Brisbane-based <a href="https://www.apartments.com.au/developers/red-co">Red &amp; Co Developments</a> has officially launched its $250million COMO apartment development in Varsity Lakes, while simultaneously commencing construction.&nbsp;

Building work is now underway at COMO following the appointment of <a href="https://www.apartments.com.au/builders/5point-projects">5Point Projects</a> as contractor to deliver the boutique development which will rise on a 2857 sqm site overlooking Lake Orr at 22 Lake Street.

When completed, <a href="https://www.apartments.com.au/new-apartments/como-varsity-lakes-22-lake-street-varsity-lakes-qld-4227">COMO</a> will comprise 156 apartments across 16 levels located in the heart of Varsity Lakes.

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The project, which will sit alongside Bond University, will deliver a diverse array of apartment designs comprising one-, two- and three-bedroom residences that have already attracted interest from local and interstate investors as well as an array of owner occupiers looking to gain a foothold in the precinct.

Red &amp; Co, which has largely focused on the Brisbane market in recent years where it has delivered more than 500 apartments and townhouses across 26 projects, has designed COMO to combine tranquil, lakeside living with the vibrant urban convenience of the vibrant Varsity Lakes village.

“We’re thrilled to announce a start to construction of COMO in conjunction with the official launch of the project, our first for the Gold Coast,” said Red &amp; Co Director and Co-Founder David Laverty.

[smartcode_project:default project_id=135546 project_image_fid=363509]

“COMO is superbly positioned to capture the essence of the Varsity Lakes village lifestyle and its thriving café and dining precinct, while delivering a much-needed diverse supply of premium residences for the local market.

“Pre-launch inquiries have been strong among both local and interstate investors and owner-occupiers, including downsizers and upgraders who appreciate the value proposition that COMO represents.”

Prices at COMO start from $1,000,050.

[smartcode_project:default project_id=135546 project_image_fid=363511]

Designed by <a href="https://www.apartments.com.au/architects/bda-architecture">BDA Architecture</a>, the COMO development incorporates an extensive range of amenities for residents including a 25-metre rooftop lap pool, sundeck, barbecue and dining areas, as well as multiple rooftop pickleball and paddleball courts, a wellness and activity centre, gym, sauna, plunge baths and landscaped gardens.

“COMO presents a rare opportunity to secure a stylish, lifestyle-focused home in one of the Gold Coast’s most sought-after neighbourhoods,” added Laverty.

“The rooftop will be the epicentre of fun for residents with an array of amenities for residents that are quite unique for a boutique project such as this, all while offering spectacular vistas across the Gold Coast as far north as Southport and south to Burleigh.”

[smartcode_project:default project_id=135546 project_image_fid=363514]

&nbsp;

Red &amp; Co has chosen the Varsity Lakes site for its proximity to top-tier schools, major shopping hubs, such as Robina Town Centre and its CBD offering, as well as key Gold Coast transport links, including Varsity Lakes Train Station.

COMO will be located just a short walk to shops, cafes and restaurants in Varsity Lakes and just a 10-minute drive to the Burleigh Heads beachfront.

With construction currently underway, Red &amp; Co anticipates COMO will be completed in 2028.

[smartcode_project_cta:default project_id=135546]

Joel Robinson

Red & Co to launch debut Gold Coast development Como Varsity Lakes as construction commences

Longstanding Gold Coast developer Raptis has acquired a prime development site on Surf Parade for its next Broadbeach apartment project.

Progressing towards completion of <a href="https://www.apartments.com.au/new-apartments/the-sterling-broadbeach-6-8-george-avenue-broadbeach-qld-4218">The Sterling Broadbeach</a>, 90 apartments on nearby George Avenue, <a href="https://www.apartments.com.au/developers/raptis">Raptis</a>, led by second-generation family man Evan Raptis, has picked up a block on the corner of Surf Parade and First Avenue.

The site had been earmarked for a luxury apartment project with 33 full-floor apartments across a 37-storey tower. Raptis will go back to the drawing board and create a building more appropriate for the site. The development application will be lodged later this month.

Evan Raptis told Apartments.com.au the site ticks all the boxes.

"Broadbeach is a suburb we've developed several buildings over the years. Surf Parade ticks all the boxes for the type of apartment development we want to deliver."

Raptis had several pre-lodgement meetings with council to ensure they are aligned in the development.

<img alt="Raptis" data-entity-type="file" data-entity-uuid="f0d58573-07a4-47a8-9f5e-fbf35fb03dc3" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-03-05%20at%204.58.23%E2%80%AFPM.png?VersionId=iczZEd_4_o4UL0PHMPJGfy_q3tv96J5i" />

Surf Parade has emerged in recent years as one of the most popular streets in Broadbeach for development.

South East Queensland developer Mosaic Property Group kicked it off with Marella by Mosaic. Bassar Group sold out Infinity on the street, while for its&nbsp;first Gold Coast development, Polycell grabbed a Surf Parade site for <a href="https://www.apartments.com.au/new-apartments/the-rochester-broadbeach-143-surf-parade-broadbeach-qld-4218">The Rochester</a>, which is nearly sold out.

Melbourne-based developer Hirsch &amp; Faigen recently launched its fourth Gold Coast project on the exclusive strip. The Eveleigh Broadbeach will have 100 apartments across a 31-storey building designed by Rothelowman.

GV Property Group site development specialists Antonio Mercuri and Luke Reaby, who both amalgamate sites and sell shovel-ready sites to developers up and down the Gold Coast, sold Surf Parade to Raptis.

Raptis secures prime Surf Parade site for next Broadbeach apartment development

Less than two years after breaking ground, Gardner Vaughan Group is celebrating the topping out of Bask, its second development in the exclusive coastal enclave of Bokarina on Queensland’s Sunshine Coast.&nbsp;

Located only minutes from the beachfront, the two seven-storey luxury apartment towers, known individually as Mydas and Caretta, offer a selection of one-to-four-bedroom residences with views of Lake Kawana, the Glasshouse Mountains, and Bokarina Beach.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333359]

Gardner Vaughan Group Commercial Director Sam Gardner said the milestone marks the home stretch for construction, with first residents expected to be able to move in from Spring 2026.&nbsp;

“This is a significant milestone in bringing this development to life and represents our confidence in this region’s long-term growth and appeal,” Gardner said.&nbsp;

“With 85 per cent of apartments already sold, buyers are joining an established, coastal village that offers the very best of the Sunshine Coast – seasonally patrolled surf beaches, renowned restaurants, and links to established health and retail.&nbsp;

“The final collection of three- and four- bedroom apartments range in size from 127sqm to 300sqm, each with two or three secure car parks and storage, and with construction fast approaching completion we don’t expect the last few apartments to remain on the market for long.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=333362]

Local restaurateur Luke Stringer, who co-owns and manages the award-winning Bocca Italian and Playa Mexican restaurants in Bokarina, has lived in the beachside suburb for 18 months and worked there for more than three years, and said the beachside suburb was thriving.&nbsp;

“It’s fair to say Bokarina is finally stepping into the sun and there’s a lot to love about the place,"&nbsp;Stringer said.

"It’s such a great community, where you see the same smiling faces every morning and everything’s within easy reach – it’s the perfect hub in the middle of the Sunshine Coast.

“When we first opened Bocca Italian, we were the lone restaurant, but it’s been amazing to see how the area has grown. The more venues that open, the busier it gets for everyone. When Playa Mexican opened its first Saturday night, Bocca had a record night and Playa was packed too, which blew us away how everyone is thriving.&nbsp;

“There’s a great energy around the place now, and people are really embracing Bokarina as a food and lifestyle destination.”&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363368]

Stringer joined other buyers at Bask Bokarina and the Gardner Vaughan Group team to celebrate the topping out at a special event in February.&nbsp;

Located in Kawana Waters, midway between Caloundra and Maroochydore, Bokarina locals enjoy scenic walking paths around Lake Kawana, playgrounds, beachfront boardwalk and parklands, alongside all the convenience of a masterplanned beachside community.&nbsp;

“You see people jogging or swimming in the morning, then grabbing coffee at the cafes, people are really embracing the area and all this growth is bringing more people to Bokarina,” Stringer added.&nbsp;

To take advantage of the vistas, each of the 135 apartments at Bask is designed with full size windows and high ceilings that provide an abundance of natural light.&nbsp;

Prices for the remaining three-bedroom apartments start at $1,599,000 and four-bedroom apartments start at $3,149,000.&nbsp;

[smartcode_project:default project_id=141609 project_image_fid=363369]

The mixed-use development also features ground-level retail space for cafés, dining options and boutiques, including the soon-to-be-opened ‘Corner Shop’, by the team behind Noosa’s well known ‘Organika’.

Sam Gardner said Gardner Vaughan Group’s 37-year history building and developing across South East Queensland has contributed to the success of its second development in Bokarina, which follows the recently completed Zinc Apartments.&nbsp;

“We care how people live and this is reflected in the way we approach the design and delivery of every development,” he said. “Furthermore, as a builder-developer we have full control over the construction program and our 100 per cent completion rate is something people can draw confidence from.”&nbsp;

Founded by civil engineers Guy Gardner and Darryl Vaughan in 1989, the family-owned business has evolved from a consultancy firm to an award-winning builder-developer, with projects across the Sunshine Coast, Moreton Bay, Brisbane and the Gold Coast.

[smartcode_project_cta:default project_id=141609]

Gardner Vaughan Group tops out Bask Bokarina apartments

Prolific Melbourne developer <a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a> has launched its fourth new Gold Coast development in as many years.

<a href="https://www.apartments.com.au/developers/hirsch-faigen">Hirsch &amp; Faigen</a>, led by Daniel Faigen and backed by Eddie Hirsch, co-founder of United Petroleum, has unveiled The Eveleigh, on a prime 1,100 sqm site at 7-9 Surf Parade in the heart of Broadbeach.

<a href="https://www.apartments.com.au/new-apartments/the-eveleigh-broadbeach-7-9-surf-parade-broadbeach-qld-4218">The Eveleigh</a> will deliver 100 apartments across 31 levels, making it the company’s largest Gold Coast project to date. It builds on the success of its three earlier developments, <a href="https://www.apartments.com.au/buildings/hemingway-1267-1273-gold-coast-highway-palm-beach">The Hemingway in Palm Beach</a> and <a href="https://www.apartments.com.au/buildings/emerson-kirra-100-musgrave-street-coolangatta">The Emerson at Kirra</a>, both completed, and <a href="https://www.apartments.com.au/new-apartments/yves-mermaid-beach-7-9-mermaid-avenue-mermaid-beach">Yves Mermaid Beach</a>, which is nearing completion.

[smartcode_project:default project_id=149670 project_image_fid=360966]

The announcement of The Eveleigh affirms the company’s sustained confidence in the Gold Coast market which continues to remain undersupplied. It also increases the value of Hirsch &amp; Fa​igen’s Gold Coast development portfolio to more than $700 million since the company first entered the market in 2021 with Hemingway.

The company has enlisted its preferred architecture firm Rothelowman to design The Eveleigh, which will offer a thoughtfully curated lifestyle, including a substantial wellness precinct, communal recreation areas, children’s play spaces, work-from-home facilities, and shared lounge and dining areas.

[smartcode_project:default project_id=149670 project_image_fid=360965]

Designed for the prime market demographic of downsizers and interstate lifestyle investors in mind, The Eveleigh has been crafted to offer an increasingly rare blend of affordable luxury in a tightly held market. Uniquely positioned in the heart of the Gold Coast’s most sought-after lifestyle suburb of Broadbeach, the project will also boast uninterrupted beach and hinterland views.

The Surf Parade site is just a short walk to the bustling Broadbeach dining and retail precinct, Pacific Fair, The Star Gold Coast and convention centre, and an easy stroll to Kurrawa Beach and the recreational amenity of Pratten Park on the Broadbeach foreshore.

[smartcode_project:default project_id=149670 project_image_fid=360975]

“We’re excited to be proceeding with our fourth project on the Gold Coast in what is certain to become the new luxury precinct in Broadbeach,” says Anthony Bueti, the CFO of Hirsch &amp;a​mp; Faigen and a shareholder of the group.

“With the likes of Mosa​ic and Abedian &amp;a​mp; Co also launching quality projects in the area, the transformation will cement Broadbeach as the premier lifestyle and amenity suburb on the Gold Coast.

"After four years in the Gold Coast market, and with three successful projects completed, The Eveleigh is the product of everything we have learned to love about the Gold Coast and it will be an incredible addition to our growing portfolio in one of the most vibrant property markets in the country. We continue to remain very confident in the high-end Gold Coast property market.”

Urban Activation Director Matt George is handling sales for The Eveleigh, having sold out The Emerson, The Hemingway, and Yves, all before construction was completed.

Melbourne builder MAXCON has already commenced construction on The Eveleigh. They are forecasting a mid-2028 completion.

[smartcode_project_cta:default project_id=149670]

Hirsch & Faigen unveils The Eveleigh in Broadbeach

Two years after securing development approval for the final stage of its award-winning Thornton Precinct on the doorstep of Penrith Station, Urban Property Group is set to launch <a href="https://www.apartments.com.au/new-apartments/mayfair-on-penrith-172-lord-sheffield-circuit-penrith-nsw-2750">Mayfair on Penrith</a>, around 400 apartments designed to reflect two of Sydney’s most iconic structures.

The builder-developer has continued refining the design plans for the two-building development on a significant 8,280 sqm site on Sheffield Circuit, recognising the importance of the prime parcel as one of the closest developable sites to the station.

UPG enlisted architecture firm SJB to design the project. The team said they drew inspiration from both the General Post Office in Martin Place and East Circular Quay to help shape the design. The two-level colonnade, in particular, reflects the famous GPO building, which dates back to the 1860s.

[smartcode_project:default project_id=136726 project_image_fid=362014]

There will be one-, two-, and three-bedroom apartments on offer, with interiors by Cox Architecture. Residences will sit above a retail podium featuring hospitality and lifestyle operators such as One Playground and Volcano’s Steakhouse, contributing to an activated ground plane within the broader Thornton precinct.

A communal rooftop with a pool and views towards the Blue Mountains will provide shared open space for residents. The development is positioned between Ron Mulock Oval and Westfield Penrith, with the Nepean River and Great River Walk also nearby, placing daily amenity and green space within walking distance.

&nbsp;

[smartcode_project:default project_id=136726 project_image_fid=362015]

Mayfair is being delivered by Urban Property Group, a family-owned developer and builder with nearly 40 years’ experience across Sydney. The project will be the first in Penrith to be offered with Resilience Insurance’s 10-year Latent Defects Insurance (LDI) policy, which Urban Property Group has adopted across a number of its recent developments. The developer also has a 4.5-star iCIRT rating, one of the best ratings in market providing further confidence to buyers.

Urban Property Group CEO Patrick Elias said providing additional assurance to off-the-plan buyers has become increasingly important.

“Anything we can do to give confidence in our product is a plus,” Elias told Apartments.com.au.

“Consumers are a lot more weary and a lot more concerned in buying off the plan than they ever have been. They’re making their single large investment, which is their home, and providing confidence is something that we feel is paramount.”

[smartcode_project:default project_id=136726 project_image_fid=362020]

The LDI policy provides a 10-year warranty covering structural defects, with independent inspections carried out during construction and protection for owners if defects arise post-completion.

Mayfair represents Urban Property Group’s sixth and final development within Thornton, consolidating the masterplanned precinct immediately east of the station.

The developer, which builds its own projects, has already commenced construction. SRM Residential is handling the sales campaign.

[smartcode_project_cta:default project_id=136726]

Urban Property Group to close the curtain on award-winning Thornton precinct with Mayfair on Penrith release

Mortgage

Almost three-quarters of variable borrowers who asked for a rate cut, got one, a new survey has found.&nbsp;

In a RateCity.com.au survey of over 1,000 mortgage holders, of those on a variable rate, 52 per cent haggled with their bank for a lower rate. Over 73 per cent of these people were successful in getting at least one rate cut.

A rate reduction of 0.25 per cent could save the average mortgage holder $1,241 in interest after one year and $3,656 after three years. This is based on a $500,000 loan balance with 25 years remaining.

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market.&nbsp;

[smartcode_project:default project_id=29048 project_image_fid=151675]

RateCity.com.au home loan database analysis:

<ul>
	<li>49 lenders have cut at least one variable rate in the past two months.</li>
	<li>10 lenders have hiked variable rates in that time.</li>
	<li>The vast majority of variable rate cuts are reserved for new customers, not existing ones.</li>
</ul>

RateCity research director, Sally Tindall, said while the RBA is not expected to move the cash rate tomorrow, one phone call could potentially save the average variable rate mortgage holder thousands.

&ldquo;Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,&rdquo; she said.

&ldquo;A lot of people think a handful of basis points won&rsquo;t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years.&quot;

While the majority of changes to fixed rates in the last two months have been hikes, the opposite is happening in the variable rate market

jordan_55689

Three out of four mortgage holders who asked for a rate cut, got one: RateCity 

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

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

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Australian homeowners are skeptical about receiving unbiased advice from a bank when it comes to refinancing a home loan, according to research commissioned Mortgage Choice.

The research reveals two out of five (38%) homeowners are either in the process of refinancing or are considering making the move to a new loan.

However, 53% of homeowners are wary that if they speak to a bank they won’t be advised if they could get a similar or better home loan deal elsewhere. One in two (49%) homeowners feel that banks don’t always have their best interests at heart.

High levels of trust for mortgage brokers 

The survey results confirmed that a significant majority (94%) of Australian homeowners say they trust the loan recommendations made by a mortgage broker.

For half (55%) of the respondents surveyed, the number one benefit of partnering with a mortgage broker during the refinancing process is professional support comparing loan options, rates and features. For 45% of refinancers, a mortgage broker streamlines the process, “saving time and hassle”.

“Faced with what can be an overwhelming choice of home loans, homeowners want to be confident they are making the move to a loan that will improve their financial wellbeing through a lower rate, improved loan features, or both," Susan Mitchell, CEO of Mortgage Choice said.

“While banks can provide information on their own product suite, they do not have an in-depth understanding of competitors’ products. That is why I urge borrowers in the market for a better deal to engage the help of an experienced mortgage broker to learn what other options they have,” she added.
</body></html>

Mortgage Choice found 53% of homeowners are wary that if they speak to a bank they won’t be advised if they could get a similar or better home loan deal elsewhere

urban.com.au

Australians are skeptical about receiving unbiased refinancing advice from banks

<html><body>
Is it a case of banks don’t know what’s going on, or is it more a statement they don’t want to know? Pour yourself a fresh cup of coffee and read on. Don’t forget, your comments are welcomed and be sure to share them.
There are three main issues that banks appear to be very silent on and the question that is fitting in this property-climate is simply: “why are they so quiet?” A question which begs a straight answer; especially with the concerns surrounding foreign and local property investors buying newly built property and pricing local first-time-home-buyers out.
The three concerns and issues I refer to are:
·     Rental guarantees
·     Overly inflated commissions and
·     The scourge of the financial industry sector, selling property without a real estate industry license.
My immediate guess is, if you are riding the “Gravy Train” of “Overseas &amp; Local Investors” why should these seemingly illegal practices be of concern to banks? Again and for now, I’m just speculating that; it’s best to turn a blind eye than it is to confront what may well be considered unfair and unjust to local home buyers. After all, first-time-home-buyers aren’t the flavor of the month to all concerned, now are they?
It is my strong belief that the three topics noted, create an unfair advantage that has driven property values sky-high as developers reach for the skies.
Why is this unfair? I have previously discussed in other articles, “Rental-Guarantees” and “Overly-Inflated Commissions” are ultimately paid by the investor.
<a href="https://mail.privatemedia.com.au/owa/redir.aspx?SURL=buh8exBazU3bNSloPOr0rrJNNQesJNSotxGFO7YMkRixynWPdWzSCGgAdAB0AHAAOgAvAC8AdwB3AHcALgBsAGkAbgBrAGUAZABpAG4ALgBjAG8AbQAvAHAAdQBsAHMAZQAvAGkAbgB0AGUAcgBuAGEAdABpAG8AbgBhAGwALQBpAG4AdgBlAHMAdABvAHIAcwAtAGIAZQBpAG4AZwAtAGQAdQBwAGUAZAAtAHMAeQBkAG4AZQB5AC0AYQB1AHMAdAByAGEAbABpAGEALQBlAGQAdwBpAG4ALQBhAGwAbQBlAGkAZABhAA..&amp;URL=http%3a%2f%2fwww.linkedin.com%2fpulse%2finternational-investors-being-duped-sydney-australia-edwin-almeida"> </a>Ha! And you thought the developers were generous and paid for these right? Therefore, driving the values of the newly built properties upward.
Now allow me to break it down for you.
Rental guarantees:
What is common amidst most of the activity surrounding the sales of newly built property is the rental guarantees. Some rental guarantees are lasting for as long as 3 years.
It is my belief that any incentive made by the vendor or the agent to enhance the sale, the incentive has to be disclosed and must also form part of the contract of sale. The inducement being the rental guarantee but this is not limited to a rental guarantee.
In my time I have also seen cars and furniture packages form part of sales incentives, all in the aim to entice the investor to buy.
Inflated Commissions:
Yes, I know I speak out a lot about this very subject but when spruikers earn 5 times what the local agent earns in one sale, there has to be something wrong. If I don’t speak out, will the REI NSW step in or any of the REI’s for that matter?
I stopped holding that breath 4 years ago.
Nevertheless, the banking bodies should take note as their clients (the investors) are ultimately paying for this.
I also note that most of my endeared friends that have created this negative impact on the local home front, all sell newly built property. An arena where highly inflated commissions can and are paid out.
Selling without an industry license:
The temptation is just too great and the grass is greener on the other side. When so much money is at stake we have seen; brokers, accountants, financial planners and advisers jump the fence to moonlight as real estate agents as they lead their clients astray.
Again, this is an area where the banks should focus on, as local investors fall prey to the rogues within the financial sector.
A closer eye and perhaps a magnifying glass should be used to review contracts especially when the buyers are: Trustee Companies for Self-Managed-Super-Fund (SMSF) Trusts. More to the point when the property is new as this is the territory where these rogues, feast and boast about the high commissions earned.
Rental guarantees, overly inflated commissions and spruikers selling real estate without a license under the guise of calling themselves property-marketers: should send alarm bells ringing through the banking sector. But once more, why is there so much silence surrounding the very issues that have overly inflated the value of a new property in Sydney?
Getting to the nuts and bolts
Unethical real estate agents, spruikers, property marketing companies and the scourge of the financial sector; all have been ensnared by the prize of the high commissions and in turn lure investors by creating false perceptions of property: growth, demand, under-supply and high return on investment. How? By the simple use of instruments (such as rental guarantees) outside of the contract of sale and therefore, making the transaction questionable and unconscionable.
The falsely represented, high priced, new property sales ultimately filters down to established homes and we have what I refer to as “property-osmosis”. Property osmosis is an upward pull of established property's prices, caused by the exaggerated values of the surrounding new developments.
Most people are also under the impression that Overseas-Investors are paying for their properties with 100% cash. However, that it is not the case. Most investors buy property with a high deposit and borrow 50-60% through a loan vehicle.
In actual fact, Chinese citizens can only take up to $50,000 out of China through legal channels. However, there are means and ways to take $200K-$400K without much fuss.
Therefore, banks are more than happy to lend at 60% Loan to Value Ratios, as they are well secured even if the market dips by 20-30%. As you can see, there is very little risk for the banks.
Then there are our home grown Local-Investors that have been enticed to buy. Their property investment guides as previously mentioned are mainly, property spruikers and financial experts that assist in creating (SMSF) schemes to buy property. These vehicles also requiring low LVRs to purchase.
Typically, the SMSF schemes may borrow 70-80% to buy the investment property. Again the banking sector feeling secure on all counts.
What banks and Industry bodies need to do
The first and foremost prudent demand banks should place on the real estate industry is, for the “Sales Inspection Report and Agency Agreement” to be disclosed. Disclosure of what the “AGENCY” is being rewarded for the sale, will provide a twofold and strong indication to the valuer if there are any hidden agreements not being revealed.
·     Overinflated commissions
·     Payments made to agent/agency to cover rental guarantees and other incentives not disclosed in the Contract of Sale, which are passed on to the investor.
A copy of the agency/corporation license, should also accompany the contract of sale when providing the relevant documentation to the valuers. For the bank valuers to properly asses the true value of the property.
·     An agency or business name on the front page of the contract inserted after "Vendor's Agent" does not represent that the agent holds an industry license.
Perhaps at this very moment there is simply too much at stake to curve these questionable practices. The banks, financial institutions, real estate agents and we may also include the government, are all making too much money on this gravy train, to really care about our local first home buyers.
I am troubled nonetheless to think that all these practices that may be considered highly questionable if not illegal, have and continue to go on and right under the very noses of the banking institutions.
EDWIN ALMEIDA is licensee in charge of <a href="https://www.just-think.com.au/" target="_blank">Just Think Real Estate</a>.<a href="https://www.just-thin.com.au/"> </a>
He is also the creator of <a href="https://www.youtube.com/user/JustThinkProperty" target="_blank">Oz Real Estate.TV</a> and a presenter for <a href="https://propertyinvestingvault.com/" target="_blank">propertyinvestingvault.com</a>.
 
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Banks turning a blind eye: Edwin Almeida

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Australia's largest and most recently listed mortgage aggregator Australian Finance Group (AFG) released its December 2015 quarter Mortgage Index, which now again includes figures at the state level.
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<div>The index, which is not seasonally adjusted, showed a solid 7 per cent increase in the volume of mortgages sold from the prior corresponding period, up from $12.9 billion in December 2014 to $13.8 billion last quarter.</div>
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<div><a href="/images/2016/01/14/AFG1.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/14/AFG1.jpg" alt=""></div>
<div> </div>
<div>
<div>This was in spite of the investor share of the market continuing to decline, with this sector slinking back down to a 6 year low.</div>
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<div>Investor loan volumes are expected to stabilise from here, with the impact of tighter lending rates for investors and tougher lending criteria now largely baked in. </div>
<div> </div>
<div>Click to enlarge</div>
<div><img src="/images/2016/01/14/AFG2.jpg" alt=""></div>
<div> </div>
<div>
<div>The investor segment of the market had clearly become overheated in 2013, contributing to slowing rental growth.</div>
<div> </div>
<div>State versus state</div>
<div> </div>
<div>At the state level, AFG recorded more than $5 billion of mortgages written in New South Wales for the third time, as the state saw mortgage volumes up by 12 per cent from one year ago.</div>
<div> </div>
<div>The data series adds further weight to the suggestion that the Melbourne market may be set for a bright 2016, with mortgage volumes in Victoria up by nearly 18 per cent over the year in rising to a new high, despite the final quarter of the year being a short one due to the Christmas break.</div>
<div> </div>
<div>Mortgage volumes written also increased by 13 per cent over the year in South Australia, but have declined in Western Australia (-10 per cent) and the Northern Territory (-21 per cent respectively).</div>
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<div><a href="/images/2016/01/14/AFG3.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/14/AFG3.jpg" alt=""></div>
<div> </div>
<div>
<div>Mortgage sizes have soared</div>
<div> </div>
<div>The average size of mortgage written continues to rise, up by 20 per cent over the past three years to a fresh all-time high of $476,479.</div>
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<div><a href="/images/2016/01/14/AFG4.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/14/AFG4.jpg" alt=""></div>
<div> </div>
<div>The average size of mortgage written in NSW increased to a new high of $583,708, with mortgage sizes also rising by around 7 per cent over the past year in Victoria, Queensland, and South Australia. </div>
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<div><a href="/images/2016/01/14/AFG6.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2016/01/14/AFG6.jpg" alt=""></div>
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<div> </div>
<div>
<div>The wrap</div>
<div> </div>
<div>While AFG's index may be distorted by changes in market share, meaning that users should be wary of premature extrapolation, the figures do provide further hints as to what to expect in the year ahead.</div>
<div> </div>
<div>It is evident that markets will increasingly be driven forward by owner-occupiers rather than investors, while the market in Melbourne continues to defy...well, people like me, I suppose, who felt that the market have may peaked some years ago.</div>
<div> </div>
<div>Overall, APRA's cooling measures appear to have worked and the property market seems to have calmed after the frenzy we saw around April and May last year, particularly in Sydney. That said, mortgage volumes - and particularly mortgage sizes - have to date remained very high, with owner-occupiers plugging most of the gap being left by investors. Accordingly, we might expect to see a more sustainable and balanced market going forward in 2016. </div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
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Our mortgages are getting bigger: Pete Wargent

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Someone with lots of time on their hands and not much to do has decided I’m a stressed person.
I should probably seek professional help because not only am I stressed but, alarmingly, I don’t know it. I’m never felt more relaxed in my life, but the aficionados has declared me stressed and these people are experts. Clearly I have a serious disorder.
But it gets worse. Apparently Australia is chock full of people just like me - stressed to the max, but don’t know it. We’re delusional apparently.
We’re all suffering from a new 21st Century disorder known as mortgage stress. The symptoms are a high standard of living, a quality home, an ability to pay all your bills, holidays overseas, happy kids and 30% of your income spent on your mortgage.
It’s a national issue because we don’t know it’s serious. We should all be in therapy but most of us aren’t. Someone should bring on a parliamentary inquiry. 
Sorry, I forgot, they already have. We already have an politicians inquiry into affordability, following close on the heels of the previous 18-month investigation that found nothing of value.
Here’s how it works. One of those pointless businesses that compare home loans and interest rate deals has decided to drum up a bit of publicity in a competitive industry.
They know the key to success is to publish something sensationally negative and they know media is obsessive-compulsive over the whole issue of house prices and affordability.
So they’ve invented something called mortgage stress. They’ve arrogantly decided on a benchmark based on nothing other their desire for media profile. 
So they’ve come up with garbage like this: “On average many owners in capital cities are on the tipping point of mortgage stress, committing 29% of their income to cover repayments. When owners use 30% of their income to repay their loans they are considered to be in mortgage stress.”
Really? According to which experts? Who has pronounced 30% to be the point at which we all fall into stress?
The answer is someone who writes press releases for a loan comparison outfit. It’s the quintessential case of lies, damned lies and statistics.
With the latest findings of this pointless exercise, you could actually come up with something spectacularly positive. Because the latest “research” indicates that Sydney residents with mortgages are NOT mortgage stressed. On average, Sydneysiders with mortgages spend only 26% of income on their mortgages payments. 
After all the hysteria about Sydney prices and the so-called affordability crisis, Sydney households are actually very comfortable with their home loans. Isn’t that extraordinary?
Melbourne also is a city bereft of mortgage stress, with the typical household paying only 28% of income on the mortgage. Perth is very comfortable also. And across Australia, the average household is below the arbitrary red line of 30%.
That’s worth a headline, I would have thought, assuming you believe these figures have any relevance at all.
But the press release writer has buried this deep down the bottom of the media statement, because it’s a rather inconvenient fact. It doesn’t fit the objective of a sensationally negative finding.
The spokesperson for the pointless organisation (which will remain nameless because they don’t deserve the publicity) has declared the results “a bit worrying”.
“It’s alarming that so many Australians are over-stretching themselves and first home buyers and those buying with others are the worst off,’’ she said.
Actually, it’s not alarming at all. It’s quite the opposite. According to their figures, the residents of our largest and most expensive cities are not mortgage-stressed at all. And the average Australian is below the manufactured stress level.
So what did media do? Naturally they published the “findings” pretty much verbatim from the press release, breathlessly declaring a crisis.
Another addition to the great seething mass of misinformation about Australia real estate.
In my perfect world, publishing this kind of dishonest, fabricated-crisis nonsense would be a criminal offence. I see it as a form of fraud.
 
TERRY RYDER is the founder of <a href="https://www.hotspotting.com.au/" target="_blank">hotspotting.com.au</a>. You can <a href="https://mailto:ryder@hotspotting.com.au" target="_blank">email him</a> or follow him on <a href="https://twitter.com/hotspotting" target="_blank">Twitter.</a> 
Terry was recently joined by Property Observer editor at large Jonathan Chancellor for a webinar on why research is the key to successful property investing in 2015. You can download slides and audio from the webinar here.
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Are you suffering from mortgage stress? Terry Ryder

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Housing finance data for January 2016 shows that the value of housing finance commitments was recorded at $31.9 billion over the month. 
Based on this figure, mortgage lending fell by -3.4 percent over the month.  Even though the data is seasonally adjusted, we often see falls in mortgage lending over January so perhaps we need not read too much into the fall, however, this is the largest January fall in lending since 2011.
<a href="/images/2016/04/15/Chart-1-1-580x213.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/15/Chart-1-1-580x213.jpg" alt="">
Looking at the two major components of mortgage lending: owner occupier and investors both have recorded a fall over the month. In January there was $20.5 billion worth of finance commitments to owner occupiers and $11.4 billion in commitments to investors. The value of owner occupier commitments fell by -4.3 percent over the month but was 15.9 percent higher year-on-year.
Investor commitments fell by -1.6 percent in January and were -14.8 percent lower year-on-year. With investor demand having slowed over recent months, they now account for 35.6 percent of all mortgage commitments which is virtually right on its decade average after peaking at 43.3 percent of all housing finance commitments in May of last year.
<a href="/images/2016/04/15/Chart-21-580x210.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/15/Chart-21-580x210.jpg" alt="">
Of the $20.5 billion in commitments to owner occupiers in January, $1.9 billion was for construction of dwellings, $1.2 billion was for purchase of new dwellings, $7.2 billion was for refinancing of established dwellings and $10.2 billion was for the purchase of other established dwellings.  Construction of dwellings was the only segment of lending to rise over the month (+0.7 percent) with falls in value of lending for purchase of new dwellings (-5.2 percent), refinancing established dwellings (-2.3 percent) and purchase of other established dwellings (-6.4 percent). 
Despite monthly falls, year-on-year all segments have seen an increase in lending with construction of new dwellings rising 6.1 percent, purchase of new dwellings up 35.6 percent, refinances up 36.0 percent and purchase of other established dwellings having increased by 4.8 percent.  Although lending is up over the past year, there is a clear downwards trend in owner occupier lending, particularly for established dwellings, over recent months.  It will important to monitor whether this trend persists in coming months as it could point to slowing value growth.
<a href="/images/2016/04/15/Chart-3-1-580x213.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/15/Chart-3-1-580x213.jpg" alt="">
Following intervention in the market by the regulator, we have seen a sharp slowdown in lending to the investment segment over the past 8 months.  As earlier mentioned, investors accounted for 43.3% of all housing finance commitments in May of last year with their proportion falling to 35.6% in January 2016.  Looking at the two components, in January 2016 there were $899 million worth of commitments for new construction and $10.5 billion worth of commitments for established housing stock. 
Over the month, the value of commitments fell by -4.2% for new construction and by -1.4% for established housing stock.  Year-on-year the value of lending is 3.2% higher for new construction but -16.0% lower for established stock.  Much like the owner occupier chart, it shows that demand for established stock has eased and is trending lower, albeit at a slower pace.  In fact, the value of commitments for established investment stock is at its lowest level since April 2014.
<a href="/images/2016/04/15/Chart-4-1-580x215.jpg" target="_blank">Click to enlarge</a>
<img src="/images/2016/04/15/Chart-4-1-580x215.jpg" alt="">
The CoreLogic Mortgage Index which is published weekly and tracks mortgage activity across our proprietary platforms indicates that January was a weak month for housing finance commitments.  We would expect that housing finance commitments will rise in February and so far March also points to increasing demand.  However, mortgage demand remains lower than it was at the end of last year and lower than it was a year ago.  While housing finance commitments should increase from their January levels it is unlikely that demand will start to grow as strongly as it was in the early part of last year or late in 2015.
The constraints on investment lending have been extremely effective and have resulted in a swift and significant pull-back in demand, in fact the value of investment housing finance commitments in January was -20.0% lower than its April 2015 peak.  Although the CoreLogic Mortgage Index points to a rebound in demand over the coming months, we expect that growth in housing finance commitments will remain more subdued than what we saw over recent years. 
Of course, the direction of housing finance will ultimately be determined by housing demand.  After demand weakened over the second half of 2015 we have seen stronger demand early in 2016 with much stronger auction clearance rates falling property listings in a number of cities and a rise in property transactions.
Cameron Kusher is research analyst for CoreLogic RP Data. You can contact him <a href="https://blog.corelogic.com.au/about/">here</a>.
 
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Mortgage demand shrinks in January, will it continue throughout 2016? Cameron Kusher

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When it comes to the question of who pays the mortgage interest, the answer is that New South Wales and Victoria do: well over half of the national interest payable in fact.
<a href="/images/2015/11/25/Interest%20Payable.jpg" target="_blank">Click to enlarge</a>
 <img src="/images/2015/11/25/Interest%20Payable.jpg" alt="">
<div>While this might seem surprising, in fact the share of interest paid by the largest two states has declined over the past two decades.</div>
<div> </div>
<div>The reason for this has been the expansion of both the population and mortgage sizes in Queensland (its share of the mortgage interest pie increasing from 15%to 19%) and Western Australia (its share increasing from 9 to 13%).</div>
<div> </div>
<div>The changes elsewhere have been negligible when viewed from the national level.</div>
<div> </div>
<div>Despite the Australian population having increased by well over 1 million persons (or about 4.7%) over the past three years, total interest payable has declined by nearly 22% thanks to the slashing of interest rates.</div>
<div> </div>
<div>
PETE WARGENT is the co-founder of <a href="https://allenwargent.com/" target="_blank" rel="nofollow">AllenWargent</a> property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank" rel="nofollow">blogger</a>. 
His latest book is <a href="https://www.bigskypublishing.com.au/Books/General-Interest/Four-Green-Houses--and-a-Red-Hotel/1015/productview.aspx" target="_blank" rel="nofollow">Four Green Houses and a Red Hotel</a>.
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Who pays the interest? Pete Wargent

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GUEST OBSERVER
As a nation, Australians are fascinated with residential real estate.
Today, you cannot open a newspaper, turn on the radio, watch television, or even have a chat with a friend without the subject of residential real estate coming up. 
Of course, when you consider that real estate is the nation’s number one asset class, this is hardly surprising. 
Everyone has an opinion when it comes to real estate. Most recently, we have heard a number of people argue that lenders and mortgage brokers are encouraging borrowers to take out loans they cannot afford, putting them in housing stress. 
I don’t want to contribute further opinion to this topic. Instead, I want to lay down some facts and figures that will hopefully go a long way to painting the true story. 
Residential real estate, like any commodity, is driven by a few key fundamentals, including supply and demand, the cost of credit, employment and access to credit. 
Access to credit, or the amount of money an individual can borrow, will determine what they can and will pay for a property. In recent times, there has been a lot of discussion about the high debt levels in Australia and the purported inappropriate lending practices undertaken by Australia’s lenders and mortgage brokers. 
While we do have high levels of debt in Australia, data from CoreLogic shows the proportion of income needed to service current household debt is actually lower now than it was in 2011. 
In 2011, the proportion of household income required to service an 80% LVR mortgage across the combined capital cities was 43.92%. By 2016, that percentage had dropped to 35.02% thanks, in part, to historically low interest rates.  
So while property is certainly expensive and the level of household debt is high, it would seem many Australians are actually in a better position now than they were five years ago.  
Moreover, lending practices are constantly improving. Borrowers aren’t being forced into higher loans, they are simply choosing to borrow more in order to purchase their desired asset. 
The banking industry is highly regulated and both brokers and lenders are more scrupulous than ever.
20 years ago, a home loan application was a single sheet of paper and the level of data that was collected by a lender was scant. 
Only 10 years ago, approximately 50% of all home loan applications in Australia required borrowers to certify their income and their asset position. These loans, commonly referred to as low-doc or no-doc loans, were very popular within Australia. 
When you contrast these lending practices with what we have today, it is fair to say things have come a long way. 
Today, new legislation requires brokers and lenders to forensically examine a borrower’s assets and liability situation. They are also required to verify a borrower’s employment through documentation as well as telephone checks and discussions with employers. At the end of the day, nobody - lender or mortgage broker - wants a consumer to be in a situation where they access credit they can't afford. 
At Mortgage Choice, the vast majority of our customers are more than nine months in front of their mortgage repayments. They are overpaying their mortgage in a bid to quickly and efficiently reduce their level of debt. 
 Looking ahead, brokers and lenders will continue to do the right thing by their customers, helping them into loans they can afford and helping them to get their foot onto the property ladder.   
I believe property prices will continue to rise across most markets. However, the rate of growth may be more moderate than what we have seen in the past. I do not think mortgage holders are at risk of losing their property. I believe Australia’s lenders and mortgage brokers do all they can to ensure borrowers are in the right product for their needs and long will this tradition continue.
John Flavell is chief executive officer <a href="https://www.mortgagechoice.com.au/" target="_blank">Mortgage Choice</a>.
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The industry has never been healthier: John Flavell

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Housing affordability, rather the lack of it, doesn’t seem to be going away anytime soon, and Treasurer Scott Morrison’s recent speech at an Urban Development Institute of Australia event just reinforced the view.  
In such a scenario, the ‘bank of mum and dad’ for first-home buyers might be the way to realise the ‘great Australian dream’.
With the apartment median price in Sydney around $850,000, and Melbourne not too far behind, saving for even that 10 percent or higher deposit is a tough task for the new kids on the property block.
Normally, when a borrower can’t meet a 20 percent deposit and stamp duty, the bank will impose a Lenders Mortgage Insurance, which adds up to a few thousands of dollars. 
The ‘bank of mum and dad’ can seem to be a good option in such circumstances.
Ask a parent how far they would go to support the financial aspirations of their children, and chances are they will say: “Yes, if I had the money I would be happy to act as a guarantor for my children to purchase a property.” 
According to Todd Hunter, founder and director wHeregroup, mum and dad can help their children — even when they are teenagers — get a head start into the property market by buying a cheap property in the right location and let it sit there for 10 or 20 years and grow in value. Once the property is sold, the children will have a ready-made deposit without asking parents for help.  
Cheap properties below $250,000, and they don’t have to be in the city. And cheap properties because they “tend to pay for themselves, meaning the rent pays the interest on the loan, so any extra payments they make go directly off the principal of the loan”.
While this may be a great way to get the next generation started in property, there’s also a rising trend for adult children who are already property owners to dip into the bank of mum and dad besides the first-home buyers, according to Mortgage and Finance Association of Australia (MFAA) director and managing director of smart lending Melissa Gielnik in an article in www.domain.com.au earlier this year.
“In the past three years brokers across the MFAA network have witnessed a spike in requests for these types of loans and expect this trend to continue. Parental guarantee loans represent over 15 per cent of loans written for some brokers,” Gielnik said.
“As the housing market continues to grow parental guarantees are becoming more popular with upgraders allowing them to avoid mortgage insurance and therefore borrow a larger amount,” she said.
Housing is the single biggest asset class in Australia, worth an estimated $6.5 trillion across 9.6 million dwellings, according to CoreLogic. To put it in perspective, this is worth more than three times the value of Australian superannuation funds ($2 trillion) and more than four times the value of Australian listed stocks ($1.5 trillion).
But roping in parents to guarantee loan doesn’t come without risks, as Mamiza Haq, a lecturer in finance at The University of Queensland, points out in an article in <a href="https://theconversation.com/the-problems-with-relying-on-the-bank-of-mum-and-dad-33826" target="_blank">The Conversation</a>. 
The risk to lenders
Family-pledged loans can be categorised as non-conforming loans, an area where lenders seek to minimise the level of risk as much as possible. The Australian Prudential Regulatory Authority has outlined some guidelines for Authorised Deposit-Taking Institutions (ADIs) with regard to loans including a guarantor relationship (e.g. from a parent of the borrower) as these loans carry a greater risk. 
Inadequate bank supervision and poorly underwritten home mortgages led to the financial crisis, adds Haq. 
Sydney mortgage broker Elaine Lam explains in an article in The Australian that while “a family guarantee can be a useful tool that allows borrowers to finance property with little or no deposit, the procedure can be a risky strategy as it allows borrowers to buy property with no cash and no evidence of genuine savings, as long as the bank is satisfied the borrower can meet the ongoing loan repayments, says Lam. In the event the borrower defaults on the loan, the bank will come after the parents for any losses and costs that the bank incurs.
Consumer advocates also cite “lots of cases" where guarantors have been faced with the prospect of losing their home, adds Haq.
In the current uncertain economic climate with low wage growth and rising costs of living, parents must consider the risks of acting as guarantor, and all the legal responsibilities that come with it, before pitching in to help your children realise the ‘Australian dream’.
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