<p>A luxury beachfront apartment at Rainbow Bay has more than doubled in value since it sold off the plan six years ago, setting a new local apartment record in the process.</p>

<p>The three-bedroom apartment in the Flow development on Petrie Street, the first of four new projects locally by Paul Gedoun's S&amp;S Projects, has sold for $7.4 million, after originally selling for $3.27 million when the project launched in 2020.</p>

<p>The seventh-floor apartment, comprising 187 sqm of internal living space and a 54 sqm balcony overlooking Froggies Beach and Snapper Rocks, was purchased by a local family.</p>

<p>The transaction was negotiated by Pezet Matheson director Kerry Pezet and equates to more than $30,000 per sqm.</p>

<p>Pezet said the sale reflected the limited opportunities to buy into the boutique beachfront development.</p>

<p>"The sale highlights the rarity of opportunities within the boutique beachfront development, where residences seldom become available," Pezet said.</p>

<p>"Flow is one of the Gold Coast's most tightly held buildings. Buyers from our database move quickly when residences become available, and achieving an off-market sale at $7.4 million demonstrates the depth of demand for property of this calibre."</p>

<p><img alt="Flow" data-entity-type="file" data-entity-uuid="c585b206-2130-4eee-a50c-3f27c51a7c70" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-06%20at%208.33.25%E2%80%AFPM.png?VersionId=m3pHRDV62Y3fvN.XQuQHq.52ilTWpRLf" /></p>

<p>Flow was the first of four luxury apartment developments delivered by Paul Gedoun's S&amp;S Projects at Rainbow Bay and was completed in 2023.</p>

<p>Positioned on the beachfront overlooking Snapper Rocks, the residence includes three bedrooms, three bathrooms, a powder room and views stretching north along the coastline towards Surfers Paradise.</p>

<p>Pezet Matheson Residential principal Mitchell Lambert said buyers continued to prioritise quality beachfront apartments in tightly held locations.</p>

<p>"Flow Residences offers a rare combination of elevated beachfront positioning, architectural excellence, comprehensive resident amenity and premium finishes, which is exactly what discerning purchasers are seeking," Lambert said.</p>

<p>"The transaction further reinforces Rainbow Bay's reputation as one of Australia's premier coastal lifestyle destinations, where limited supply and growing demand continue to support strong market performance."</p>

<p>Pezet Matheson originally marketed and sold out Flow off the plan, making the latest transaction a return to one of the project's original buyers.</p>

<p>Paul Gedoun is selling his third project, <a href="https://www.apartments.com.au/new-apartments/radia-rainbow-bay-271-boundary-street-coolangatta-qld-4225">Radia Rainbow Bay</a>, after recently completing, and selling out, <a href="https://www.apartments.com.au/buildings/esprit-217-227-boundary-street-coolangatta-qld-4225">Esprit</a>. He has plans for a <a href="https://www.apartments.com.au/news/qld/first-look-s-s-projects-proposes-88-apartment-wellness-tower-at-coolangattas-boundary-street">fourth building</a>, 88 apartments on <a href="https://www.apartments.com.au/new-apartments/209-213-boundary-street-coolangatta-qld-4225">Boundary Street</a>.</p>


Joel Robinson

Rainbow Bay apartment doubles in price since off the plan sale during pandemic

<p data-end="315" data-start="85">The long-planned transformation of Brisbane's historic Shafston Estate has taken another major step, with Capella Hotel Group announced as the luxury hospitality partner behind what will become Brisbane's first branded residences.</p>

<p data-end="499" data-start="317">The project, to be known as <strong data-end="376" data-start="345">Capella Residences Brisbane</strong>, is being delivered by Verso Projects at the landmark Kangaroo Point riverfront estate, with completion targeted for 2029.</p>

<p data-end="899" data-start="501">The announcement follows a series of planning changes to the project over recent years. The site was originally approved in 2023 for a 15-level, 37-apartment development designed by Rothelowman for Burgundy Group before Verso Projects took over the 10,070 sqm riverfront holding and lodged revised plans with Kerry Hill Architects to increase the development to a 25-level tower with 51 apartments.</p>

<p data-end="1154" data-start="901">The latest announcement confirms Capella Hotel Group will bring its branded residential offering to the project, marking just the second Capella Residences development globally after Seoul, and the group's first branded residential project in Australia.</p>

<p data-end="1387" data-start="1156">The <a href="https://www.apartments.com.au/new-apartments/23-castlebar-street-kangaroo-point-qld-4169">Castlebar Street development</a> will centre around the restoration of the heritage-listed Shafston House, one of Brisbane's oldest residences, originally constructed in 1851 by Reverend Robert Creyke as a single-storey cottage known as Ravenscott.</p>

<p data-end="1387" data-start="1156"><img alt="Capella" data-entity-type="file" data-entity-uuid="2b9f4ce5-638f-4d6b-8082-3ca7e4b75fca" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-09%20at%207.20.41%E2%80%AFAM.png?VersionId=f7aeqsW_DzOJI4FymWb3lD8NptSfsP7q" /></p>

<p data-end="1611" data-start="1389">Capella said the project aligns with its focus on heritage-led developments, with the Brisbane estate combining the restored historic residence with a new luxury apartment tower and hospitality-inspired resident amenities.</p>

<p data-end="1823" data-start="1613">Residents will have access to the Capella Living Room, a concierge-led communal space inspired by the group's luxury hotels, alongside landscaped gardens, six swimming pools, wellness and recreation facilities.</p>

<p data-end="2042" data-start="1825">The broader estate will also include two riverfront homes, a six-berth private marina, porte cochère arrival experience, secure basement parking and a new section of public riverwalk along the Brisbane River frontage.</p>

<p data-end="2177" data-start="2044">The heritage Postal Depot Building will also be retained and repurposed as a guest house, in line with the revised development plans.</p>

<p data-end="2420" data-start="2179">The project represents another evolution for the site, which Kerry Hill Architects previously described as a rare opportunity to restore one of Brisbane's most significant heritage estates while creating a new benchmark for apartment living.</p>

<p data-end="2724" data-start="2422">"The Shafston Estate provides a once-in-a-generation opportunity to restore one of Brisbane's finest heritage precincts and to reinstate residential use as a unique site perched on the edge of Kangaroo Point," Kerry Hill Architects said in its Urban Context Report accompanying the planning submission.</p>

<p data-end="2858" data-start="2726">"The project will celebrate excellence in sub-tropical residential design, setting a new benchmark for vertical living in Brisbane."</p>

<p data-end="3130" data-start="2860">Verso Projects, which now has an $8.5 billion development pipeline spanning more than 6,000 dwellings across apartments, townhouses, retail and commercial projects, said the partnership with Capella would elevate the development beyond a traditional residential project.</p>

<p data-end="3415" data-start="3132">"We feel honoured to be restoring Shafston Estate to its former glory, elevating it to new heights of luxury and excellence underpinned by Capella's distinctive service ethos and design philosophy, and making it a standout landmark in Brisbane," Verso Projects CEO Steve Laffey said.</p>

<p data-end="3658" data-start="3417">"By partnering with Capella, globally recognised for its refined approach to luxury hospitality and deep respect for cultural and historical context, we will elevate this project beyond a residential offering into a world-class destination."</p>

<p data-end="3820" data-start="3660">Capella Hotel Group President Roland Fasel said Brisbane's emergence as a global city made it the right location for the company's Australian residential debut.</p>

<p data-end="3961" data-start="3822">"Brisbane is a city on the cusp of something remarkable, and Capella Residences is our commitment to being part of that story," Fasel said.</p>

<p data-end="4083" data-start="3963">"The Capella residential experience is more than luxury. It is about a sense of belonging to a place with deep meaning."</p>

<p data-end="4227" data-start="4085">Private appointments have now opened for the project, with a display suite expected to open in late 2026 ahead of the planned 2029 completion.</p>


Capella to launch Brisbane's first branded residences at Shafston House, Kangaroo Point

<p>Lewis Land's latest apartment release within its <a href="https://www.apartments.com.au/new-apartments/harbour-shores-biggera-waters-564-oxley-drive-biggera-waters-qld-4216">Harbour Shores</a> masterplan is targeting one of the Gold Coast's fastest-growing buyer groups, with almost a third of apartments at Solis priced below $1 million.</p>

<p>The seven-storey building at Biggera Waters will comprise 91 apartments, including 24 one-bedroom residences starting from $778,000, a price point Lewis Land says is aimed squarely at first home buyers struggling to enter the Gold Coast market.</p>

<p><img alt="Harbour Shires" data-entity-type="file" data-entity-uuid="e7486e37-22f6-4c92-b212-9b0622070b8f" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.34%E2%80%AFAM.png?VersionId=W8MJwJUCf6HkIyl_EVSksnd.QI6MZryY" /></p>

<p><a href="https://www.apartments.com.au/developers/lewis-land-group">Lewis Land</a> Head of Development Michael Long said the developer deliberately allocated a significant proportion of the project to more affordable apartment types.</p>

<p>"First home buyers have been priced out of many parts of the Gold Coast, and we saw a clear opportunity to address this and play our part in a longer-term housing solution," Long said.</p>

<p>"That's why 24 of the 91 apartments being delivered at Solis have been designed and priced for the city's next generation of homeowners, quality one-bedroom apartments, half of which include an additional multipurpose room to maximise space and flexibility.</p>

<p>"This approach places 30 per cent of apartments in Solis under $1 million, and with close proximity to Harbour Town's future light rail extension connecting residents to the city's major employment and knowledge hubs, it's a win for buyers looking to secure their first property."</p>

<p><img alt="Sores" data-entity-type="file" data-entity-uuid="550526d3-73ba-4710-9739-c5f4294a30ef" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-07-08%20at%209.09.29%E2%80%AFAM.png?VersionId=cQQdXHt9wS0UXwZEm5Py5bH_3kAmzyhu" /></p>

<p>Designed by BDA Architecture, Solis will deliver a mix of one, two and three-bedroom apartments, with residences ranging up to 232 sqm. Apartments feature generous balconies and contemporary finishes, while residents will have access to Harbour Shores' lagoon pool, clubhouse, tennis court, gym, yoga studio and sauna.</p>

<p>The focus on first home buyers resonated with purchaser Holly Humphreys, who said she and her boyfriend spent more than a year searching for their first property before shifting their attention from houses to apartments.</p>

<p>"We fell in love with the first house we bid on and got our hopes up, but after repeated knockbacks we learned not to get too attached," Humphreys said.</p>

<p>"We offered at the high end of price guides, but sales kept going even higher. That's where we really struggled and we needed to re-evaluate our budget and our expectations. Standalone houses were off the table, and we pivoted to apartments and townhouses."</p>

<p>Humphreys said it was encouraging to see developers recognising the growing demand from first home buyers.</p>

<p>"There's a growing number of young buyers looking to enter the market earlier because they understand that getting in now can make a real difference as prices continue to rise," she said.</p>

<p>"It's fantastic to see a developer recognise this and then actively take measures to deliver an apartment with us in mind."</p>

<p>Solis is the first development planned within the second stage of the Harbour Shores masterplan, with early works expected to commence in September 2026.</p>

<p>[smartcode_project_cta:default project_id=113271]</p>


Lewis Land targets first home buyers at latest Harbour Shores release, Solis

<p>Luxury apartment developer Abadeen has recorded $19.25 million in apartment sales across two of its Lower North Shore developments in the lead-up to the end of the financial year, headlined by the sale of a $6.75 million penthouse at <a href="https://www.apartments.com.au/buildings/koyo-crows-nest-5-rodborough-avenue-crows-nest-nsw-2065">KOYO in Crows Nest.</a></p>

<p>The transactions also included the sale of a newly completed three-bedroom apartment at <a href="https://www.apartments.com.au/buildings/park-residences-cremorne-2-sutherland-street-cremorne-nsw-2090">Park Residences in Cremorne</a> for $6.35 million, with the residence selling shortly after the project's first public inspections following completion.</p>

<p>The sales come as completed, owner-occupier-focused apartments continue to attract strong demand across Sydney's Lower North Shore, particularly from buyers looking for certainty and immediate occupancy.</p>

<p>The penthouse at KOYO spans 491 sqm across a single level and was designed by architect Koichi Takada. The development is one of Abadeen's flagship boutique projects in Crows Nest.</p>

<p>[smartcode_project:default project_id=108800 project_image_fid=370093]</p>

<p>Abadeen Executive Chairman and Founder Justin Brown said buyer activity lifted noticeably in the lead-up to the end of the financial year.</p>

<p>"We saw a clear increase in enquiry levels, inspection numbers and buyer engagement across our completed projects leading into the end of the financial year," Brown said.</p>

<p>"Buyers have become far more decisive over the past six months. The combination of improving confidence, limited supply and the ability to physically inspect completed residences is creating strong competition for premium apartments in the best locations."</p>

<p>Brown says the&nbsp;response to Park Residences following completion has been particularly strong.</p>

<p>"Buyers want certainty and are responding positively to the opportunity to walk through a finished product, inspect the quality firsthand and move in immediately," Brown suggested.</p>

<p>"Projects such as Park Residences and KOYO demonstrate that when the product is exceptional and the location is irreplaceable, buyers are prepared to act quickly."</p>

<p>[smartcode_project:default project_id=114246 project_image_fid=370116]</p>

<p>Abadeen CEO Joe Tack said quality continued to differentiate projects in the current market.</p>

<p>"Today's buyers are incredibly discerning," Tack said.</p>

<p>"They are seeking larger floorplans, premium finishes, walkability, lifestyle amenity and confidence in the developer delivering the project. Well-designed boutique developments continue to outperform because they offer something genuinely difficult to replace.</p>

<p>"The enquiry we are seeing across our completed and recently completed Lower North Shore portfolio is very encouraging, and we expect this momentum to continue into spring."</p>

<p>The sales follow increased enquiry across Abadeen's Lower North Shore portfolio which also includes <a href="https://www.apartments.com.au/buildings/northcote-collective-naremburn-2-northcote-street-naremburn-nsw-2065">Northcote Collective in Naremburn</a> which also completed recently.</p>


KOYO penthouse headlines Abadeen's $19.25 million EOFY sales flurry

<p>The City of Sydney has approved plans for <a href="https://www.apartments.com.au/developers/billbergia">Billbergia Group</a> and Metrics Credit Partners’ $3.5 billion Castlereagh Place project in the heart of the Sydney CBD</p>

<p>The towers will be among the tallest in <a href="https://www.apartments.com.au/developments/sydney-nsw-2000">Sydney</a>'s CBD, with more floors than any other residential tower in the city.&nbsp;</p>

<p>The 6,000 sqm site was acquired by the joint venture partners in 2024. It is the largest amalgamated land parcel in the Sydney CBD and comprises eight individual sites fronting Castlereagh, Pitt and Liverpool Streets.&nbsp;</p>

<p><a href="https://www.apartments.com.au/new-apartments/castlereagh-place-sydney-324-348-pitt-street-sydney-nsw-2000">Castlereagh Place</a> will transform an underutilised city block into a landmark mixed-use destination, anchored by two 82-storey towers comprising 607 luxury residences above an 8-level podium housing a 209-room luxury hotel. A 1,000 square metre civic park on ground level features a curated mix of food, beverage and retail.</p>

<p>The plans have been refined over the past year to rebalance the residential and hotel offering, and reconfigure the retail footprint to create a stronger, more dynamic dining experience.</p>

<p>A three-level flagship building on the prominent corner of Pitt and Liverpool Streets will be the gateway to the Castlereagh Place lifestyle precinct. Set to become a Sydney icon, the building is capable of housing multiple hospitality venues.</p>

<p>“Castlereagh Place is designed to be the City's next great urban oasis - an energetic mixed-use precinct that pulses with life, day and night,"&nbsp;said Joseph Kinsella, Group Director of Billbergia.</p>

<p>"It will bring the vibrancy of places like Barangaroo and Darling Quarter into a more accessible, central destination at the very heart of Sydney."</p>

<p>Kinsella said the project will build on&nbsp;Sydney’s growing laneway culture with the City’s largest network of new activated lanes - an expanded, next-generation take on precincts like Angel Place, Palings Lane and Ash Street in Wynyard.</p>

<p>[smartcode_project:default project_id=134477 project_image_fid=374401]</p>

<p>Castlereagh Place has been designed by architects <a href="https://www.apartments.com.au/architects/fjc-studio">fjcstudio</a> in collaboration with Trias Studio, Aileen Sage and Polly Harbison Design, joint winners of an international design competition in 2018.&nbsp;</p>

<p>Signature design elements from the original scheme remain unchanged, while the public domain has been significantly enhanced, delivering 60 per cent more open-to-sky space.</p>

<p>Pedestrian access will also be enhanced through new laneways linking Pitt, Liverpool and Castlereagh Streets, drawing people into a new civic park with outdoor seating, landscaping and integrated public art.</p>

<p>With activated laneways supported by strong hospitality offerings, Castlereagh Place is tipped to become a vibrant new dining destination in the heart of Sydney’s CBD.</p>

<p>It marks the largest undertaking to date for the Billbergia and Metrics Credit Partners partnership. Together they are developing other underutilised Sydney sites into mixed-use precincts, including the $2.2 billion Concord Central and the $1.3 billion Chatswood Grand Residences.</p>

<p>Metrics Managing Partner and Group CEO Andrew Lockhart said Castlereagh Place is a landmark project that will redefine Sydney’s skyline.</p>

<p>"As the tallest residential high-rise development, the revitalised site will offer panoramic views across the CBD and surrounds. We are excited to partner with Billbergia to reinvigorate an underutilised site and create a sophisticated and contemporary mixed-use offering situated in the heart of Sydney.”</p>

<p>Total apartments within the towers have increased to 607 dwellings, with a focus on larger floorplans. Aligned to growing market demand, Castlereagh Place now comprises 299 three-plus-bedroom apartments, 198 two-bedroom units and 110 one-bedroom configurations.</p>

<p>[smartcode_project:default project_id=134477 project_image_fid=374402]</p>

<p>Resident amenities will include an exclusive residents club containing a gym, rooftop pool, dining rooms, co-working spaces, library, golf simulator, games room, cinema room, and access to an exclusive concierge service. There will be around 500 basement car spaces below the towers.</p>

<p>The development will also include a state-of-the-art wellness centre, set to feature a bathhouse with magnesium pools, hot/cold plunge pools and premium amenities.</p>

<p>&nbsp;</p>

<p>According to fjcstudio, the towers will feature distinctive yet elegant architectural design reflecting Sydney’s geometry and urban character, with a network of through-site links and intimate public spaces activating the streetscape.</p>

<p>"Castlereagh Place is a city-making project of significant scale and ambition," said Richard Francis-Jones, Design Director at fjcstudio.</p>

<p>"It will create a rich urban complex of public open spaces, landscaped gardens, and vibrant laneways. Defining these new public spaces and the important streetscape of Castlereagh Street is a sequence of fine-grained, diverse retail and hotel architecture designed in collaboration with Aileen Sage, Polly Harbison Design and Trias.</p>

<p>“Rising above the tree-lined, human-scale streetscape are two slender residential towers that will transform the city skyline and look towards the Harbour, Hyde Park, and the Royal Botanic Garden.”</p>

<p>Demolition and early construction works have commenced onsite at Castlereagh Place.</p>

<p>[smartcode_project_cta:default project_id=134477]</p>


Billbergia, Metrics, approved for $3.5 billion Sydney skyscrapers

Rmbs

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<p>The performance of Australian residential mortgage-backed securities (RMBS) will weaken moderately in 2020, following some improvement in Q3 2019, but delinquencies will remain low overall, according to a new report from Moody's Investors Service.</p>
<p>Their report found tat Australia's muted economic environment, record levels of household debt and the conversion of interest-only mortgages into principal and interest loans will lead to a moderate increase in RMBS delinquency rates in 2020. However, mortgage borrowers are seeing some relief in the form of low interest rates and rising house prices, which should constrain the degree of deterioration.</p>
<p>The 30+ day delinquency rate for prime Australian RMBS decreased to 1.57% in September 2019 from 1.67% in June 2019.</p>
<p>Moody's has lowered its growth forecast for the Australian economy over recent months and now expects real GDP growth of 2.2% for 2020, down from an earlier forecast of 2.5%.</p>
<p>The forecast for 2020 is higher than the 2.0% recorded in 2019, but down considerably from 2.7% in 2018.</p>
<p>Alena Chen, Vice President, Moody’s said, in this economic environment, expect mortgage delinquencies to increase moderately, particularly given that high household debt - which amounts to almost 200% of annual gross disposable income - will leave households vulnerable to economic and housing market shocks."</p>
<p>"However, we expect most mortgage borrowers will be able to continue meeting mortgage repayments at Moody's forecast level of economic growth and unemployment, which means delinquencies will remain low overall," she stated.</p>
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j.ballantyne1990-6AQqhLzZaK

Australian RMBS will weaken moderately in 2020: Moody’s Investors Service

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<p>Australian RMBS delinquency rates, which rose slightly over the three months ended 31 March 2019, will continue to increase over coming quarters, according to the latest report from Moody's Analytics.</p>
<p>They believed arrears will rise because of high debt levels, the conversion of a large number of interest-only mortgages to principal and interest loans and declining house prices.</p>
<p>They suggested however that delinquency rates will only increase moderately, given stable GDP growth, low unemployment and recent interest rate cuts.</p>
<p>The 30+ day delinquency rate for prime Australian RMBS was 1.58% in March 2019, compared with 1.54% in December 2018 and 1.48% in March 2018.</p>
<p>For prime RMBS issued by major banks, the 30+ day delinquency rate was 1.75% in March 2019 compared with 1.72% in December 2018.</p>
<p>For regional banks, the delinquency rate was 1.65% in March 2019, unchanged from December 2018, while for prime RMBS issued by other authorised deposit-taking institutions, the delinquency rate was 0.54% in March 2019, compared with 0.50% in December 2018.</p>
<p>The 30+ day delinquency rate for non-conforming RMBS was 3.75% in March 2019, up from 3.23% in December 2018 and 3.05% in March 2018.</p>
<p>Alena Chen, Vice President of Moody’s said, "over coming quarters, we expect Australia's record-high household debt, which amounts to almost 200% of annual gross disposable income, will contribute to a moderate increase in delinquencies."</p>
<p>"Meanwhile, a large number of interest-only mortgages are due to convert to principal and interest loans by the end of 2020, which will cause some delinquencies over this period. Banks originated a significant volume of interest-only loans in 2014 and 2015," she said,</p>
<p>The five year interest-only period for these mortgages will end in 2019 and 2020.</p>
<p>When interest-only loans convert to principal and interest, borrowers have to make higher monthly repayments, which can lead to delinquencies.</p>
<p>Commonwealth Bank saw a rise in arrears in their <a href="/news/cba-arrears-rise-but-home-loan-book-continues-to-grow-slowly">March quarter results</a>.</p>
<p>Banks have already started trying to limit a large impact of moving mortgage holders from interest only to P&amp;I.</p>
<p>This time last year ANZ had 26 percent of their loan book made up of IO loans. They <a href="/expert-insights/finance/anzs-home-loan-portfolio-shows-big-drop-in-interest-only-borrowers">reduced that number to 18%</a> as of May.</p>
<p>NAB have an unhealthier <a href="/news/nab-housing-lending-revenue-continues-to-drop-and-shareholders-pay-the-price">26% of their loan book</a> given to interest-only loans.</p>
<p>Chen said Moody's expect house price declines to lead to a moderate increase in mortgage delinquencies over coming quarters."</p>
<p>"House prices in Australia declined by an average of 7.3% in the 12 months to 30 May 2019, while in Sydney and Melbourne, prices declined by an average of 10.7% and 9.9% respectively."</p>
<p>"We expect prices to continue to decline moderately over the remainder of 2019." she said.</p>
<p>Mortgage delinquencies will only increase moderately, while defaults and losses will remain low, given that continued GDP growth, low unemployment and recent interest rate cuts will support borrowers' ability to meet their mortgage repayments.</p>
<p>Moody's Investor Service forecast's real GDP growth of around 2.5% in both 2019 and 2020.</p>
<p>Australia's unemployment rate was 5.2% in April 2019 and they expect it will remain relatively stable at 5.5% by the end of 2019 and 2020.</p>
<p>In early June, the Reserve Bank of Australia lowered the cash rate by 0.25 percentage point, which prompted most lenders to lower their floating-rate mortgage interest rates.</p>
<p>To see which banks decided to pass on the full rate cut, <a href="/expert-insights/finance/what-are-the-latest-home-loan-cuts-and-whos-making-them">click here</a>.</p>
<p> </p>
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Australian RMBS delinquency rates to keep rising: Moody's

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<p>Moody's Investors Service says that the 30-plus day delinquency rate for prime Australian residential mortgage-backed securities (RMBS) increased in the fourth quarter of 2018.</p>
<p>It tips they will likely continue to rise moderately amid declining house prices, high levels of debt, and the conversion of interest-only mortgages to principle and interest loans. </p>
<p>The 30-plus day delinquency rate for prime RMBS increased to 1.58% in December 2018 from 1.49% in September 2018.  </p>
<p>The increase was driven in part by declining house prices, with house prices in Australia declining by 6.3% for the 12 months to February 2019, and by 10.4% and 9.1% in Sydney and Melbourne.  </p>
<p>Moody's expects prices will continue to decline moderately through 2019, while record-high household debt – at 191% of annual gross disposable income – will also contribute to a moderate increase in delinquencies.  </p>
<p>"Nevertheless, we expect the increase in mortgage delinquencies to be limited, while defaults and losses will remain low, as continued GDP growth and low unemployment will continue support borrowers' ability to meet mortgage repayments," says Alena Chen, a Moody's Vice President and Senior Analyst.  </p>
<p><a href="https://www.propertyobserver.com.au/images/2019/3/22/RMBS%20.jpg" target="_blank">Click here</a> to enlarge:</p>
<p><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2019/3/22/RMBS%20.jpg" alt=""></p>
<p>Specifically, Moody's forecasts real GDP growth of around 2.5% in both 2019 and 2020, and for Australia's unemployment rate to remain relatively stable at 5.5% over the same period.  </p>
<p>"Mortgage delinquencies will likely increase over the short term in areas hit by the far north Queensland floods in February 2019, as borrowers may lose income or face costs while dealing with the aftermath of the disaster," adds Chen.  </p>
<p>However, Moody's says this is unlikely to translate into a material increase in defaults, given that insurance payouts, government assistance and financial hardship arrangements entered into with lenders will ease the burden on borrowers.</p>
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Australian RMBS delinquencies to rise as house prices fall: Moody's

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<div>Moody's Investors Service says that mortgage delinquencies will increase over the next two years.</div>
<div> </div>
<div>The forecasts suggests a record number of interest-only (IO) mortgages converting to principal and interest (P&amp;I) loans, will continue to the rise.</div>
<div>  </div>
<div>When IO loans convert to P&amp;I, borrowers have to make higher monthly repayments, and this 'payment shock' can lead to mortgage delinquencies and makes IO loans riskier than P&amp;I loans. </div>
<div>  </div>
<div>Moody's data shows that the 90 days past due delinquency rate for mortgages that have converted to P&amp;I from IO is 0.94%, double that of IO loans that have not yet converted and 0.24 percentage points higher than all securitised mortgages. </div>
<div> </div>
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<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%201.jpg" target="_blank">Click here </a>to enlarge:</div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%201.jpg" alt=""></div>
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<div>Refinancing interest-only mortgages is also becoming more difficult, which will in itself contribute to an increase in mortgage delinquencies. </div>
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<div>Moody's conclusions are contained in its just-released report, "RMBS - Australia Mortgage delinquencies to increase as record number of IO loans to convert to P&amp;I". </div>
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<div>Banks in Australia originated a significant volume of IO loans in 2014 and 2015, which means a record number of these loans are scheduled to convert to P&amp;I over 2019 and 2020, when their five-year IO period ends. </div>
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<div>
<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%202.jpg" target="_blank">Click here </a>to enlarge: </div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%202.jpg" alt=""></div>
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<div>IO loans accounted for more than 40% of all mortgages originated by banks for much of 2014 and 2015, with this figure peaking at 46% in June 2015. </div>
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<div>At current mortgage interest rates, monthly repayments on loans that convert to P&amp;I from IO will increase by around 30%, which can lead to delinquencies. </div>
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<div>With RMBS, IO loans accounted for around 32% of all loans in such deals on average as of November 2017. However, on an individual deal basis, the share of IO loans ranges from 0% to 50%. </div>
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<div>
<a href="https://www.propertyobserver.com.au/images/2018/8/3/MOODY%203.jpg" target="_blank">Click here</a> to enlarge:</div>
<div><img src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,q_auto:good/https://s3-ap-southeast-2.amazonaws.com/po.images/2018/8/3/MOODY%203.jpg" alt=""></div>
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<div>"Therefore, the degree to which individual deals will be exposed to potential delinquencies as loans convert to P&amp;I from IO will depend on each deals' exposure to IO loans and their IO period maturity profile," the report noted.</div>
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