New home sales fell in November as interest rates rose for the third time this year stalling new home buyers, new figures show.
The Housing Industry Association's new home sales figures showed that the sale of new homes and units among Australia's largest builders and developers dropped 5.3 per cent last month to 7097 dwellings.
The results follow a 1.3 per cent rise in October to 7434 dwellings.
HIA chief economist Harley Dale said the fall was due largely to the November rate rise, which pushed interest rates up to 6.25 per cent and followed rises in May and August.
"New home sales have well and truly had their wings clipped in 2006 as demand for new housing has suffered a second wave of weakness at the hands of a fresh set of rate rises,'' he said.
He said that, with affordability at record lows, there simply were not enough people who could afford to buy new homes.
The monthly HIA report showed that private detached house sales dropped by 7.5 per cent during the month, reflecting falls in the resource-poor states of NSW and Victoria.
Mr Dale said private, detached house sales were now at their lowest level since December, 2000.
Sales of multi-units rose 8.8 per cent, but were note enough to offset a 16 per cent fall in October.
Detached house sales dropped 28.6 per cent in Victoria and 14 per cent in NSW.
But they rose 14.5 per cent in South Australia, 12.3 per cent in Western Australia, and 4.3 per cent in Queensland.
The new home sales survey is compiled from a sample of the largest 100 residential builders in Australia and is the leading indicator on new housing activity.
Source: AAP
Tuesday, December 19, 2006
Sunday, December 10, 2006
Low doc home loans on par with income verified interest rates
Adelaide Bank, a major player in the lo doc [low documentation] home loan sector has issued an earnings downgrade after intensifying competition in the mortgage lending sector forced it to remove premium pricing on its low-documentation home loans. The regional bank revised its earnings per share (EPS) growth forecast for fiscal 2007 to between 6c and 9c a share, down from 10c. The downgrade surprised the market and its shares ended down 53c, or 3.9 per cent, at $13.05.
"Competition in the banking sector, in particular the mortgage markets, has continued to intensify this financial year," the bank said.
"As a consequence, the mortgage portfolio is being repriced at a faster rate than had been expected when the 2007 financial year budgets were formulated in May."
CEO-in-waiting Jamie McPhee said the loans affected were all low-documentation loans, which comprised about 35 per cent of the bank's mortgage loan book. "They have been priced historically at a premium to a standard product," Mr McPhee said. "Today's new business is no longer written at a premium and that's the big change."
Mr McPhee said Adelaide Bank was one of the first banks to offer low-documentation loans, which were popular among the self-employed who often did not have the documentation to support a loan application, unlike company workers.
"We were early into the low-doc space, but more of the market has offered them and that premium has been competed away," he said.
Mr McPhee said the bank was also exploring development options, which could impose a short-term burden on EPS growth but increase it in the medium term. "We think there's other opportunities for the bank to take hold of, and those things come at additional cost," he said.
Investments the bank is considering include acquisitions and new product developments.
Last year, AdBank bought Goldman Sachs JB Were's margin lending business and a portfolio funding business.
"These businesses have made a significant contribution to the bank's profit growth and their contribution for the 2007 financial year is in line with or exceeding expectations," the bank said.
AdBank reported a 13 per cent lift in net profit to a record $94.42 million for 2005-06 and achieved EPS growth of 13 per cent to 88.68c. Mr McPhee will replace outgoing AdBank chief executive officer Barry Fitzpatrick when he retires next month.
AAP
"Competition in the banking sector, in particular the mortgage markets, has continued to intensify this financial year," the bank said.
"As a consequence, the mortgage portfolio is being repriced at a faster rate than had been expected when the 2007 financial year budgets were formulated in May."
CEO-in-waiting Jamie McPhee said the loans affected were all low-documentation loans, which comprised about 35 per cent of the bank's mortgage loan book. "They have been priced historically at a premium to a standard product," Mr McPhee said. "Today's new business is no longer written at a premium and that's the big change."
Mr McPhee said Adelaide Bank was one of the first banks to offer low-documentation loans, which were popular among the self-employed who often did not have the documentation to support a loan application, unlike company workers.
"We were early into the low-doc space, but more of the market has offered them and that premium has been competed away," he said.
Mr McPhee said the bank was also exploring development options, which could impose a short-term burden on EPS growth but increase it in the medium term. "We think there's other opportunities for the bank to take hold of, and those things come at additional cost," he said.
Investments the bank is considering include acquisitions and new product developments.
Last year, AdBank bought Goldman Sachs JB Were's margin lending business and a portfolio funding business.
"These businesses have made a significant contribution to the bank's profit growth and their contribution for the 2007 financial year is in line with or exceeding expectations," the bank said.
AdBank reported a 13 per cent lift in net profit to a record $94.42 million for 2005-06 and achieved EPS growth of 13 per cent to 88.68c. Mr McPhee will replace outgoing AdBank chief executive officer Barry Fitzpatrick when he retires next month.
AAP
Mortgage brokers to become top lenders
Mortgage brokers are becoming the first choice for home buyers when they're arranging a loan, a survey shows.
The Mortgage Industry Association of Australia(MIAA)/BankWest home finance survey released today showed more than 41 per cent of recent or intending homebuyers would go to a mortgage broker.
That figure compares with 37.5 per cent who regarded banks as their first preference.
MIAA chief executive Phil Naylor said the figures showed a rise in the public acceptance of brokers.
"Public awareness of brokers is now more than 90 per cent," he said.
It is the first time the survey has shown homebuyers prefer arranging their loan through a broker rather than going straight to a bank.
BankWest's head of broker sales, Phil Colton said the research highlighted that banks really couldn't afford to ignore the broking industry.
The research shows that borrowers preferred brokers mainly because they did all the legwork for customers, but also because they could offer a range of loan options from different lenders.
The MIAA/Bank West survey is conducted twice a year.
Source: AAP
The Mortgage Industry Association of Australia(MIAA)/BankWest home finance survey released today showed more than 41 per cent of recent or intending homebuyers would go to a mortgage broker.
That figure compares with 37.5 per cent who regarded banks as their first preference.
MIAA chief executive Phil Naylor said the figures showed a rise in the public acceptance of brokers.
"Public awareness of brokers is now more than 90 per cent," he said.
It is the first time the survey has shown homebuyers prefer arranging their loan through a broker rather than going straight to a bank.
BankWest's head of broker sales, Phil Colton said the research highlighted that banks really couldn't afford to ignore the broking industry.
The research shows that borrowers preferred brokers mainly because they did all the legwork for customers, but also because they could offer a range of loan options from different lenders.
The MIAA/Bank West survey is conducted twice a year.
Source: AAP
Monday, December 04, 2006
Mortgage lender goes for broke to expand results.
Australian Mortgage Broker and lender Aussie Home Loans Group's aggressive expansion has helped bump up its annual profit despite stagnant east coast housing markets.
The mortgage lender and broker formed by John Symond yesterday posted a 44 per cent rise in net annual profit for 2005-06 to $19.7 million.
Aussie said it processed more than $10 billion worth of housing loan applications throughout the year, with the average loan size increasing to $242,000, which is higher than the Australian Bureau of Statistics average of $221,000.
Mr Symond told AAP that even though the Perth residential property market was "going gangbusters", challenging conditions in NSW had made the overall situation tough.
But he said the unlisted Aussie Home Loans was able to maintain profit growth, employing more people and rolling out more branches. "Our mortgage writers don't write any more business but there's more of them and we're touching more people," Mr Symond said.
In the year to June 30, Aussie increased its sales force by 19 per cent to 600 mortgage advisers.
"We have also very successfully rolled out about 14 new franchise businesses at a rate of about one a month," Mr Symond said.
"These have mostly been in parts of regional Australia we have not serviced before, so more consumers are being touched by the Aussie brand."
Aussie's credit card business was also growing fast and now had more than 100,000 customers, Mr Symond said.
Aggressive growth would continue in 2007 through the rollout of more franchise businesses and the establishment of new products.
Capital expenditure over the next 12 months was expected to hit about $10 million.
As for the group's future profitability, Mr Symond said Aussie had a "confident view of the medium term".
This month's quarter of a percentage point interest rate rise to 6.25 per cent had caused more caution in the housing market, Mr Symond said.
But he felt another rate rise was unlikely.
"We might have reached the top of the cycle this time and I'm hopeful the Reserve Bank will see no reason for an increase next year - unless of course inflation gets ugly again.
"And if the economy was to slow I don't think they'll hesitate in bringing rates back down.
"The market is certainly going to hurt for a few years to come.
"Consumer debt is at astronomical levels, so people won't go out and randomly spend.
"That's what the RBA want and that's what the RBA will probably get."
Source: AAP
The mortgage lender and broker formed by John Symond yesterday posted a 44 per cent rise in net annual profit for 2005-06 to $19.7 million.
Aussie said it processed more than $10 billion worth of housing loan applications throughout the year, with the average loan size increasing to $242,000, which is higher than the Australian Bureau of Statistics average of $221,000.
Mr Symond told AAP that even though the Perth residential property market was "going gangbusters", challenging conditions in NSW had made the overall situation tough.
But he said the unlisted Aussie Home Loans was able to maintain profit growth, employing more people and rolling out more branches. "Our mortgage writers don't write any more business but there's more of them and we're touching more people," Mr Symond said.
In the year to June 30, Aussie increased its sales force by 19 per cent to 600 mortgage advisers.
"We have also very successfully rolled out about 14 new franchise businesses at a rate of about one a month," Mr Symond said.
"These have mostly been in parts of regional Australia we have not serviced before, so more consumers are being touched by the Aussie brand."
Aussie's credit card business was also growing fast and now had more than 100,000 customers, Mr Symond said.
Aggressive growth would continue in 2007 through the rollout of more franchise businesses and the establishment of new products.
Capital expenditure over the next 12 months was expected to hit about $10 million.
As for the group's future profitability, Mr Symond said Aussie had a "confident view of the medium term".
This month's quarter of a percentage point interest rate rise to 6.25 per cent had caused more caution in the housing market, Mr Symond said.
But he felt another rate rise was unlikely.
"We might have reached the top of the cycle this time and I'm hopeful the Reserve Bank will see no reason for an increase next year - unless of course inflation gets ugly again.
"And if the economy was to slow I don't think they'll hesitate in bringing rates back down.
"The market is certainly going to hurt for a few years to come.
"Consumer debt is at astronomical levels, so people won't go out and randomly spend.
"That's what the RBA want and that's what the RBA will probably get."
Source: AAP
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