A 64-page report from the Reserve Bank of Australia (RBA) asks if lending practices are conservative enough in a low interest rate environment to prevent a meltdown in the financial services sector, once rates begin rising. The RBA concluded that lenders' balance sheets will probably survive a housing price collapse, unless “current rates of growth in investor lending and housing prices persist, or increase further.” The report notes that banks have been falling all over themselves to court investors, allowing owner-occupied home lending to lay fallow in comparison. Even if the RBA or the Australian Prudential Regulation Authority (APRA) curtail investor lending, household spending will suffer in a housing downturn. Read the full story here.
A quarter of first-home buyers need at least five years of savings for a down payment
One in four first home buyers saved for more than five years before first buying a property, financial services provider Mortgage Choice revealed in survey results of 1000 first-timers this week. One might assume this time will lengthen if prices continue to climb as they have: an 11 per cent increase over the last year makes a year's worth of savings less valuable. According to the survey, 40 per cent of first-time buyers couldn't land properties where they wanted, with most blaming high prices. But almost four in 10 were spending less than a quarter of their after-tax income on mortgage repayments. Read the full story here.
Meriton is now the number one home builder in Australia
Australia's largest homebuilders increased housing starts by 30.6 per cent over the last year to 66,764 dwellings – the highest level in the last decade. Oddly, revenues for those top 100 homebuilders are marginally down for the last financial year. More dwellings but less revenue – that means builders are shifting to construction that produces less revenue per unit: apartments. Land development is down, while employment for high-rise construction is up. And Meriton, top homebuilder for the last year, tops the list, with about 8000 apartments on the way, more than double their figure from last year. Read the full story here.
Collections: Mortgage News