Overseas lenders hoping to attract new customers have begun expanding access to 60-second loan application processes. Pre-approval can be almost instant in Australia, though getting the actual loan will still require
significant paperwork. Instant pre-approvals earned the ire of American regulators during the financial crisis as a conduit to low-documentation lending, which eroded loan quality and raised default rates. Australian regulators may start to look at quick-approval processes here, hoping to protect Australia's historically-low default rate. Meanwhile, Australian Finance Group’s chief executive officer Mark Hewitt said applying for a home loan online must become easier for Internet approvals to grow. Read the full story here.
First five-year rates, now three-year rates: CBA cuts interest below 5 per cent
Commonwealth Bank and Westpac joined their rivals in the Big Four lenders and cut its three-year rate by 15 basis points to 4.94 per cent, equalling NAB and ANZ. Funding costs for banks fell after unexpectedly-high unemployment numbers last week changed calculations about when the Reserve Bank may raise interest rates, lowering the swap rate for bank lending. Three-year loans remain the most popular fixed rate product, but five-year loans have increased in popularity since major lenders cut rates below 5 per cent last month. About 20 per cent of borrowers use five-year loans now, compared to 13 per cent before the cuts, a record high. Read the full story here.
Mining boom town real estate busted
Property values in Kalgoorlie, Port Hedland, Karratha, Moranbah, and other mining hubs around the country are reeling from the pullback in the resources industry. Median weekly rent is down 20 per cent from $410 in June 2013 to $330 last quarter, according to the Real Estate Institute of WA. The median sales price in Queensland's mining town of Moranbah has fallen from $750,000 12 months ago to $370,000 today. The median rent is down from about $1,500 per week to about $450 per week. Sales volumes have fallen by a third in Kalgoorlie-Boulder with the average days on the market double that of Perth. Read the full story here.
Stockland expects residential housing values to slow their gains
Stockland's quarterly report Monday shows that the development firm expects property price growth to slow from the current torrid pace of 10 per cent a year to about one per cent in real terms – though population growth and an undersupply of houses will keep health market conditions next year, particularly in Sydney and Queensland. Stockland's net profit this year rose 12 per cent to $527 million on the back of strong real estate market performance. Read the full story here.
China's smart money is cashing out
Li Ka-shing – who may have the greatest last name for a financial tycoon – started quitting China's property market a year ago. He's sold about $3.5 billion in mainland and Hong Kong property and has been looking for foreign markets to diversify his risk. Meanwhile, Wang Jianlin, chairman of Wanda Group and the richest man on the mainland, announced the investment of $1.7 billion in Australian real estate last week. China's residential property sales fell 17.9 per cent in July from a year ago, while home prices fell last month in 64 of the 70 surveyed cities. Read the full story here.
Collections: Mortgage News