Melbourne developer Spacious Group has completed Voyage Altona, one of the closest new apartment developments to Altona Beach.

Off the plan purchasers have started moving into the 49-apartment project on Pier Street, with the remaining move-in-ready one-, two- and three-bedroom apartments starting from just over $500,000.

Display apartments have now been fitted out, allowing prospective buyers to inspect the completed residences by appointment.

[smartcode_project:default project_id=112195 project_image_fid=372638]

The completed apartments feature open-plan living and dining areas which extend onto private balconies and terraces, while full-height glazing maximises natural light throughout the interiors.&nbsp;

Hybrid timber-look flooring, stone benchtops, Miele appliances, porcelain-tiled bathrooms and generous storage feature throughout the building which also features landscaped communal areas, expansive shared terraces, lift access and secure on-grade parking.

Drawing inspiration from its bayside setting, Voyage adopts a restrained palette of warm neutral tones and textured finishes. Many of the apartments take advantage of views across Port Phillip Bay, while the indoor-outdoor living spaces have been designed to make the most of the coastal outlook.

[smartcode_project:default project_id=112195 project_image_fid=3286]

Voyage was developed to address what Spacious Group identified as an undersupply of higher-quality apartment product in Altona, with a focus on owner-occupiers looking to remain within the bayside community.

"Voyage responds to very strong local buyer demand for quality, owner-occupier-focused product," says Barry Plant Projects Director Jarrod Farey, who has handled sales since the project's launch.

"The project delivers an elevated lifestyle proposition, with its design and quality of finish far exceeding anything previously produced in the area, as well as its proximity to Pier Street Village and the beach."

The majority of purchasers have been local downsizers and owner-occupiers looking to stay within the Altona community but who previously had limited opportunities to buy a brand-new apartment.

[smartcode_project_cta:default project_id=112195]

Joel Robinson

Spacious Group completes Voyage Altona in Altona's beachside precinct

Homecorp has secured approval for a $360 million apartment development at Budds Beach, paving the way for one of the Gold Coast's most amenity-rich residential projects to launch later this year.

Gold Coast City Council has approved Lýon Residences, a 32-level tower that will deliver 178 two and three-bedroom apartments across a prominent corner site at 8-10 Acacia Avenue and 25-27 Oak Avenue.

The approval comes as developers continue to invest in premium lifestyle-driven apartment projects on the Gold Coast, where owner occupiers are increasingly prioritising amenity as much as apartment size and location.

<a href="https://www.apartments.com.au/new-apartments/l-on-residences-25-27-oak-avenue-surfers-paradise-qld-4217">Lýon Residences</a> has been designed around a resort-style wellness offering, headlined by a Moroccan-inspired spa precinct featuring treatment rooms, a Nordic sauna and steam room, hot and cold plunge pools, a soaking pool and a residents-only juice bar.

The rooftop will include a heated infinity pool and spa, residents' lounge with private kitchen and bar, gymnasium, yoga and Pilates studio, outdoor entertaining areas and barbecue facilities overlooking the Surfers Paradise skyline.

<img alt="Lyon" data-entity-type="file" data-entity-uuid="2d3e29af-8793-486e-a684-52cef862241f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-15%20at%204.32.26%E2%80%AFPM.png?VersionId=ayG2zpLf3SS6Zy8XmKDcQods4kVWb0gm" />

Homecorp Founder and CEO Ron Bakir said Budds Beach provided the ideal location for the company's latest luxury apartment project.

"Budds Beach represents one of the most unique and sought-after pockets of the Gold Coast, and Lýon Residences has been designed to reflect that sense of rarity and refinement," Bakir said.

The project arrives as wellness continues to become a defining feature of new residential developments both in Australia and internationally.

The latest Global Wellness Institute figures show wellness real estate remains the fastest-growing segment of the global wellness economy and is forecast to exceed $1.8 trillion by 2030. Australia continues to rank among the world's 15 largest wellness real estate markets, with developers increasingly integrating health, recreation and community facilities into apartment projects.

Queensland is also experiencing strong population growth, with the Gold Coast continuing to outperform many other Australian cities as demand for new housing remains elevated ahead of the 2032 Olympic and Paralympic Games.

Bakir said the project had been designed to respond to that shift in buyer expectations.

"Strong population growth and sustained demand across the Gold Coast continue to highlight the need for well-designed new housing supply. Lýon Residences responds directly to this demand while setting a new benchmark for residential living," he said.

Each apartment has been designed to maximise views across the coastline, the Nerang River and the Gold Coast hinterland.

Located just minutes from Surfers Paradise beach and the Broadwater, the development also offers easy access to the light rail network, Broadbeach and Burleigh Heads.

Early site works are underway, with construction expected to commence later this year.

Homecorp approved for Budds Beach apartment tower, Lýon Residences

New apartment developments with uninterrupted, north-facing views over Perth's Swan River are exceptionally rare.

Recognising just how limited those opportunities are, <a href="https://www.apartments.com.au/developers/edge-visionary-living">Edge Visionary Living</a>, one of Perth's most respected builder-developers, targeted <a href="https://www.apartments.com.au/developments/applecross-wa-6153">Applecross</a>, assembling an unrepeatable 6,342 sqm riverfront site on the corner of Moreau Mews and Canning Beach Road to create one of Perth's only new north-facing apartment developments directly overlooking the Swan River.

Today, <a href="https://www.apartments.com.au/buildings/riviere-residences-applecross-59-canning-beach-road-applecross-wa-6153">Rivière Residences</a> offers buyers a unique opportunity to choose between completed residences ready to move into now and off-the-plan homes in the final stage, Rivière West.

[smartcode_project:default project_id=28384 project_image_fid=3823]

Across the completed East and Central buildings, residents are already enjoying the development's luxury amenity, while two of the precinct's hospitality venues are now open.

The completed component of the development gives buyers the advantage of experiencing the finished product firsthand, including its uninterrupted river views, while still having the opportunity to secure a residence in the final stage.

"People are wowed by the view and the quality of the apartments,"&nbsp;Edge Visionary Living Sales Executive, Holly McSweeney, says.

"They're looking for the convenience of lock-and-leave living, but they're not looking to downsize on quality."

[smartcode_project:default project_id=28384 project_image_fid=3826]

The rarity of the development hasn't been lost on prospective buyers, McSweeney says.

For McSweeney, it all comes back to a location that is becoming increasingly difficult to replicate.

"Location, location, location," she says. "We are nestled right on the front of the Swan River. You can never get built out, so wherever you are in Rivière Residences, you've got views of the river forever."

The unique waterfront position has resonated particularly strongly with local downsizers. McSweeney says many buyers are long-time Applecross residents looking to transition from large family homes into a luxury apartment without sacrificing space, quality or the lifestyle they've enjoyed for decades.

<iframe allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" allowfullscreen="" frameborder="0" height="315" referrerpolicy="strict-origin-when-cross-origin" src="https://www.youtube.com/embed/N_FowNW0wu8?si=vb25XFq1wZ-iufAW" title="YouTube video player" width="560"></iframe>

A major focus for Edge in recent years has been resident amenity. Across its apartment portfolio, from beachfront developments in Scarborough to luxury towers in South Perth, the developer has increasingly invested in the spaces beyond the apartment itself.

The strategy has largely been shaped by downsizer demand. Many buyers are moving from large family homes with swimming pools and established gardens. While they're looking to leave the maintenance behind, they don't want to compromise on lifestyle.

At Rivière, <a href="https://www.apartments.com.au/architects/hillam-architects">Hillam Architects</a> designed the resident facilities as an extension of each apartment. A 25-metre heated swimming pool takes advantage of the north-facing river outlook, complemented by a large gym, sauna and steam rooms, private dining spaces, residents' lounges, a cinema, games room, and dedicated wine and whisky rooms.

[smartcode_project:default project_id=28384 project_image_fid=372542]

The waterfront location has also proved to be a major drawcard. Residents are within walking distance of the Raffles Hotel, South of Perth Yacht Club, the Heathcote Cultural Precinct and the cafés, restaurants and boutiques along Ardross Street.

Beyond the location and amenity, McSweeney says many buyers take confidence from Edge's fully integrated development model.

Having delivered apartments across Perth for decades, Edge now designs, develops and constructs its projects in-house, giving the company greater control over quality, delivery and the finished product.

"What I love is when people walk through their apartment for the first time and say, 'This is better than what we imagined,'" McSweeney says. "We hear that all the time."

Completed apartments in the East and Central buildings are now available to inspect by appointment, while Rivière West, the final stage of the precinct, is expected to be completed in the first quarter of 2027.

[smartcode_project_cta:default project_id=28384]

North-facing Swan River views drive demand at Rivière Residences in Applecross

Nearly 60 per cent of apartments at McNab Group's $220 million The Tannery development in Brisbane's West End have sold ahead of the project's public launch, including a suburb-record $2.57 million sale for a two-bedroom apartment.

The early sales campaign has secured buyers for 50 of the project's 87 apartments, highlighting continued demand for larger owner-occupier apartments that combine generous floorplans with premium lifestyle amenities in one of Brisbane's most tightly held inner-city suburbs.

[smartcode_project:default project_id=143337 project_image_fid=374768]

McNab Group Executive Chairman Michael McNab said selling more than half the project before launch reflected changing buyer expectations.

"Selling more than half the project before public sales open tells us buyers are actively seeking apartments that offer something genuinely different," McNab said.

"Today's buyers are looking beyond four walls. They want homes that genuinely enhance the way they live, with spaces that support health, connection and everyday wellbeing."

[smartcode_project:default project_id=143337 project_image_fid=374767]

A key point of difference for the project is the adaptive reuse of the heritage-listed Dixon's Tannery building, which will become The Retreat, a residents-only wellness precinct rather than being redeveloped into additional apartments.

The Retreat will feature a sauna and steam room, hot and cold plunge pools, a commercial-grade gym, Pilates studio, cinema, library, co-working spaces and private dining room. Rooftop amenities will include a swimming pool, landscaped gardens, outdoor entertaining areas and dog-friendly spaces.

[smartcode_project:default project_id=143337 project_image_fid=374760]

Designed by Cottee Parker Architects with interiors by Tom Mark Henry and landscape architecture by Aspect Studios, The Tannery comprises 87 two, three and four-bedroom apartments across 11 levels overlooking the Brisbane River.

Cottee Parker principal Dee Passenger said preserving the original tannery building had been central to the project's design.

"The easy option would have been to maximise the site's development potential with additional apartments. Instead, McNab has chosen to preserve the original tannery as a shared wellness retreat, ensuring this important piece of Brisbane's history remains at the heart of the community."

Passenger said sustainability also played a key role in the design, with materials from the original industrial site salvaged and repurposed throughout the development.

[smartcode_project:default project_id=143337 project_image_fid=374761]

Motiv CEO Carly Cottam said buyers had responded strongly to the combination of larger apartments, wellness facilities and the West End lifestyle.

"We are seeing more buyers looking for homes in the sky that provide the space and functionality of a traditional home, while benefiting from the convenience and lifestyle that apartment living brings," Cottam said.

She said purchasers included both owner occupiers and investors, with demand coming from local buyers as well as interstate purchasers.

Coinciding with the public launch, McNab also announced a partnership with Queensland Ballet, whose neighbouring Thomas Dixon Centre shares historical ties with the original Dixon family.

Located on a 4,465 sqm site at 439 Montague Road, The Tannery overlooks the Brisbane River and is around 10 minutes from the CBD.

Construction is underway, with completion expected in the second half of 2027.

[smartcode_project_cta:default project_id=143337]

More than half of residences sold before public sales as McNab announces significant partnership with Queensland Ballet

McNab's The Tannery nears 60 per cent sold before public release, sets two-bedroom West End record

Iwan Sunito's vision for a landmark mixed-use precinct in Sydney's Inner West has taken a major step forward, with approval granted for the $1.9 billion Five Dock development first unveiled earlier this year.

The approved scheme by <a href="https://www.apartments.com.au/developers/one-global-capital">One Global Capital</a> will deliver an 80,500 sqm mixed-use precinct comprising 840 apartments, integrated hotel accommodation, commercial and retail space, alongside publicly accessible open space designed to create a new destination for the growing suburb.

"This is a significant milestone for One Global Capital and for the future of housing delivery in Sydney," Sunito said.

"The Housing Delivery Authority was established to identify major housing projects capable of delivering meaningful supply more efficiently, and we are delighted that Spencer Street has been recognised as one of those projects.”

He said the declaration reflected the rapid progress achieved since acquiring control of the site.

"In less than seven months we have progressed from taking control of the site to securing entry into one of the NSW Government's most important planning pathways. It reflects the experience of our team, the strength of our consultant group led by Urbis, and our long-term commitment to delivering transformational projects that contribute to Sydney's future."

When the project was revealed earlier this year, Sunito described the opportunity as one of the strongest development sites he had worked on.

"I probably hadn't appreciated the uniqueness of the site until more recently when putting together the concept plans," Sunito said.

"The proximity to the water, and the golf course opposite, is unlike any other part of Parramatta Road. We have a unique position and view corridors over the water that makes this one of the best sites I've worked on."

The development has evolved since its initial announcement, with the approved plans increasing the residential component from the originally proposed 750 apartments to 840 homes while retaining the project's focus on creating an integrated neighbourhood rather than a standalone residential development.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/a-city-within-a-city-iwan-sunito-flags-1-5-billion-mixed-use-precinct-in-five-dock">"A city within a city": Iwan Sunito flags $1.5 billion mixed-use precinct in Five Dock</a>

The precinct will combine apartments with hotel accommodation, commercial workplaces, retail offerings and public spaces, creating a mixed-use environment intended to serve both residents and the broader Five Dock community. The proposal also continues the collaboration between One Global Capital and internationally recognised architect <a href="https://www.apartments.com.au/architects/koichi-takada-architects">Koichi Takada</a>, whose previous work with Sunito includes Infinity, Arc and Skye North Sydney.

Takada previously said the design was driven by a philosophy of integrating nature into the built environment.

"The concept for this development is born from our design approach to naturalising architecture," Takada said.

"The public realm benefits from biophilic design that integrates generous landscaping, and the development is optimised for natural daylight, airflow and water views to foster wellbeing, sustainability and spaces that foster community interaction."

Sunito has consistently described the project as a "city within a city", with a strong emphasis on creating a destination that extends beyond housing.

"We want to create a development that's not only to be seen, but to be experienced by the whole local community," he said.

The approval comes as Five Dock continues its transformation ahead of the opening of the Sydney Metro West line, with the new Five Dock station set to significantly improve connections between the Inner West, Parramatta and the Sydney CBD.&nbsp;

The precinct will also benefit from its proximity to the Parramatta Road corridor, nearby waterfront parklands and established retail and dining offerings that have made Five Dock one of Sydney's most tightly held Inner West suburbs.

Iwan Sunito secures approval for $1.9 billion Five Dock mixed-use precinct

Finance

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The Australian Bureau of Statistics (ABS) released housing finance data for January 2015 this week. 
This data represents the first full month of lending-based results after APRA’s recommendation to Australian Authorised Deposit-taking Institutes (ADI’s) reinforcing sound residential mortgage lending benchmarks. <img class="aligncenter size-full wp-image-4377" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-11.jpg" alt="Chart 1" width="500" height="186"> Over the month the total value of housing finance commitments fell by -0.6% across both the owner occupier and investor segments of the market. The value of housing finance commitments has increased by 12.8% year on year. 
Taking a look at the breakdown between the owner occupier and investor segment of the market, it is clear that most of the strength is coming from investors. The value of owner occupier housing finance commitments fell by -1.0% over the month and investor lending recorded a fall of -0.1%. 
Despite the monthly fall in lending, the value of housing finance commitments was 7.1% higher year on year to owner occupiers and 22.1% higher to investors. <img class="aligncenter size-full wp-image-4378" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-21.jpg" alt="Chart 2" width="500" height="182"> The proportion of total lending to investors reached an all-time high in January 2015. Over the month, 41.4% of the value of all housing finance commitments was to investors. 
In comparison, a record low 39.1% of the value of housing lending was to owner occupiers for new loan purposes and 19.5% was to owner occupiers for refinances. If we look solely at the value of new lending (excluding refinances) investor lending hit a record high 51.4% of all new lending in January 2015. <img class="aligncenter size-full wp-image-4379" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-31.jpg" alt="Chart 3" width="500" height="180"> Focussing on the owner occupier segment of lending, $17.7 billion was lent in January down from $17.9 billion in December. Across the segment: $1.8 billion was lent for construction of new homes, $0.9 billion for the purchase of new homes, a record high $5.9 billion for refinances and $9.1 billion for purchase of established homes.
 Month on month, housing finance commitments for owner occupiers fell by -2.6% for construction of new homes, -5.4% for the purchase of new homes, +1.8% for refinances and -2.0% for purchases of established dwellings. year on year, the strength in the owner occupier segment has largely been from refinances which have increased by 28.5%. Across the other segments, construction of new homes were up +1.5%, purchase of new homes are -7.2% and purchase of established homes are -0.9%.
The data indicates that much of the activity across the owner occupier segment of the market is coming from refinances as home owners shop around for a better deal or prepare to withdraw some of their equity which would feed into the strength of the investment segment. <img class="aligncenter size-full wp-image-4380" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-41.jpg" alt="Chart 4" width="500" height="183"> Turning to the investment lending segment, $12.5 billion was lent in January which was slightly lower than investment lending in December. Over the month there was $0.8 billion in commitments for construction of new dwelling and $11.7 billion for commitments to existing homes showing that investor lending is largely going to existing homes with lending to that segment almost 14 times greater than lending for new construction. Over the month, investor commitments for new construction fell -18.8% compared to a 1.6% increase in lending for purchases of existing homes.
year on year, the value of commitments for construction of new dwellings is 85.1% higher while investor lending for established homes has increased by 19.1%. The data shows that despite lending to investors is surging, a relatively small amount of this lending is contributing to new housing stock being constructed. <img class="aligncenter size-full wp-image-4381" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Chart-51.jpg" alt="Chart 5" width="500" height="181"> Turning to the first home buyer segment of the market, the number of owner occupier first home buyer commitments fell sharply in January. It should be noted that this data series is not seasonally adjusted. Over the month there were 5,961 commitments which was -26.4% lower over the month and -14.4% lower year on year. As a proportion of all owner occupier housing finance commitments, investors accounted for 14.2% of commitments in January. 
Based on this data, the level of first home buyer participation in the market remains extremely low, however a weakness of the ABS data set is that it doesn’t identify first home buyers that are purchasing as investors. Anecdotally, it appears that many first time buyers are choosing to purchase an investment property rather than a principal place of residence. <img class="aligncenter size-full wp-image-4382" src="https://blog.corelogic.com.au/wp-content/uploads/2015/03/Mortgage-Index.jpg" alt="Mortgage Index" width="500" height="181"> The CoreLogic RP Data Mortgage Index measures activity across CoreLogic RP Data’s mortgage platforms each week. The activity is highly correlated with housing finance data and as the above chart shows, activity has surged over recent weeks. Based on this data, it suggests that despite the Christmas / New Year slowdown there has been no sustained slowdown in mortgage demand. Given this we would expect a rebound in housing finance commitment over the coming months.
Following the letter from APRA to Australian ADI’s in December we have seen a slight easing in housing finance commitments however, it is too early to suggest the two are related. Investor activity remains very strong and for the first time on record we have seen six consecutive months in which lending to investors is greater than lending to owner occupiers for new loans. Investors are largely purchasing existing homes which does little to contribute to new housing, although the value of commitments to investors for new construction has risen sharply over the past year. The owner occupier segment is largely being driven by refinance activity as borrowers shop around for better deals on their mortgage and prepare to re-invest some of their equity.
Over the coming months it will be important to monitor if the new guidelines from APRA and the ramping up of their surveillance of mortgage lending has much of an effect on demand. We would suspect that the high level of competition in the mortgage market is likely to result in minimal change across the board. While some individual lenders may have to tinker with their lending policies, borrowers have many other banks to choose from if one borrower cannot provide the type of product they are looking for.
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ckusher-ujnxiKuFQs

Housing finance eases but lending to investors soars to an all-time high: Cameron Kusher

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Hi Margaret,
I’m looking to buy my first investment property. I already have my own home which we have a fair bit of equity in. We will use that equity to finance the next deposit. 
Do we have to have access to that equity to put down as a deposit at contract signing? Or can we sign a contract with 100% of the purchase value subject to finance?
Regards,
Samuel
Hi Samuel,
First of all, congratulations on being ready to take this first step!  As it is likely you may be looking for an investment property anywhere in Australia, its important that you understand the differences which exist in every state in terms of how a property is transacted and the procedure for deposits.
First of all, the deposit required in every state, and when it is paid, is different. For example, in NSW, the deposit is either made in the form of a non-refundable 0.25% of the purchase price upon acceptance of the offer (to secure it and protect you from being gazumped), with the balance of 10% of the purchase price being required five days later (at which time the contract becomes unconditional), or as a straight 10% when you are ready make your contract unconditional (but in the meantime someone else can buy it).
In complete contrast, a QLD purchase attracts an initial deposit of whatever you can negotiate (I always suggest $1,000 and this is refundable)  with a ‘balance deposit’ (again I suggest a further $9,000) to be paid upon the contract becoming unconditional.  In between those two extremes falls the other states, and you must become familiar with each state’s individual process before you even begin to find your investment.
In any event, a deposit of some type is usually paid, and in your case, the entire amount of your deposit is tied up as equity in other property.  While you can use your own cash to make a deposit, this is not advised.  This is because if you use your own cash, you cannot subsequently ‘repay’ yourself from the loan you get to buy the property, as this payment to you is considered by the tax office to be a personal payment.  It then loses the ability for the interest incurred on this amount to be claimed as a deduction.  It’s important to preserve the nexus between a payment and the property, and the only way to do that is to ensure loan funds are spent directly on the property or its expenses.
You have two ways that you can get to this deposit and still maintain full deductibility without using your own cash:
<img src="/images/2014/07/04/yellow-one.jpg" alt="">You can approach the lender even before you find a property and set up a ‘line of credit’ loan using your current property equity.  This line of credit loan then sits undrawn, and the moment you find a property it is available for you to draw from to make the deposit.  As long as the funds from this debt are only ever used for, and connected to, an investment property, they are fully deductible.  There is a multitude of ways you can do this:
<ul>
<li>you can make it as large as your equity allows, use it for deposits every time you buy a new property, obtaining an 80% loan against any new property when you settle it (and so your 20% and costs comes from the line of credit to add to this 80% loan), 
</li>
<li>you can apply for only enough for the deposit, and then apply for a loan increase to be effected when the property settles and can be taken as security, or, 
</li>
<li>if you have enough equity in your own home, you can just put in place a loan big enough to buy the whole property – drawing the funds up as needed to pay deposits, costs and the final payment.</li>
</ul>
<img src="/images/2014/07/04/yellow-two.jpg" alt="">You can instead get a deposit bond.  This is an insurance policy of sorts, which guarantees to the vendor that, if you renege and do not proceed with the purchase, your forfeited deposit will be paid by them.  A deposit bond has a fee which is often less than the interest on the deposit would be if you were to use loan funds, but be warned – while the insurance company pays the forfeited deposit they still chase you to get it back!  This is only of concern if you withdraw from the purchase after your contract has become unconditional.
Whatever you decide, it’s important to get guidance from a qualified person who can be sure you structure this correctly, as getting it wrong can be a tax nightmare.  It’s also important that, before you even get started, you become educated – do a lot of reading and find a great property investment course to do first!
Have a property question?   <a href="mailto:askmargaret@propertyobserver.com.au" target="_blank">Ask Margaret!</a>
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mlomas-KC9MUPZ6Ca

Ask Margaret: How can I use my house's equity to finance my first investment?

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The Australian Bureau of Statistics (ABS) recently released housing finance data for December 2014.  
The data showed an end of year surge both in the value and the number of loans.  The surge coincided with the Australian Prudential Regulation Authority (APRA) warning Australian Authorised Deposit-taking Institutions (ADIs) about risky mortgage lending practices during the month.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg"><img class="aligncenter size-full wp-image-4253" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-1.jpg" alt="Chart 1" width="500" height="182"></a>
Over the month, the value of housing finance commitments increased by a total of 4.7%, the largest monthly increase since September 2013.  
The large increase was comprised of a 4.1% increase in owner occupier refinanced loans, a 3.6% increase in owner occupier new loans and a 6.0% increase in investor loans.  
The surge in investor loans is noteworthy, but so too is the jump in owner occupier new loans which had been flat for the past 12 months.  
Year on year, owner occupier refinances have increased by 27.0%, owner occupier new loans have increased by 4.9% and investor loans have climbed 18.8% higher.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg"><img class="aligncenter size-full wp-image-4254" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-2.jpg" alt="Chart 2" width="500" height="180"></a>
In December 2014, there were $5.8 billion in housing finance commitments for owner occupier refinances, $12.3 billion for owner occupier new loans and $12.6 billion for investor loans.  Both refinances and investor loan commitments were at a record high.  
Based on this data, the proportion of owner occupier new loans accounted for an all-time low 40.1% of housing finance commitments compared to 18.9% of all commitments for owner occupier refinances and a near record high 41.0% of commitments to investors.  
If we strip out refinances, investors accounted for a record high 50.6% of new housing finance commitments in December 2014.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg"><img class="aligncenter size-full wp-image-4255" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-3.jpg" alt="Chart 3" width="500" height="182"></a>
Looking specifically at the owner occupier segment of the market, there was $1.9 billion in commitments for construction of dwellings, $1.0 billion in commitments for the purchase of new dwellings, $5.8 billion in refinancing of established dwellings and $9.4 billion in commitments for established dwellings. 
 There has been a surge in finance demand over the year, particularly for newly constructed dwellings and refinances.  
Year on year, the change in owner occupier housing finance commitments has been recorded at: 14.6% for the construction of new dwellings, 1.8% for the purchase of new dwellings, 27.0% for refinances and an increase of 3.5% for purchase of established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg"><img class="aligncenter size-full wp-image-4256" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-4.jpg" alt="Chart 4" width="500" height="184"></a>
Focusing on the investment segment, in December 2014 there was $1.0 billion lent for the purposes of both construction of new and $11.5 billion borrowed for investment in established homes.  The year on year changes have been recorded at 59.8% for new construction and 16.1% for established homes.
<a href="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg"><img class="aligncenter size-full wp-image-4257" src="https://blog.corelogic.com.au/wp-content/uploads/2015/02/Chart-5.jpg" alt="Chart 5" width="500" height="179"></a>
The other important figure released by the ABS is the owner occupier first home buyer commitments. The ABS has recognized that these figures have been under-reported and have revised these figures this month.  Note that these figures still only include first home buyers that are purchasing homes for owner occupation. 
In December 2014, there were 8,213 owner occupier housing finance commitments to first home buyers, representing 14.5% of all owner occupier commitments.  Despite the revisions, the number of commitments is -1.3% lower over the year.  Furthermore, the 14.5% represents the lowest proportion of commitments to first home buyers since June 2004.
The data indicates first home buyers continue to languish whilst those that already own homes and are upgrading, refinancing or purchasing an investment property continue to dominate the market.  What is less clear is how many first time buyers are doing so for investment purposes (the ABS doesn’t provide a further breakdown of investment loans by buyer type as they do for owner occupiers).
As noted earlier, APRA wrote to Australian ADIs in December reiterating what they determine are prudent measures for lending and potential repercussions for those that don’t follow these guidelines. 
Given the results you would have to say it had little effect on borrowers or lenders in December.  It’s also worth noting that along with an 18.8% year on year increase in the value of investor commitments over 2014, the RBA’s housing credit data showed that total investor credit expanded by 10.1% in 2014. 
APRA noted concerns with lenders growing the investment segment of their loan book above 10% annually.  Based on these results you would have to say there remain some concerns for the regulator and it will be interesting to see if or what their next move is. 
What’s not in doubt is that the ball is now firmly in APRA’s court and we are closely watching what happens next.
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Investors surge after APRA warns about investor housing lending in December 2014

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Last week’s cut to the cash rate will start many borrowers thinking about refinancing their home loan. But like any financial decision, switching mortgages should not be taken lightly.
Here are several traps to avoid:
<ol>
<li>
Failing to consider your own circumstances – if your situation has changed since you first took out your mortgage, it’s wise to reassess whether you’ve got the right product. However, some changes of circumstances may mean that the loan you’re in will be the best deal you can get. If you have become self-employed since first taking out your mortgage, for example, you may be required to take out a low-doc loan if you refinance. These tend to charge higher interest rates than standard discounted home loans, so it’s likely you’d have to pay more. Similarly, if you or your partner has retired or stopped working for some other reason, your ability to repay a loan may be assessed differently by a new lender than under your existing mortgage contract. 
</li>
<li>
Ignoring switching costs – Fixed rate mortgages charge break fees for exiting early. These may make it prohibitively expensive to switch. Exit fees for variable rate mortgages were banned in 2011 and those on most on older mortgages would have expired by now but there are still costs associated with taking out a new mortgage that should be balanced against any savings you’ll receive by getting a lower rate. Fees to watch for include discharge fees paid to your current lender for preparing documents to finalise and pay out the existing loan; application fees to the new lender; valuation fees charged by the new institution for obtaining an up-to-date valuation on the property; and land registration fees for replacing the mortgage with the existing lender with one from the new institution. Canstar estimates these refinancing fees can add up to around $1,000. Consider whether that cost outweighs the benefits of a lower interest rate over a reasonable pay-back period. 
</li>
<li>
Comparing apples with oranges – if you have a fully featured mortgage, make sure you’re comparing the cost of a similar loan. Basic mortgages typically cost less than fully featured options, but a loan with more features may save you money in the long run if you take advantage of it. Holding $10,000 in an offset account could save $250 a year on a $250,000 loan that charges 5% interest. That may not sound like much, but that’s the equivalent of 0.2% lower annual interest rate. On the other hand, if you’ve never used the features such as offset accounts, discounted credit cards or home insurance policies that come with some loans, this might be a good time to dispense with the extras. 
</li>
<li>
Going for a fixed rate – rates are at historic lows. Fixed rate mortgages are available at 4.35%, fixed for two years on a 30 years mortgage (from Loans.com.au), according to Finder.com.au. Variable rate loans are offering 4.25% (also from Loans.com.au).   If you want to be sure of what your repayments will be, consider a fixed rate loan but remember you will be trading off flexibility. Most fixed rate loans prevent you from making extra repayments or repaying in full before the end of the term. Should you circumstances change, you may be hit with break fees if you choose to lock in the interest rate. 
</li>
<li>
Failing to approach your existing lender – rather than rushing out and swapping lender, have you approached your existing lender to see if they can give you a better deal? If there are lower rates in the market and you’re a good customer, they may go out of their way to keep you. It can be more efficient and less costly to get a better deal where you are rather than moving externally, especially if you hold other financial products – bank accounts and credit cards for instance – with the same institution. 
</li>
<li>
Ignoring some of the options – whether you’re using a mortgage broker to help you refinance, referring to a comparator website or succumbing to advertisements, remember that there are other options out there. Brokers include only a sub-set of available lenders on their panel of suggestions. You may get a good deal, but is it the best in the market? The only way to find out is to research more widely. Again, there’s an element of trade-off here. You might find that near enough is preferable to spending hours of investigation to get the best of the best. 
</li>
<li>
Failing to consider the lender’s history – if you’re switching to a variable rate, remember these can change at any time. Some lenders offer attractive promotional rates to lure borrowers in but fail to pass on subsequent interest rate cuts in a timely manner. Many lenders have quickly followed the Reserve Bank of Australia at this rate cut but that’s not what happens every time. A month-long delay in passing through a 0.25% interest rate cut would cost $83 in interest repayments on a $400,000 mortgage. Lenders may even lift rates out of cycle with the RBA if they decide that’s right for their business. It’s very difficult to tell which lenders will be the ones to do these things but investigating their behaviour when interest rates changed in the past may sound some warning bells. </li>
</ol>
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zfielding-GvX3Uq9KTa

Seven traps to avoid when refinancing

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GUEST OBSERVATION
Heading into 2015, I think we can expect to see a steady increase in the level of refinancing.
The Reserve Bank’s decision to cut the cash rate in February will no doubt encourage more home owners to review their current mortgage, which may prompt them to take the plunge and refinance into a more competitively priced home loan.
But while an increasing number of home owners could potentially be inspired to refinance their mortgage as a result of the rate cut, I do not expect to see a dramatic increase in the number of new home buyers entering the market.
Given how low interest rates already are, the February rate cut is unlikely to persuade potential home buyers to bring their property purchase plans forward. Instead, potential buyers will continue to take their time and enter the market at a point that is convenient for them.
That said, the Reserve Bank of Australia together with other industry regulators, including the Australian Prudential Regulation Authority (APRA), will still keep a close eye on what is happening in the property market as they will want to make sure the rate cut doesn’t artificially inflate the property market – especially in Sydney.
As part of the Reserve Bank’s February cash rate decision, governor Glenn Stevens said the Bank would work closely with “other regulators to assess and contain economic risks that may arise from the housing market”. 
This statement strongly suggests industry regulators won’t hesitate to implement certain lending restrictions if the latest rate cut results in a sudden and dramatic increase in demand for property.
Jessica Darnbrough is head of corporate affairs with <a href="https://www.mortgagechoice.com.au/" target="_blank">Mortgage Choice</a>.
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JessicaDarnbrough-syp4rPD4iy

RBA's rate cut will trigger rise in refinancing: Jessica Darnbrough

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Australians with multiple superannuation accounts could be paying thousands in unnecessary fees every year.
<a href="/news">According to new figures released today </a>by the Australian Taxation Office (ATO), 45% of working Australians have more than one super account.
The ATO is encouraging those with multiple accounts to consider consolidating their super into one preferred account. Australian Prudential and Regulation Authority (APRA) figures show the median figure for fees and charges paid by Australians for a low cost superannuation account is $532 per year.
“Consolidating your super into one preferred account is easier than ever and the New Year is the perfect opportunity to make a fresh start with your finances.” says ATO Assistant Commissioner of Superannuation, John Shepherd.
“It is not uncommon for people to open a new super account when they start a new job instead of taking their super fund with them when they change jobs.
“People might also have super accounts which they have lost track of, for example, they may not have updated their contact details with their funds when they moved house — there are still $5.8 billion worth of accounts in this category.”
Australians are encouraged to use the improved myGov online portal to check their super accounts and consolidate multiple accounts.
“myGov has made it much easier for people to combine their super accounts in one place,” Shepherd said.
“Users can see all their accounts and consolidate them with a few clicks and having one account minimises fees and can help maximise retirement savings.
“We’ve recently seen a significant increase in Australians merging their super into one preferred account with more than 265,000 accounts with balances totalling $1.13 billion consolidated in the six months to December 2014. In one case, 17 accounts were consolidated.
“This is a rise of 400% from the six months to December 2013 when 52,000 accounts worth more than $270 million were consolidated.
“If you’ve tried to combine your accounts before and found it difficult to do, give it another go. We have simplified the process since our online services were first launched and it’s now easier than ever to consolidate your super.”
Shepherd said that before people consolidate, they should look at any insurance cover with each fund, as it will be cancelled once they close their account.
“People should also make sure their super fund has their tax file number. They'll pay less tax on their super and it will help us to make sure all their super accounts are displayed online,” he said.
The following data provides a breakdown of the lost super by postcode as at 31 December 2014:
<table style="width: 460px;"><tbody>
<tr>
<th>
State
</th>
<th>
Total no. of accounts
</th>
<th>
Value of accounts
</th>
</tr>
<tr>
<td>
ACT
</td>
<td>
22,270
</td>
<td>
$248,435,330.45
</td>
</tr>
<tr>
<td>
NSW
</td>
<td>
405,079
</td>
<td>
$4,212,608,046.21
</td>
</tr>
<tr>
<td>
NT
</td>
<td>
23,819
</td>
<td>
$208,096,039.80
</td>
</tr>
<tr>
<td>
QLD
</td>
<td>
274,790
</td>
<td>
$2,722,734,421.04
</td>
</tr>
<tr>
<td>
SA
</td>
<td>
72,238
</td>
<td>
$680,425,943.04
</td>
</tr>
<tr>
<td>
TAS
</td>
<td>
22,160
</td>
<td>
$198,112,427.52
</td>
</tr>
<tr>
<td>
VIC
</td>
<td>
264,330
</td>
<td>
$2,736,093,306.68
</td>
</tr>
<tr>
<td>
WA
</td>
<td>
207,075
</td>
<td>
$1,518,250,373.92
</td>
</tr>
<tr>
<td>
Total
</td>
<td>
1,291,761
</td>
<td>
$12,524,755,888.66*
</td>
</tr>
</tbody></table>
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jchancellor-FAypfDUnLy

Australians losing thousands with multiple super accounts

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It seems that one of the big issues for Australian households trying to achieve their financial goals is, simply, a lack of discipline with their money, according to a new survey.
ME Bank’s Savings Intentions and Behaviours Survey, which queried 1,500 adults across the country in December 2014, found that 59% of Australian households do not consistently set a budget.
A further 41% set a budget but do not stick to it, while only 38% of households keep written or electronic records of their monthly expenses over the past six months.
ME Bank head of deposits and transactional banking, Nicolas Emery, said that commitment to detail and discipline are necessary for good savings habits.
“But it’s easy to resolve: you just need to track the real costs of your household expenses, set a realistic budget and commit to every single detail, consistently,” he said.
However, this wasn’t the only alarming statistic they found.
Around 46% of Australian households reported they were ‘credit card revolvers’, where they rarely or never paid their debt off completely. A further 20% failed to pay household bills on time.
“Real problems start to occur when you get stuck in a roundabout of not paying your credit card or bills on time,” said Emery.
“We strongly advise anyone struggling with credit card debt after Christmas, or anytime of the year to address the issue as soon as possible.”
He suggested that consolidating debts through a personal loan can remove you from the “interest payment roundabout”.
Interestingly, it was Gen X and Gen Y that came out the worst, with 72% of Gen Y not keeping a record of monthly expenses and 67% not setting a weekly or monthly budget.
Across the age groups, it seems that most are cautionary or conservative with financial goals. The majority of the top goals related to paying off debt, with the top being paying off mortgage and/or debt or small savings goals. This included saving for a rainy day, saving for a holiday, car or other non-home related expense.
{mijopolls 73}
 
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jduke-EHk3XBmHkn

Poll: Are you disciplined with money?

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Guest observation
Working with the banks on a daily basis, its easy to understand why tech savvy entrepreneurs are competing for their market share.
Innovation, like <a href="https://http//www.afr.com/p/business/companies/paypal_targets_aussie_business_loans_RrvZdKX866PcZidAXElHcJ">PayPal's </a>venture into the small business loans sector, will force our banks to become more competitive and accommodating when dealing with small to medium enterprises (SMEs) who continue to be forced to meet ridiculous hurdles when trying to access capital.
Although our banks would argue otherwise, in my opinion, other than continuing to channel huge amounts of dollars into property, our banks have played a very small role in helping SME’s grow during the post GFC years and the economic recovery in general.
If you were to look deeper into lending in Australia, you will see that most of the lending that does occur to businesses is supported by the security of Real Property.
Banks have effectively homogenised lending to the lowest common denominator, with very little room for negotiation when it comes to products, pricing or terms. They also almost always rely on Real Property Security as a substitute to critical credit analysis, where a lender would set pricing according to risk.
This standardised form of lending has ensured that the banks can continue to operate with the lowest cost base generating the highest returns.
Of course, this has been great windfall for shareholders, but at what cost to the real economy? 
<a href="https://http//www.afr.com/f/free/blogs/christopher_joye/houses_overvalued_official_up_to_OaTjLJaWNe179RZAhcUzJI">Our property market is one of the most expensive in the world</a>, <a href="https://http//www.smh.com.au/business/the-economy/australians-living-the-high-cost-life-20140430-37h4b">we have one of the highest costs of living </a>and yet our economy lacks efficiency and <a href="https://http//theconversation.com/australias-productivity-problem-why-it-matters-8584">productivity has deteriorated dramatically during the past decade</a>.
These imbalances are very obvious and have all been compounded by the fact that capital in Australia is not channeled into the most productive areas where it will achieve the maximum return.
Banks play a critical role in our economy. We need them to be profitable and well capitalised, but while they continue to remain protected from competition, remain “<a href="https://http//www.afr.com/p/business/financial_services/major_banks_pay_the_price_for_being_fSEQAeD1pHK9L8Qm6hJFkP">to big to fail</a>” and continue to rely on government guarantees underwritten by our tax dollars, they should be forced to make a greater contribution to the growth and success of our economy.
Or, to put it another way, they should not be allowed to conduct their business in a way the that kills productivity and put into jeopardy the hopes and dreams of future generations.
Con Katsiouras is the Director of Folio Finance.
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po-LsXgBTHBmX

Lending to housing is a productivity killer

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The new Mortgage Choice Happy As Index has found that 49.4% of Victorians are comfortable with their finances, with 28.6% noting they are uncomfortable.
Just over 20% considered themselves “neutral” with their finances.
Mortgage Choice spokesperson Jessica Darnbrough said that it was a pleasing result, pointing to the number of those committed to saving their money.
“When Victorians were asked how much of their after tax income they had managed to save this year, more than 40% said they had saved more than 16% of their after tax income,” said Darnbrough.
A further 10.8% said that they saved 21% to 25% of their income.
Less than 25% noted that they hadn’t saved at all.
“The index found that almost 40% of Victorians only worry about their finances when they have a ‘big financial commitment’,” she said. A total of 20% said that they think about finances on a ‘daily basis’.
The majority, at 59.8%, said that they were happy or extremely happy with their current lifestyle. This was a result only beaten by Queenslanders, with 63% citing themselves as happy or very happy with their current lifestyle.
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Almost half of Victorians “financially comfortable”: Mortgage Choice Happy As Index

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GUEST OBSERVATION
Banks borrow short and lend long. So if all of a bank’s depositors suddenly want their money, the bank would be unable to pay them. A bank may have made great loans but it can only unwind these loans slowly over time.
In most situations this doesn’t matter. Banks know their cash flows and play the probabilities, making sure they have a buffer of liquid assets to meet normal withdrawals.
However, a crisis can trigger a run on banks. Every depositor wants to get his or her money out of the bank before everyone else. The bank runs out of cash and closes its doors. It fails.
Bank regulation is at the heart of the current <a href="https://fsi.gov.au" target="_blank">Financial System Inquiry</a> chaired by David Murray. It will consider which regulations are important, which need to be strengthened and how <a href="https://www.bis.org/bcbs/index.htm" target="_blank">international banking rules</a> should apply in Australia.
Our recent <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2478496" target="_blank">research</a> compares some of the different rules that may be used to limit bank risk. We find that increased bank capital requirements are the most effective policy but must be applied across all institutions to stabilise the banking system.
The global financial crisis
The 2008 crisis resulted in plenty of traditional bank runs. In the United Kingdom, retail depositors lined the streets to take their money out of the failing Northern Rock.
We also saw a different type of bank run during this period. For example, a bank run led to the collapse of Lehman Brothers. Yet this didn’t involve retail depositors. It was institutions that stopped lending to Lehman Brothers on the wholesale market.
Australia’s banking system in 2008 was fundamentally sound. Our banks didn’t have abnormal levels of bad loans. Legal differences meant the default issues plaguing bank mortgages in California, Florida and elsewhere in the United States couldn’t occur in Australia.
Yet our banks were still exposed to the crisis through their reliance on imported wholesale funds. The Australian government responded to this risk of an “imported crisis”. In October 2008, it introduced explicit deposit insurance and guaranteed bank wholesale borrowing.
But why did Australia’s sound banking system come under pressure in 2008? Is there potential for Australia to import a banking crisis in the future? And what sort of banking regulations do we need to deal with this possibility?
Importing a banking crisis
Wholesale funds now provide a large part of the total funds available to banks in many countries. This has changed the nature of the risks they face.
<img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/63663/width668/sd32vc8q-1415143968.png" alt="">
 <a class="source" href="https://www.rba.gov.au/publications/rdp/2013/pdf/rdp2013-15.pdf" target="_blank" rel="nofollow">RBA Discussion Paper 2013-15 “Trends in the Funding and Lending Behaviour of Australian Banks“ Chris Stewart, Benn Robertson and Alexandra Heath</a>
Australian banks source much of their wholesale funding offshore. This inflow of capital allows Australia to undertake more investment, generating higher levels of growth and enhanced well-being.
Before the crisis, Australian banks were borrowing internationally an amount equal to 5% of our gross domestic product each year. In 2008, international funds flowing though the banks funded about one-fifth of Australia’s total investment.
The flow of international funds did not stop during the crisis. However, they became more expensive, transmitting the pain felt by European and US institutions to Australia.
Banks were not the only institutions affected by the sudden rise in the cost of foreign funds. Foreign direct investment, foreign portfolio investment, offshore capital raisings by Australian companies, and government borrowings were also impacted.
However, the impact on banks was more significant. Unlike other institutions, banks borrow money for relatively short periods but use the money to lend to companies and individuals for the long term. When they depend on short-term international funds, a sudden rise in the price of those funds exposes banks to higher costs and potential failure. Any failure can also have significant economic and political implications. The failure of one bank can lead to a run and the failure of other banks.
This means governments tend to intervene if bank failure is imminent. For example, Bankwest in 2008 was owned by flailing UK bank HBOS. It was facing failure and, following government intervention, was bought by the Commonwealth Bank.
The government’s move to insure bank deposits and wholesale funding stabilised the banking system during the crisis. Yet these were ad hoc policy responses. Australia still needs to develop long-term policies to deal with the next financial crisis.
Article continues on the next page. Please click below.
<hr class="system-pagebreak">
Developing the right regulation
Our recent research compares some of the different rules that are used, or might be used, to try to limit bank risk from offshore funding. This research is unique as we consider the consequences of specific policies at times of crisis and also during usual operations.
A policy may be effective at preventing a crisis but if it means that borrowers pay more and depositors receive less most of the time, then the protection provided by the policy may be overwhelmed by the day-to-day cost to the Australian public.
We take it as given that ordinary retail depositors will have some form of implicit or explicit government protection, so our focus is on the risk of bank default on bondholders. A bank fails if an increase in the cost of wholesale funds cuts its cash flows so that it cannot meet its debt obligations.
Regulators can do many things to limit banks’ exposure to imported wholesale funds and maybe make them less exposed to importing a banking crisis.
Regulations may require that banks use limited or no imported wholesale funds at all. Banks would have to be fully funded by domestic savings. Some countries like China have policies like this.
This policy is unlikely to work in Australia because it would significantly limit investment during normal operations. There would be no risk of importing a crisis but there would also be less domestic investment as borrowers would face higher interest rates. India has adopted this type of policy for many years and it has adversely impacted growth.
Depositors may gain from being a source of scarce investment funds but there would also be other costs. The banking sector would contract due to the restriction on fund access resulting in less competition.
Another policy that would reduce the likelihood of importing a financial crisis is for the government to have an explicit or implicit policy of bailing out bondholders. This occurred in the UK and US during 2008.
This policy has undesirable implications. If banks know that taxpayers effectively insure their bondholders, they will reduce the amount of equity issued and increase their amount of bonds. This would result in an increase in new entrants to the market based on excessively risky funding models.
Having a larger number of banks adopting a fragile funding model increases the likelihood of bank failures. If banks know they will be bailed out if they fail, then banks are more likely to fail. A bail-out policy actually increases the likelihood of future crises.
The most effective policy for dealing with wholesale funding risk is to increase the amount of capital banks are required to hold. While regulators have asked banks to hold more equity capital as insurance against lending risks, this policy can also reduce funding risks.
If a wholesale funding squeeze means that a bank cannot pay its bondholders, then the bank fails. If the squeeze simply reduces the dividend to shareholders, then the bank continues to operate. So requiring banks to hold more capital and less debt directly reduces the risk of failure.
While our research suggests that uniform minimum capital requirements can stabilise our banking system, it has been suggested these requirements only apply to “big” banks. Such an asymmetric policy would be undesirable. If there are weak funding restrictions on small banks, this will encourage the entry of a greater number of smaller and potentially more fragile banks. The result is an increased risk of future crises.
An asymmetric policy of increasing the capital requirements on large banks but not on small banks could have a stabilising effect if the government resolved never to bail out the small banks. Small banks could enter and leave the industry as funding conditions allowed and act as a shock-absorber to the system.
Politically, however, this is unlikely to work. Bankwest was not allowed to fail but was folded into the Commonwealth Bank. Even a small credit union like the Fitzroy and Carlton Community Credit Co-operative was <a href="https://www.bankmecu.com.au/why-bank-with-us/news-media/media/bankmecu-and-fitzroy-carlton-community-credit-co-operative" target="_blank">folded into a larger bank</a> last year rather than being allowed to fail.
Any new regulations to deal with the possibility of a future crisis must also deal with political reality. Minimum capital requirements on all banks can stabilise the banking system. However, a policy that just targets the big banks is unlikely to succeed.
Rodney Maddock is Vice Chancellor's fellow at Victoria University and adjunct professor of economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King is professor, Department of Economics at <a href="https://www.monash.edu.au/" target="_blank" style="line-height: 1.3em;">Monash University</a>.
Stephen King and Rodney Maddock received funding from CIFR for this project.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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