsp;has already commenced construction on the building, which is slated for completion in early 2027. Keenan &amp; Byrne is marketing Koya.

[smartcode_project_cta:default project_id=150787]

Japandi-inspired Koya Residences launch in Toowong

Finance

Australia&rsquo;s biggest bank, CBA, has increased its 2- and 4- year fixed home loan rates by 0.05 per cent for owner-occupiers paying principal and interest. 
&nbsp; 
It is the third time CBA has hiked its 4-year fixed rate this year, but the first time the bank has hiked its 2-year rate for owner-occupiers.

&ldquo;CBA is factoring in a rise in the cost of funding over the next couple of years, particularly now the RBA&rsquo;s term funding facility has closed.&rdquo; 
&nbsp; 
A recent economic insights report from CBA shows around half of its new owner-occupier loans settled in June were fixed, with the two-year rate the most popular. 
&nbsp; 
&ldquo;Despite today&rsquo;s hikes, CBA still has one rate under 2 per cent &ndash; the bank is not going to let go of that easily,&rdquo; said RateCity.com.au research director, Sally Tindall. 
&nbsp; 
&ldquo;CBA&rsquo;s two-year rate was extremely competitive and attracting significant interest. By keeping it just under 2 per cent, the bank is trying to keep momentum going at a more sustainable price,&quot; she said. 
&nbsp; 
Analysis of the RateCity.com.au database shows over the last two months, there have been more hikes than cuts in every fixed rate category with the exception of 1-year rates. 
&nbsp; 
But ME Bank has cut rates across a few home loans from early August, while boosting its refinance cashback offer to $3,000.

The cuts were across its two-year fixed and variable home loan range.

The two-year fixed rate Member Package home loan was cut by 20 basis points to 1.89% p.a. (3.17% p.a. comparison rate*) - a &quot;record low&quot; for the lender.

This particular comparison rate applies to owner occupier borrowers with 80% LVR i.e. a 20% deposit, paying principal &amp; interest.&nbsp;

The same advertised rate applies to other LVRs in the product line, but different comparison rates apply.

A number of other home loans - both fixed and variable - with different LVRs were also cut by between 5 and 31 basis points.

While the majority of changes to fixed rates in the last two months have been hikes, RateCity advise the opposite is happening in the variable rate market.&nbsp; 
&nbsp; 
RateCity.com.au home loan database analysis shows 49 lenders have cut at least one variable rate in the past two months while 10 lenders have hiked variable rates in that time.

The vast majority of variable rate cuts are reserved for new customers, not existing ones, RateCity research director, Sally Tindall, said.

&ldquo;Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,&rdquo; she said. 
&nbsp; 
&ldquo;Before you call, check what rate your bank is giving new customers for the same home loan, but also find out what other lenders have on offer.

&ldquo;If you are paying significantly more than a new customer, pick up the phone and ask your bank &lsquo;why?&rsquo;.

[smartcode_project:default project_id=7363 project_image_fid=41840] 
&nbsp; 
&ldquo;If you have a good track record of paying down your debt, and the bank thinks you might switch to a more competitive lender, they&rsquo;re likely to play ball. 
&nbsp; 
&ldquo;A lot of people think a handful of basis points won&rsquo;t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years,&rdquo; she said.

ME has also increased its cashback offer to $3,000 for externally-refinanced home loans.

The new lending amount must be minimum of $250,000.

Eligible refinancers must apply by Friday 27 August inclusive, and settle by Friday 29 October.

ME Bank CEO Adam Crane said the cuts would assist borrowers &quot;looking to maximise their borrowing in a challenging property market.&quot;

In February, ME Bank merged with Bank of Queensland with the deal expected to be finalised this month.

But ME Bank cut rates across a few home loans, while boosting its refinance cashback offer to $3,000

jchancellor-FAypfDUnLy

Home loan mortgage rate rises continue

EXPERT INSIGHT

So you think it&rsquo;s the right time to dive in and buy a home.

I can&rsquo;t tell you you&rsquo;re wrong. I can tell you it would have been better to do it before prices began soaring, and that if they keep soaring it will get worse still.

When the year began, the typical Sydney price was <a href="https://www.corelogic.com.au/news/corelogic-december-home-value-indices">$872,000</a>. Five months later at the start of June it is <a href="https://www.corelogic.com.au/news/australias-housing-boom-rolls-national-home-values-lifting-another-22-may">$970,000</a>.

That&rsquo;s a jump of almost $100,000 in a matter of months &mdash; an awfully big price for procrastinating.

In Melbourne the typical price has climbed from $682,000 to $740,500. In Perth it has climbed from $471,000 to $521,500, and so on.

And banks are beginning to withdraw the cheapest of their still-very-cheap mortgage rates, at this stage mainly the fixed four-year rates which had been below <a href="https://www.domain.com.au/news/house-hunters-facing-rising-fixed-mortgage-rates-with-further-hikes-expected-1054965/">2%</a>.

So why on earth wouldn&rsquo;t you dive in, cut your living expenses to the bare minimum and try and buy a home while it&rsquo;s the least bit possible?

One (slight) reason to relax is mortgage rates. Despite the increases in fixed four-year rates, three-year rates have barely moved. That&rsquo;s because the Reserve Bank has promised to hold the three-year bond rate <a href="https://www.rba.gov.au/media-releases/2021/mr-21-09.html">constant</a> at 0.1%.

Buying has become a bigger commitment

The three-year bond rate determines the cost to banks of their three-year fixed rate mortgages.

The Reserve Bank has said it does not expect to lift its 0.1% cash rate until &ldquo;2024 at the earliest&rdquo;. Movements in the cash rate determine movements in variable mortgage rates.

But there is another reason for proceeding with caution and taking stock.

For our parents, buying a home was an exceptionally good deal, not only because homes were cheaper &mdash; until the end of the 1990s homes typically cost between two and three times household after-tax income, they now cost closer to five &mdash; but also because over time the loan became easier to pay off.

That isn&rsquo;t because mortgage rates were coming down &mdash; at times they were going up &mdash; it&rsquo;s because during our parents&rsquo; times wages (and prices) were climbing.

It meant that even if someone of our parents&rsquo; generation just squeaked through one of the bank&rsquo;s tests about their ability to make payments on a mortgage, a few years and lots of inflation and several big wage rises down the track those mortgage payments shrank compared to everything else.

Once, wage rises took care of repayments

Many of our parents paid off their mortgages early.

One way to look at this is that the bank&rsquo;s ability-to-repay calculators were set too harshly. They failed to account for future hefty wage rises and inflation.

It&rsquo;s probably also true that they were set more generously than they might have been in an implicit acknowledgement of what the assistant governor in charge of the Reserve Bank&rsquo;s economic branch Luci Ellis calls &ldquo;<a href="https://www.rba.gov.au/publications/rdp/2006/2006-12/global-trends.html">mortgage tilt</a>&rdquo;.

The former governor, Glenn Stevens, used another term, &ldquo;<a href="https://www.rba.gov.au/speeches/1997/sp-ag-081097.html">front-end loading</a>&rdquo;.

Mortgages were &lsquo;front-end loaded&rsquo;

When inflation was high, and as a consequence interest rates were high, wages that climbed rapidly with high inflation made the servicing burden &ldquo;most acute in the very early phase of a loan, falling over time&rdquo;.

On a graph (and the former governor presented a graph) the line showing payments as a portion of income tilts down over time.

In a world of lower inflation and interest rates, the tilt becomes flatter.

By now (Stevens published the graph in 1997) the line must be near horizontal.

If wage growth remains near the <a href="https://twitter.com/1petermartin/status/1399520798734389250/photo/1">record lows</a> the treasury is forecasting it will become scarcely any easier to make payments on a home loan over time.

Yet the banks are still handing out loans using the sort of formulas they used to.

If you get a loan you&rsquo;ll be assessed as being able to (just) make the payments as always, but you&rsquo;ll be denied the near certainty of being able to more easily meet the payments as time goes on.

Now, we retire mortgaged

This is a different from the risk you&rsquo;ll also run of today&rsquo;s ultra-low mortgage rates climbing (which banks do take into account in deciding whether to give you a loan).

The proportion of homeowners reaching retirement age while still paying off their mortgage has doubled in 20 years. Which might be why some banks ask for details of your super before granting you a loan. It isn&rsquo;t an idle inquiry.

Might things get better? Maybe, if we can get wages moving again.

Evidence given to Tuesday&rsquo;s post-budget Senate estimate hearing provides cause for hope, and despair.

Super hikes will make things worse

The budget forecasts for wage growth over the next four financial years are incredibly low &mdash; 1.5%, 2.25%, 2.5% and 2.75%

On Tuesday Treasury Secretary Steven Kennedy revealed that each would have been higher &mdash; 0.4 points higher &mdash; had the government not persisted with the five scheduled annual increases in compulsory superannuation contributions of 0.5% of salary starting in July.

The treasury believes each increase will slice 0.4 percentage points from wage growth, on the basis that employers, who are legally required to pay the contributions, will have to find the money somewhere.

It&rsquo;s the same conclusion reached by the government&rsquo;s <a href="https://theconversation.com/that-extra-youre-about-to-get-in-super-most-of-it-will-come-from-you-but-dont-expect-the-ads-to-tell-you-that-154723">retirement incomes review</a>.

It&rsquo;s cause for hope because it means that when those five increases stop (in mid-2026, or sooner if the government stops them mid-track) wages might be able to grow more strongly.

It&rsquo;s cause for despair because if the treasury is right, we are denying ourselves wage rises we could use in return for super we will increasingly use to pay down our mortgages.<img alt="The Conversation" height="1" src="https://counter.theconversation.com/content/161873/count.gif?distributor=republish-lightbox-basic" style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important; text-shadow: none !important" width="1" z5zyoz6tp="" />

<a href="https://theconversation.com/profiles/peter-martin-682709">Peter Martin</a>, Visiting Fellow, <a href="https://theconversation.com/institutions/crawford-school-of-public-policy-australian-national-university-3292">Crawford School of Public Policy, Australian National University</a>

This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/paying-off-a-home-loan-used-to-be-easier-than-it-looked-its-now-harder-heres-why-161873">original article</a>.

jordan_55689

Paying off a home loan used to be easier than it looked - it's now harder - here's why

<html><body>
Expert Observer

At its meeting today, the Board decided to maintain the current policy settings, including the targets of 10 basis points for the cash rate and the yield on the 3-year Australian Government bond, as well as the parameters of the Term Funding Facility and the government bond purchase program.

The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven. While there are still considerable uncertainties regarding the outlook, the central case has improved. Global trade has picked up and commodity prices are mostly higher than at the start of the year. Inflation remains low and below central bank targets.

Sovereign bond yields have increased over recent months due to the positive news on vaccines and the additional fiscal stimulus in the United States. Inflation expectations have also lifted from near record lows to be now closer to central banks' targets. The 3-year government bond yield in Australia is at the Board's target of 10 basis points and lending rates for most borrowers are at record lows. The Australian dollar remains in the upper end of the range of recent years.

The economic recovery in Australia is well under way and is stronger than had been expected. The unemployment rate fell to 5.8 per cent in February and the number of people with a job has returned to the pre-pandemic level. GDP increased by a strong 3.1 per cent in the December quarter, boosted by a further lift in household consumption as the health situation improved. The recovery is expected to continue, with above-trend growth this year and next. Household and business balance sheets are in good shape and should continue to support spending.

[smartcode_project:default project_id=7275]

Nevertheless, wage and price pressures are subdued and are expected to remain so for some years. The economy is operating with considerable spare capacity and unemployment is still too high. It will take some time to reduce this spare capacity and for the labour market to be tight enough to generate wage increases that are consistent with achieving the inflation target. In the short term, CPI inflation is expected to rise temporarily because of the reversal of some COVID-19-related price reductions. Looking through this, underlying inflation is expected to remain below 2 per cent over the next few years.

Housing markets have strengthened further, with prices rising in most markets. Housing credit growth to owner-occupiers has picked up, with strong demand from first-home buyers. In contrast, investor credit growth remains subdued. Given the environment of rising housing prices and low interest rates, the Bank will be monitoring trends in housing borrowing carefully and it is important that lending standards are maintained.

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The Board remains committed to the 3-year government bond yield target of 10 basis points. Later in the year it will consider whether to retain the April 2024 bond as the target bond or to shift to the next maturity. The initial $100 billion government bond purchase program is almost complete and the second $100 billion program will commence next week. Beyond this, the Bank is prepared to undertake further bond purchases if doing so would assist with progress towards the goals of full employment and inflation. Authorised deposit-taking institutions have drawn $95 billion under the Term Funding Facility and have access to a further $95 billion. Since the start of 2020, the RBA's balance sheet has increased by around $215 billion.

These various monetary measures are continuing to help the economy by keeping financing costs very low, contributing to a lower exchange rate than otherwise, and supporting the supply of credit and household and business balance sheets. Together, monetary and fiscal policy are contributing to the recovery in aggregate demand and the pick-up in employment.

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The Board is committed to maintaining highly supportive monetary conditions until its goals are achieved. The Board will not increase the cash rate until actual inflation is sustainably within the 2 to 3 per cent target range. For this to occur, wages growth will have to be materially higher than it is currently. This will require significant gains in employment and a return to a tight labour market. The Board does not expect these conditions to be met until 2024 at the earliest.
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Bank will be monitoring trends in housing borrowing carefully: RBA Governor Philip Lowe's April 2021 meeting statement

<html><body>The Australian Prudential Regulation Authority chairman Wayne Byres has told parliamentarians that the regulator’s job was not to “solve house prices” or “solve affordability.” 

But Byers did tell the House of Representatives Economics Committee that APRA was watching closely for riskier lending.

“The last statement from the Council of Financial Regulators said quite clearly we are watching for a deterioration in lending standings and that’s not evident at this point,” he said 

“That is not to say it won’t emerge but it’s not obvious at this stage.” 

Byres accepted that house prices would rise faster than incomes when he noted the regulator remained focused on protecting depositors and the stability of the financial system.

“It’s not our job to solve house prices and it’s not our job to solve house pricing affordability,” Byres said.

“We are watching for a deterioration in lending standings, and that’s not evident at this point. 

"That is not to say it won’t emerge, but it’s not obvious at this point,” Mr Byres said.

The comments come despite strong monthly price growth and the highest auction clearance rates in years.

The AFR recently reported APRA data revealed a 31 per cent increase in interest-only loans, a 27 per cent increase in mortgages with a loan-to-valuation ratio (LVR) of 95 per cent and a 26 per cent increase in mortgages where the borrower was granted a loan more than six times their annual income.

Byres noted buying activity was being driven by first home buyers, which was creating a different dynamic to the prior times of APRA intervention that curbed investor and interest-only loans in 2014 and 2017.

Byers did note the vast majority of home owners who stopped mortgage payments during the pandemic last year had resumed repayments.

Deferred loans accounted for 0.5 per cent of banks’ total loan books in February, the parliamentary committee was advised on Monday.

It was down from 10 per cent on last May.

APRA will be monitoring how lenders dealt with customers still struggling to pay their mortgages.
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APRA, the prudential regulator has also rejected any suggestion the regulator’s job was to “solve house prices.” 

jchancellor

APRA doesn't see role as solving housing affordability

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The lowest home loan rate in the market has dropped to 1.69 percent at the Greater Bank.

It announced the new market leading rate of 1.69 percent following a cut of 0.20 percent to its 1 year fixed rate for owner occupiers paying principal and interest. 

Canstar editor-at-large and money expert, Effie Zahos says chasing a low rate should be on every homeowners’ radar.

“Interest rates will remain at rock bottom for the next three years, though fixed rates are likely to rise before variable rates do as the longer term bond market starts to anticipate monetary tightening a few years ahead,” Zahos said..

“The move from Greater Bank proves competition is still rampant in the home lending space,” she said. 

UBank is at 1.75 percent followed by Homestar at 1.75 percent.

Ratecity noted Greater Bank borrowers will need to shop around or refix their rate after the first year as the loan reverts to a variable rate of 3.66 per cent. 

Greater Bank home loans are only available for borrowers in NSW, ACT and Queensland. 

RateCity.com.au analysis shows if an owner-occupier with a $400,000 home loan switched from the average existing owner-occupier rate of 3.05 per cent, to this new rate from Greater Bank, they could potentially save $5,039 in the first year, including refinancing costs. 

However, after five years borrowers could be $3,849 worse off, unless they switch or refix their loan.

<img alt="" height="492" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/ratecity_cheapest_home_loan.jpg" width="604">

Notes: based on an owner occupier paying principal and interest, switching loans 5 years in to a 30 year home loan with a balance of $400K. Assumes the customer does not refix / refinance after the 1 year fixed rate expires. Refinancing costs include discharge fees but not government fees.

RateCity.com.au data shows 24 lenders have cut 317 home loan rates since 1 January.
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Canstar editor-at-large and money expert, Effie Zahos says chasing a low rate should be on every homeowners’ radar.

Home loan rate hits new record low of 1.69%

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At its first meeting in 2021, the RBA have kept the interest rates at record 0.10 per cent.

They also announced an extra $100 billion of bonds. Westpac had said it was possible the RBA would extend, but expected them to wait until March.

CreditorWatch chief economist Harley Dale says the RBA used up its ammunition late in 2020 and the focus this year will be firmly on federal and state fiscal policy to complement super-low borrowing rates and keep the Australian economic recovery on track.

"In terms of all the policies that the RBA has in place, the Central Bank will be closely keeping an eye on early 2021 economic updates for key sectors such as retail," Dale said, adding that unemployment numbers, a key metric for the RBA, had been stronger than forecasted.

Every expert and economist surveyed in Finder's RBA Cash Rate Survey predicted the cash rate would hold, but a record number expressed positive sentiment about employment.

Positive sentiment around employment dropped to zero in April when the lockdowns first began, but the recent unemployment figures and recovery has seen 73 per cent suggest employment is positive, a record number since Finder started collecting the data in March 2018.

Graham Cooke, head of consumer research at Finder, said the swing in positivity around employment is significant. 

“There was a lot of fear during the first three quarters of 2020 that certain sectors within the jobs market would not survive without government support. 

“It now looks like experts are fairly confident that the market is robust enough to ride out COVID-19.

“Affordable housing, however, may be quickly evaporating, with house prices on-track to increase this year in every capital city,” he said.

Record house prices have led to a 12-month low in sentiment about housing affordability. 

Only 10% of experts are optimistic, down from a high of 62% in September 2020.

“A combination of record low interest rates, reduced supply, government stimulus and bolstered savings has pushed sale prices north and climbing. 

“Potential buyers who have been sitting on the fence should act sooner rather than later based on these results,” Cooke said.

 
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At its first meeting in 2021, the RBA have kept the interest rates at record 0.10 per cent

RBA holds interest rate at record low 0.1 per cent, purchases extra $100 billion of bonds

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EXPERT OBSERVER

The ABS reported a 0.9% lift in the December quarter CPI which was greater than Westpac’s (and the market median) forecast of 0.7%. At two decimal places the CPI lifted 0.86% with the annual pace lifting a touch from 0.7%yr to 0.9%yr.

The core measures were around expectations with the trimmed mean lifting 0.4%qtr (WBC forecast 0.3%/market median 0.4%) while the weighted median gained 0.5%. Excluding the imputed series had little impact on the core measures.

The CPI is still being influenced by government taxes and subsidies which have been pushing and pulling on the data. However, outside of dwelling prices we found little to suggests more broad based inflationary pressures.

The main surprise compared to our forecast was how the surge in housing demand lifting dwelling prices to swamp the benefit of the Home Builders Grants. In many capital cities developers were able to lift prices in excess of the value of the grants, even in Perth and Hobart were the Federal Grant ($25,000) was supplemented by state government grants ($20,000).  

In our preview we had expected that the know rise in childcare would be offset by falling housing costs but rising underlying dwelling prices swamped the discounts. Prices fell in Sydney (-0.3%), Adelaide (-0.5%), Darwin (-2.3%) and Canberra (-0.5%) but lifted in Melbourne (0.9%), Brisbane (2.0%), Perth (2.2%) and Hobart (1.1%). The large rise in Perth and Hobart is somewhat very surprising given the lower level of house prices in those capital cities and the almost doubling of the size of the grants in those cities.

It is also worth noting that rents rose 0.1%, while modest it was stronger than the expected fall -0.3%. Electricity prices fell -7.5% due to a $600 in WA which saw electricity prices fall -66.7% in Perth.  

There was the expected rise in two key components; the 33.7% lift in childcare and the 10.9% rise in tobacco prices.

The ABS informed us earlier of the magnitude of the rise in child care due to the ending of free child care in Victoria. Overall, household equipment and services rose 3.4% (WBC forecast 3.5%). Excluding child care this group would have fallen -0.7%.

Tobacco prices rise every December quarter due to the re-indexing of the excise to the CPI.

Unlike the NZ CPI it was harder to find any broader inflationary pressures from the COVID induced changes in demand. Holiday travel cost did rise bit more than expected but household contents were close to expectations while clothing fell more than expected.

However, dwelling prices are running well ahead of our expectations and even rents have turned positive. These factors can have a meaningful impact on estimates of core inflation, something we will be looking more deeply at for our monthly update.

Justin Smirk is an economist at Westpac.
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The main surprise compared to our forecast was how the surge in housing demand lifting dwelling prices to swamp the benefit of the Home Builders Grants

Q4 CPI above expectations as dwelling prices surge: Westpac

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The consumer price index (CPI) beat its market expectation over the quarter and rose 0.9 per cent, according to figures released by the ABS.

Over the 12 months to December, CPI rose 0.9 per cent. The RBA have indicated that they want CPI between two to three per cent for a steady period before lifting interest rates, among other key metrics such as unemployment.

Commsec's Craig James says inflation is likely to remain below, or near the bottom, of the Reserve Bank’s 2-3 per cent target band for most of 2021.

"As a result the Reserve Bank has committed to not increasing the cash rate for three years."

The December quarter inflation rise follows a 0.7 per cent increase in the September quarter and a 0.3 per cent fall in the June quarter.

Michelle Marquardt, head of prices statistics at the ABS, said the December quarter CPI was primarily impacted by an increase in tobacco excise and the introduction, continuation and conclusion of a number of government schemes, including childcare fee subsidies and home building grants.

Prices rose in the purchase of new dwellings (0.7 per cent) following increased demand. 

"The rise in demand for new dwellings is reflected in higher building approvals for houses and a record value for housing loan commitments in November," Marquardt said.

"The December quarter rise of 0.7 per cent in the purchase price of new dwellings would have been higher, but was partially offset by the Federal government's $25,000 HomeBuilder grant, and similar $20,000 grants by the Western Australian (WA) and Tasmanian state governments."

Westpac's Justin Smirk did suggest holding back the rise in the CPI is the WA $600 Household Electricity Credit, as well as the Federal Government Homebuilder Grants supplemented in WA and Tasmania by state grants.

Westpac had been forecasting a 0.7 per cent lift in the CPI which would have held the annual rate steady at 0.7 per cent.

 

 
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CPI outperforms market expectation, up 0.9%

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UBank, a subsidiary of NAB, has announced the new lowest fixed rate in Australia – 1.75 per cent for three years.

But customers will have to be quick, with the rate set to expire in a little over a month.

The three-year fixed rate is 0.13 per cent below the next lowest fixed rate and 1.34 per cent lower than the average existing owner-occupier rate of 3.09 per cent (RBA data).

UBank has also cut its other fixed rates by up to 0.35 per cent for new customers.

There are now 53 lenders offering at least one fixed or variable rate under 2 per cent on over 120 different home loans, according to RateCity.com.au data.

RateCity.com.au research director Sally Tindall said while the RBA was set to keep rates on hold, competition between lenders was still driving home loan rates down.

“Lenders have been offering home loan rates under 2 per cent since June last year, yet thousands of existing mortgage holders seem content with the idea of paying a rate starting with a ‘3’,” she said.

<img alt="" height="459" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/cheaper_fixed_rates_urban.jpg" width="1200"> Source: RateCity.com.au

“UBank’s decision to offer a market-leading rate for just over a month is designed to get people to act.

“Putting an expiry date on this deal could help combat complacency among mortgage holders.

“Mortgage holders suffering from inertia are likely to be getting fleeced,” she said.

“Fixed rates are typically less flexible than variable ones, so if you want access to an offset account and unlimited repayments, you might look at splitting your loan or consider a variable rate loan,” she said.
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UBank, a subsidiary of NAB, has announced the new lowest fixed rate in Australia – 1.75 per cent for three years.

UBank announce Australia's lowest fixed rate home loan

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Australian Finance Group secured a record-breaking December quarter with more than $19.9 billion of home finance lodged by AFG brokers.

AFG CEO David Bailey advised the national figure represented an increase of 9.5% on the prior quarter and a 30% increase on the corresponding quarter in 2019.

But the percentage of investor loans remained at an all-time low of 21%.

Some 42% of lodgements were for those upgrading their homes.

With government incentives, first home buyers represented 22% of lodgements, triggering a record high loan to value ratio of 73% due to the high proportion of first home buyers who typically have smaller deposits.

Overall the broker saw gains across the country lead by Victoria up 18% and Western Australia recording a 13.3% jump on Q1 2021. 

New South Wales up 3.5% for the quarter, Queensland up 7.8%, South Australia up 0.4%. 

The Northern Territory recorded a drop of 10%.

The average loan size was also at record levels, coming in at $544,359 for the quarter.

A record 88% took a principal &amp; interest product over an interest only loan. 

The average loan size was also at record levels, coming in at $544,359 for the quarter.

“The market is well aware that low interest rates are likely bottoming out and this has seen the percentage of customers choosing a fixed rate product still high at 29.2%,” Bailey said.

With the four big banks leveraging their funding advantage through very competitive pricing and cash back offers, smaller lenders’ share of the market remained at 41%.

The Westpac stable of brands – Westpac, BOM, BankSA and St George – have increased their combined market share of AGF loans by 2.5% to be sitting at 18.7% while CBA group – CBA and Bankwest – dropped 4.7% to now be holding 20.7% of the market.
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