Malaysian developer <a href="https://www.apartments.com.au/developers/s-p-setia">SP Setia</a> is the latest to jump into St Leonards booming Transport Oriented Development precinct.

The developer, which has previously delivered Sapphire by the Gardens apartment development in Melbourne, identified the Atchison Street site in 2023. It filed a Scoping Report around 12 months ago, and now has revealed the designs for the new&nbsp;40-storey mixed-use tower.

The State Significant Development Application covers <a href="https://next-portal.urban.com.au/projects/14650/summary">20-22 Atchison Street</a>, a 1,374 sqm site positioned between St Leonards Station and the new Crows Nest Metro station.

Designed by <a href="https://www.apartments.com.au/architects/cox-architecture">COX Architecture</a>, the project would deliver 181 apartments, above a four-storey commercial podium, five basement levels, and new public domain works along Mitchell Street. The apartment mix comprises 35 one-bedroom apartments, 39 one-bedroom-plus-study apartments, 85 two-bedroom apartments, and 22 three-bedroom residences.

The proposal has been lodged as a shop-top housing development under the NSW Government’s TOD planning pathway, which allows increased density around key transport infrastructure. The site sits within the recently rezoned Crows Nest Accelerated TOD Precinct.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b799673d-48e2-46b0-801a-0e33a9330100" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20site.png?VersionId=dPh0UfwfaHpbFL1R7H1cbZNbIW0CHbCC" />

SP Setia acquired the Atchison Street site as part of its continued expansion into the Australian apartment market. In comments made to City &amp; Country (The Edge Malaysia) in 2023, SP Setia President and CEO Datuk Choong Kai Wai described the acquisition as “a strategic move” aligned with the group’s post-pandemic market recovery strategy.

“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.

The tower has been designed as a slender vertical form rising from a mixed-use podium, with COX Architecture positioning the development as a response to the evolving St Leonards and Crows Nest skyline.

“The purpose of the project is to facilitate the delivery of high-quality housing at a strategically located site and deliver a built tower outcome that is consistent with the desired future character of St Leonards and aligns with the TOD controls,” the design report stated.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="b1a85eee-76f7-436c-a6da-73ba827b9b13" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/atchinson%20entry.png?VersionId=dA9jHGPMcm.dDbwk4QfxqWiY5bfh3UVt" />

The podium would incorporate retail uses fronting Atchison Street, commercial tenancies, landscaped communal areas, and pedestrian improvements along Mitchell Street. Vehicle access and loading would be consolidated via Atchison Lane.

Residents would have access to more than 665 sqm of communal indoor and outdoor spaces, while the development proposes 96 parking spaces across five basement levels.

The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.

COX said the tower form responds directly to the emerging high-density character of the precinct while seeking to maximise solar access, cross ventilation, and outlook from apartments.

<img alt="First look: SP Setia targets St Leonards skyline with 40-storey TOD tower" data-entity-type="file" data-entity-uuid="2163f85c-f63b-4be3-aafa-f8763976cec5" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Article%20Feature%20Image%20%28Grid%29_5.png?VersionId=WiAmtIKJ6.ZQ41EtYEQ1fol7AeorKBlL" />

“The building is orientated towards north,” the Apartment Design Guide compliance report noted, adding that the tower’s slim form was driven by the constrained inner-urban site dimensions.

The design also incorporates landscaped setbacks and communal open space at podium level, intended to soften the interface with surrounding streets and improve pedestrian amenity.

The project adds to a growing wave of redevelopment proposals reshaping St Leonards and Crows Nest following the opening of the Sydney Metro City line and the NSW Government’s push for higher-density housing around major transport nodes.

Last week Stockland filed plans just down the road. They want to build a <a href="https://www.apartments.com.au/new-apartments/601-pacific-highway-st-leonards-nsw-2065">52-storey tower on Pacific Highway</a>.

Read more:&nbsp;<a href="https://www.apartments.com.au/news/nsw/first-look-stockland-plans-52-storey-538-apartment-st-leonards-tower">First look: Stockland plans 52-storey, 538-apartment St Leonards tower&nbsp;</a>

Joel Robinson

First look: SP Setia targets St Leonards skyline with 40-storey TOD tower

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> has revealed plans for a new mixed-use tower at 10 Dangar Street, Wickham, advancing a proposal that would reshape the southern gateway to Newcastle’s city centre with one of the city’s tallest residential buildings.

The State Significant Development proposal, now on exhibition, seeks approval for a <a href="https://www.apartments.com.au/new-apartments/bowline-10-dangar-street-wickham-nsw-2293">43-storey tower</a> immediately adjacent to the Newcastle Interchange. The project would deliver around 200 apartments, including 42 affordable housing dwellings, alongside 99 co-living units, a 171-room hotel, retail space, and new public domain integrated through the site.

The scheme marks a significant escalation of plans previously approved for the site. Urban Property Group took over the prominent 2,904 sqm parcel, where excavation and demolition had already commenced under an earlier consent for a 14-storey mixed-use development.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="58a96dd9-407f-4d20-86b4-94e4bfeef74b" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20podium.png?VersionId=LGlf08pdFGAZDzvx_CXC4XakHNZRuEE0" />

Designed by <a href="https://www.apartments.com.au/architects/sjb-architects">SJB</a>, the tower has been conceived as a landmark transit-oriented development anchored to the Newcastle Interchange precinct. The proposal includes 245 build-to-sell apartments across a mix of one, two, and three-bedroom residences, as well as two penthouses. Fifteen apartments and one operational unit are earmarked for NDIS housing. The co-living component would add a further 99 units, while the podium would accommodate retail uses and hotel facilities.

SJB said the site presents “a valuable opportunity to anchor the precinct by setting the standard for design, active ground planes and character at the key southern gateway.”

The architecture responds directly to the site’s position beside major transport infrastructure and within one of Newcastle’s fastest-evolving urban renewal precincts. The tower form sits above a sculpted podium designed to frame new public spaces, including a through-site pedestrian link connecting Station Street to Hannell Street, landscaped plazas, and activated retail edges.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="a7bd6ff0-f7db-4ce8-a6dc-ea56e72c6149" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20lanne.png?VersionId=xzf39VADyhj7zBQY2I9fx9vI62u2tuSb" />

The design report describes the project as part of the broader transition of Wickham into “a vibrant, high-quality mixed-use urban precinct” that leverages proximity to the station, open space, and regional connectivity.

A detailed public art strategy has also been prepared for the development. The strategy positions the project as “a transit-oriented development of state significance at the gateway to Newcastle’s city centre” and outlines a series of integrated artworks responding to Newcastle’s industrial and transport heritage.

Creative Road’s curatorial framework for the project, titled Unveil, draws on “stratified surfaces, carved volumes, and light-filled apertures” while referencing Newcastle’s transformation from an industrial city into a contemporary education and technology hub.

<img alt="First look: Urban Property Group unveils Newcastle’s next supertower at Wickham interchange" data-entity-type="file" data-entity-uuid="77a882bb-14b1-4d28-99ff-9438e39508c0" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/wickham%20site.png?VersionId=cevgo_vN0eKPK78P8YcEu3mKPLkpFqE7" />

The proposal is being advanced through the NSW Housing Delivery Authority pathway after being declared State Significant Development in June 2025. The accompanying scoping report states the development aims to “maximise the site’s proximity to the Newcastle Interchange by delivering transit-oriented development” while increasing housing supply and affordable housing provision within the Newcastle LGA.

Urban Property Group’s plans align with the long-term strategic vision established under the Wickham Master Plan, which identified the interchange precinct as suitable for substantial uplift in height and density. The current proposal would significantly intensify that vision, positioning the tower among the tallest developments proposed for Newcastle.

The site sits immediately north of the Newcastle Interchange, bounded by Dangar Street, Hannell Street, and Charles Street. It is surrounded by a rapidly growing cluster of residential towers and mixed-use projects that have emerged following the completion of the light rail and transport interchange.

First look: Urban Property Group unveils Newcastle’s latest tower at Wickham interchange

Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;

Positioned on the banks of the Brisbane River, the <a href="https://www.apartments.com.au/new-apartments/180-macquarie-street-st-lucia-qld-4067">premium site at 180 Macquarie Street</a> features uninterrupted river frontage in one of Brisbane’s most tightly held residential precincts.&nbsp;

The proposed development, currently under assessment with Brisbane City Council, has been designed by <a href="https://www.apartments.com.au/architects/plus-studio">Plus Studio</a> with interiors by <a href="https://www.apartments.com.au/interior-designers/mim-design">Mim Design</a> and will deliver a boutique collection of premium residences positioned specifically for owner occupiers and downsizers.&nbsp;

The residences are set to redefine luxury apartment living in the area, with a focus on architectural quality, refined finishes, landscape integration and elevated amenities including curated wellness facilities, resort-style pools and recreation spaces rarely seen in the local market.&nbsp;

Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;

Bottega House Managing Director Nick Malloch said the project reflects the group’s ambition to deliver a highly curated residential offering within one of Brisbane’s most tightly held precincts.&nbsp;

“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;

“Our vision from the outset was to create a boutique collection of residences that feel more like private homes than traditional apartments, with generous proportions, refined finishes and exceptional amenity throughout."

Malloch says there is a&nbsp;lack of premium owner-occupier stock of this quality in the market, particularly for downsizers wanting space, privacy and a true lifestyle offering without compromise.&nbsp;

"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;

Bottega House secures landmark riverfront site in St Lucia 

<section data-scroll-anchor="false" data-testid="conversation-turn-6" data-turn="assistant" data-turn-id="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" data-turn-id-container="request-WEB:84a2af5e-d7cf-4ddf-922a-f4d44d6c6caa-2" dir="auto">
<section data-scroll-anchor="false" data-testid="conversation-turn-2" data-turn="assistant" data-turn-id="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" data-turn-id-container="request-WEB:5a5ab36c-8dd3-454c-b456-c501f22f0eb4-0" dir="auto">
The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.

<a href="https://www.apartments.com.au/new-apartments/exhale-surfers-paradise-8-enderley-avenue-surfers-paradise-qld-4217">Exhale</a>, a glass-encased tower featuring 54 large-scale apartments at 8 Enderley Avenue, is SIERA’s third Gold Coast development. It follows the recently completed PIPIS Bilinga beachfront project, which achieved suburb-record prices, and the soon-to-be-completed Chevron Island development, Tapestry.

[smartcode_project:default project_id=112661 project_image_fid=359603]

<a href="https://www.apartments.com.au/developers/siera">SIERA</a> Founder and Managing Director Brent Thompson said the arrival of the piling rig represented a significant milestone for the development, which is scheduled for completion in late 2028.

Over the next month, around 260 piles are expected to be installed as work progresses on the basement structure. The building is anticipated to rise above ground level early next year, before unveiling its sculptural glass curtain wall, developed in collaboration with specialist façade engineers.

“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.

[smartcode_project:default project_id=112661 project_image_fid=355935]

Designed by BDA Architecture, Exhale will comprise just 54 two- and three-bedroom residences across 26 levels, a level of low-density living rarely delivered in this beachside pocket between Surfers Paradise and Broadbeach.

The project has been conceived as a resident-only building, with no short-stay accommodation permitted. SIERA says the model is intended to appeal to long-term owner-occupiers rather than transient holiday demand.

[smartcode_project:default project_id=112661 project_image_fid=361052]

Residences have been designed with large-format layouts and expansive glazing, with most apartments featuring more than 30 metres of glass frontage to maximise natural light and ocean views.

The amenity offering spans two levels and centres on wellness and lifestyle, including a heated magnesium pool, sauna, yoga and Pilates studio, gymnasium, private dining facilities, cinema lounge, and dedicated surfcraft storage.

[smartcode_project:default project_id=112661 project_image_fid=359607]

More than half of the apartments have already sold. SIERA has also opened a sales gallery for Exhale at its Chevron Island commercial premises, near its Tapestry tower and the site of its second Chevron Island apartment development, which is slated to launch in early 2027.
</section>
</section>

[smartcode_project_cta:default project_id=112661]

SIERA kicks off construction at Northcliffe tower Exhale

Local Little Bay residents, along with buyers from premium postcodes across Sydney’s affluent Eastern Suburbs, have dominated purchases in developer-builder Urban Property Group’s first Eastern Suburbs apartment development, <a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a>.

The $250 million coastal project, one of the first new developments in the area in several years, has proven particularly popular with downsizers, especially those from Coogee and Bondi. One Double Bay downsizer paid $4.7 million for a four-bedroom penthouse, setting a new local apartment price record in the process.

Buyers have been attracted to the combination of coastal tranquillity, premium design and amenity-rich neighbourhood living. The walkable village setting, along with proximity to three of Sydney’s leading golf courses, New South Wales Golf Club, St Michael’s Golf Club and The Coast Golf Club, has also been a key drawcard.

[smartcode_project:default project_id=112343 project_image_fid=352689]

Built across two low-rise buildings designed by <a href="https://www.apartments.com.au/architects/hill-thalis-architecture-urban-projects-pty-ltd">Hill Thalis</a> and set along a lush, landscaped green spine, designed by leading landscape architect <a href="https://www.apartments.com.au/landscape-architect/arcadia-landscape-architecture">Arcadia</a>, ESTE Little Bay offers a collection of one, two, three and four-bedroom residences with interiors by Richards Stanisich.

<a href="https://www.apartments.com.au/developers/urban-property-group">Urban Property Group</a> Sales Director, Tom McIvor said the response to ESTE has been "nothing short of extraordinary."

“Buyers have been quick to recognise ESTE as a rare opportunity to invest in a coastal sanctuary that offers both seclusion and connectivity to the heart of Sydney,” McIvor said.

[smartcode_project:default project_id=112343 project_image_fid=352687]

<a href="https://www.apartments.com.au/project-marketer/srm-residential">SRM Residential</a> Senior Director, <a href="https://www.apartments.com.au/project-marketer/srm-residential">Clayton Ross</a> said the local market has responded incredibly well, driven by ESTE’s exceptional location and the rarity it offers.

“We’ve seen strong interest from a variety of buyer groups, all of whom are drawn to the exclusivity and quality of the build and construction by the 4.5-star iCIRT-rated builder / developer, Urban Property Group. There’s truly nothing else like it along Sydney’s coastline.”

[smartcode_project:default project_id=112343 project_image_fid=352690]

The project also includes robust buyer protections, including Resilience Insurance’s Latent Defects Insurance, providing 10 years of structural cover, and an independent iCIRT-rating of the developer.

“The iCIRT-rating adds another layer of confidence,” Ross added. “Buyers see it as a safeguard for their investment and their lifestyle.” A highlight of ESTE’s offering is its exclusive wellness amenities, including a heated rooftop infinity pool and outdoor heated spa, a state-of-the-art Technogym fitness centre, and a sauna.

<a href="https://www.apartments.com.au/new-apartments/este-little-bay-jennifer-street-little-bay-nsw-2036">ESTE Little Bay</a> is topped out and is on track to complete towards the end of 2026, with residents moving in before Christmas.

[smartcode_project_cta:default project_id=112343]

Eastern Suburbs buyers snap up ESTE Little Bay apartments

Home Loans

<html><body>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/05/04/ratecity-logo.jpg" alt="" width="687" height="184">
SPONSORED POST
If you’re living in a market where property prices have been surging, refinancing could allow you to reduce your gearing level while giving you access to more money.
How? Well, imagine that back in 2014 you borrowed $500,000 to purchase a $600,000 property. Now imagine that your mortgage debt had since fallen to $475,000 while your property’s value had grown to $650,000.
In that case, your equity would’ve risen from $100,000 to $175,000, while your loan-to-valuation ratio (LVR) would’ve fallen from 83 percent to 73 percent. 
If you were to get an updated valuation on your property during the refinancing process, the new lender might respond to your improved financial position by extending you more credit.
In our hypothetical example, the new lender might allow you to stretch your LVR from 73 percent to 80 percent, and therefore allow you to increase your mortgage from $475,000 to $520,000.
Suddenly, you’ve got an extra $45,000 to play with! You could use that money to pay for home renovations, a new car or a holiday. Or you could put it straight into your offset account and potentially access it several years in the future.
Property prices are growing at double-digit rates in four of Australia’s eight capital cities, according to the latest data from CoreLogic.
Sydney’s median price jumped 18.9 percent in the 12 months to 31 March 2017, while Melbourne’s climbed 15.9 percent, Canberra’s 12.8 percent and Hobart’s 10.2 percent. 
Even if you live in one of the other four capital cities, it’s possible that prices in your suburb are recording significant growth or that your suburb’s median price has risen significantly since you purchased your property.
If you want to reduce your debt ratio and unlock equity in your home, you need to refinance.
RateCity is making the process easier with its <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article2&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>, which will allow borrowers to access market-leading rates for their refinance.
Borrowers who are with ANZ, Commonwealth Bank, NAB or Westpac could actually save up to $39,000 over 15 years by switching through the <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article2&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>.
RateCity arrived at that figure after calculating how much borrowers would save if they switched from an average-sized mortgage from the average discounted variable rate offered by one of the big four banks to the lowest variable rate in the <a href="https://www.ratecity.com.au/sale?utm_source=propertyobserver&amp;utm_medium=referral&amp;utm_campaign=rcsale_propertyobserver_article2&amp;rmatt=tsid:1030695%7Ccid:54369%7Ccgid:543693734136%7Ccrid:15969009" target="_blank">Switch &amp; Save Sale</a>. 
RateCity then factored in the discharge fees, application fees and ongoing fees to work out the savings over a 15-year loan term.
Some people think of a mortgage as a one-time event – you take out the loan and then stick with it until the bitter end. 
However, smart borrowers regularly refinance, because they know it not only gives them a chance to reduce their repayments, but also lower their LVR and increase their equity.
</body></html>

jchancellor-FAypfDUnLy

The property boom could be the best thing to happen to your mortgage: RateCity

<html><body>
Interest rates hikes have struck home owners and investors after the Commonwealth Bank (CBA) lifted fixed rate deals on its loans by as much as 0.5 per cent. Customers taking out fixed rate deals with rate will now be hit with increases across 1, 2, 3, 4 and 5 year fixed terms. It is the second rate hike within 20 days.
However, the bank provided for owner occupiers signing up to principal and interest fixed home loan deals to escape the latest hikes.
The Commonwealth Bank said the move was to ensure it "continue[d] to meet our regulatory requirements".
In a memo issued to mortgages brokers, CBA outlined that interest-only investment loans would be the worst hit — 2, 3, 4, and 5 year terms would all rise by 0.5 per cent.
The changes are effective for new and existing customers who switch into one of these products from today.  
Three-year fixed rate interest-only owner occupier loan rates will rise by 0.25 per cent to 4.49 per cent.
Three-year fixed rate interest-only investment loan rates will rise by 0.5 per cent to 4.94 per cent.
Three-year principal and interest investment loan rates will rise by 0.25 per cent 4.69 per cent.
CBA raised rates for interest-only loans to 5.94 percent in March.
Homebuyers also faced increased fixed interest rates in December 2016.
The bank’s measures follow an increased crackdown by the banking regulator, the Australian Prudential and Regulation Authority, to limit interest-only loans.
</body></html>

j.ballantyne1990-6AQqhLzZaK

Commonwealth Bank increases interest rates for home owners and investors 

<html><body>
Interest-only loans account for a sizeable number of total housing credit, according to the RBA’s latest Financial Stability Review 2017.
Interest-only (IO) loans account for a sizeable and growing share of total housing credit in Australia, now representing around 23 per cent of owner-occupier lending and 64 per cent of investor lending (Graph B1)
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20B1.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/19/Graph%20B1.jpg" alt="">
IO lending has the potential to increase households’ vulnerability in part due to the higher average level of indebtedness over the life of an IO loan compared with a regular principal-and-interest (P&amp;I) loan.
Measures to address some risks associated with IO lending practices were among those taken in late 2014 by the Australian Prudential Regulation Authority (APRA) and the Australian Securities and Investments Commission (ASIC), in conjunction with the Council of Financial Regulators, to reinforce sound housing lending practices.
While the share of IO loans in total lending approvals subsequently declined, IO loans have since started to rise again, especially for investors, which has again attracted regulator attention.
In March 2017, APRA announced new measures requiring authorised deposit-taking institutions (ADIs) to limit new IO lending to 30 per cent of total new residential mortgage lending and, within that, to tightly manage new IO loans extended at high loan-to-valuation ratios (LVRs).
This box outlines in more detail recent trends in IO lending and the nature of the potential risks that can arise from this type of lending.
For P&amp;I loans, the balance of the loan must be paid down over the entire term of the loan. In contrast, for IO loans repayments of principal are not required during the IO period, which is typically the first five to ten years of the loan.
Instead, scheduled principal repayments start at the end of the IO period, with the balance of the loan then paid off over the residual loan term.
As a consequence, for a typical 30-year P&amp;I loan of $400 000 with an interest rate of 4 per cent, borrowers would be ahead on principal repayments by around $38 000, or about 10 per cent of the initial balance, after five years compared with an IO loan (Graph B2).
<a href="https://www.propertyobserver.com.au/images/2017/04/19/Graph%20B2.jpg" target="_blank">Click to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2017/04/19/Graph%20B2.jpg" width="700" height="425">
Further, because the scheduled balance on an IO loan is always higher than on a comparable P&amp;I loan, IO loans incur a greater interest cost over the term of the loan (around 9 per cent extra in the previous example).
An IO loan can potentially also be refinanced at the end of the IO period into another IO loan, prolonging the period before scheduled principal repayments start.
Both investors and owner-occupier borrowers make extensive use of IO lending for a range of reasons.
Housing investors make the most use of IO loans.
Since interest payments on investment loans are tax deductible, the incentive to pay down a loan’s principal is reduced.
IO loans also enable investors to maintain a higher level of leverage and so magnify potential gains or losses if housing prices rise or fall.
As noted earlier, the share of owner-occupier lending that is IO has also risen noticeably over time.
This has been due to increasing numbers of owner-occupiers using IO loans and the increasing average sizes of IO loans (relative to P&amp;I loans).
Another reason borrowers may prefer IO loans to P&amp;I loans is because they can offer greater repayment flexibility.
Borrowers with lumpy income or those wanting to build buffers or save for planned expenditures, such as renovations, can use IO loans with an offset or redraw facility to minimise the effective interest costs over the period of the loan while still ensuring funds are readily available for other uses.
In particular, offset accounts and redraw facilities allow borrowers to effectively amortise loan balances during the IO period and so reduce (or eliminate) the extra interest cost associated with the higher principal balance on IO loans compared with P&amp;I loans.
However, borrowers need to be disciplined in their repayment behaviour to receive these benefits; otherwise they may incur greater interest costs, and remain more indebted for longer.
IO loans are also routinely used for bridging finance and construction loans to minimise repayments for the short duration of these loans.
For some time regulators have highlighted the potential risks associated with IO compared with P&amp;I loans.
Because IO loans allow borrowers to remain more indebted for longer, there may be greater credit risks associated with such loans.
When loan balances stay high, there is an increased risk of borrowers falling into negative equity should housing prices decline.
Another risk is that borrowers may find it difficult to service higher required payments at the end of the IO period, which increases the chance of default.
For example, repayments on a $400 000 loan with a 4 per cent interest rate and a five-year IO period would typically increase by around 60 per cent at the end of the IO period.
While some borrowers may have planned to refinance into another IO loan at the end of the IO period, this may be difficult if circumstances have changed.
Borrowers who anticipate future price rises can use IO loans to maintain a higher level of leverage for a given servicing payment, thereby magnifying their returns from rising housing prices but also magnifying any losses.
More generally, at an aggregate level this behaviour could induce a more pronounced cycle in housing prices than would otherwise occur, amplifying the size of any subsequent downswing in housing prices.
In recognition of the higher risks associated with IO loans, some lenders have introduced premiums on advertised interest rates for IO loans.
For example, the four major banks have announced, on average, an 18 basis point premium for IO owner-occupier loans and a 15 basis point premium for IO investor loans (in addition to premiums for investor loans relative to owner-occupier loans).
Lenders’ practices in assessing the ability of borrowers to repay their loans are important to manage the systemic risks posed by IO lending.
These practices determine the maximum loan size that a borrower could sustainably repay out of their income.
In particular, APRA serviceability guidance for ADIs sets out prudent practices for IO loans, with the capacity to repay assessed at the higher repayment amount required when the IO period ends (known as the residual-term method).
Under this residual-term method, borrowers seeking IO loans receive a lower maximum loan size than would be available for an equivalent P&amp;I loan.
Nonetheless, prior to the 2014 measures, some lenders assessed serviceability based on lower hypothetical P&amp;I repayments calculated from the entire term of IO loans (including the IO period; known as the full-term method).
This approach risks borrowers being unable to meet their repayment obligations when the IO period ends and higher repayments commence.
This is potentially in breach of the National Consumer Credit Protection Act 2009, which requires that lenders make loans that consumers will be able to repay without undue hardship.
ASIC has found that around 40 per cent of loans reviewed in 2014 used the full-term approach; lenders have since undertaken to change their practices in order to meet their responsible lending obligations and APRA’s guidance.
There have also been some recent reports of borrowers applying for P&amp;I loans to maximise their borrowing capacity, and then switching soon after approval to an IO loan. APRA has recently issued guidance to address this behaviour.
Find the RBA's latest Financial Stability Review 2017 <a href="https://www.rba.gov.au" target="_blank">here</a>.
</body></html>

Interest-only loans account for a sizeable housing credit portion: RBA

<html><body>
National Australia Bank (NAB) has announced further changes for residential investor and owner-occupier borrowers.
The rate for NAB’s 1 Year Package Fixed Rate for Residential Investment Home Loan has risen to 4.29 percent p.a. for principal and interest repayments.
For the 1 Year Package Fixed Rate for Interest Only Residential Investment Home Loan, rates changed to 4.39 percent p.a.
Fixed rates for all other interest only owner occupier and interest only residential investment loans increased by 0.10 percent p.a. 
“We are operating within a dynamic financial, economic and regulatory environment, and it’s important that we regularly review our pricing and policy measures across all of our home loan products to ensure we continue to lend responsibly,” a spokesperson from NAB told Australian Broker.
The changes made to our fixed rates on Friday 7 April 2017 apply to new loan accounts only.
Throughout March and the beginning of April, the Mozo website saw a spate of interest rate hikes from 40 lenders, including all four of the big banks.
"Investors were hammered in this round of increases, with rates rising an average of 0.19% on principal and interest loans, and 0.23% on interest only," Steve Jovcevski at Mozo noted.
</body></html>

NAB lifts fixed rates for new borrowers

<html><body><div class="page" title="Page 2">
<div class="layoutArea">
<div class="column">
The amount of residential mortgages nationwide more than 30 days in arrears increased to 1.52 percent in November 2106 from 1.2 percent from November 2015, according to Moody's.
Mortgage delinquencies hit record highs in Western Australia, South Australia and the Northern Territory and increased nationwide over the year to November 2016.
<a href="https://www.propertyobserver.com.au/images/2017/04/6/Screen%20Shot%202017-04-06%20at%201.51.06%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/6/Screen%20Shot%202017-04-06%20at%201.51.06%20PM.png" alt="" width="656" height="182">
<div class="page" title="Page 4">
<div class="section">
<div class="layoutArea">
<div class="column">
The report said the ACT had the lowest 30+ delinquency rate (0.91 percent) of any state or territory in Australia in November 2016.
"A high proportion of borrowers in the ACT are employed by the government, which offers more secure and stable employment compared with jobs in the private sector. The ACT accounts for just 2.12 percent of the total loans in the RMBS we rate," it said.
"30+ delinquency rates in the Northern Territory (2.23 percent) and South Australia (2.16 percent) also hit record highs in November 2016.
"Final demand in the Northern Territory contracted 3.8 percent over the year to December 2016, the weakest performance in the country behind Western Australia.
"South Australia's final demand increased 1.3 percent, below the 1.6 percent national average.
"The populations in the Northern Territory and South Australia are both relatively small, and mortgages from this territory and state account for just 0.68% and 4.72 percent of the loans in the RMBS portfolio."
<a href="https://www.propertyobserver.com.au/images/2017/04/6/Screen%20Shot%202017-04-06%20at%201.55.11%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/04/6/Screen%20Shot%202017-04-06%20at%201.55.11%20PM.png" alt="">
 
</div>
</div>
</div>
</div>
</div>
</div>
</div></body></html>

jonathanchancellor-7SQnKwU6yx

Mortgage delinquencies hit record highs in Western Australia, South Australia and Northern Territory: Moody's

<html><body>
The chief of the Australian prudential regulator has said its recent measures to restrict interest-only loans by banks was in response to heightened risks from the hot property market and to ensure that banks maintain adequate capital.
APRA chairman Wayne Byres’ remarks came during the keynote address at the AFR Banking &amp; Wealth Summit 2017, and follow RBA Governor Philip Lowe's speech on Tuesday night when he expressed concern at the high proportion of interest-only loans and the taxation framework for property investors that has contributed to high home prices.
"Put simply, the capital adequacy framework needs to address the concentration in housing lending that has built up in the banking system over time: if we are going to put an increasing number of eggs into a single basket, we'd better make sure that basket is a (unquestionably) strong one,” Byres said.
He said the APRA will issue an information paper around the middle of the year, "which will set out the extent of further strengthening required, and the timeframe over which that can be achieved in an orderly manner”.
While it was not APRA's mandate to determine home prices, it had to act in response to market conditions, Byres said.
“Our role in the current environment is to promote a higher-than-normal degree of prudence – definitely by lenders and, ideally, also borrowers – in both credit decisions and balance sheet strength. On this occasion, we have focussed on interest-only lending to complement our earlier measures. 
Byres said that housing lending risks and bank capital adequacy are not independent issues.
“Beyond the recently-announced tactical responses to current conditions in the housing market, making sure the system is on a sound footing for the longer term is even more important."
He reiterated the pro-active stance of the regulator, saying it “can and will do more (or less) as conditions evolve".
Outlining the recent flurry of regulatory action, Byres noted that while measures such as the annual cap on investor lending growth of 10 percent and restrictions on interest-only loans have had and will continue to have a positive impact, at the same time the risks   haven’t moderated:
<ul>
<li>house prices remain high;</li>
<li>household income growth remains subdued;</li>
<li>the already high ratio of household debt to income has got higher;</li>
<li>the already low official cash rate has got lower (although not all of this reduction has flowed to borrowers, particularly investors - Chart 2); and </li>
<li>competitive pressures haven’t diminished.</li>
</ul>
He concluded by saying that APRA will be looking at many components of the capital adequacy framework, but "given its position as the dominant asset on the balance sheet of the banking system, the adequacy of capital requirements for housing-related risks will be a critical part of that assessment". 
</body></html>

APRA chair says latest lending curbs to ensure banks have adequate capital

<html><body>
ASIC has announced a targeted industry surveillance to examine whether lenders and mortgage brokers are inappropriately recommending more expensive interest-only loans.
With many lenders, including major lenders, charging higher interest rates for interest-only loans compared with principal-and-interest loans, lenders and brokers must ensure that consumers are not provided with unsuitable interest-only loans.　
ASIC announced that eight major lenders will provide remediation to consumers who suffer financial difficulty as a result of shortcomings in past lending practices. 
ASIC will shortly commence a surveillance to identify lenders and mortgage brokers who are recommending high numbers of more expensive interest-only loans.
Data will be gathered using ASIC's compulsory information-gathering powers from large banks, other banks, mutual banks and non-bank lenders. 　
In an environment where many interest-only loans are now clearly more expensive than principal-and-interest loans, lenders and mortgage brokers must carefully consider the implications of providing borrowers with interest-only loans. While interest-only loans may be a reasonable option for some borrowers, for the vast majority of owner-occupiers in particular, an interest-only loan will not make sense.　
In 2015, ASIC conducted a review of how lenders provide interest-only home loans. ASIC found that lenders were not properly inquiring into a consumer's actual living expenses when assessing their capacity to make repayments. ASIC's review led to industry-wide improvements by lenders: see 15-220MR Lenders to improve standards following interest-only loan review.　
As part of today's announcement, eight lenders examined by ASIC have improved their practices for enquiring about expenses to determine the consumer's financial situation and capacity to make repayments. Rather than obtaining a single monthly living expense figure and then relying on a benchmark figure to assess suitability, borrowers' actual figures for different categories of living expenses (e.g. food, transport, insurance, entertainment) will now be obtained. This will provide lenders with a better understanding of consumers' expenses. 　
In addition to typical hardship processes, lenders will individually review cases where consumers suffer financial difficulty in repaying their home loans, and determine whether they have been impacted by shortcomings in past lending practices. Where appropriate, consumers will be provided with tailored remediation, which may include refunds of fees or interest. 　
As interest rates are currently at record lows, and were falling in the lead up to 2015 and during 2016, ASIC does not expect lenders to identify high numbers of consumers who are now experiencing financial difficulty due to past lending decisions. Nevertheless, these additional actions will ensure that consumers are not disadvantaged.　
To ensure that these remediation programs are operating effectively, ASIC is requiring lenders to audit their processes. 　
ASIC Deputy Chairman Peter Kell said, 'Home loans are the biggest financial commitment most people will ever make. In assessing whether borrowers can meet loan repayments without substantial hardship in the short and longer term, it is important that lenders can collect and rely on information which provides an accurate view of the consumer's financial situation. This is especially the case when interest rates are at record low levels'. 　
'Lenders and mortgage brokers must also ensure that consumers are being provided with the home loan product that meets their needs. Lenders and mortgage brokers need to think twice before recommending that a consumer obtain a more expensive interest-only loan'.
In 2015, ASIC reviewed interest-only loans provided by 11 home lenders, and issued REP 445 Review of interest-only home loans (Refer:REP 445) in 2015, which made a number of recommendations for home lenders to comply with their responsible lending obligations (Refer:15-297MR).　
In REP 445, ASIC gave guidance on how lenders can make proper inquiries into a borrower's actual expenses. 　
ASIC's monitoring of lenders’ home lending practices continues. ASIC will carry out further reviews to ensure that industry standards are improved where necessary. ASIC will also take enforcement action as appropriate.　
Any consumer with concerns about their ability to make home loan repayments should contact their lender in the first instance. Consumers can also access free external dispute resolution, through either the Financial Ombudsman Service (FOS) or Credit and Investments Ombudsman (CIO).　
The eight lenders are: 　
<ul>
<li>Australia and New Zealand Banking Group Limited　</li>
<li>Bendigo and Adelaide Bank Limited　</li>
<li>Commonwealth Bank of Australia 　</li>
<li>Firstmac Limited　</li>
<li>ING Bank (Australia) Limited 　</li>
<li>Macquarie Bank Limited　</li>
<li>National Australia Bank Limited　</li>
<li>Pepper Group Limited.</li>
</ul>
</body></html>

ASIC look at lending of eight major lenders

<html><body>
Westpac chief executive Brian Hartzer has rejected speculation that there was a “housing bubble” while admitting that the market was stretched in some areas.
The CEO of the country’s second-largest bank repeated the same view he expressed before a parliamentary committee in March in an interview with The Weekend Australian ahead of the bank’s 200th anniversary.
“I would draw the distinction between a speculative bubble in prices and prices beyond what fundamentals would justify," Hartzer told the parliamentary committee.
He described the property market as “certainly complex”, with wide variations across regions, he told the newspaper. “Western Australia and Queensland are obviously having real challenges and we have some very unusual dynamics going on in the Sydney and Melbourne real estate markets.”
Hartzer said the bank did not believe there was a property bubble “in terms of people speculating on the value of properties going up and using leverage to do it”.
But he said high housing prices was more because of supply constraints than ­excessive demand, noting that “some of the fundamentals around value are looking pretty stretched in some parts of the market”. 
Westpac expects that supply issues could be solved by working with developers and state and local governments, which would reduce the pressure on the housing market and also lower “risk” over time.
Westpac recently said it was not worried by the latest note from the Australian Prudential Regulation Authority to tighten requirements for investor and interest-only loans as the bank had already taken action in the interest-only lending area.
“We have been clear in our communications around wanting an interest rate differential for ­interest-only loans to encourage people to move to principal and interest loans,” he said.
The bank recently raised variable home loan rate for owner occupiers by 0.08 percent to 5.49 percent per annum for customers with interest only loans and for investors with interest-only loans, by 0.28 percent to 5.96 percent per annum. 
Hartzer said the bank was already well below APRA’s 10 percent cap on investor lending, with its lending for investor loans at 5.9 percent of its total mortgage book at the time of its full-year ­results at the end of September last year.
He said the bank was celebrating its 200th anniversary at a time when the political system was “finely balanced” with the banks having become a “pretty convenient target” for criticism, including an opposition promising to hold a royal commission into the banking industry.
</body></html>

Westpac CEO Hartzer says ‘no bubble’ in housing, but market stretched

<html><body>
The level of delinquent housing loans for prime residential mortgage-backed securities increased 1.29 percent in January from December's 1.15 percent, according to S&amp;P Global Ratings.
The category for mortgages 31-60 days in arrears showed the largest increase.
The report said the magnitude of the month-on-month increase in January 2017 was higher than in previous months.
"While some of the increase is due to a decline in outstanding loan balances, the category for mortgages 31-60 days in arrears showed the largest increase," the report found.
"This suggests more borrowers have fallen behind on their loan repayments for the first time.
"The major bank and regional bank sectors recorded larger increases in borrowers who are 31-60 days behind on their mortgage repayments.
"All originators except nonbank financial institutions recorded an increase in arrears in January compared with the previous month.
"Despite the increase, arrears levels in January remained close to long-term averages."
"Mortgage arrears rose in every state and territory in January from the previous month.
"Among the states, South Australia recorded the largest increase in arrears, rising to 1.81 percent from 1.53 percent in December, Home loan arrears in Western Australia rose to 2.33 percent in January from 2.10 percent in December.
"Arrears rose month on month in January to 1.03 percent in New South Wales and 1.18 percent in Victoria."
The report can be found at <a href="https://www.sfsurveillance.com.au/" target="_blank">https://www.sfsurveillance.com.au</a>.
</body></html>

Home loan delinquencies rise in January

<html><body>
Blaming booming housing market conditions and also concerns that APRA will further tighten lending standards, the Commonwealth Bank and St George have joined NAB and Westpac in another out-of-cycle increase in mortgage rates for investment and owner-occupier loans.
CBA has raised the standard variable rate on interest-only owner-occupier loans by 25 basis points to 5.47 percent, while principal and interest loans will edge up by 3 basis points.
CBA, which has already tightened investor lending requirements, made the most aggressive push on interest-only investor loans, raising them up by 26 basis points to 5.94 percent.
Late on Friday Westpac-owned St George Bank announced it planned to follow suit with the big four banks and raise its rates.
St George said property investors would see their home loan rates rise by 23 basis points while investors with interest-only loans would see their rates increase by nearly one-third of a percentage point.
Rates for owner-occupiers with interest-only mortgages would go up by eight basis points.
ANZ also raised rates on Friday.
"These changes reflect a need to closely manage our regulatory obligations, our portfolio risk and the competitive environment," said ANZ's group executive for Australia, Fred Ohlsson.
The bank's moves follows similar action from both Westpac and NAB after concerns were again raised by the banking regulator APRA about the need to rein in speculative property lending.
NAB raised its standard variable rate by 7 basis points to 5.32 percent, while investor loans jumped 25 basis points to 5.8 percent.
Westpac moved a more modest 3 basis points on its standard variable loan and 23 basis points on investor loans.
"Investors have been slapped with the biggest rate hikes so far amid growing speculation that APRA will further tighten investor lending standards in another attempt to cool down unsustainable housing prices in Sydney and Melbourne," Mozo director Kirsty Lamont said. 
Commonwealth Bank was among the nation’s banks to hit investors with surprise interest rate hikes made independently of any move in the Reserve bank’s official interest rate.
Some analysts argue rate hikes are piling more risk on to a system.
“There is clear evidence that the macro conditions for Australian house prices are deteriorating,” CLSA analyst Brian Johnson told The Australian.
“This change in sentiment is particularly worrisome, given the extent of Australian housing investors who are willing to tolerate a substantial post-tax negative carry on home loans in anticipation of a future gain,” he said.
“The expectation that house prices are no longer rising in itself could trigger correlated selling from this negative cash flow cohort.”
</body></html>

Home Loans

Editor's Picks

Have something to contribute?

Developments

New apartments

New townhouses

News

Home Loans

Editor's Picks

Receive the latest news stories to your inbox

Have something to contribute?

Developments

New apartments

New townhouses

News