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

Mortgages

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Second-round submissions to an inquiry into the banking system have challenged findings that the system is competitive and called for a review of mortgage broking practices to ensure consumers are getting quality advice on home loans.
The Financial System Inquiry released its interim report in July, calling for further input on a range of questions, including whether bank ownership of mortgage brokers was restricting competition.
Second round submissions were published on Friday.
The Mortgage and Finance Association of Australia challenged the report’s finding that the banking sector was “competitive, albeit concentrated”, noting that the financial crisis and government intervention had restricted competition.
However, the MFAA said there was no evidence that bank ownership of mortgage broking groups was limiting competition or discouraging brokers from acting in the consumers’ interest.
The MFAA argued that the National Consumer Credit Protection Act, 2009 required brokers to disclose commissions and lender panels and ensure clients were not disadvantaged by any conflicts of interest.
Suncorp disagreed, arguing that bank ownership of mortgage brokers was distorting the way in which mortgage brokers directed borrowers to lenders.
“Of great concern is the fact that customers view brokers as independent but the major banks have growing influence over these channels which they now predominantly own, and coupled with generous incentive schemes, are able to direct business to their products,” Suncorp said in its submission.
Consumer group Choice called for a review of how mortgage broking regulations were working for consumers including an assessment of the impact of mortgage brokers’ remuneration and institutional arrangements on the services they offered. It also called for an investigation into whether more extensive rules about the quality of mortgage broker recommendations and disclosures were required.
Choice said conflicts of interest reduced the quality of mortgage brokers’ recommendations and service for consumers. 
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Banking system uncompetitive and mortgage broking review needed: Senate inquiry submissions

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The Australian Prudential Regulation Authority (APRA) released their quarterly Authorised Deposit-taking Institution (ADI) Property Exposures data for June 2014 yesterday.
The data always provides a valuable insight into current and historic mortgage lending by ADIs. This quarter’s data showed some very interesting trends.
<img class="aligncenter size-full wp-image-3648" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-11.jpg" alt="Chart 1" width="500" height="181">
Based on the value of all outstanding mortgages by households to Australian ADI’s, there $811.7 billion outstanding to owner occupiers (66.2%) at the end of June 2014 and $413.5 billion to investors (33.8%). Over the 12 months to June 2014, the total value of outstanding mortgages to owner occupiers has increased by 7.5% compared to a 10.9% rise in outstanding credit to investors.
<img class="aligncenter size-full wp-image-3649" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-21.jpg" alt="Chart 2" width="500" height="181">
At the end of June 2014, 36.0% of loans outstanding had an offset facility, up from 34.0% a year earlier. 35.7% of all outstanding mortgages were interest-only which was the highest on record and up from 34.3% a year earlier. 
Just 0.2% of all outstanding mortgages were reverse mortgages and 2.9% were low documentation which was down from 3.9% a year earlier. Other non-standard loans accounted for just 0.1% of all outstanding mortgages.
<img class="aligncenter size-full wp-image-3650" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-31.jpg" alt="Chart 3" width="500" height="180">
The average balance on all outstanding mortgages at the end of June 2014 was $237,200.  The average balance has increased by 3.2% over the past year.  Loans with an offset facility ($282,900) and interest-only mortgages ($299,000) have much higher average outstanding loan balances.  It is interesting to note that the annual growth in average outstanding loan balances has been much more moderate for mortgages with an offset and interest-only mortgages at 1.6% and 1.8% respectively.  Encouragingly, the data also indicates that outstanding balances are reducing for low documentation and other non-standard loans as they become less common.  Over the past year the average balance has fallen by -3.5% for low-documentation loans and by 5.9% for other non-standard loans.
Turning the focus to new loans written over the June quarter, 62.1% of lending was to owner occupiers and a record high 37.9% was to investors.  Compared to the June 2013 quarter, owner occupier lending is up 2.0% and investment lending is 14.4% higher.
<img class="aligncenter size-full wp-image-3651" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-41.jpg" alt="Chart 4" width="500" height="179">
Over the quarter, 0.7% of new loans approved were low-documentation, 43.2% were interest only, 0.2% were other non-standard loans, 43.0% were third party originated loans and 3.7% were loans approved outside of serviceability.  The 43.2% of new loans which were interest only was a record high, interest only loans tend to be (but not always) reflective of lending for investment purposes. 
The ADIs seem to be increasing the usage of their broker channels with the 43.0% of loans originated by third parties the highest proportion since June 2008.  Although only 3.7% of loans were approved outside of serviceability over the June quarter, this was the highest proportion on record. 
This may indicate that there has been some relaxation of lending standards over the quarter, however it is difficult to conclude any firm conclusions.  Nevertheless it is something to keep an eye on over the coming few quarters.
<img class="aligncenter size-full wp-image-3652" src="https://blog.rpdata.com/wp-content/uploads/2014/08/Chart-51.jpg" alt="Chart 5" width="500" height="183">
Looking at the loan to value ratios (LVR) of loans written over the June quarter, 24.0% of new loans had an LVR of less than 60%, 42.2% of loans had an LVR of between 60% and 80%, 21.3% had an LVR of between 80% and 90% and 12.5% had an LVR of 90% or more. The 12.5% of new loans with an LVR of more than 90% is the lowest proportion since June 2011. This suggests there are proportionally less high-risk mortgages being written.
The data has certainly shifted quite significantly over the past quarter and year. There is definitely a significant level of activity by investors and clearly ADIs appear happy to lend to them.  The rise in the proportion of new loans written outside of serviceability is a potential concern. However, it is positive to see that the proportion of loans with an LVR of 90% or more falling.  The high level of interest only lending is also a cause for concern.  Of course interest rates are currently very low but such a high level of interest only lending in light of low interest rates may cause some issues when rates eventually start to rise.
As we have mentioned previously, the high proportion of investment lending is our biggest cause for concern in the current market. The lure of strong capital growth in Sydney and Melbourne is attracting the attention of investors as risk-free investments offer very low returns. 
Of course, that growth in values won’t continue forever and once it slows or values fall our chief concern remains that many investors may look to exit the asset class.  Should this occur, inner city unit markets (where investor activity is most prevalent) could see a more significant drop in values than they otherwise would have as investors exit at a time when demand also falls.  This scenario could have greater repercussions for the overall market, not just the inner city areas.
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ckusher-ujnxiKuFQs

The high proportion of investment lending remains our biggest cause for concern

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The National Australian Bank has reported its third quarter results, posting a $1.7 billion net profit.
Its cash profit rose 7% to $1.6 billion, while revenue fell 1% due to lower markets income amid volatility.
Business lending balances grew at an annualised rate of 5.5% over the quarter.
“The group achieved a satisfactory third quarter result,” said NAB chief executive Andrew Thorburn.
“Costs were well contained and asset quality continues to improve. While revenue growth remains challenging, Australian home lending continues to achieve market share gains and Australian business loan growth improved in what is traditionally a stronger quarter,” he said.
This article first appeared on <a href="https://www.smartcompany.com.au/" target="_blank">SmartCompany</a>.
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NAB reports $1.7 billion third quarter net profit

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QBE Insurance Group has announced plans to partially float QBE LMI, its mortgage insurance business.
The insurance giant has penciled in the partial float for 2015.
QBE's LMI division is one of just two mortgage insurers operating in Australia.
Rival Genworth was partially floated earlier this year by its US parent raising nearly $500 million. Its successful float in May was at $2.65 a share, trading yesterday at $3.56 a share.
QBE LMI holds around $1.2 billion in net tangible assets at the end of June.
“QBE LMI’s results have been outstanding and are expected to remain so for the foreseeable future,” QBE chief John Neal said.
“The capital intensity of this business led us to purchase additional reinsurance protection to support the business’ growth plans, however, with the longer term in mind, the introduction of third party shareholders offers QBE LMI enhanced capital flexibility to support its growth ambition.”
QBE today also released its audited half-year profit results, which had been flagged in a profit warning late last month.
The insurer confirmed a net profit after tax of US$392 million, down 18% on the prior corresponding period.
QBE has also announced a capital raising of around $810 million.
Around $650 million worth of shares will be offered to institutions, with $160 million to be sold through a share purchase plan.
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jchancellor-FAypfDUnLy

QBE LMI likely to float in 2015, following Genworth's successful strategy

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<h1><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/56051/width668/q2sg9fzf-1407484075.png" alt="" style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;"></h1>
Charis Palmer  is deputy business editor at The Conversation
Emil Jeyaratnam is multimedia editor at The Conversation.<img src="https://counter.theconversation.edu.au/content/30272/count.gif" alt="The Conversation" width="1" height="1" style="line-height: 1.3em;">
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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How exposed are Australian banks? The infographic that explains Australian banks' exposure to commercial property

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There’s something of a home loan ‘rate war’ going on at the moment, which can be great for borrowers. But it also creates pitfalls for the unwary.
Take some mortgage advertising I saw this week: it promoted a variable mortgage rate of 4.65% but beside it was a ‘5.21% comparison rate’.
Look at the difference: on a $300,000 25-year mortgage at 4.65% your total interest bill is $207,941. But if you pay 5.21%, your costs total $237,198. The difference between what’s calculated from the headline offer and the actual costs over the long-term is around $30,000.
This type of advertising is a common marketing device. The low interest rate is merely an ‘introductory rate’ which in this case lasts three years. And after three years the home loan reverts to a much higher rate.
So given the current interest rate cycle it’s a good time to discuss the comparison rate. The ‘comparison rate’ is a legislated requirement brought in by the federal government. It was introduced in 2003 at a time when ‘honeymoon rates’ were popular and advertised interest rates were not informing borrowers about the true long-term cost of their home loan.
It’s quite difficult for average borrowers to calculate what they really pay over the long-term if they pay one rate for, say, two years and then revert to a ‘true’ rate for the next 23 years.
So to resolve the confusion the government mandated a formula that all mortgage lenders must use in their advertising. It includes unavoidable fees and charges, and interest rates over a set period, which creates the comparison interest rate.
Because all lenders have to use the same formula, the result gives a borrower the means to compare the true cost of a loan before they commit to it, and it gives some reality to the headline interest rate.
This regulation set by the government is important, but it only goes so far. The key to getting the right loan is for you as a consumer to take this information and act on it. The law says that a comparison rate must be co-located with the promotional rate, and with the same prominence. But a comparison rate is useless unless borrowers are looking at it and registering what it means. In talking to people, I often find that consumers misinterpret the comparison rate as “X” lenders best rate compared to “Y” lenders best rate. This is not at all the case.
When you look down the most affordable variable rate loans (4.6%-4.8%) at a site such as RateCity, you see that those lenders with the best ranking have comparison rates almost identical to their advertised rates – that is, the rate they advertise is basically what the borrower will pay. But other loans only start at 4.6%, before reverting to something much higher.
Consumers are easily confused by the terminology and practices of the financial services industry. So if you’re searching for something as important as a mortgage, and a comparison rate gives you a chance to level the playing field, you really must pay attention.
Mark Bouris is Executive Chairman of wealth management company <a href="https://www.ybr.com.au" target="_blank">Yellow Brick Road</a>.<a href="https://www.ybr.com.au/"> </a>
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What the comparison rate really tells you about your mortgage

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GUEST OBSERVATION
The major Australian banks have recently cut fixed mortgage rates below 5%. They have done so without any prompting from the Reserve Bank of Australia, which may actually start raising the policy rate within the next six months, especially if inflation continues to run around the top end of its 2-3% target range.
Why, then, did the Australian banks cut their mortgage rates?
One possible reason lies in an obscure old macroeconomic theory of “secular stagnation” that has been gaining credence recently throughout the financial industry worldwide.
Resurrecting an old theory
In a speech at the International Monetary Fund last November, Larry Summers, Harvard economist and former US Treasury Secretary, resurrected this old theory, originally developed by another Harvard economist, Alvin Hansen, in the late 1930s.
When a consumption-led recovery in the midst of the Great Depression started to falter, Alvin Hansen was inspired by the then nascent Keynesian idea that the economy as a whole could persistently suffer from inadequate demand in the absence of a massive policy intervention.
US population growth had slowed dramatically during the Great Depression and Hansen believed this was a “secular” (that is, long-term, non-policy) source of decline in private investment in new capital infrastructure. According to his very Keynesian theory, this weak investment brought consumption down with it and, like John Maynard Keynes, Hansen did not believe in the ability of wage and price adjustment to restore the economy to full employment in the face of inadequate demand. Instead, he believed that fiscal policy would have to take up the slack, which it did with the onset of World War II.
The baby boom after the war meant that the theory of secular stagnation was largely forgotten. But Larry Summers sees similar forces at work in recent times and he considers secular stagnation as a leading explanation for why the US housing bubble in the 2000s didn’t result in an overheated economy at the time.
One might question the idea that the US economy didn’t overheat prior to the global financial crisis. But real GDP growth and inflation were actually quite moderate by historical standards throughout the 2000s. Summers speculates that this was because economic growth would have been much slower in the absence of a bubble due to secular stagnation.
Global savings glut and the chase for yield
This story is somewhat related to former Federal Reserve Chairman Ben Bernanke’s “global savings glut” hypothesis about why interest rates remained so low throughout the 2000s. In Bernanke’s view, there were too many savers, especially from Asia, chasing too few high-return and often risky investments. This “chase for yield” put downward pressure on interest rates and fuelled the US housing bubble.
So what is the prediction of secular stagnation for the future and why might it explain the Australian banks’ recent cuts in mortgage rates?
The basic prediction of the theory is that economies throughout the world will continue to stumble along with anaemic growth and no inflationary pressures for the foreseeable future. At best, there will be more moderate growth from time to time, but it will occur due to periodic financial bubbles triggered by a chase for yield and low interest rates. Faced with slow economic growth and low inflation, central banks will contribute to these bubbles by lowering their policy rates or making large-scale asset purchases (aka “quantitative easing”) when rates hit the zero lower bound.
In cutting their mortgage rates, the Australian banks appear to have bought into the secular stagnation theory and are clearly betting on continued downward pressure on interest rates driven by a global chase for yield.
Is there hope for a less stagnant future?
Can anything to be done about secular stagnation or, perhaps, is its relevance to the current economic situation overstated?
Similar to Alvin Hansen in the 1930s, Larry Summers argues that public investment in infrastructure provides the best way to address inadequate demand. He notes that current low interest rates also mean that the cost of financing public infrastructure investment is unusually low.
Would this fiscal policy approach work? Japan is an obvious place to look at in terms of what might happen in the face of demographic-led stagnation. And the results are not particularly promising. Japan has undertaken massive debt-financed infrastructure spending and this has not exactly produced a booming economy. Of course, unemployment has remained low and deflation, not inflation, has been the greater problem. So perhaps things would have been even worse in the absence of Japan’s massive fiscal interventions.
Meanwhile, it’s not really clear how relevant secular stagnation is for the rest of the world, including Australia. Indeed, in an odd way, the possibility of secular stagnation means that we should at least briefly celebrate when we see Australian inflation running at the top end of its target range.
This is not to say that the RBA should abandon or revise up its inflation target. But higher inflation is an indication that the secular stagnation hypothesis may be incorrect, while the RBA can always raise its policy rate to bring inflation down again in the future. Of course, the Australian banks currently betting on low interest rates won’t be quite as happy if this scenario were to play out.
James Morley is professor of economics and associate dean (research) at <a href="https://www.asb.unsw.edu.au/Pages/default.aspx" target="_blank" style="line-height: 1.3em;">Australian School of Business</a>. He receives funding from the Australian Research Council.
This article was originally published on <a href="https://theconversation.com" target="_blank">The Conversation</a>.
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Why did Australian banks cut their mortgage rates?

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<h1><img src="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/55198/width668/h3p45kff-1406675366.jpg" alt="" style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12px; line-height: 1.3em;"></h1>
<img src="https://counter.theconversation.edu.au/content/29843/count.gif" alt="The Conversation" width="1" height="1">
Charis Palmer is deputy business editor and Emil Jeyaratnam multimedia editor at <a href="https://theconversation.com">The Conversation</a>.
This article was originally published on <a href="https://theconversation.com">The Conversation</a>.
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Australia’s housing debt: The infographic that shows why we should be cautious

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Yesterday, the Commonwealth Bank cut its five-year fixed mortgage rate by 70 basis points to 4.99%, prompting cuts from competitors NAB and Westpac.
It's a record low for the bank. As <a href="/expert-insights/finance/competitive-cba-cuts-five-year-rate-to-record-low-as-inflation-quickens">Jonathan Chancellor reports</a>, Westpac and NAB matched the Commonwealth Bank's rate within a few hours. 
Westpac's 0.80% cut only comes into effect on July 28. Their offer includes a discount of 0.2% under the bank's Premier Advantage Package. It will be available to both new and existing customers for a limited time.
NAB dropped its five-year fixed rate by 70 basis points, matching the Commonwealth Bank's 4.99% rate. The new rate will be available from tomorrow. It also cut rates on its three and four-year fixed rate home loans, with a 4.99% rate for its four-year product and 4.94% rate for its three year fixed rate loan. 
ANZ is the only of the "big four" banks to hold the interest rate on its five-year fixed rate loan after yesterday's Consumer Price Index figures were released. Its offers a 5.94% rate on the product. Michelle Hutchison of rate comparison website Finder.com.au says those worried about potential interest rate rises should consider adopting a fixed loan while rate remain competitive.
"Long-term fixed rates such as five-year terms are riskier than shorter terms for one or two years because you have potentially more to lose because you're betting over a longer period of time," said Hutchison. However, she warns borrowers against taking up a loan purely because of a low interest rate.
"It's great to see the big banks dropping their rates and being more competitive but borrowers need to look into all the conditions and details before jumping into a fixed home loan. For instance, Commonwealth Bank's five-year fixed rate of 4.99% must be taken out in their packaged deal which means it has an annual fee and you need to open other accounts with the bank too," she says.
"The problem with fixing your home loan right now is that there's a chance more lenders will follow the major banks' lead and drop their five-year fixed rates even further so borrowers could miss out on even bigger savings. 
"Borrowers are also betting on their fixed rate staying below variable rates for most of the next five years. But fixing brings reassurance that your mortgage repayments won't move which can be worthwhile if you're budget is tight or you're planning to have a reduced income for starting a family or going overseas in the next few years," Hutchison explains.
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NAB and Westpac meet CBA's rate cut

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The Commonwealth Bank has cut its five-year fixed mortgage rate to a record 4.99% low, an adjustment of 70 basis points from July 23.
 It is the first time the big bank has cut its five-year fixed rate below 5%. Within hours Westpac and NAB followed by matching the CBA's five-year rate. 
The NAB also cut rates on its three and four-year loans.
Meanwhile Australia’s headline inflation rate was up 0.5% in the June quarter.
There was an annual gain of 3%, according to the Australian Bureau of Statistics.
The ABS’s measure of core inflation sits near the top of the Reserve Bank of Australia’s target range of 2% to 3%.
Michael Blythe, chief economist at Commonwealth Bank of Australia, said the figures were a touch above market expectations and "are a reminder that not all inflation risks are to the downside".
"The QI underlying figures were revised a touch higher as well. Nevertheless, the message from the RBA is that they want a long period of stability in rates," he advised.
"In our view, the RBA can stay on hold till QI 2015."
Savanth Sebastian, economist at CommSec said at present inflation is not a threat to the economy, meaning that the Reserve Bank can comfortably keep interest rates at exceptionally low levels over the medium term. 
"Domestic inflationary pressures remain well contained and given the slow growth in wages it is unlikely to result in a change to the domestic inflation landscape." 
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