The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.

Wing Tai Asia has lodged plans for a major residential tower at 464-466 St Kilda Road, replacing the former VACC House with an 18-storey mixed-use development designed around a retained heritage podium and a sculpted contemporary tower.

The proposal, prepared under Victoria’s Significant Residential Development with Affordable Housing pathway, would deliver 325 apartments and ground-floor retail across the prominent 4,653 sqm boulevard site in Melbourne’s St Kilda Road North Precinct.

The project centres on the adaptive reuse of the site’s heritage-listed VACC Building, an eight-storey office designed by Bernard Evans that has occupied the address for decades. Planning documents state the development would involve “carefully dismantling and conserving off-site the original metal fabric of the podium visible from St Kilda Road,” before reinstating it as the defining frontage of the new scheme.

Above the restored podium, Wing Tai is proposing a curvilinear residential tower. The scheme includes 172 one-bedroom apartments, 63 two-bedroom apartments, 66 three-bedroom apartments, and 24 four-bedroom apartments, alongside two ground-floor food and beverage tenancies fronting St Kilda Road.

The tower has been designed with substantial articulation and variable setbacks to minimise perceived bulk and maintain view corridors along the boulevard. Urbis, which prepared the planning report, said the design “has been significantly articulated through a curvilinear design” with “an interplay with materials, façade expression and depth” to create visual separation and visual interest.

The proposal also includes 254 basement car spaces, landscaped pedestrian links connecting St Kilda Road and Queens Lane, and a biophilic landscape strategy featuring canopy trees, raised planters, cascading greenery and a glass oculus pool overlooking the eastern frontage.

Planning documents confirm the $270.1 million development will contribute 3 per cent of project costs to the Social Housing Growth Fund as part of the application process.

Wing Tai acquired the St Kilda Road property in 2018 alongside Abacus Property Group for $95.38 million, before later consolidating ownership of the site. The property previously served as the Victorian Automobile Chamber of Commerce headquarters for around 60 years.

The transformation of the St Kilda Rd boulevard is already beginning to materialise, with a number of high-profile projects recently completed, launched, or approaching launch as developers continue to back the long-term appeal of the precinct.

Among the most notable recent completions is Louise by Samuel Property Group, just off the strip on Queens Lane, the same pocket Hirsch &amp; Faigen recently launched The Queensbury. Mirvac is too on the same street with The Albertine, which is approaching completion.

Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.

Joel Robinson

Wing Tai unveils 325-apartment St Kilda Road tower on former VACC House site

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

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

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

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

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

Bottega House secures landmark riverfront site in St Lucia 

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

SIERA kicks off construction at Northcliffe tower Exhale

Mortgage Rate

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Some 43 per cent of mortgage holders are looking to refinance in light of COVID-19 and record low rates, according to a new survey from RateCity.com.au.
By comparison, a 2018 RateCity survey found just 19 per cent of borrowers were looking to refinance, following the Banking Royal Commission.
RateCity.com.au analysis of RBA data estimates that existing owner occupiers are paying over one per cent more than the lowest variable rate in market.
Sally Tindall, research director at RateCity.com.au, said the loyalty tax gets worse the longer you stick with your bank.
“It’s taken a pandemic to get people to shift their mindset, but hopefully we’ll come out of it more budget-conscious and less complacent towards our mortgages,” Tindall said.
“People won’t just tolerate overpaying anymore.
“The banks are pulling out all the stops too, putting some of the biggest cash back offers and rock-bottom rates on the table and adding more flexibility on fixed rate loans to attract new business – and it is working.
“The latest figures from the ABS for May showed refinancing increased 63 per cent compared to last year, and our research suggests it is not losing steam. 
“The best way you can get a rate cut is to turn yourself into a new customer and switch. If you aren’t in a position to refinance, pick up the phone and try some old-fashioned haggling with your bank,” she said.
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Mortgage holders looking to refinance doubles in two years: RateCity

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There are six lenders with variable home loans rates with a two at the front, according to RateCity.com.au.
They expect six to climb to 20 at the next RBA cut, if banks pass on at least 0.20 per cent to borrowers. 
RateCity research director Sally Tindall said owner occupier rates starting with a ‘2’ could become the new norm if the RBA made two more cuts to the cash rate.
“With two more rate cuts on the cards, we could see the lowest variable rate drop below 2.60, potentially even below 2.50 per cent.
“From here on in, lenders are going to be hard pressed to pass RBA cuts on in full, but rivalry in the home loan market will keep pushing rates down, even if it’s not by as much as the RBA would like.
“This pressure will force more banks to offer owner occupier rates under 3 per cent, especially for people with a decent amount of equity in their property.
Reduce Home Loans and Mortgage House offer the lowest variable rate at 2.89 per cent.
<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/2019/8/29/Variable%20Home%20Loan%20Rates.jpg" alt="">
 In the fixed rate space, 28 banks already have rates under three per cent, with 77 lenders taking the axe to fixed home loans in the past two months as banks price in future cuts.
“Some of the sharpest rates are reserved for fixed customers, starting from 2.79 per cent for one year, and 2.94 per cent for five years.
“Even the major banks’ 3-year fixed rates are lower than their basic variable rates – a sign that the banks think the only way is down for the cash rate.”
The big four banks gap between fixed and variable rates.
<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/2019/8/29/Big%20four%20gap.jpg" alt="">
 
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jrobinson-rf4aSBido9

Home loans with 2 at the front are going to become the new norm: RateCity

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Property buyers are leaning towards variable rate home loans, given the recent interest rate cuts and proposed further cuts from the RBA.
New data from Mortgage Choice shows demand for fixed rate home loans fell in July.
Only 14 per cent of all home loans written were for fixed rate loans.
Mortgage Choice chief executive officer Susan Mitchell said demand for fixed rate loans is the lowest they've seen all year. 
"Despite some very attractive fixed-rate home loan pricing, borrowers across the country are reluctant to fix.    “Last year, a low fixed rate would have been under 4% p.a., but today we are seeing rates starting with a two, which is certainly the lowest fixed rates we have seen in recent history. 
The state by state breakdown of fixed and variable mortgage. To enlarge, click here.
<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/2019/8/22/Variable%20rate%20by%20state%20Mortgage%20Choice.jpg" alt=""> Source: Mortgage Choice
“It’s not entirely surprising that borrowers are choosing to keep their options open by opting for variable rate home loans. The reality is, the opportunity to save on repayments if the Reserve Bank cuts the cash rate is too good to pass up.
The RBA suggested at its August meeting, as they have done for a number of months, that they would consider a further easing if necessary to support sustainable growth in the economy.
Reacting to a dwindling in fixed home loan mortgages are the St George, Bank of Melbourne and BankSA, who have slashed their fixed rates by up to 1.40 per cent.
St George and Bank of Melbourne are offering up to five year fixed rates as low as 2.94 per cent, for customers with a deposit of 40 per cent or more, and 2.99 per cent for customers with a deposit of 20 per cent or more.
The two are now offering the lowest four and five year fixed rates, according to RateCity.com.au data.
A total of 75 lenders have cut fixed rates since the most recent RBA cut on 2 July 2019, the biggest being a cut of 1.60 per cent.
RateCity research director Sally Tindall said the banks were gearing up for long-term low rates.
“The banks are falling over each other to claim the title of having the lowest fixed rate on the market,” she said.
“Fixed rates as low as 2.94 per cent will prompt some customers to review their own rate and potentially switch lenders.
“It’s unusual to see some of the largest banks offering some of the lowest fixed rates in the country.
“The idea of fixing your rate under three per cent until August 2024 is a foreign concept to a lot of Australian mortgage holders. While these low fixed rates may seem like sensational deals, we’re likely to see more cuts. 
“The latest ABS data shows the percentage of people opting to fix has fallen to just 14.1 per cent, which suggests customers are holding out to see how low rates go,” she said.
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Lenders cutting fixed rates to sub three per cent as demand wanes

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EXPERT OBSERVER
Mortgage rates in Australia have fallen sharply from around 8 to 10 per cent since 2008.
<div>So it's reasonable to expect that housing rental yields would be considerably lower too.</div>
<div> </div>
<div>At the nadir, though, gross rental yields across the combined capital cities had sunk to below 3½ per cent, which is clearly far too low (and that's a gross figure). </div>
<div> </div>
<div>Here's an interesting chart from CoreLogic today, showing combined capital city yields tracking back quite quickly towards a rather more sustainable 4 per cent. </div>
<div> </div>
<div>Sydney has done some of that lifting, but with more pressure on its rental market the main driver has been Melbourne, with gross rental yields rising from near-record lows of 3.1 per cent in February 2018 to 3.6 per cent. </div>
<div> </div>
<div>Click <a href="https://2.bp.blogspot.com/-e8HYLNBoDoE/XHh_JygJXNI/AAAAAAAAuxY/aMPH6jBgzuQpI94mLAipxCfUG5l1kkXGACLcBGAs/s640/Yields.jpg" target="_blank">here</a> to enlarge</div>
<div> </div>
<div><img src="https://2.bp.blogspot.com/-e8HYLNBoDoE/XHh_JygJXNI/AAAAAAAAuxY/aMPH6jBgzuQpI94mLAipxCfUG5l1kkXGACLcBGAs/s640/Yields.jpg" width="640" height="414" data-original-height="538" data-original-width="829"></div>
 
<div>(Source: CoreLogic)</div>
<div> </div>
<div>There has been a wide variation of results across markets, with demand largely coming from the bottom up thanks to first home buyer stimulus, but the upper quartile of the market seeing far fewer transactions on tight lending standards. Negative equity hasn't featured too much in Australian housing in recent years, but with tighter credit holding down markets in Perth, Darwin, and some other regions, this is starting to become a factor of concern, especially as some borrowers are forced off interest-only mortgages. Noted CoreLogic on the second wind for the Perth and Darwin downturn: 'This renewed downwards pressure on home values coincides with a softening in labour market conditions, with weaker housing market results likely compounded by credit scarcity.'</div>
<div>
 Perth's median price has fallen by about 20 per cent over a downturn now spanning more than 4½ years. <div><img src="https://1.bp.blogspot.com/-5wxI9592SwI/XHjwAsnWzuI/AAAAAAAAuyM/074mg4IqR4o3KHA-SG1XvyuEwjozIgyxQCLcBGAs/s640/Perth.jpg" width="640" height="408" data-original-height="842" data-original-width="1316"></div>
 <div>(Source: CoreLogic)</div>
<div> </div>
<div>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>.</div>
</div>
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pwargent-M4siyDbqQY

Rental property yields recovering: Pete Wargent

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Thousands of potential Sydney upsizing vendors are not going anywhere this spring, being trapped in their current home with their current financing.
All due to tighter home loan lending restrictions that leaves them unable to negotiate the required funds to upsize.
Indeed many of these home owners would not be able to get the same existing loan amount if they tried, and not just because of weak income growth.
Stricter lending rules are a good thing, especially at a time of historically low interest rates, but they will continue to be a major brake on buyer potential to bid for property.
This means fewer offers from finance approved buyers which means the galloping price growth seen during the five year boom just won't happen.
The size of the imminent spring price falls will depend, in part, on just whether downsizing vendors seek to sell at a discount to recent values.
I think sales activity levels will remain subdued.
With very high household debt, these stricter lending criteria were introduced for good reason by the regulatory authorities over the past four years.
The unexpected royal commission into finance has extenuated the tightening by lenders.
Gone is the one size fits all approach which saw inflated amounts being lent to desirous home buyers.
Lenders now look thoroughly at the applicant's income and expenses - everything from utility bills, childcare, Netflix subscriptions, education, insurance, telephone and internet, groceries and medical, health and disability requirements. Even beauty treatments.
The regulator also now expects lenders to discount uncertain or variable income by at least 20%, including any rental income for investment properties.
Mozo finance commentator Steve Jovcevski suggests stay put home owners are also struggling to refinance their way into better mortgages. 
He nominated a couple with one dependent and a dual income of $120,000 who purchased a home in 2013, borrowing $800,000.
Their $4,295 monthly repayments leaves them $3,680 to manage their other expenses.
Fast forward five years, the couple now has a $129,000 combined salary and they've had another child.
They're still paying the same amount, have $734,600 left to pay off, and would like to refinance to closer to the 3.8% on offer rather than staying with their current 5% rate.
When they secured their 2013 loan, the bank used a poverty line index to estimate their costs ($3,276 per month) with a buffer of 1.5% to ensure the couple could meet their repayments if rates increase.
The bank now defines their actual expenses as being $4000 per month, and applies a 2% buffer.
Under the new criteria the refinancing couple can only borrow $680,000.
These home owners have been dubbed 'mortgage prisoners', unable to move to a more competitive mortgage deal, even if they’ve met every repayment, because they would not pass new affordability tests.
The banks would like to continue their loan growth, but for the penalties being handed out for breaches against their responsible lending obligations.
The best poised spring buyers are likely stumping up a near 20% deposit.
And have done a through spring clean of their finances, including getting rid of excess credit cards, which are a negative on their credit ranking.
Find a good mortgage broker too.
This article first appeared in The Daily Telegraph. 
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jchancellor-FAypfDUnLy

New financing restrictions leading to 'mortgage prisoners'

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Westpac has cut its rates, and promised longer discounts.
The nation's second-largest lender has cut lending rates by up to 110 basis points in an aggressive bid for new borrowers.
Its new loan packages also aim to lock-in new borrowers with lucrative discounts of up to 80 basis points for the life of the loan. A basis point is 0.01 percentage point.
Fairfax Media advised the new Westpac rates will also apply for new lenders for Bank of Melbourne, BankSA and St George Bank.
The offer will replace the existing two-year introductory discounts with a life of loan discount for principal and interest and interest only borrowers. The new flexi first option home loan, with its basic home loan product with a headline rate of 3.98 per cent, will now include a 75 basis point discount for the life of the loan.
The flexi first principal and interest option for investors, which has a headline rate of 4.48 per cent, includes an 80 basis point discount for the life of the loan.
The interest only version has a headline rate of 5.08 per cent and a 71 basis point life of loan discount.
The offer excludes owner occupied loans with interest only repayments or to switches within the Westpac Group.
Westpac is set to advise the new first time buyer flexi first option home loan borrowers will receive an 85 basis point discount for the first five years and then roll onto a 75 basis point discount for the life of the loan. The headline rate is 3.88 per cent. First time investors will receive a 110 basis point discount for the first five years and then revert to a 80 per cent discount for the loan's life.
Its headline rate is 4.18 per cent.
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Westpac cuts new loan rates, and promises longer discounts

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EXPERT OBSERVER
Over the past few weeks three of the four major banks in Australia have announced that they are going to be increasing variable mortgage rates. 
While there has been a lot of adjustments to mortgage rates over recent years, the big difference with the latest announcement is that the higher mortgage rates are going to affect owner occupiers. 
Most of the previous mortgage rate changes announced by the major banks have only affected investors and those with interest only mortgages.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH1.jpg" target="_blank">to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/7/KUSH1.jpg" alt="">
Many of the smaller regional banks have pushed mortgage rates for owner occupiers higher over recent months citing higher short-term funding costs. 
Although until now the major banks had resisted making an adjustment to mortgage rates it seems they too have had their hand forced by higher funding costs.  The above chart highlights the cost of short-term funding to banks (the three-month bank bill swap rate) and it clearly shows that the cost of short-term funding has increased.  It currently sits at 2.26% compared to the official cash rate which remains unchanged at 1.5% since August 2016.
Click here <a href="https://www.propertyobserver.com.au/images/2018/9/7/KUSH2.jpg" target="_blank">to enlarge</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/9/7/KUSH2.jpg" alt="">
Short-term funding costs have certainly risen recently however, it is also interesting to look at the composition of funding to Australia’s banks. Short-term funding is not an insignificant part of the funding profile (slightly more than 20%), although the share of funding from short-term debt has fallen over recent years as domestic deposits have increased. 
There are other ways to handle higher short-term funding costs rather than lifting mortgage rates but that would likely mean cutting dividends which lenders seem reluctant to want to do or reducing deposit interest rates which would likely see a further reduction in the primary funding source: domestic deposits.
From a housing market perspective the timing of the announcement of higher interest rates is an interesting one. 
After many years of strong value growth, Sydney and Melbourne housing is now well embedded in a downturn.  Tighter credit conditions, higher mortgage rates for investors and interest-only borrowers and reduced affordability have already led to the falls of -5.6% from the peak in Sydney and -3.5% from their peak in Melbourne.  This has occurred so far without higher interest rates for owner occupiers paying off principal and interest however, that is about to change.
The timing of the hikes to mortgage rates is also interesting in that it has been announced right at the beginning of the Spring Selling Season.  Although spring, in my mind and according to the data, is somewhat overhyped as a good time to sell, more stock does typically become available for sale over the period and buying activity typically increases. 
The other usual occurrence at the beginning of spring is that lenders offer enticing mortgage rates to the market to jostle for market share.  By contrast this year, major lenders are announcing higher mortgage rates.
Higher mortgage rates have already driven a slowing of demand for investors over the past year.  Although the magnitude of the mortgage rate increases announced is fairly small (around 15 basis points by each lender) it is likely that the higher mortgage rates will impact on housing market sentiment. Furthermore it may end up further exacerbating the declines which are already occurring in Sydney, Melbourne, Perth and Darwin and the slowing of value growth being experienced elsewhere. 
Overall this move seems likely to lead to a continuation of the currently weak housing market conditions over the coming months and may weaken the market further.  From the lenders perspective, clearly they realise that the housing downturn is becoming entrenched (particularly in Perth and Darwin, but more recently in Sydney and Melbourne) and they are doing what they can to maintain profitability in the face of lower mortgage volumes.
CAMERON KUSHER is a property research analyst for CoreLogic
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Higher mortgage rates likely to prolong the housing market weakness: CoreLogic

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Online retailer Kogan is set to launch a range of home loan products.
The new product, which will be called Kogan Money, will partner with Adelaide Bank and Pepper to offer the loans.
David Shafer, executive director at Kogan.com, said the partnerships with Adelaide Bank and Pepper to launch Kogan Money Home Loans will help Aussie homeowners.
"Kogan is excited to partner with Adelaide Bank and Pepper to enable us to offer Aussies a range of competitively price home loans available online," Shafer said.
“Adelaide Bank has a long history of partnering with innovative brands and businesses that bring greater choice and diversity to consumers."
“Pepper is the leader in alternative lending in Australia and, since 2001, has been helping Aussies who may not tick all the traditional boxes for home loans to get financing.
“With well over a million active customers, Kogan.com is proud to be able to form partnerships like these that form a genuine win-win-win for both Adelaide Bank and Pepper, for Kogan’s shareholders, and most importantly for Kogan.com customers.”
Kogan has nearly $1.4 million customers, growing by 45 percent from last year.
Last month they posted a 277 percent rise in full year profit to $14.11 million, up more than $10 million from last year. Revenue soared by 42 percent to $412.31 million.
Kogan's announcement highlighted these key areas of the agreement.
- Kogan Money Home Loans will focus on offering competitive home loan products to homeowners and investors.
- Adelaide Bank will make available competitively priced conforming, or prime, home loans
- Pepper will make available competitive near prime, non-conforming or specialist, home loans.
- Branding, marketing and customer acquisition will be provided by Kogan.com
- Kogan.com will earn fees on all home loans.
 
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Kogan launches home loan products

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EXPERT OBSERVER
Borrowers continue to choose variable rate home loan products as demand for fixed rate home loans fell for the eigth consecutive month.
Variable rate home loans accounted for over 82% of all home loans written throughout May 2018 – up over 2% from the month prior, and almost 7% higher than the 12-month average. This trend will continue as borrowers develop apathy towards the Reserve Bank of Australia’s stagnant cash rate.   Indeed, we continue to see borrowers opt for the flexible nature of variable rate home loans which may offer a redraw facility, offset accounts and the ability to make extra repayments. These features are not typically associated with fixed rate loans.
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/choice1.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/6/14/choice1.jpg" alt=""> While a fixed rate product provides repayment certainty, variable home loan rates have been relatively stable for a prolonged period of time giving borrowers little incentive to fix. This week’s Housing Finance data from the Australian Bureau of Statistics found that 52,116 home loans were approved throughout April, down 1.4% from the previous month. Unsurprisingly, the value of investment loans dipped somewhat, falling 0.9% to $10.7 billion in April, which could reflect tighter lending standards and serviceability policies. However, May data may show an increase in investment loans following APRA lifting the cap on investor loan growth at the end of April. ABS data also shows the value of owner-occupied housing loans in April rose just 0.2% to $20.9 billion.
Click here <a href="https://www.propertyobserver.com.au/images/2018/6/14/choice2.jpg" target="_blank">to enlarge.</a>
<img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/6/14/choice2.jpg" alt="">   The data also showed, in original terms, the number of first home buyer commitments as a percentage of total owner-occupied housing finance commitments rose to 17.6% in April 2018 from 13.7% in January 2018.
This increase is significant and first home buyers seem to be propping up the market.     Looking ahead, I expect to see a combination of factors, such as historically low interest rates, easing property prices and access to FHOGs, to maintain home loan demand - whether variable or fixed - but preparation is key.   With increased scrutiny on lending practices, buyers looking to secure housing finance should take practical steps to improve their serviceability and speak to their local mortgage broker, who can help take the guesswork out of the process and find the right financial product for their personal circumstances.
Susan Mitchell is the CEO of Mortgage Choice.
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Borrowers choose flexibility over certainty: Mortgage Choice

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ME Bank has apologised to customers after 2,500 mortgagors were affected by a “system error” that led to borrowers being charged a higher interest rate without adequate notice.
On 17 April 2018, Members Equity Bank (ME) announced that it was raising its variable home loan interest rates, The Adviser website noted.
Under the changes, ME’s standard variable rate for owner-occupier principal and interest (P&amp;I) borrowers with an loan-to-value ratio (LVR) of 80% or less increased by 6 basis points to 5.09% p.a. (comparison rate of 5.11% per annum).
Variable rates for investor principal and interest borrowers increased by 11 basis points, while rates for interest-only borrowers increased by 16 basis points.
According to ME CEO Jamie McPhee, the changes were brought in as a result of increasing funding and compliance costs.
While the bank did publicise the rate change two days before it was due to take effect, Martin North at the Digital Finance Analytics website suggested usual practice is for a mortgagor to be notified 20 days in advance of an interest rate change.
According to the bank, however, a “system error” led to customers being charged the new rates on 19 April without the adequate time warning.
A ME spokesperson said that the “proper process” is for ME to write to customers to notify them their repayments are going up “but not to increase their repayments until at least 20 days after they get that notification”.
“Unfortunately on this occasion, due to a system error, we increased the home loan repayments immediately for about 2,500 owner-occupier and investor customers — about 1% of our home loan accounts.”
The bank reportedly detected the “error” the following day (20 April) and “immediately intervened to ensure no additional customers were affected”, the spokesperson said.
“We are clearly very sorry for the error and the impact it has had on customers,” the CEO said.
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