<p>The residential transformation of St Kilda Road is set to continue into with more new apartment plans for the sought-after boulevard.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p data-end="345" data-start="110">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.</p>

<p data-end="689" data-start="347">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.</p>

<p data-end="689" data-start="347">Dexus recently secured approval for its slice of St Kilda Road, while Gurner also has approved plans for the precinct.</p>


Joel Robinson

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

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>“Our target for this exceptional development is local and overseas buyers, including first-home buyers, downsizers and investors,” Choong said.</p>

<p>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.</p>

<p>“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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>The proposal also includes a commitment for 10 per cent of residential floor space to be allocated toward affordable housing through a monetary contribution.</p>

<p>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.</p>

<p><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" /></p>

<p>“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.</p>

<p>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.</p>

<p>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.</p>

<p>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>.</p>

<p><em>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></em></p>


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

<p><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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.”</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>

<p><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" /></p>

<p>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.</p>

<p>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.</p>

<p>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.</p>


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

<p>Bottega House has completed settlement of a landmark riverfront site in Macquarie Street, St Lucia, representing its first major Brisbane development.&nbsp;</p>

<p>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;</p>

<p>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;</p>

<p>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;</p>

<p>Exclusive sales for the project will be led by Keenan &amp; Byrne, ahead of an anticipated launch later this year.&nbsp;</p>

<p>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;</p>

<p>“This is an incredibly rare riverfront opportunity and one we have approached with a long-term perspective,” Malloch said.&nbsp;</p>

<p>“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."</p>

<p>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;</p>

<p>"Demand is expected to be strong given the scarcity of premium riverfront opportunities of this nature within Brisbane’s inner-west."&nbsp;</p>


Bottega House secures landmark riverfront site in St Lucia 

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<p data-end="157" data-start="0">The arrival of the first piling rig officially marks the commencement of construction at SIERA’s new beachside apartment development, Exhale, in Northcliffe.</p>

<p data-end="459" data-start="159"><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.</p>

<p data-end="459" data-start="159">[smartcode_project:default project_id=112661 project_image_fid=359603]</p>

<p data-end="651" data-start="461"><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.</p>

<p data-end="950" data-start="653">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.</p>

<p data-end="1081" data-start="952">“The façade was designed to maximise panoramic coastal views while creating a distinctive architectural identity,” Thompson said.</p>

<p data-end="1081" data-start="952">[smartcode_project:default project_id=112661 project_image_fid=355935]</p>

<p data-end="1307" data-start="1083">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.</p>

<p data-end="1522" data-start="1309">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.</p>

<p data-end="1522" data-start="1309">[smartcode_project:default project_id=112661 project_image_fid=361052]</p>

<p data-end="1714" data-start="1524">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.</p>

<p data-end="1945" data-start="1716">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.</p>

<p data-end="1945" data-start="1716">[smartcode_project:default project_id=112661 project_image_fid=359607]</p>

<p data-end="2220" data-is-last-node="" data-is-only-node="" data-start="1947">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.</p>
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<p>[smartcode_project_cta:default project_id=112661]</p>


SIERA kicks off construction at Northcliffe tower Exhale

Mortgage Rate

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<p>Australia’s biggest home loan lender, Commonwealth Bank, has scaled back the discounts offered on new home loans.</p>
<p>The <em>Australian Broker</em> website says it did so as it faces increased funding pressures.</p>
<p>The website obtained a memo sent to the broking industry in which the major lender announced it will be reducing discounts by up to 15 basis points on new Mortgage Advantage Packaged Owner Occupied and Investment Home Loan applications.</p>
<p>The bank advised it was not raising or decreasing its headline rates.</p>
<p>The changes only related to a reduction in discounts on a select number of variable rate home and investment home loan products.</p>
<p>The discounts were also being reduced by 8 basis points on its Three-Year Special Rate Saver, Extra Life of Loan and Extra Introductory Rate products for new owner occupied and investment home loan applications. </p>
<p>The reduced discount rates apply to new home loan applications for these products from 26 August 2016.</p>
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jchancellor-FAypfDUnLy

CommBank cuts is discount mortgage offerings

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<p>GUEST OBSERVER</p>
<p>If you’ve owned your home for a number of years, it’s likely you’ve racked up some impressive gains in home equity – that’s the difference between the property’s market value and the balance of your home loan.</p>
<p>This means there’s a whole stash of cash just waiting to be tapped into either through a home loan refinance or a loan top up. While it’s tempting to spend up big, treating your home as an ATM isn’t healthy. We share some smart, sensible, and downright frivolous ways to use your home equity.</p>
<p><strong>Smart moves</strong></p>
<p>Use equity to renovate your existing home – Quality home improvements can add to your lifestyle; save on the cost and hassle of relocating to a new home, and best of all the renovations can increase the market value of your home.</p>
<p>Invest in a rental property – Using your home to grow wealth? Now that’s a smart move. Tapping into equity may even mean you don’t need to save for a cash deposit.</p>
<p><strong>Sensible – with strings attached</strong></p>
<p>Consolidating personal debt – If you’re juggling a few credit cards, a personal loan and maybe a car loan, consolidating the lot into your home loan can streamline your finances. It means just one monthly repayment to manage, and as home loans usually have a lower rate, you’ll save on interest costs.</p>
<p>But – and it’s a big but – you could be turning short term debts into a long term debt and end up paying more than necessary in long term interest. Use the savings on monthly repayments to make extra home loan repayments and keep a lid on interest costs while you whittle away the loan.</p>
<p>ME’s 10<sup>th</sup> biannual <em>Household Financial Comfort Report </em>shows that more households ‘paying off or owning a home’ reported to be drawing on their home equity to ‘pay off debt’ and ‘to make ends meet’ during the first half of 2016.</p>
<p><strong>Think twice</strong> </p>
<p>Here today, gone tomorrow purchases – using home equity to fund a round the world vacation, a new designer wardrobe, or any purchase with no real lasting value calls for some serious soul searching. Not only will you be whittling away precious equity, you are adding the cost of long term interest to the purchases.  </p>
<p>The time may come when you really need that equity for must-haves rather than luxuries. So think twice and weigh up other finance options like, say, a personal loan, which will allow you to pay off big ticket purchases buys in just a few years.</p>
<p><em><span lang="EN-US">Patrick Nolan is head of home loans for industry super fund-owned bank ME. You can contact Patrick <a href="https://www.mebank.com.au/personal/home-loans/home-loans/" target="_blank">here</a>.</span></em> </p>
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The good, the bad and the ugly of dipping into home equity: Patrick Nolan

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<p><img src="https://counter.theconversation.edu.au/content/63512/count.gif" alt="The Conversation" width="1" height="1"></p>
<p>GUEST OBSERVER</p>
<p>The big, but completely unsurprising, news this week was the Reserve Bank of Australia cutting the cash rate to an historic low 1.50 percent.</p>
<p>As Vital Signs has been saying for some time, this month was a likely candidate for a cut, once second-quarter inflation was confirmed to be disturbingly low – as it was last week.</p>
<p><a href="/images/2016/08/05/Screen%20Shot%202016-08-05%20at%208.48.39%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/08/05/Screen%20Shot%202016-08-05%20at%208.48.39%20AM.png" alt=""></p>
<p>Australia is faced with extremely low inflation, low effective growth, a squishy labour market, and prudential regulation measures enacted last year partially reigning in the housing market. Given this, it was almost inevitable Glenn Stevens would engineer another cut.</p>
<p>But there were some other figures of note this week. Australian retail trade rose 0.1 percent in June, compared to market expectations of 0.3 percent – further underlining the weak domestic economy.</p>
<p>Adding to that story of gloom, private sector building approvals were down in June, both in absolute terms and relative to expectations. House approvals fell 2.3 percent implying a 5.9 percent drop compared to a year earlier. Apartment approvals fell 2.4 percent, implying a 4.8 percent drop year-on-year.</p>
<p>Chinese manufacturing data was mixed – or perhaps just confusing – with the official Purchasing Managers' Index (PMI) down to 49.9, from 50.0 the month before. Recall that 50 is the break even between expansion and contraction. Meanwhile, the private Caixin index came in at 50.6 in July, up from 48.6 in June. This was the first jump above 50 since February 2015.</p>
<p>Why the difference? The likely answer is that the official government PMI is more relevant for large, state-owned enterprises, while the Caixin index is a better gauge of smaller and medium-size companies.</p>
<p>In the US, payroll processing firm ADP’s latest data revealed a 179,000 increase in non-farm payrolls in July. This was essentially confirmation of the official Bureau of Labor Statistics figures (though on a slightly different scale) of strong job creation in the US. This is further evidence of the likelihood of a rise in official rates by the Fed in the next month or two.</p>
<p>Now, back to Australian interest rates. Lower rates only have a potential stimulatory effect if they are passed on to borrowers by (largely) the big 4 banks. About half of Tuesday’s cut was passed on – with the rest “kept” for bank shareholders.</p>
<p>On Thursday afternoon, Prime Minister Malcolm Turnbull and Treasurer Scott Morrison announced at a press conference that the big 4 banks would have to front the House Economics Committee annually to “explain” their interest rate decisions.</p>
<p>Populist nonsense? Interventionist joke? Meaningless charade? Those are all phrases that come to mind. Turnbull grinned like a Cheshire cat as he described it as a “great opportunity” for the banks. Ho, ho, ho.</p>
<p>I’m no apologist for the banks, but they do have a legitimate argument that their funding costs have been rising. The US money market funds are much harder to tap as they have become significantly more conservative after the Primary Reserve Fund “broke the buck<a href="https://www.investopedia.com/terms/b/broke-the-buck.asp">”</a> during the financial crisis. Deposits now make up about 60% of bank funding, compared to 40 percent in 2007-08 – and those rates have been rising.</p>
<p>Nonetheless, the banks do have a good deal of market power. It’s legitimate for them to use that, unless they are violating competition law. That’s a matter for the Australian Competition and Consumer Commission, not the House Economics Committee.</p>
<p>One final note. To all those people who keep saying “rates have been cut a lot and it hasn’t done any good”: please search my name and the word “counterfactual”.</p>
<p><em><span class="fn author-name">Richard Holden is p</span>rofessor of economics, UNSW Australia and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">here</a>.</em></p>
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Vital signs: only the banks know

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<p>SPONSORED POST</p>
<p>Property owners can claim a tax deduction for interest paid on a loan used to buy an investment property, but not on a mortgage used to buy their own home.</p>
<p>Boutique lender CSC Home Loans has developed Mortgage Down to help investors maximise tax deductions and minimise non-tax deductable interest by optimising the way their property debt is structured.</p>
<p>“Mortgage Down allows the property investor to pay off their home loan sooner and create equity in their own home faster. This gives the property owner more opportunity to create additional investments,” says Mortgage Down group marketing director Venn Williams.</p>
<p>Under a tax ruling from the Australian Taxation Office PR2015/2, the loan structure allows investors to reduce the interest rate on their non-deductable principal and interest home loan and increase the interest rate on their deductable interest-only investment loan.</p>
<p>“If you own your own home and have an investment property, then you could qualify for a home loan rate beginning with a 2,” Williams says.</p>
<p>The average interest rate for a standard variable owner-occupied mortgage from a bank was 5.4 percent in May 2016, according to the Reserve Bank of Australia.</p>
<p>A 1 percent reduction in the interest rate charged on a $250,000 home loan taken over 25 years would save the borrower $43,468 over loan’s term and cut the time to repay the debt by 4 years. A 2 percent drop in the rate would save $84,640 and let the borrower repay the loan 6 and a half years sooner.</p>
<p>The higher interest rate charged on the investment loan means the investor may be able to claim a larger tax deduction.</p>
<p>The innovative loan structure is available to Australian residents who own their home and either already have an investment property or are about to buy one.</p>
<p>The product offers other features such as an o set account, redraw facilities and debit cards. Usual borrowing conditions apply. </p>
<p><span>To download a free ebook on new financial year taxation tips for property investors,</span><a href="http://propertyobserver.com.au/forward-planning/tools/ebooks-and-webinars/55208-new-financial-year-tax-planning-tips-for-property-investors" target="_blank"> click here</a><span>.</span></p>
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Optimise the way your property debt is structured

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<p><span>The tougher lending criteria being imposed by the major banks, particularly in regards to living expenses, is silly and irrelevant, the former CEO of the Australian Institute of Professional Brokers has argued.</span></p>
<p><span>The tougher rules are hurting prime borrowers, said founder and owner of Melbourne-based Universal Wealth Management Maria Rigoni, speaking to MPA's sister publication Australian Broker.</span></p>
<p><span>“Lending criteria is getting harder and harder so really good, credit-worthy borrowers are being declined loans on the most simple and silly of reasons.</span></p>
<p><span>“What is happening is people are finding it harder and harder to borrow or refinance. You might have all these cheaper options out there, but with the way that [the banks] are squeezing down how much people can borrow, consumers are being stuck in high interest rate loans and you can’t move.”<br><br> Rigoni’s argument comes just after ANZ announced in a note to mortgage brokers that it would change the way minimum living expenses were calculated when it decides on home loans.</span></p>
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Broker slams major banks over lending criteria

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<p>Home loan consumers should be cautious of “phantom rates”, the head of major mortgage group 1300HomeLoan, John Kolenda has warned.</p>
<p>He has questioned the sustainability of some rate offers as lenders have been unfairly baiting consumers with “aggressively priced” mortgage products which turn out not to be true. </p>
<p>“Some lenders are aggressively pricing products to lure customers and boost their market share and then when they are signed up they increase their mortgage rates independently of any interest rate decisions by the Reserve Bank of Australia (RBA),” Kolenda said.<br><br>Kolenda says lenders are blaming cost of funding issues and changes to regulations for non-delivery. <br><br>“We also had the out of cycle raises on home loan rates in response to rising funding costs and the additional costs coming in for the additional compliance and regulatory increase on reserves that the banks will have to have in place by end of June this year.<br><br>“But the bank wholesale funding costs did not rise enough to warrant the types of rate increases they imposed.<br><br>“I think there was an element of a profit grab done under the umbrella of higher regulatory and funding costs at the time when those decisions were made.”<br><br>Kolenda pointed to the bond market where NAB recently estimated rates over the bank bill swap rate (BBSW) had increased by at least 30 basis points.<br><br>“This again raises serious concerns as to how lenders will react when it comes to their existing customers, especially when lenders are offering rates as low as 3.69 per cent for new business,” he said.<br><br>“We question the sustainability of that rate offer with the back drop of current market conditions.”</p>
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John Kolenda warns on phantom mortgage home loan rates

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<p><span>Fixed-rate mortgages accounted for more than one in every five home loans in February, despite a small drop in demand, Mortgage Choice advised.</span></p>
<p><span>Fixed-rate home loans accounted for 22.28% of all loans written throughout February – just 1.34 percent down from the 23.62 percent from the previous month, according to the mortgage broker’s latest national home loan approval data. Mortgage Choice based its research on new borrowers who sourced a loan through it in February.</span></p>
<p><span>Chief executive John Flavell said while fixed rates saw a small drop in demand throughout February, they continue to prove a popular home loan product choice for many Australians.</span></p>
<p><span>“We are still seeing quite a bit of volatility in the interest rate market, causing many borrowers to opt for the security of a fixed rate home loan,” he said, while adding that going forward, he wouldn’t be surprised to see demand for fixed rate products taper off.</span></p>
<p><span>“Given the Reserve Bank of Australia has indicated that they won’t hesitate to cut rates again if the need arises, borrowers may be encouraged to take out variable rate home loans and take full advantage of the current low interest environment,” he said.</span></p>
<p><span>Across the country, demand for fixed rate products was highest in New South Wales, accounting for 28.42 percent of all home loans written in February.</span></p>
<p><span>Queensland and South Australia were not far behind, with fixed-rate demand at  23.64 percent and 17.29 percent respectively.</span></p>
<p><span>Meanwhile, Victoria and Western Australia saw lower demand for fixed rates, with only 16.92 percent and 13.23 percent of all loans written in each state respectively.</span></p>
<p><span>Overall, variable rate home loans remained the most popular with borrowers, with 77.72 percent opting for a variable rate mortgage in February.</span></p>
<p><span>“The property market may still be showing signs of volatility, but the reality is that interest rates continue to sit at all-time lows. So, regardless of whether a borrower takes on a variable or fixed rate mortgage they can rest assured that they’re securing a great deal,” Flavell said.</span></p>
<p>Property Observer looked up the best fixed rate products on <a href="https://mozo.com.au/home-loans/fixed-rate" target="_blank">www.mozo.com.au</a> and found interest rates ranging from 3.79% to 4.44% on a period of one to three years.</p>
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Fixed rate home loans dip in February, says Mortgage Choice

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<p><span style="line-height: 1.3em;">Fixed rate home loans accounted for nearly a quarter of all home loans in Australia in January, reflecting the uncertain interest rate environment, says lending broker Mortgage Choice.</span></p>
<p>Demand for fixed rate home loans has hit its highest level in more than 12 months, national home loan approval data from ASX-listed Mortgage Choice shows.</p>
<p>Fixed rate home loans accounted for 23.62% of all loans written in January, up from 19.44% in the previous month. </p>
<p>“Home loan interest rates are incredibly volatile at the moment. Consumers are unsure whether or not Australia’s lending institutions are going to raise or cut their home loan interest rates,” said Mortgage Choice chief executive officer John Flavell.</p>
<p>“With that in mind, it is not surprising to see a growing number of borrowers looking for some safety and security around their home loan repayments in the form of a fixed rate mortgage.”</p>
<p>Flavell said the last time demand for fixed rate home loans was this high was back in November 2014 when there was a similar level of complexity and confusion around interest rates. </p>
<p>“Over the coming few months, I wouldn’t be surprised to see demand for fixed rates continue to increase slightly.”</p>
<p>Queensland recorded the strongest demand for fixed rate products, with this type of loan accounting for 31.12% of all home loans written throughout January. </p>
<p>New South Wales and Western Australia were next, with 24.07% and 23.15% respectively. </p>
<p>Victoria and South Australia were at the other end of the spectrum, with fixed rate products making up 13.09% and 20.03% of all loans written in each state respectively. </p>
<p>But while demand for fixed rate products across Australia grew in January, variable rate home loans – specifically ongoing discount mortgages – remained most popular with borrowers. </p>
<p>Across Australia, 49.53% of borrowers took out an ongoing discount variable rate home loan – down from 52.07% in the previous month.</p>
<p><a href="/images/2016/02/16/Screen%20Shot%202016-02-16%20at%208.42.50%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2016/02/16/Screen%20Shot%202016-02-16%20at%208.42.50%20AM.png" alt=""> </p>
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One in four home loans are fixed: Mortgage Choice 

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<div>The latest AMP.NATSEM Household Debt report showed that the average household debt in Australia has increased to a new high of $245,000, continuing a prolonged run-up which has seen the average debt per household increase by a factor four since 1988, up from $60,000.</div>
<div> </div>
<div>While the bulk of the rise in mortgage debt has been driven by 30 to 50 year olds, the over 65s cohort also accounts for a fair proportion of the increase in household debt, with more Australians than ever before taking liabilities into retirement.</div>
<div> </div>
<div>Despite this, the latest Australian National Accounts implied that interest serviceability has continued to become easier.</div>
<div> </div>
<div>There are a thousand possible ways to measure this, nine of which is satisfactory: the blue points on the chart below denote interest paid on dwellings as a percentage of total employee compensation minus income tax, while the red points show total interest paid inclusive of consumer debt (excluding unincorporated enterprises) as a percentage of gross household income.</div>
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<div><a href="/images/2015/12/14/Interest.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/Interest.jpg" alt=""></div>
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<div>
<div>You could spend forever debating what should or should not be included in household income (imputed interest on dwellings, benefits receivable etc.) or backed out of gross household income (e.g. other taxes, transfers, insurance premiums etc.) but the results tend to be broadly similar. </div>
<div> </div>
<div>Of course the results generally appear to be "too low" due to the significant number of debt free households. The important thing to note is the trend, which shows that while the mining boom was in full swing the aggregate mortgage interest repayment burden was tending towards excruciating levels by September 2008 (when the official cash rate was still as high as 7 per cent). but since that time serviceability has become relatively speaking very easy.</div>
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<div><strong><span style="text-decoration: underline;">Buffers at record highs</span></strong></div>
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<div>The Reserve Bank of Australia (RBA) has noted in its Financial Stability Review that indicators of household financial stress are presently low, with households pushing ahead on repayments to the extent that aggregate mortgage buffers - as measured by balances in offset and redraw facilities - remain at around 16 per cent of outstanding loan balances, or the equivalent of well over two years of scheduled repayments at current interest rates. </div>
<div> </div>
<div><a href="/images/2015/12/14/Buffers.gif" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/Buffers.gif" alt=""></div>
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<div>Loan arrears and mortage delinquencies data are also tracking at historically low levels, with favourable delinquency developments having cascaded lower since the 2008 book year. </div>
<div> </div>
<div>A crude comparison the aggregate interest paid to the total stock of outstanding housing credit implies that the average mortgage rate is well under 5 per cent, suggesting in turn that Australians have taken advantage of the very generous fixed rates available through 2015.</div>
<br><div class="separator"> </div>
<strong><span style="text-decoration: underline;">The outlook</span></strong><br><br><div>The first chart above shows the sensitivity of household finances, and especially mortgage repayments, to the unpredictable changes in interest rates. Mortgage repayments are on average clearly very affordable now, but may not be so if interest rates rise sharply.</div>
<div> </div>
<div>The AMP.NATSEM report found that the highest typical debt repayment burdens are to be found in the outer suburbs of our capital cities.</div>
<div> </div>
<div>If interest rates were to rise by 2.5 percentage points - essentially the equivalent of ten interest rate hikes - then the most indebted households could see mortgage repayments rise from 42 per cent of household income to a stress-inducing 58 per cent, while perhaps unsurprisingly the most indebted low income households would be the hardest hit of all.</div>
<div> </div>
<div>An increase in interest rates of 2.5 percentage points would also see repayments for the typical first homebuyer rising from 21 per cent to 30 per cent of household income, or a shade over an extra $8,000 per year.</div>
<div> </div>
<div>There are few indications that the official cash rate is set to move materially higher any time soon, although shifts in capital requirements and funding costs may be another matter. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Fragile markets</span></strong></div>
<div> </div>
<div>Unemployment rates have generally been trending down since January 2015, although unemployment rates in Western Australia and the Australian Capital Territory are in an uptrend, and the housing market in Darwin looks exceptionally fragile.</div>
<div> </div>
<div><a href="/images/2015/12/14/UERATE.jpg" target="_blank">Click to enlarge</a></div>
<div><img src="/images/2015/12/14/UERATE.jpg" alt=""></div>
<div> </div>
<div>
<div>Although household financial stress is currently low, it seems likely that there will be some vulnerable housing markets in 2016, which may include;</div>
<div> </div>
<div>-resources regions and markets, with the terms of trade crunch likely to result in multiple mass lay-offs to add to the winding down of capital investment;</div>
<div> </div>
<div>-suburbs and sub-regions which are experiencing extensive over-building of apartments. particularly inner city high-rise stock, and those areas with already elevated and rising vacancy rates; </div>
<div> </div>
<div>-off-the-plan developments which will be adversely impacted by APRA's tougher deposit measures; and</div>
<div> </div>
<div>-outer suburban fringe locations in Sydney which saw a massive spike in investor activity and rapid price growth in 2015.</div>
<div> </div>
<div>I'd include a generic entry here for "mining towns", but many have been so utterly smashed already, leading to investor defaults and bankruptcies, since not only were prices unsustainable, so too were rents, and even tenancies. </div>
<div> </div>
<div><strong><span style="text-decoration: underline;">Auctions</span></strong></div>
<div> </div>
<div>Sydney's preliminary auction clearance rate rebounded a bit to 55.2 per cent this week, with outer suburban markets looking particularly dormant, The strongest auction market was a resurgent inner west, with a strong preliminary auction clearance rate of 74.6 per cent (<em>CoreLogic-RP Data</em>).</div>
<div> </div>
<div>This month's Labour Force data showed that New South Wales economy has generated a seasonally adjusted +176,000 jobs over the past year, for an outrageous employment growth rate of +4.9 per cent (trend +160,000 jobs, or +4.4 per cent). The Detailed Labour Force figures, which provide more colour by city, region and industry will be released on Thursday. So stay tuned for that and more this week. </div>
<div> </div>
<div>
<p><span><em>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>.</em><br></span></p>
<p><em>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>.</em></p>
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Record household debt of $245,000: Pete Wargent

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<p><span>GUEST OBSERVER</span></p>
<p><span>The Big 4 banks have no excuse to hold onto any rate cut made today and customers should be prepared to ditch and switch if the banks hold out.</span></p>
<p><span>Mozo data shows that the average Big 4 Bank standard variable rate of 5.61% is now 0.52 basis points higher than the market average of 5.09%. </span></p>
<p><span>Last month’s out of cycle rate hikes will already cost big bank home loan customers an extra $372 in interest repayments annually . </span></p>
<p><span>Any moves by the Big 4 to hold onto cuts today will be deeply unpopular, especially in light of the windfall profits announced by NAB and ANZ last week.</span></p>
<p><span style="line-height: 1.3em;">Last month's rate hikes sparked a 25% increase in refinancing activity </span><span style="line-height: 1.3em;">on </span><span style="line-height: 1.3em;">Mozo.com.au </span><span style="line-height: 1.3em;">and we'd expect to see the big banks lose more customers if they hold out today.</span></p>
<p><span>Since Westpac hiked rates on 14 October, just 9 lenders have followed suit, but in this instance no news is not necessarily good news for borrowers. </span></p>
<p><span>Regardless of which way today’s Reserve Bank decision goes, Mozo is predicting a second wave of home loan rate changes as lenders take the opportunity to make their move.</span></p>
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<span style="line-height: 1.3em;">Intense competition among online and non-bank lenders means we could see them pass on the full 25 basis point discount to really increase their market lead.</span>
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<p><span>Seventeen lenders now have interest rates below 4%, see graph below: </span></p>
<p><a href="/images/2015/11/Screen%20Shot%202015-11-03%20at%2010.58.35%20AM.png" target="_blank"><span>Click to enlarge</span></a></p>
<p><span><img src="/images/2015/11/Screen%20Shot%202015-11-03%20at%2010.58.35%20AM.png" alt="" width="832" height="521"></span></p>
<p> </p>
<p><a href="/images/2015/11/Screen%20Shot%202015-11-03%20at%2010.59.27%20AM.png" target="_blank">Click to enlarge</a></p>
<p><img src="/images/2015/11/Screen%20Shot%202015-11-03%20at%2010.59.27%20AM.png" alt="" width="762" height="317"></p>
<p> </p>
<p><em>Kirsty Lamont is marketing director of <a href="https://mozo.com.au/" target="_blank">Mozo</a>.</em></p>
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