<p>The enormity of delivering a true skyscraper in Australia's new development market is often overlooked.</p>

<p>It has taken the best part of a decade since plans for Chevron One were first unveiled, but the 52-storey tower is now complete, with residents collecting their keys and moving into what has become one of the Gold Coast's most recognisable new landmarks.</p>

<p>Rising 127 metres above Chevron Island, Chevron One stands almost twice as high as any other building on the island. Its scale places it alongside the trio of towers at Jewel, arguably the last truly significant addition to the central Gold Coast skyline when they were completed around six years ago.</p>

<p>While there are several developments underway around a similar height to Chevron One, they are more concentrated within clusters of the highest towers in the city. The fact Chevron One sits within a developing precinct, looking back at the other high-rise developments in Surfers Paradise and Broadbeach, makes it a different proposition altogether. It will certainly become a reference point on the Gold Coast skyline.</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68833]</p>

<p>Developer Bensons Property Group is behind the 52-storey tower, which has just shy of 250 apartments, along with an exhaustive list of resident amenity spread across what is the largest development site ever assembled on Chevron Island.</p>

<p>The tower has been the talk of the town for years, says Ray White Projects Gold Coast agent Caitlin Rosenboom, who is selling the remaining apartments.</p>

<p>"People have been watching Chevron One go up for years," Rosenboom says, adding that many prospective buyers have been surprised by the scale of the views once they step inside.</p>

<p>"It's only when they walk through a completed apartment that they truly understand the position of the building," Rosenboom says.</p>

<p>"The views are jaw-dropping. Whether you're looking east over the ocean, across Surfers Paradise, along the river systems or out to the hinterland, every level offers something different but equally impressive."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=360215]</p>

<p>One of Chevron One's defining advantages is its location on the eastern side of Chevron Island on Stanhill Drive, a position which protects the views forever.</p>

<p>"There's only one row of houses between Chevron One and the water, and the height restrictions along the river means views from Chevron One can never be built out,"&nbsp;Rosenboom says.</p>

<p>While new apartment developments continue to emerge across the Gold Coast, Rosenboom says opportunities to secure a completed apartment with this level of outlook are becoming increasingly rare.</p>

<p>"The size of the site is something that would be incredibly difficult to replicate today," she says.</p>

<p>"That's allowed Chevron One to deliver the sort of amenity, open space and resident facilities that very few projects can offer. There are not many completed apartment buildings on the Gold Coast right now that can compete with the combination of scale, quality and amenity."</p>

<p>[smartcode_project:default project_id=6515 project_image_fid=68839]</p>

<p>There's around 2,000 sqm of amenity solely for the use of residents of Chevron One. Club One features a uniquely shaped swimming pool that mirrors the footprint of the building itself, set within a extensively landscaped gardens. There's also an indoor pool and spa, a fully equipped gym with a Pilates room, a yoga garden, a bookable private dining area and lounge that can host up to 30 people, and a 24-hour concierge service.</p>

<p>As for the buyers, Rosenboom is fielding enquiry from everywhere: Sydneysiders and Melburnians looking at the new and off-the-plan market following the changes in the Federal Budget, as well as those looking to relocate, through to South East Queenslanders seeking either a permanent home or a weekender bolthole.</p>

<p>"The Gold Coast lifestyle continues to resonate with people relocating from the southern states, and when they see the views and the quality of what's been delivered at Chevron One, it becomes very easy for them to understand the appeal," Rosenboom says.</p>

<p>A diverse mix of one, two and three-bedroom apartments remain available, with each offering "something a little different", be it the orientation and views, configuration, or level, to suit a wide variety of buyers.</p>

<p>The remaining apartments are ready to inspect in person, by appointment.</p>

<p>[smartcode_project_cta:default project_id=6515]</p>


Joel Robinson

A decade in the making: Residents to move into Chevron One as construction wraps up

<p>A general rule of thumb in new apartment developments is that the penthouses get the rooftop.</p>

<p>It's a formula that's become commonplace across Australia's apartment market. Residents might have access to a pool, gym or barbecue facilities on a dedicated lower level, but the most desirable outdoor spaces are typically reserved for the highest-priced homes at the top of the building.</p>

<p><a href="https://www.apartments.com.au/developers/sherpa-property-group">Sherpa Property Group</a> has taken the opposite approach.</p>

<p>Rather than dedicating the rooftop to a handful of buyers, the Gold Coast developer has made it the centrepiece of its Flourish collection, creating expansive shared spaces from the best vantage point in the building.</p>

<p>The philosophy has reached its most ambitious expression at <a href="https://www.apartments.com.au/new-apartments/flourish-soleira-palm-beach-1150-1160-gold-coast-highway-palm-beach-qld-4221">Flourish Soleira</a> in Palm Beach, where two rooftop precincts connected by a skybridge will deliver one of the most extensive lifestyle offerings seen in a residential apartment project on the Gold Coast.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374053]</p>

<p>"We're seeing a clear move toward developments that offer more than just an apartment," Sherpa Group founder Christie Leet said.</p>

<p>"People want spaces that support how they actually live, whether that's working from home, staying active, or spending time with family and friends.</p>

<p>"That's where amenity becomes critical. It's not just about what's included, but how those spaces are designed to be used every day."</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374052]</p>

<p>The breadth of amenity has already attracted buyers across multiple demographics. Younger first home buyers have been drawn to Soleira's one-bedroom apartments, a product rarely delivered in Palm Beach, while families have responded to practical inclusions such as the shallow children's pool adjoining the main lap pool and the extensive communal recreation areas.</p>

<p>Instead of a single rooftop, Soleira delivers two distinct lifestyle zones.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=372547]</p>

<p>The southern rooftop has been dedicated to wellness, featuring a gym, yoga and Pilates studio, work-from-home facilities, a wellness centre, spa, and hot and cold plunge pools.</p>

<p>The northern rooftop focuses on recreation and entertaining, incorporating a heated resort-style pool, private dining rooms, pizza ovens, barbecues, a golf simulator, children's recreation areas, and what is expected to be the Gold Coast's first rooftop basketball court, which will also double as a squash court.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=374054]</p>

<p>Beyond the rooftops, Soleira will introduce 1,500 sqm of curated retail beneath the towers, creating one of Palm Beach's first genuinely mixed-use lifestyle precincts where cafés, restaurants and convenience retail become part of residents' everyday lives.</p>

<p>Sherpa has also retained management rights across the development, allowing it to oversee the long-term operation of the building through a 24-hour concierge model. The developer is also exploring additional revenue streams within the precinct aimed at helping offset ongoing body corporate costs for residents.</p>

<p>[smartcode_project:default project_id=150017 project_image_fid=370962]</p>

<p>While Soleira is the largest project Sherpa has delivered, the rooftop-first philosophy has been evolving for several years.</p>

<p>It began with <a href="https://www.apartments.com.au/new-apartments/amargo-6-12-sixth-avenue-palm-beach-qld-4221">Flourish Amargo</a>, the first project released under the Flourish brand. Rather than competing at the ultra-luxury end of the market with oversized half-floor and full-floor residences, Sherpa focused on creating lifestyle-driven apartments supported by resort-style shared spaces.</p>

<p>Amargo introduced more than 800 sqm of rooftop amenity, combining wellness facilities, heated pools, entertaining areas, cabanas, pizza ovens and private dining spaces into what was designed as an extension of residents' homes rather than a facility used only occasionally.</p>

<p>[smartcode_project:default project_id=146527 project_image_fid=366550]</p>

<p>That approach continued with Flourish Oasis, where the same amenity-led philosophy was refined into a more boutique development. Strong demand from Sherpa's growing VIP database saw much of the project sold before it reached the broader market, reinforcing buyer appetite for apartment communities centred around shared lifestyle experiences.</p>

<p>Flourish Amargo is slated for completion mid-way-through next year, with Oasis to be delivered by late 2027. Flourish Soleira is expected to complete in 2030.</p>

<p>[smartcode_project_cta:default project_id=150017]</p>


Sherpa takes amenity to the sky as Flourish Soleira captures booming Palm Beach demand

<p>As apartment living continues to evolve across Sydney's growth corridors, the quality and distribution of shared spaces is increasingly shaping how residents experience home. Rather than functioning as add-ons, amenities are being embedded into the daily rhythm of a building, supporting everything from quiet retreat to social interaction, often within a single vertical community.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/aeris-melrose-park-nursery-street-melrose-park-nsw-2114">Aeris</a> in Melrose Park, this approach is resolved through a layered amenity offering that unfolds from ground level through to its upper podium. Developed by <a href="https://www.apartments.com.au/developers/sekisui-house-australia">Sekisui House Australia</a> in partnership with Hankyu Hanshin Properties, the project introduces 468 apartments across two towers and a mid-rise building, positioned at the highest point of the broader masterplan.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=359199]</p>

<p>The amenity experience begins at street level, where two courtyards sit within a landscaped setting that connects residents to the wider network of parks and green spaces. These green spaces are not isolated pockets but part of a wider pedestrian network that links Aeris to the surrounding <a href="https://www.apartments.com.au/developments/melrose-park-nsw-2114">Melrose Park</a> precinct, including Central Park, future schools, and the Town Centre opening in July 2026. The result is a transition that moves from public to private without abrupt boundaries, allowing residents to pass through shaded, tree-lined environments before reaching the building itself.</p>

<p>Moving upward, the focus shifts to the level five podium, where the primary communal facilities are concentrated. This space brings together a 16-metre swimming pool, outdoor seating areas, and a communal BBQ zone arranged to take advantage of elevated outlooks. Seating is positioned beneath pergolas, creating pockets of shade that extend the usability of the space throughout the day. The pool edge aligns with views toward the wider district, reinforcing the sense of elevation that defines the project’s positioning.</p>

<p>In the adjacent building, this is complemented by quieter, more contemplative spaces, including an outdoor cinema set within the same level. Positioned to operate primarily in the evening, it introduces a different tempo to the shared environment, shifting from daytime activity to after-hours use without requiring separate zones.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360299]</p>

<p>The podium also accommodates an intimate private resident gym. Located on the lower levels, it gives residents convenient access to fitness facilities without leaving the building.</p>

<p>Above, the elevated podium sky deck extends the amenity offering, providing additional open-air spaces with elevated outlooks across the surrounding landscape. While more restrained in program, this upper level reinforces the project’s vertical progression, from ground-level greenery to elevated outlook, allowing residents to move between distinct spatial conditions within a single address.</p>

<p>This distribution of amenities reflects a deliberate response to how residents use space across the day. Sekisui House Australia Sales and Marketing Director Peter Kalaf points to the role these shared areas play in shaping buyer demand. Aeris has been conceived as more than a collection of apartments, with the podium pool, gym and outdoor cinema forming part of a broader lifestyle offering that extends the home beyond each individual residence.</p>

<p>[smartcode_project:default project_id=426 project_image_fid=360300]</p>

<p>What distinguishes Aeris is not the inclusion of these elements individually, but how they are arranged in relation to one another. Active, social, and passive spaces are layered vertically rather than separated, allowing residents to choose between them without leaving the building or moving far from their apartment. This proximity supports both routine use, such as a morning swim or evening workout, and more occasional gatherings, whether around the BBQ area or within the cinema setting.</p>

<p>The amenity design also sits within a broader framework of connectivity across Melrose Park. The Melrose Park Town Centre, anchored by Coles and Dan Murphys, features a mix of retail, dining, health and lifestyle offerings, bringing everyday convenience closer to residents. By the end of the year, more than five hectares of parks and open space, equivalent to around seven football fields of green space on residents' doorstep, will further enhance the precinct, allowing the internal facilities at Aeris to operate as an extension of the wider neighbourhood rather than a substitute for it.</p>

<p>Construction at Aeris continues to gather momentum, with ground floor slabs expected to be completed in late 2026 before the first sections of the buildings begin to rise above ground.</p>

<p>[smartcode_project_cta:default project_id=426]</p>


Elevated amenity anchors daily life at Aeris, Melrose Park

<p>Repeat buyers are one of the strongest measures of confidence in any apartment development.</p>

<p>At <a href="https://www.apartments.com.au/new-apartments/era-newcastle-west-124-126-bull-street-newcastle-west-nsw-2302">ERA</a> in Newcastle West, some purchasers are returning to <a href="https://www.apartments.com.au/developers/gwh">GWH</a> after living at the developer's One Apartments. Their decision to purchase again was driven by the quality of life they found after moving into their first GWH home.</p>

<p>Keith Wilton had spent years living in a house in East Maitland before deciding it was time for a change. Apartment living had always been on his radar, but he was selective about what he wanted.</p>

<p><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/FH_1EzB-1vs?si=XScVlP1ERsTDJoME" title="YouTube video player" width="560"></iframe></p>

<p>"I had some boxes I wanted to tick," he says.</p>

<p>Keith points to the open-plan design, generous outdoor areas and considered inclusions as key reasons One Apartments worked for him.</p>

<p>“One of those things was a nice indoor open plan area, but also I wanted a nice outdoor open area that I could entertain on in summer or Christmases or birthdays,” he says.</p>

<p>He also found value in the smaller details, from integrated appliances to shared resident spaces including the pool, cinema and rooftop areas.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356818]</p>

<p>After comparing several developments, he chose One Apartments because of GWH's longstanding local reputation and his own experience working with the developer on a commercial project more than a decade earlier.</p>

<p>"I knew that they were local, that the quality of the build was going to be up there. I'd looked at other apartment complexes around and close by, and I just knew that here was a better decision location wise."</p>

<p>Today, Keith says the move has completely changed how he experiences Newcastle.</p>

<p>"I enjoy living in this location because it's more of a lifestyle change. That Newcastle city living where you can walk to restaurants and bars and even beaches and parks and even shopping across the road."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356828]</p>

<p>Beyond the location, he says it's the sense of community that has surprised him most.</p>

<p>"Everyone loves living here because they chose to live here, but everyone looks out for each other. It's a real great community feel here."</p>

<p>For Aimee and Lyle Goodman, the journey started almost by chance.</p>

<p><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/tsioMLcnjas?si=zq-ys3JuWpfa5hFv" title="YouTube video player" width="560"></iframe></p>

<p>The couple happened to be having coffee in Newcastle when they noticed the site where One Apartments was about to begin construction.</p>

<p>"We were aware GWH was planning a development," Aimee says. "We made one phone call and things moved pretty quickly after that."</p>

<p>As busy business owners, they initially thought apartment living would simply reduce the maintenance that came with larger homes. Instead, it fundamentally changed how they spent time together.</p>

<p>"We actually catch up more as a family now," Aimee says.</p>

<p>"We've had homes with big yards and lots of space, but everyone ended up in different rooms. Here we'll have dinner together, the kids can play, and we spend far more quality time together."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356829]</p>

<p>Lyle says their confidence came from GWH's reputation within Newcastle's building industry.</p>

<p>"I know people who've worked across different apartment projects, and whenever GWH came up the feedback was always the same. They're rock solid. They're quality."</p>

<p>That confidence only grew throughout the buying process.</p>

<p>"One of the things that really impressed us with GWH was the whole process, was the communication," Lyle says. "It was consistent, it was regular, there was no problem if we had some weird questions, there was no problems in getting answers."</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351104]</p>

<p>Aimee says one moment stood out.</p>

<p>"The project actually finished on time. We realised we needed to hurry up and sell our house because everything was happening exactly when they said it would."</p>

<p>The positive experience at One Apartments ultimately gave all three buyers the confidence to purchase again with GWH, this time at ERA.</p>

<p>Their confidence reflects what many buyers are seeking in today's apartment market. Location remains important, but so too does certainty around delivery, quality and long-term liveability.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356822]</p>

<p>ERA builds on those foundations with 280 one, two and three-bedroom apartments across two landmark towers in <a href="https://www.apartments.com.au/developments/newcastle-west-nsw-2302">Newcastle West</a>.&nbsp;</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/fk-australia">Fender Katsalidis</a>, the project will include more than 2,000 square metres of resident amenities, including a resort-style pool, gym, sauna, private cinema and rooftop entertaining spaces overlooking the harbour and coastline.&nbsp;</p>

<p>The development is also within walking distance of the Newcastle Interchange, Honeysuckle, Darby Street, the harbour foreshore, restaurants, retail and the city’s beaches, continuing the walkable lifestyle that existing GWH buyers say has transformed how they live.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=356826]</p>

<p>For Keith, the appeal remains straightforward.</p>

<p>"You feel at home even before you've moved into your home."</p>

<p>For Aimee, the change is measured in time.</p>

<p>“I just felt like I had more time,” she says.</p>

<p>[smartcode_project:default project_id=135096 project_image_fid=351102]</p>

<p>Construction at ERA is now underway, with more than half of the residences already sold and limited two and three-bedroom apartments remaining in the East Tower release. Priced from $980,000 for two-bedroom residences and $1.46 million for three-bedroom residences, buyers can secure an apartment with a 10 per cent deposit, with premium homes offering ocean views from Level 8 and harbour views from Level 10.</p>

<p>ERA is also backed by Resilience Insurance's 10-year Latent Defects Insurance policy, providing protection against structural or waterproofing defects for 10 years after completion. The project is anticipated to be completed in early 2028.</p>

<p>[smartcode_project_cta:default project_id=135096]</p>


From ONE to ERA: Why buyers are choosing GWH again in Newcastle West

<p>Virgate Property Group is preparing to commence construction of Verdé, its new apartment development in Melbourne's Arts Precinct at Southbank, following a strong run of sales that has seen more than half of the project's 173 apartments secured.</p>

<p>Verdé has attracted a broad mix of first home buyers, owner-occupiers upgrading from nearby inner-city suburbs and investors, with younger owner-occupier couples aged between 28 and 45 accounting for the strongest enquiry. Many are already living in Southbank, South Melbourne, Albert Park, Port Melbourne, South Yarra and the CBD.</p>

<p>"Verdé is located in one of the most desirable pockets of southern Melbourne," Blair Property Group Director Darren Blair, who is managing sales at Verdé, said.</p>

<p>"It's within walking distance of the Arts Centre, Royal Botanic Gardens, Albert Park Lake, and Southbank's restaurants and retail. It's a great lifestyle location with strong amenity and liveability, which made it a very attractive choice for the project."</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=372549]</p>

<p>Virgate was already familiar with the precinct, having previously delivered the successful Domain House development in neighbouring South Melbourne. That experience gave the developer confidence to acquire the Coventry Street site and continue expanding its presence in Melbourne's inner south.</p>

<p>"We had been keeping an eye on the site and the broader precinct for a few months before deciding to move forward with the acquisition," Virgate said.</p>

<p>The project was ultimately secured in 2020 following feasibility studies, planning assessments and due diligence, with the brief centred on delivering "a high-quality, considered design that feels both refined and fit for purpose."</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=314259]</p>

<p>Designed by <a href="https://www.apartments.com.au/architects/bruce-henderson-architects">Bruce Henderson Architects</a>, Verdé comprises 173 one, two and three-bedroom apartments priced from $599,000. The architecture is distinguished by a faceted glass façade that responds to both the site's outlook and Melbourne's changing light conditions.</p>

<p>According to Bruce Henderson Architects, the coloured glazing gives the building a distinctive identity while also providing privacy and solar shading, with residences oriented to capture views across the bay, city skyline and surrounding parklands.</p>

<p>Inside, <a href="https://www.apartments.com.au/interior-designers/designoffice">DesignOffice</a> has created interiors focused on natural light, efficient planning and enduring materials. Apartments feature engineered oak flooring, natural stone benchtops, floor-to-ceiling glazing and SMEG appliances, while a restrained material palette aims to complement the expansive outlooks rather than compete with them.</p>

<p>[smartcode_project:default project_id=4661 project_image_fid=372550]</p>

<p>Resident amenity has also been designed around everyday functionality rather than occasional use. Facilities include a concierge-serviced lobby, residents' lounge with fireplace, library and co-working space, gym, terrace garden with barbecue facilities, ground-floor café, and package delivery management.</p>

<p>The project's location continues to be one of its strongest drawcards. Positioned on Coventry Street, Verdé sits within walking distance of the National Gallery of Victoria, Arts Centre Melbourne, Royal Botanic Gardens and Albert Park Lake, while Southbank's dining precinct, Sturt Street trams and the new ANZAC Station are all nearby. The surrounding education catchment also includes Melbourne Grammar, Melbourne Girls Grammar, Mac.Robertson Girls' High School and several major university campuses.</p>

<p>The sales team says buyers have responded particularly well to the combination of location, design quality and long-term liveability.</p>

<p>"They're responding really positively to the quality of the design, premium resident amenities and the uninterrupted views. Many also appreciate the location and how connected it is to everything they need."</p>

<p>The ability to secure stamp duty savings before completion has also been a key factor for purchasers, alongside the opportunity to personalise finishes ahead of settlement.</p>

<p>With construction set to commence soon and more than half the apartments already sold, Verdé enters its next phase as one of the Arts Precinct's more established apartment developments, offering remaining buyers an opportunity to secure a residence before construction advances further. Expected completion is scheduled for late 2027.</p>

<p>[smartcode_project_cta:default project_id=4661]</p>


Virgate's Verdé Southbank moves toward construction as sales fly past halfway stage

Interest Only

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<div>In August 2017 I attempted to estimate the value and timing of forced interest-only ('IO') resets as a result of tighter lending standards. </div>
<div> </div>
<div>Since that time many rational borrowers have elected to switch to principal and interest (P&amp;I) loans to benefit from the more attractive mortgage rates on offer. </div>
<div> </div>
<div>APRA's quarterly ADI figures showed that the flow of new IO loans was under 16 per cent for a second consecutive quarter. </div>
<div> </div>
<div>This dynamic combination has had a marked impact on the stock value of outstanding IO loans, declining by $93.2 billion of 16.1 per cent year-on-year.</div>
<div> </div>
<div>As a share of ADI residential term loan exposures IO loans have therefore been reduced to 31 per cent as at March 2018, well down from close to 39 per cent a year earlier. </div>
<p> </p>
<div class="separator"><img src="https://1.bp.blogspot.com/-8ZXOTXlNodQ/Wy8El82AoVI/AAAAAAAAqwI/Ksa4JePKI1oQlWmiti6A7-46KuZ3uYeugCLcBGAs/s640/APRA1.jpg" width="640" height="374" data-original-height="803" data-original-width="1367"></div>
<p> </p>
<div>Most borrowers appear to be handling the switch comfortably.</div>
<div> </div>
<div>Those most impacted are likely to be portfolio investors, although many of this cohort built their portfolios over a long period of time, building equity and cashflow in doing so. </div>
<div> </div>
<div>Some may have to sell a property or two in order to reduce debt. </div>
<div> </div>
<div>The share of higher loan-to-value (LVR) ratio lending continued to tighten in the March quarter, having already declined considerably since 2014. </div>
<div> </div>
<div class="separator"><img src="https://1.bp.blogspot.com/-xenupVlmdH4/Wy8El_m7iWI/AAAAAAAAqwQ/-WTHJbrtXA4wGT7M1HI2xxF-dGZjeU-_ACEwYBhgL/s640/APRA2.jpg" width="640" height="366" data-original-height="790" data-original-width="1378"></div>
<div> </div>
<div>The latest figures relate to the first three months of 2018, so it's difficult to know whether the Royal Commission had any further impact over the following period through to June.</div>
<div> </div>
<div>It's interesting to note that the major lenders have lost some market share over time.</div>
<div> </div>
<div>Yet bank share prices saw a punchy rebound this week, possibly relating to a short squeeze, or more likely a pervading sense of relief as the media loses its appetite for daily stories from the Royal Commission. </div>
<div> </div>
<div>
<span>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and </span><a href="https://petewargent.blogspot.com/" target="_blank">blogger</a><span>.</span>
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pwargent-M4siyDbqQY

Most IO borrowers handling the switch to P&I comfortably

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<div>EXPERT OBSERVER</div>
<div> </div>
<div>It looks as though tighter deposit requirements have run their course. </div>
<div> </div>
<div>Although December 2018 was a horrible quarter for mortgage lending in the lead-up to the end of the Royal Commission, the squeeze on loan-to-value ratios looks to be just about done. </div>
<div> </div>
<div>
<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/2019/3/22/interest%20only%201.jpg" alt=""> </div>
<div> </div>
<div>
<div>There are relatively few interest-only (IO) mortgages being written now, and this squeeze also looks to be about done. </div>
<div> </div>
<div>It's a smaller share of a smaller pie, and this is reducing household debt ratios as we speak (contrary to the incorrect claims you might read elsewhere). </div>
<div> </div>
<div>
<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/2019/3/22/interest%20only%202.jpg" alt=""> </div>
<div>
<div>The ADI stock of outstanding IO loans is now less than ¼ of mortgages by value, the lowest on record across the data series. </div>
<div> </div>
<div>This may sound a lot, but most IO loans revert to principal repayment relatively quickly, and anyway IO mortgages can make a lot of sense for borrowers with offset accounts. </div>
<div> </div>
<div>Many borrowers have opted to revert to principal repayment early for the cheaper mortgage rates on offer. </div>
<div>
<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/2019/3/22/interest%20only%203.jpg" alt=""> </div>
<div> </div>
<div>
<div>There was previously some debate surrounding what constituted a 'new' IO loan, but the interest-only 'cliff' is no longer a thing, since any mechanically forced reset no longer applies. </div>
<div> </div>
<div>It's in nobody's interests to see stressed borrowers go into arrears, so the reset should now be managed comfortably enough.</div>
<div> </div>
<div>
<div><strong>Left the building</strong></div>
<div> </div>
<div>It's interesting to note that partly thanks to switching across to cheaper rates, interest repayments have now declined to sit well below 10 per cent of household disposable income, down from 16 per cent a decade earlier.</div>
<div> </div>
<div>This is a very significant decline, and this hugely improved level of mortgage serviceability partly accounts for why mortgage arrears remain so low. </div>
<div> </div>
<div>Betwixt the Council of Financial Regulators and the Reserve Bank today the respective authorities confirmed today that there would be no further tightening of lending standards required, instead perhaps implying that banks rather need to write some business.</div>
<div>
<br><strong>From the RBA:</strong>
</div>
<div> </div>
<div><em>"From a financial stability perspective, prudent lending standards are a good thing. They ensure that households and banks are resilient to changes in circumstances. </em></div>
<div><em> </em></div>
<div>
<em>But there needs to be a balance. </em><em>The regulators are not proposing any further tightening in lending standards. </em>
</div>
<div><em> </em></div>
<div><em>And the appropriate amount of credit risk is not zero – banks need to continue to lend and that will inevitably involve some credit losses."</em></div>
<div> </div>
<div>Welcome news, while fixed mortgage rates are being cut widely as funding costs have declined. </div>
<div> </div>
<div>The regulators have left the building (for the time being!). </div>
<div> </div>
<div>
<div id="post-body-36613851729109642" class="post-body entry-content">
<div>
<em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em> </div>
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Interest-only cliff: no longer a thing - Pete Wargent

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<p class="x_MsoBodyText">The announcement of the removal of the 30 percent cap for new interest-only residential mortgages will allow lenders to offer more choice for customers, leading to an increase in competition across the industry, particularly for smaller and regional banks, the Australian Banking Association chief, Anna Bligh said.</p>
<p class="x_MsoBodyText">“While banks will continue to lend prudently, today’s decision will mean all banks can offer more choice for customers who are looking to buy a house or apartment. </p>
<p class="x_MsoNormal"><strong>Average rates according to borrower</strong> </p>
<table class="x_MsoTableGrid" border="1" cellspacing="0" cellpadding="0"><tbody>
<tr>
<td valign="top" width="301">
<p class="x_MsoNormal">Owner occupier, principal and interest</p>
</td>
<td valign="top" width="58">
<p class="x_MsoNormal">4.27%</p>
</td>
</tr>
<tr>
<td valign="top" width="301">
<p class="x_MsoNormal">Owner occupier, interest-only</p>
</td>
<td valign="top" width="58">
<p class="x_MsoNormal">4.68%</p>
</td>
</tr>
<tr>
<td valign="top" width="301">
<p class="x_MsoNormal">Investor, principal and interest</p>
</td>
<td valign="top" width="58">
<p class="x_MsoNormal">4.60%</p>
</td>
</tr>
<tr>
<td valign="top" width="301">
<p class="x_MsoNormal">Investor, interest-only</p>
</td>
<td valign="top" width="58">
<p class="x_MsoNormal">4.84%</p>
</td>
</tr>
</tbody></table>
<p class="x_MsoNormal">Source: RateCity.com.au</p>
<p class="x_MsoBodyText">“Increased competition across the industry will mean customers have more ability to shop around for the best deal for them when looking at an interest-only home loan,” she said. </p>
<p class="x_MsoBodyText">In terms of banks home loan commitments, the proportion of interest-only loans are now 16 percent much lower than the proportion seen two years ago at 37 percent.</p>
<p class="x_MsoNormal">Sally Tindall, research director at RateCity.com.au, noted APRA’s intervention has had a marked effect on new borrowing.</p>
<p class="x_MsoNormal">“This announcement will see banks re-open their books to more interest-only lenders, particularly investors."</p>
<p class="x_MsoNormal">But Tindall was unsure whether there would be a drop in interest-only rates to attract more borrowers.</p>
<p class="x_MsoNormal">“Banks have grown accustomed to charging borrowers more for interest-only loans," she said.</p>
<p class="x_MsoNormal">The final ACCC report into residential mortgage pricing released last week found that the big four banks collected an extra $1.1 billion over the last financial year as a result of hiking interest-only rates as since March 2017 there has been a 37 basis point average increase in interest rates on investor, interest only loans.</p>
<p class="x_gmail-normal"><span lang="EN">On average the rates are now 32 basis points above investor, principal and interest loans, and 76 basis points above owner occupied, principal and interest rates.</span></p>
<p class="x_gmail-normal"><span lang="EN">“We have also seen an increase in interest rates for owner occupier interest only loans that are up 33 basis points since their lows in March last year,"</span> Mozo’s property expert Steve Jovcevski said.</p>
<p class="x_gmail-normal"><span lang="EN">“</span><span>While we welcome the push to improve lending standards, it’s clear the cap on interest only loans has put the brakes on the investor market.</span></p>
<p class="x_gmail-normal"><span lang="EN">“Coupled with the cooling of the housing markets across the country which have pulled back significantly since their peaks, it’s clear the temporary cap has done its job,” Jovcevski said.</span></p>
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j.ballantyne1990-6AQqhLzZaK

APRA's IO loan cap abolition will allow greater choice for over charged borrowers

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<div>
<p>Westpac has denied an AFR report it is giving risky property investors less than a month to find another lender.</p>
<p>The bank is alleged to be sending a single-page letter to investors warning it can "no longer support our commercial relationship with you."</p>
<p data-gtm-vis-first-on-screen-7770372_137="3688" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Victor Kumar, a director of Right Property Group, a buyers' agency, reportedly has seen the letter sent to property investors.</p>
<p>The letter informs borrowers that Westpac is a responsible lender.</p>
<p>Martin North, principal of Digital Finance Analytics, has reportedly been in contact with borrowers who have received the letter.</p>
</div>
<div>
<p>Westpac denied the claims. </p>
<p>Initially Westpac said it was attempting to locate the letter and declined to comment.</p>
<p>"We don't support the claims made regarding the Westpac customer communications," a spokesman later told the AFR.</p>
<p>"Based on the limited information we have been provided, the statements made are incorrect."</p>
<p>As banks are forensically examining their lending books, the Westpac letters are reportedly being sent to interest-only borrowers with multiple properties and high loan-to-value ratios, usually 80 per cent or above.</p>
<p>The investors, who often have up to six properties, have been told they have until October 20 – or less than a month – to find a new lender.</p>
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Westpac denies risky property investors are being given one month to find alternate finance

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<p>Canstar's weekly wrap of interest rates for owner occupiers puts the average standard variable rate at 4.43%.</p>
<p>The rates range from 3.39% to 5.73%.</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2018/5/23/principal.jpg" target="_blank">Click here to open in new window</a></em></p>
<p><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/2018/5/23/principal.jpg" alt=""></p>
<p>Interest only has an average 4.74% rate, with a range from 3.58% to just over 6%.</p>
<p><em><a href="https://www.propertyobserver.com.au/images/2018/5/23/io-loans.jpg" target="_blank">Click here to open in new window</a></em></p>
<p><a href="https://www.propertyobserver.com.au/images/2018/5/23/io-loans.jpg" target="_blank"><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/2018/5/23/io-loans.jpg" alt=""></a></p>
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jonathanchancellor-7SQnKwU6yx

Interest rates for owner occupiers average 4.43% standard variable rate

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<p>GUEST OBSERVATION</p>
<p>Australian taxpayers won’t face a rise in taxes now that Treasurer Scott Morrison announced the government will not increase the Medicare Levy by 0.5% as planned. This was to originally fully fund the National Disability Insurance Scheme (NDIS).</p>
<p>This is on the back of strong company tax receipts stemming from companies using up carry-forward losses accumulated in the wake of the financial crisis.</p>
<p>Australian Bureau of Statistics data for 2016/17, released this week, showed tax revenue for the federal government (including taxes received from other levels of government and public corporations) increased A$19.4 billion (5.2%).</p>
<p>The averted tax rise will be welcome news for Australian taxpayers. It also wedges the Labor opposition.</p>
<p>They have said that the NDIS was fully funded on their watch. So now they are proposing a 0.5% tax rise on all incomes over A$87,000. That’s pretty close to full-time male average weekly earnings and comes close to capturing half of Australian households.</p>
<p>The federal budget on May 8 will no doubt have further goodies for voters in the run-up to the net election, which will be either this year or relatively early next year. As usual, we will be reporting directly from the budget lockup.</p>
<p>One of the central economic puzzles of the last several years has been persistently low inflation in all advanced economies, despite general economic recovery and falling unemployment.</p>
<p>This week’s Australian consumer price inflation figures revealed a 0.4% increase for the March quarter, and 1.9% for the last 12 months. The March quarter figure was below market expectations of 0.5%, and also the previous (December quarter) figure of 0.6%. Education prices were up 2.6% on the quarter, and health prices up 2.2% (or 4.2% for the year to March 2018).</p>
<p>This puts inflation still below the Reserve Bank of Australia’s (RBA) target band of 2-3%. That band, of course, has been in place since the early 1990s – beginning with this speech by then governor Bernie Fraser.</p>
<p>Numerous central banks around the world have a similar approach. The basic idea is that a central bank can build a reputation over time to commit to monetary policy such that inflation lies in the band.</p>
<p>Now there are pros and cons to this approach to monetary policy, and it has its critics. But that is another tale for another day.</p>
<p>Just assuming that inflation targeting is the correct objective, how is the RBA doing? Well, one small hitch in the plan is that inflation has been outside the band for a long time now (basically since 2014), as the RBA’s own figures show.</p>
<p>Given the level of unemployment in Australia, low wages growth, and stubbornly low inflation, the RBA probably should have cut rates further a fair while back. But they seem, probably rightly, terrified of further fuelling a potential housing bubble.</p>
<p>Meanwhile, the credibility of their commitment to the inflation target withers. If only the regulation of our banking and finance sector had been better for the last, say, decade or two.</p>
<p>Speaking of such regulation, RBA assistant governor Chris Kent gave a speech Tuesday about the important issue of interest-only loans. Kent’s speech was significant because it followed up on remarks in the RBA minutes about the same issue that I discussed in this column last week.</p>
<p>It seems that the RBA “house view” on interest only loans is as follows. There could be a problem but the Australian Prudential Regulation Authority (APRA) stepped in and the banks have voluntarily tightened lending standards recently. Also because the <em>average</em> household with an interest only loan has a buffer of savings, everything will be fine. Nothing to see here.</p>
<p>I hope the RBA’s conclusion is right, but I know for sure that the reasoning is not. It’s actually the <em>marginal</em> household’s financial position and behaviour that matters, not the average household.</p>
<p>The average United States borrower with an adjustable-rate mortgage did not default in 2007, 2008 or 2009. But these mortgages were a huge contributor to the financial crisis, along with subprime mortgages.</p>
<p>Kent dutifully laid out the risks from interest only loans, saying:</p>
<p>"Because there’s no need to pay down principal initially, the required payments are lower during the interest-only period. But when that ends, there is a significant step-up in required payments (unless the interest-only loans are rolled over)."</p>
<p>Indeed, unless they can be rolled over. Which they can’t now because of APRA and the banks finally doing something.</p>
<p>Now, prices (interest rates) on interest only loans have gone up as part of the bank response. This has led a bunch of folks to shift to amortising loans, where the principal of the loan is paid down over the life of the loan. So those borrowers who haven’t shifted to these loans already, really don’t want to.</p>
<p>Maybe they can’t afford to because of the increased repayments, that can jump 30% or more per month.</p>
<p>So what does happen? First Kent says many borrowers save ahead of time, expecting a rise in repayments. Yes, the prudent ones.</p>
<p>But how many non-prudent borrowers have there been in the Australian property market in recent years? Hint: a lot.</p>
<p>Kent also points to borrowers who seek to refinance their interest only loan. But banks don’t really want to, and APRA doesn’t want to let them. And who is going to be able to? The safer borrowers who did save and so don’t really need to avoid amortisation. The risky borrowers can’t refinance.</p>
<p>Kent says some borrowers will have to cut their spending. Chuckle, chuckle. And the final option is to sell their house.</p>
<p>Sure, no problem, unless lots of folks want to do that all at once. Then it’s a fire sale that detonates the housing market.</p>
<p>I really do hope we escape the interest only debacle unscathed. But if we do it will be pure, dumb luck, not a consequence of good design or sound regulation.</p>
<p>It definitely doesn’t justify the RBA’s house view in Kent’s concluding remarks that: </p>
<p>"The substantial transition away from interest-only loans over the past year has been relatively smooth overall, and is likely to remain so. Nevertheless, it is something that we will continue to monitor closely."</p>
<p><img src="https://counter.theconversation.com/content/95518/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1">Perhaps a there should have been a little more monitoring before interest only loans got to be 40% of all loans and more than half of the loan book of one of our biggest banks.</p>
<p><em><strong>Richard Holden</strong>, Professor of Economics and PLuS Alliance Fellow, UNSW</em></p>
<p><em>This article was originally published on <a href="http://theconversation.com" target="_blank">The Conversation</a>. Read the <a href="https://theconversation.com/vital-signs-interest-only-loans-are-an-economic-debacle-that-could-bust-the-property-market-95518" target="_blank">original article</a>.</em></p>
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Interest only loans are an economic debacle that could bust the property market: Richard Holden

jrobinson-rf4aSBido9

The limits of interest-only lending: RBA's Christopher Kent

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<p>Almost half a trillion dollars in interest-only (IO) mortgages will convert to principal and interest loans over the upcoming four years, according to the Reserve Bank of Australia.</p>
<p>The Reserve Bank estimates around $120 billion in loans will convert to the more traditional principal and interest loans every year between now and 2021.</p>
<p>Despite the large increases in repayments when IO loans reset - officials estimate they will leap by up to 40 per cent - the Reserve Bank believes most borrowers "should be able to afford the step-up in mortgage repayments" because they have accumulated substantial prepayments.</p>
<p>The RBA published figures last Friday showing that around 30 per cent of all outstanding national mortgage debt will be subject to the IO reset.</p>
<p>Some commentators have likened ths forthcoming transition to the wave of adjustable-rate loans that triggered the 2008 US subprime crisis.</p>
<p>While the Reserve Bank has always downplayed the likelihood of any US-style disaster, it admitted the resets are an "area of potential concern".</p>
<p>It is not the first time the RBA has raised the issue as in February the <span>Reserve Bank</span><span> deputy governor Michele Bullock warned n<span>egatively geared property investors with </span><span>interest-only loans</span><span> posed a growing threat to Australias financial system.</span></span></p>
<p>Officials noted in Friday's statements that many households should be able to manage the adjustment given they are ahead with their repayments.</p>
<p>There are around 1.46 million outstanding interest-only mortgages.</p>
<p>The warning came just days after the Reserve Bank governor Philip Lowe warned Australian borrowers that a likely official interest rate hike will come as a shock to some households given they haven't seen one in seven years.</p>
<p>The IO reset risk numbers peaked in 2014, banks encouraged property investors to supercharge their borrowing power by taking out loans in which the principle typically isn't repaid for the first five years.</p>
<p>The loans were then taken up by home buyers too.</p>
<p>Given the interest rate on IO loans has risen, the RBA noted switching was already underway voluntarily.</p>
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<p><span>But some banks also noted an increase in arrears among some borrowers switching to principal &amp; interest (P&amp;I) loans at the expiry of the IO period of their loans. </span></p>
<p><span>"Partly, this was borrowers taking time to adjust to the higher required repayments (given they would then include principal) but most subsequently returned to meeting their payments in full," the bank noted </span></p>
<p><span>However it was only for a small share of borrowers higher arrears.</span></p>
<p><span>"Borrowers voluntarily switching before the IO period expiry – to take advantage of the lower interest rate on P&amp;I loans – were meeting the higher repayments," the RBA noted.</span></p>
</div>
</div>
</div>
<p>IO loans have been restricted by regulators in two waves of macroprudential restraints - in 2014 and 2017 - amid concerns they were stoking dangerous housing market conditions especially in Sydney and Melbourne.</p>
<p>The issuance of interest-only loans had fallen to around 30 per cent of borrowing by investors.</p>
<p>Last month to was noted brokers are writing significantly fewer interest-only loans as borrower demand plummets.</p>
<p>Mortgage Choice has revealed the proportion of interest-only (IO) mortgages written by its brokers fell by more than 20 per cent in the 12 months leading to February 2018.</p>
<div class="b-article_blog__wrapper__content">
<p>IO loans accounted for 12.22 per cent of all home loans written in February 2018, down by 23.73 per cent to 35.95 per cent.</p>
</div>
<p>The serviceability assessments used to write IO loans incorporate a range of buffers, the RBA noted in the latest Financial Stability Review, published on Friday.</p>
<p>The bank suggested share of borrowers who cannot afford higher P&amp;I repayments - who might not be eligible to alleviate their situation by refinancing - was thought to be small.</p>
<p>"In addition, borrowers who are in this situation as a result of past poor lending practices may be eligible for remediation from lenders."</p>
<p>The RBA noted one important aim was to address the risks posed by the concentration of mortgages on banks’ balance sheets, which have increased in recent years to now account for more than 60 per cent of total loans.</p>
<p>APRA is proposing to raise the minimum amount of capital that must be used to back residential mortgages, relative to other loans.</p>
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<p><span>In addition, APRA proposes to make risk weights on mortgages more sensitive to risk. Risk weights would distinguish between P&amp;I mortgages to owner-occupiers and all other mortgages (which would require more capital), and risk weights for ADIs using the standardised approach would also be more sensitive to the outstanding LVR.</span></p>
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