More than just home loans

News / Opinion / Products

  • FIFO's Supply Chain Finance Facility - A win-win solution for businesses


    It's not often that we see innovative new products that have the potential to provide a "win - win" solution for clients and their suppliers as well as the lender.

    For more details 


  • There is a viable option to banks for business finance..


    SMEs are deserting Australian banks for online lending firms, but high fees can mean the loans do more harm than good. Angus Sedgwick, CEO of The Invoice Market, says cash flow financing can provide a fairer and more flexible funding option for Australian businesses.

    Even before the report of the Small Business Loan Inquiry, which highlighted a range of problems with the Australian lending market earlier this year, businesses had been looking for quicker and fairer funding. While many online lenders certainly provide the former, high and opaque fee structures mean SMEs may find better options by moving away from the concept of debt finance altogether - Read more

  • Four ways an Australian property bubble could burst

    Housing - Frame up Stage (600 x 450)

    01 May 2017  - In 2007/08 the GFC snuck up on Australia with devasting consequences for many. At the moment the sheer weight of commentary in the press would indicate that Australian property is at the peak of the mother of all bubbles. 

    How long will it continue? What will be the trigger that burts the bubble? When will it happen? How will the bankls and governments react ? What will be the consequences?   

    Realistcally no one knows the what, when and how of the a bust  - but the Converstaion has interviewed a number of economists ( who don't work for banks).

    Click here to read their thoughts

  • APRA Chairman warns of more rate rises


    02 May 2016  - From ABC News - APRA chairman Wayne Byres has foreshadowed banks will be obliged to embark on another round of interest rates hikes, particularly for housing investors.

    Key points:

    • All the major banks raised rates by up to 0.5pc last month and APRA says there's more to come
    • APRA warns banks about "back door" funding of investors through risky shadow banking channels
    • Investor lending last month grew at its fastest pace since January 2016

    Speaking at a property outlook forum in Sydney, the banking sector's chief regulator said while lending standards had improved and investor lending growth had slowed, more still needed to be done.

    "As a result of our most recent guidance to lenders, we expect some further tightening to occur," Mr Byres said.

    As if to prove the regulator's point, Mr Byres had hardly shuffled off stage when ANZ informed brokers rates on most new interest-only fixed-term loans would be increased by 0.4 percentage points.

    Read the full article here

  • Buying property with your superfund has drawbacks

    Office Building

    We neither support or oppose the concept of borrowing to buy property in your SMSF. Our advice is limited the the actual borrowing / loan facility and we make no comment on the actual investment or tax implications.   

    However, the concept has often been promoted as a panacea by some advisers with little regard for the lack of flexibility in dealing with changed business needs and / or circumstances.

    Since the concept was introduced we have seen a number of cases with business clients where inability to access the equity in property in there SMSF has imposed severe limitations on the development of their business. In most cases the opportunities forgone have substantially exceeded the "benefits" of tying up the asset in superannuation.

    Darryl Dixon - the executive chariman of Dixon Advisory recenty penned an excellent article in the Age regarding the possible drawbacks of  negative gearing property into SMSFs. These included;

    • the strict regulations governing limited recourse borrowing
    • the costs of borrowing in SMSFs are higher than other loans
    • limitations on tax benefits for deductions
    • the limitations on related party use
    • the superannuation tax rate is more suited to high yielding investments
    • low income, high capital gains tax investments such as property are better suited to personal portfolios.

    To read the full article

    If you have any queries regarding current or proposed borrowings by your SMSF you should seek independent advice from a suitably qualified and licenced adviser .


  • Is this the beginning of the end for Brisbane apartments?

    Hudson St Albion

    From the AFR 29 March 17 - A marketer is offering discounts of up to 39 per cent on apartments in a newly-completed residential development in a sign that Brisbane's apartment oversupply may be biting.

    Two-bedroom apartments in The Hudson development on Albion Mill marked down from $805,000 to $490,000, three-bedroom penthouses cut from $1.2 million to $960,000 and one-bedroom units reduced to $335,000 from $445,000 feature on the price list David Carter from Landmark Asset Services sent to clients this week.

    "The funder has taken the project off the developer and has given us four weeks to sell the remaining 50 or so apartments," Mr Carter wrote in the email.

    Comment: A firesale of distressed property on the scale above immediately impacts on the value of other units in the same block and surrounding developments.

    If you were unlucky enough to have purchased a two bedroom unit in the development off the plan and relying on bank finance to settle the purchase  - its now worth only $490,000 - well short of the contracted price of $805,000. The bank will lend say 80% of the lesser amount $392,000  - not the $644,000 you need to settle the purchase!!!   

  • Expect More Rate Rises

    Rates up

    28 March 2017  Last week all four big banks raised mortgage interest rates.

    The rises were specifically targeted at investors and owner occupiers who currently have interest only loans.

    The most likely reason for the increase is higher costs associated with wholesale funding that has been caused by rising rates in the US.

    The banks will seek to maintain their margins on loans to both bolster capital reserves as well as maintain profit margin - keeping the investors happy.

    For more information - see Business Insiders story on the ABC last night.

  • Time is money - the true cost of late payments

    Time is money
    • $19 billion locked away from Australian businesses every year due to late payments
    • Poor cash flow responsible for 90 percent of SME failure
    • Late invoice payment is something no business can afford to ignore

    Late invoice payment — the scourge of Australian business owners. Getting paid for the work you do is not necessarily an easy matter. Recent trade payment analysis by Dun & Bradstreet shows that just 38 per cent of business invoices are paid on time. It’s aggravating for businesses — especially SMEs Yet late payment is more than a mere vexation. Read more

  • Early Payment Discounts can be costly

    Cash (200 x 111)

    Much has been written about the advantages and disadvantages of offering early settlement discounts.The arguments in favour usually focus on the ease of implementation, the benefits of accessing working capital and of reducing customer insolvency risk by obtaining early payment. But the math underlying these arguments often doesn’t add up, and usually assumes businesses operate in a perfect world.

    In the real world, early settlement discounts can prove a hit and miss strategy at best. Read the full article here

  • 8 Steps to Better Debtor Management


    Debtor Management is critical to ensuring your business has sufficient working capital to reinvest and grow.

    Here's  a quick list of 8 steps to ensuring your cash flow management system is as robust as possible to keep your business healthy and growing. Read more here.

  • Overdue tax debts to be listed on business credit files from 1 July 2017


    From 1 July, 2017 the more disconcerting of the 2 key tax changes announced in the government’s 2016-17 Mid-Year Economic and Fiscal Outlook will come into play.

    The move will allow the ATO to disclose to credit reporting bureaus the tax debt information of businesses that have not effectively engaged with the ATO to get these debts under control.

    The measure will initially only apply to businesses with a tax debt greater than $10,000 and is at least 90 days overdue.

    Businesses that fail to address outstanding tax debts prior to FY2017-18 should expect their credit rating to be adversely affected.

    If businesses don’t secure payment arrangements with the ATO prior to July 1st, this could greatly impact their ability to secure finance in the future or to secure supplier credit arrangements.

    Comment: Payment arrangements with the ATO are an option - the penalty rate is reasonable  - but the timeframe for repayment can make the arrangement a drain on cash flow. 

    In most cases ATO debts can be refinanced (not with the major banks), and the underlying problems of insufficient working capital addressed at the same time. To discuss your problem or  further information contact AFNCF  

  • Nab - Cheapest ever rate for FHB - Increases variable rate for everyone else


    16 Mar 2017 - The Nab today announced its lowest ever rate ( 3.62% fixed for 2 years effective from today ) as a First Home Buyer special.

    Given that FHBs in Sydney & Melbourne have virtually been priced out of the market by runaway home prices its unlikely to have a lot of takeup. 

    At the same time Nab announced increases to the variable rates for all other borrowers.

    • Owner occupiers  - an increase from 5.25% to 5.32% ( before package discounts) effective 24 March
    • Investors  - an increase from 5.55% to 5.80% ( before package discounts) effective 24 March.

    Nab blamed the increases on cost of funds pressures.


  • It makes good financial sense to convert to solar for your business

    Solar (600 x 424)

    Power bills out of control?

    Our energy landscape is changing. As the price of power continues to rise, smart businesses are looking for strategies to better manage their energy costs. One solution is investing in renewable energy and energy efficiency; it can generate significant savings in energy use and costs. Energy assets usually involve a large initial investment and very low operatingcosts. In some cases, access to capital can restrict an organisation’s ability to make these types of investments. Read more

  • Settlement Risk is Rising


    8 Feb 2017 - CoreLogic figures show 40 per cent of off-the-plan settlement valuations are coming in under the contract prices across Melbourne, Brisbane and Perth. 

    While the large majority of these under valuations are not showing a significant gap between the contract price and settlement valuation, more significant differences can be seen in some projects and precincts, Lawless says.

    As units in areas with a lot of supply come to settlement, the risk of buyers receiving a "finance shock" is heightened, Lawless says. 

    From <

    Comment: In the current market "off the plan purchase" is definitely not recommended, particulalrly in areas where there is a high concentration of new developments such as the city, Docklands and South Melbourne. Even in the middle ring and outer suburbs there are pockets of intensive development ( Ringwood / Doncaster) where a large percentage of the developments have been sold to overseas buyers who may not be able to settle due to inability to borrow and/or being funds out of China. We are also aware of several developments that are well behind schedule (and possibly in danger of never completing) due to the developers not being able to borrow additional funds to complete the projects.     

  • Sooner or later the Law of Gravity prevails over the Blue Sky Theory

    London WC1

    London, like Melbourne is one of the most expensive real estate markets in the world. After many years of rising property values, the median values of residential properties in Londons central boroughs have declined over the last year. In some postal districts the decline in median value has been quite significant.

    The fundamentals for residential real estate in Melbourne or Sydney are no different to those in London. All it needs is for a "black swan" event ( Brexit) or for a "butterfly to flap its wings" in another country ( eg the Trump effect) and it could trigger a downturn in our overheated real estate market.    

    Postal  District   Change     
    Property Value Change Central London 2016
    WC1 -14.9%
    N -11.5%
    W2 -7.0%
    SE1 -12.0%
    N5 -8.4%
    N7 -6.0%
    W8 -13.0%
    SW3 -17.7%
    W2  -7.0%
    Source: Bloomberg 13/12/16


    Over the last 30 years there have been several periods when real estate values in Australi have declined by 20-30% for extended periods until the fundamentals have caught up. Residential property values in Perth, Darwin and our mining towns are currently well on their peaks of just 2 years ago. 

  • Beware of mortgage investment traps - you could lose the lot !

    Cash (200 x 111)

    14 Dec 16 -  Returns on fixed interest investments are at an all time low, with little likelihood of any improvement in the near future.  Credit guidelines are being tightened by all institutional lenders. The areas that have felt the impact of these lending restrictions are funding for investment property, apartment  development and funding for overseas purchasers of the completed units.

    The reason for the pull back by lenders is simple - there is a very strong possiblity that the residential unit market will experience a correction (read significant drop in values) as a result several factors. This could flow on to the wider property market.  The unit / apartment market is particularly at risk - simply for the reason that the majority of unit developments have been targeted at an investor market that doesn't really exist.  

    Many developers have been caught with expensive sites that they cant obtain funding to develop, or they haven't been able to complete, and have turned to seeking private funding through non traditional sources such as private lenders or SMSFs. Often the conduit for the approach is the developers own accountant, or a mortgage broker. 

    • A private mortgage loan to a property developer can be considered very high risk. If a first or second tier institutional lender wont provide funds to a unit developer, it's generally because the project is considered to be too risky.  
    • A private mortgage loan to a developer on the security of a second mortgage ( mezzanine finance) is extremely high risk, particularly if they've run out of funds to complete the development.
    • A first mortgage loan to a non resident borrower can also be very high risk. The ability to take action against the borrower in the event of default is almost non existent. In the late 1970's and 80's loans to New Zealanders were similarly restricted - if their loan fell into arrears they simply hopped on the plane and went back to NZ beyond the reach of local law at the time.  

    The higher the return offered, the higher the risk . If you lend on second mortgage, particularly to a developer  historically there's a strong chance that you could lose the lot ..........

    Click on the link below for yesterdays Money Minute segment on the Today Show

  • BMW Australia Finance to repay $72m to customers

    ASIC 3

    BMW Australia Finance, has been required to enter into an enforceable undertaking to repay $72 million to more than 15,000 clients after being found to have breached responsible lending provisions. It's believed to be Australia's largest ever consumer pay-back scheme..The affected customers have car loans for a wide range of cars and brands, new and secondhand. (Read the full story here).

    Clients who arrange their vehicle finance through car dealerships often fall victim to questionable marketing practices that are really designed to increase the profit margin for the dealer, not necessarily benefit the car buyer. ( Read more)

  • Cash on Way out


    Citibank Australia has become the first Australian bank to go completely cashless, notifying customers that its branches will no longer handle notes and coins from November 24.

    “We have seen a steady decline in the demand for cash services in our branches — in fact less than 4% of Citi customers have used this service in the last 12 months,” said Citibank head of retail bank Janine Copelin.“This move to cashless branches reflects Citi’s commitment to digital banking and we are investing in the channels our customers prefer to use.

    Copelin said that the move is not a precursor to branch closures. “While the number of customers visiting our branches to access cash handling services has fallen, the branch network remains an important component of how we serve our high-net worth customers,” she said.

    Cheque requests and other teller services” will continue at Citibank branches. Customers are now directed to ATMs and Australia Post branches (with Bank@Post and PostBillPay capabilities) for cash transactions. Deposit and mortgage account clients can also use National Australia Bank branches for cash services. Citibank’s agreement with Westpac to provide customers with fee-free usage of Westpac Group ATMs also remains in place.

    ( Source: Business Insider 9 Nov 2016)

  • "Sydney is 40% overvalued and Melbourne is recording a similar rate"

    SQM Research

    Louis Christopher runs boutique property analysis firm SQM Research, based in Sydney.

    His annual property outlook report for 2017 goes a long way to explaining why the Reserve Bank recently shifted its description of the housing markets in Sydney and Melbourne from growing "moderately" to "briskly"."What we have noticed in very recent weeks is an acceleration, particularly in the Sydney housing market," he said.
    "Our view is that this acceleration will continue, it will go well into 2017."

    SQM is forecasting price growth over 2017 of between 11-16 per cent in Sydney and 10-15 per cent in Melbourne.
    While this level of growth would still be lower than the peak of 19 per cent reached in Sydney in mid-2015, Mr Christopher said it will now occur in markets that he estimates are already massively overvalued.

    "We think Sydney is up to 40 per cent overvalued, and Melbourne is recording a similar rate - in fact Melbourne is at its most overvalued point that we've ever recorded," he warned.

    "To see price increases from this point will be a problem for the RBA in later 2017." Action needed 'sooner rather than later' to cool market. SQM's base case scenario is that the Reserve Bank will not take any action, and the bank regulator APRA will also sit on its hands after having tightened a range of lending criteria over the past 18 months, especially for investors.However, Mr Christopher said doing nothing is probably a dangerous course of action."It'd be wise to take some action sooner rather than later," he advised.

    "I would've thought potentially putting in additional deposit requirements to purchase a home, in a worst case scenario perhaps having to lift interest rates might be required.

    "What we suggest is that it's best to move sooner rather than later because, if there is no action, it could be a large issue in 2018 where potentially a hard landing could play out."

    Source - ABC Business 2 November 16

  • Guaranteed Future Value - you could pay now as well as later!

    Car 3 (600 x 405)

    A Guaranteed Future Value (GFV) for your new car after 4 years  - Sounds like a great idea. But is it?

    In the last few months GFV has become a selling point for several car manufacturers, mainly prestige or upmarket vehicles that depreciate rapidly (ie, dont hold their value well) and are sold on finance with a higher residual value / balloon at the end of the loan term than is likely to be achieved in the marketplace. 

    Again its "smoke & mirrors" marketing paid for by unwitting clients.

    • GFV is only available if the vehicle is financed through the dealer - its not offered by the dealer or the car maker.
    • You'll have to pay full price or near full price for the vehicle - no  negotiation. 
    • The finance term is usually capped and there are mileage caps with penalties for exceeding the agreed kms. Most buyers forget these limitations over the term of the finance agreement and pay penalties.
    • Condition of the vehicle at end of term is critical  - if the vehicle suffers damage or wear and tear thats deemed ( by the dealer) not to be to be fair wear and tear, the cost of repairs will be deducted from the GFV.  ( In some cases the GFV brochure extends to more than 8 pages of terms, conditions and definitions.)   

    If your vehicle finance facility is structured correctly with a balloon value at the end of the term that's conservative and able to be achieved in the marketplace in 3 - 4 or 5 years - you dont need to pay upfront for something that you may never receive.?

  • Why 0% car finance isn't a good deal

    Red car (600 x 404)

    If you could lend money at 5.15% interest - would you really end it at 0% ? - Not Likely !!

    The papers and TV are full of ads from car dealers offering finance at rates as low as 0%. There's and old saying that if something sounds too good to be true it probably is.....

    The majority of finance for car dealerships is provided by two major banks who aren't exactly known for giving away money at less than it costs them to borrow the funds from investors. 

    The fine print at the bottom of the advertisement details the terms of the finance offer. What it doesnt say is that there is no negotiation in the asking price of the vehicle and that you are paying the full list price, and the finance term is fixed. 

    So how are car dealers able to offer finance at rates like 1.9% and 0% per annum?

    Its an old "smoke & mirrors" marketing trick known as subvention  - which literally means that a gift is being given...There is little or no negotiation on the price of the vehicle or the finance terms. The buyer is paying full price ( or close to it) for a vehicle that in most cases can be purchased at a substantial discount of at least 10% - if you pay cash. In some cases the dealer and / or the car manufacturer may discount their margin a little  - but not likely.  

    Who wins?   

    • the dealer gets full price for the vehicle 
    • the lender maximises the rate on the loan
    • the manufacturer possibly gives away a little to keep the factory busy

    Who loses?.................

    Dont ask what the interest rate is ..................ask what the repayment is ......................

    The moral of the story  - arrange your finance before you talk to the dealer and bargain as a "cash" buyer

  • Settlement defaults on units hit 5% - the lull before the storm

    Melbourne Units

    8 August 2016 - ABC's The Business provides a very good summary of the scope of the problem faced by overseas purchasers. See more here

    3 August 2016  - Local law firm Maddocks, which handles the settlement of around 15% of off the plan settlements in Melbourne each year, advises that approximately 5% of purchasers are walking away from settlement. Of these approximately 2/3 are foreign based and with the new restrictions on lending they no longer qualify for finance.

    What we're seeing is the tip of the iceberg. Over the last 2 years there have been over 40,000 appartments approved for development in Melbourne, with more than 17,000 approved in the first 6 months of this year. Valuers Charter Keck Cramer report that more than 60% of off the plan apartments are being bought by Chinese purchasers.

    The problem will become far worse as mortgagee and default sales drive down the valuations of units creating a widening gap between contract price and valuations / loan approvals.

    (Source AFR as quoted in Macrobusiness)

  • RBA Rate Cut - too little to reduce 25% adult unemployment in parts of Perth

    Glenn Stevens RBA

    Tuesday 2nd August 2016  -  RBA Board cuts cash rate to a record low 1.50%  - But it wont help WA

    Glenn Stevens' parting gift to the nation was to cut the Cash Rate to the lowest level in living memory. For federal politicians and borrowers it apparently wasn't far enough. For pensioners, and those dependent on fixed income investments, its was a cut too far.

    For NSW and Victoria, and in particular Sydney & Melbourne it has the potential to add to the property boom, for WA and SA where the economies have fallen into recession as the mining boom unwinds and real estate value are starting to collapse - it wont help. In some suburbs of Perth adult unemployment has hit 25% 

    How bad is it in WA?  - technically the state is in deep recession and it will need more than a 0.25% rate cut to make any difference  - for more information 

  • Worksafe Premium Funding - pay by 1 August and be eligible for the 5% discount

    Worksafe Logo

    To be eligible for the  5% discount on your Worksafe Premium you need to pay the full premium by 1 August 2016.  If you pay in full by 31 August you maybe eligible for a 3% discount on the premium 

    Insurance Premium Funding allows you to spread the premium payment over as many as 10 months and qualify for the 5% discount  - if you act now

    For more information on Insurance Premium Funding  Read more....

  • RBA Board leaves cash rate unchanged - surprises many with neutral stance

    7 June 2016 - It came as no surprise that the RBA Board left the cash rate unchanged, after the strong performance of the economy in the last quarter.

    Whats was a surprise was that the Board indicated that there were no grounds for further cuts in the short term.

    Despite the apparently strong performanvcein the last quarter the economy has a number of structural weaknesses going foreward and the RBA appears to be keeping something in reserve ( non pun intended) for the future.

  • Residential property listings fall in May

    SQM Listings May 2016

    07 June 2016   - from SQM Research.  The number of residential properties listed for sale declined by an average of 4.3% in all states during May - but asking prices rose!

  • Nab, CBA & Westpac pass on full 0.25% rate cut, ANZ passes on 0.19%

    Australian Home (600 x 400)

    Tuesday 3 May 2016 - from AAP  

    National Australia Bank is cutting its variable mortgage rates by 0.25 percentage points, passing on the Reserve Bank's rate cut in full. The move, effective from May 16, will trim about $47 from the average monthly repayment on a 30-year $300,000 mortgage.

    The big four banks have attracted criticism for not passing on in full previous rate cuts, and there has been uncertainty about whether any cut would flow through this time due to the banks' need to raise additional capital through product repricing.

    NAB said its standard variable rate for owner occupiers will drop from 5.60 per cent to 5.35 per cent, with the rate for investor rates dropping from 5.75 per cent to 5.50 per cent.

    "The circumstances of each decision will always vary and we must take into account factors such as competition, regulatory capital requirements and funding costs," NAB personal banking group executive Gavin Slater said in a statement. "Today's decision balances the needs of our homeloan customers with our shareholders."

    NAB will also reduce its rate on standard variable business lending products by 0.25 percentage points.

    In later announcements the CBA and Westpac announced that they would pass on the full rate cut. ANZ cited increased funding costs in deciding to only pass on a rate cut of 0.19% to home owners. However, it will pass on the full 0.25% reduction to small business borrowers.

  • RBA drops Cash Rate to a record low

    Glenn Stevens RBA

    Tuesday 3 May 2016 -  At its meeting today, the Board decided to lower the cash rate by 25 basis points to 1.75 per cent, effective 4 May 2016. This follows information showing inflationary pressures are lower than expected. 

    Statement by Glenn Stevens

    The global economy is continuing to grow, though at a slightly lower pace than earlier expected, with forecasts having been revised down a little further recently. While several advanced economies have recorded improved conditions over the past year, conditions have become more difficult for a number of emerging market economies. China's growth rate moderated further in the first part of the year, though recent actions by Chinese policymakers are supporting the near-term outlook.

    Commodity prices have firmed noticeably from recent lows, but this follows very substantial declines over the past couple of years. Australia's terms of trade remain much lower than they had been in recent years.

    Sentiment in financial markets has improved, after a period of heightened volatility early in the year. However, uncertainty about the global economic outlook and policy settings among the major jurisdictions continues. Funding costs for high-quality borrowers remain very low and, globally, monetary policy remains remarkably accommodative.

    In Australia, the available information suggests that the economy is continuing to rebalance following the mining investment boom. GDP growth picked up over 2015, particularly in the second half of the year, and the labour market improved. Indications are that growth is continuing in 2016, though probably at a more moderate pace. Labour market indicators have been more mixed of late.

    Inflation has been quite low for some time and recent data were unexpectedly low. While the quarterly data contain some temporary factors, these results, together with ongoing very subdued growth in labour costs and very low cost pressures elsewhere in the world, point to a lower outlook for inflation than previously forecast.

    Monetary policy has been accommodative for quite some time. Low interest rates have been supporting demand and the lower exchange rate overall has helped the traded sector. Credit growth to households continues at a moderate pace, while that to businesses has picked up over the past year or so. These factors are all assisting the economy to make the necessary economic adjustments, though an appreciating exchange rate could complicate this.

    In reaching today's decision, the Board took careful note of developments in the housing market, where indications are that the effects of supervisory measures are strengthening lending standards and that price pressures have tended to abate. At present, the potential risks of lower interest rates in this area are less than they were a year ago.

    Taking all these considerations into account, the Board judged that prospects for sustainable growth in the economy, with inflation returning to target over time, would be improved by easing monetary policy at this meeting. 

  • Westpac joins other banks in tightening criteria for foreign borrowers


    27 April 2016:  

    Westpac Banking Corp. will no longer lend to offshore customers who aren’t citizens or who don’t hold appropriate residency visas, it said in an e-mail Wednesday. It follows Commonwealth Bank of Australia, National Australia Bank Ltd. and Australia & New Zealand Banking Group Ltd., which have tightened funding to overseas customers.Westpac has previously been the most aggresive bank lending to foreign purchasers of residential property in Australia.

    Westpac said it won’t accept applications from non-residents, self-employed foreigners and temporary visa holders living overseas. The bank also reduced the loan-to-value ratio for mortgage applicants with foreign income to 70 percent from 80 percent.

    Over the last quarter demand for Australian residential property from foreign buyers has dropped approximately 5% as a consequence of tightening controls on capital outflows by the Chinese government, as well as increased costs and tightening credit by Australian lenders.

    Given that a large percentage of the apartments being built in Sydney, Melbourne and Brisbane have been sold to foreign nationals, there is a significant increase in settlement risk as these buyers could struggle to meet their contractual commitments.

  • Victoria doubles stamp duty on property purchases by non residents

    Tim Pallas - Treasurer Victoria

    22 April 2016 - Media release by the Victorian State Treasurer and Member for Werribee Tim Pallas  

    Securing a fair deal for Victorians 

    The Andrews Labor Government is taking action to ensure foreign buyers of residential real estate contribute their fair share to the liveability of our state.

    It is only fair that foreign buyers – who do not pay taxes such as payroll tax and GST – fairly contributed to the maintenance and development of government services and infrastructure, just like Victorian taxpayers do.

    The 2016/17 Victorian Budget will increase the stamp duty surcharge on foreign buyers of residential real estate from 3 per cent to 7 per cent, and apply to contracts signed on or after 1 July 2016.

    The land tax surcharge on absentee owners will also rise from 0.5 per cent to 1.5 per cent from the 2017 land tax year.

    There have been sustained and strong levels of foreign purchasing of residential real estate in recent years. This increase will ensure a fair and equitable contribution is made by foreign purchasers of Victorian real estate.

    The measures are expected to raise $486 million over the next four years.

    Quotes attributable to Treasurer Tim Pallas

    “No Victorians will pay these surcharges. This is about ensuring foreign owners pay their fair share.”

    “It’s only fair that foreign buyers of residential real estate, who enjoy the capital growth as a result of Victoria’s liveability and the amenity of our cities, contribute to the maintenance of government services and infrastructure.”

    Victoria’s surcharges on foreign owners of residential real estate have been in operation since 1 July 2015 and have had little impact on foreign demand for Victorian dwellings.

    “Since we introduced these surcharges last year, there has continued to be a welcome and steady stream of foreign interest in our residential real estate. The surcharges ensure that buyers will continue to benefit from the best services and infrastructure.”

  • BOQ increases turnover & profits - raises home & investment loan rates


    7 April 2016  - Bank of Queensland announced its first half financial results today. Despite increasing revenue 4% to $561million and a 7% increase in operating profit to $187.8m for the 6 months the bank has lifted interest rates on its variable rate home and investment loans.

    Tha announced profit was approx 5% less than market expectations  - but the bank held its net interest rate margin steady at 1.97% defying the interest rate squeeze and interest cost increases experienced by other lenders.

    Effective from the end of next week the bank will increase its standard variable rate home loan by 0.12% to 5.86% (before discounts) and its variable rate for residential investment loans by 0.25% to 6.28% ( before discounts). 

  • Lenders impose restrictions on lending for off the plan units

    AMP Bank

    23 March 2016 - from Australian Financial Review

     AMP has joined other lenders and put more than 140 suburbs on a confidential ‘black list’ because of growing concerns about oversupply, off-the-plan sales, and, in some areas, falling prices. From The AFR:

    We have identified certain high density areas where we have put provisions in place to manage risk and over-supply,” a spokesman says. “We take a prudent approach to managing risk,” she says…

    AMP borrowers will face tougher terms on the amount borrowed, number of apartments purchased in a single development and a ban on using some incentives offered by developers, such as rental guarantees…

    An estimated 45,000 apartments are due for completion and settlement over the next nine months to Christmas in Melbourne, Sydney and Brisbane, an increase of nearly 25 per cent compared to last year, according to planning consultancy MacroPlan Dimasi.

    Another 53,000 could be coming to market in the same postcodes next year, the consultancy estimates.

    The black-listed suburbs include both popular inner-city locations such as Docklands and Southbank in Melbourne, as well as some further-out locations, such as Sydney’s Homebush and Arncliffe.

  • New Lending Protection for Small Businesses

    ASIC 3

    18 March 2016

    Small businesses enter into standard form contracts every day for financial products and services. Contracts for business loans, credit cards and client or broker agreements, for example, are almost certainly standard form contracts.

    Traditionally the major lenders contracts for small business loans have been the same as those used for large corporate borrowers, and often disadvantaged SME owners.

    The new unfair contract term protections will apply to standard form small business contracts entered into, or renewed, on or after 12 November 2016, where the upfront price payable under the contract does not exceed $300,000 – or $1 million if the contract is for more than 12 months.

    To find out more information about the unfair contract legislation click here

  • APRA bank warning over investor home loan switch


    11 March 2016  - from ABC News

    The big and sudden switch of mortgages being reclassified away from investment to owner-occupier loans has drawn the ire of the banking regulator, the Australian Prudential Regulation Authority.APRA has written to the banks noting that data had to be consistently and accurately reported.

    "A number of ADIs (Authorised Deposit-taking Institutions) have recently reported significant changes in housing loan purpose between investment and owner-occupied," APRA's head of data collection Barton Ashcroft observed. "Where the change in loan purpose is not reported correctly, APRA, the Reserve Bank of Australia and the Australian Bureau of Statistics are impeded in accurately ascertaining the underlying movements in housing loans."

    To read the full ABC News article click here

  • From AFR - BIS Shrapnel warns unit oversupply is "an accident waiting to happen"


    Australia's apartment boom is reaching its crescendo, and all cities, except Sydney will be in oversupplyb by 2017, forecaster BIS Shrapnel has warned.

    "In Melbourne the oversupply will be significant, in Brisbane it will be worse. it is an accident waiting to happen," said BIS Shrapnel Managing Director at the groups six monthly building Forecasting Conference.

    to read the full AFR article click here

    For further information on the problems facing Off the Plan purchasers  - read more here

  • ATO cracks down on holiday home deductions


    11 Feb 16 - The ATO is stepping up its focus on rental property owners, in particular holiday home owners, and will soon write to 1000 owners who may have incorrectly claimed deductions for initial repairs to recently acquired rental properties.

    The ATO last year it had sent out letters to 500 postcodes across Australia, reminding people to only claim the deductions – including maintenance and mortgage interest – they are entitled to, for the periods the holiday home was rented out or was genuinely available for rent.

    A key concern in regard to holiday home owners, is when people make claims for expenses when the property was not genuinely available for rent. ?( see  article below dated 8 Dec 15).

  • ATO demands 32 years of property records from States


    8 Dec 2015  - The ATO has lodged a notice in the Government Gazette which has demanded 32 years of detailed transaction history from Australia’s state and territory land titles offices and rental boards, in order to create a new central depository of data on property ownership.

    The information demanded by the ATO is extremely comprehensive and will be used to data match with current and previous tax records. (See the details here)  

  • Merchant Cash Advance - what is it ?

    Cash (200 x 111)

    Merchant Cash Advance facilities are a relatively new form of business finance that is being heavily promoted at the moment.

    A high risk facility for the lender, they are also a high risk facility for the client, although in the right circumstances they may have an application. .... Read more..... 

  • Changes to credit guidelines to bite hard


    The recent changes to lenders credit guidelines dictated by APRA have started to take effect with a detectable reduction in investment lending after a few months. The effects of the changes are quite significant and will have a major impact on the market whilst lenders are trying to balance their loan books.

    Longer term there will be more than a little pain as investors who have bought units off the plan on the basis of conditional finance approvals receive notice to settle and no longer qualify for the loan they need.

    There is also significant settlement risk for the banks who have lent to foreign residents..............  

    We face a repeat of the Docklands experience - but on a much larger scale - read more here....... 

  • ASIC Report into Interest Only Loans

    ASIC 3


    20 August 2015  - ASIC today released its report into Interest Only residential lending. The key findings were

    1.  The majority of interest-only home loans were extended to investors; however, a substantial proportion of interest-only home loan approvals (41% in the December 2014 quarter) were for owner-occupiers.
    2. A greater proportion of the total number of interest-only home loans was sold through third-party or broker channels, compared to direct channels
    3. The average value of interest-only home loans was substantially higher than principal-and-interest home loans for both owner-occupiers and investors, and this was especially so for loans provided through direct channels in comparison with third-party channels.
    4. Overall, there was a smaller proportion of interest-only home loans in higher LVR categories when compared to principal-and-interest home loans
    5. A diverse group of consumers tended to take out interest-only home loans. In general, interest-only home loans were more popular with consumers who earned more money, but a substantial proportion (29%) of owner-occupiers with interest-only home loans earned less than $100,000
    6. Consumers with interest-only home loans were, on average, further ahead in reducing the balance of their loan when including funds held in offset accounts related to the home loan, than those with principal-and-interest home loans
    7. In many cases the use of interest only loans was an acceptable strategy.
    8. In a large number of instances (30 - 40%) lenders had failed to properly assess borrowers living expenses and had relied on benchmarks ( such as HEMS) rather than making full investigation of the clients situation
    9. Lenders have already started to implement reforms to their procedures and policies.

  • Despite $9bn profit for the year CBA is raising $5bn extra capital - Why?

    CBA logo

    12 August 15 - Our banks are among the most profitable in the world - but they're thinly capitalised and depend on overseas capital for approx 50% of their funding. In the GFC our banks needed the intervention of the Federal government to ensure their survival. A similar situation occurred after the 1987 share market crash when Westpac and to a slightly lesser extent ANZ came very close to failing.  

    In 2007/8 the Federal Govt had the cash reserves and capacity to undewrite the banks following a long run of surpluses. This is no longer the case.  (Read more).

  • CBA tightens lending guidelines on residential developments

    CBA logo

    6 Aug 15  - The Commonwealth Bank has reduced the amount of finance it will lend to property developers in a bid to reduce their exposure to the property market. It's likely that other lenders will follow suit in the near future. The move is partially as a result of the tightening of capital requirements by APRA, partly because it is now increasingly evident that there is a significant glut developing in the residential unit market . The bank now requires that pre-sales cover 100% of construction funds advanced and  has reduced funding from 80% of costs to 75% of costs.

    Source: Business Insider - requoted from AFR

  • Victoria increases Stamp Duty on residential property purchases for non residents


    Effective from 1 July 2015 - Foreign purchasers who have entered into a contract to purchase and certain other agreements in relation to residential property in Victoria on or after 1 July 2015 will be required to pay an additional 3% stamp duty on the purchase.  Stamp duty on a residentail property with a purchse price of $1m would be $85,000 for a foreign purchaser as opposed to $55,000 for a resident.

    The amendments are quite detailed and cover a wide range of situations designed to frustrate avoidance.

    The SRO website contains detailed information, and provides examples of the situations where the increased duty will be applicable.

    This increase in Stamp Duty is in addition to any impost that  may be applied by the FIRB and heightened credit requirements from lenders.

    For further information see the SRO website

  • AMP temporarily stops residential investment lending

    AMP Bank

    29 July 2015 -  In a statement AMP said that it would increase variable rates on all existing investor property loans by 0.47% per annum from 7 September 2015. All investor applications approved during this period will also be subject to the 0.47% increase upon settlement, the bank said. In addition to the increase in investor home loans rates, the bank confirmed that it will not be accepting new or assessing existing investor property lending applications from today.

  • Bank of Melbourne & St George reduce loan to valuation ratios on SMSF loans

    St George Logo

    Westpac group subsidiaries St George and Bank of Melbourne have reduced the loan to valuation ratios (LVR) for SMSF borrowers from 80% to 70%.

    Many lenders are becoming increasingly nervoius about lending for residential property  purchases by SMSFs due to the limited recourse they have to other assets held by funds in a worst case scenario.  

    In May Nab indicated that it would stop offering limited recourse arrangement on residential property.

    ANZ doesn't offer limited recourse facilities, however at even date they are still offered by CBA and Westpac.

  • Nab joins ANZ / CBA with increased rates for residential investment loans

    Rates up

     23 July 2015  - ANZ, Australia’s third-largest bank, has increased its variable interest rate on for residential property loans for investors.

    24 July 2015 - CBA, the nation's largest home loan lender announced that it will increase the rates on investment loans    

    Monday 27 July 15 - Nab has joined CBA and ANZ and  increased the interest rates on residential investment loans.. They have also moved to reduce interest only loans, and require investors to pay principal and interest.  ..........Read more

  • The top 5 reasons businesses run out of cash

    Cash (200 x 111)

    Sucess in business is dependent on many factors - but the most important is good cash flow

    Here are the top 5 reasons that businesses run out of cash  Read more.... 

  • Melbourne - The world's most livable city - for how long??


    Melbourne World’s Most Liveable City today …………..not so sure about tomorrow! Much has been made in the press in the last 2 – 3 years about the unprecedented numbers of units currently being developed in Melbourne.

    Read More....


  • RMBS Market is Alive - non bank lender places $1billion RMBs


    Firstmac Ltd. has priced $A1 billion ($US805 million) of notes in the Australian-dollar market’s largest non-bank mortgage-bond deal since the global financial crisis.

    The Brisbane-based lender, which funds online mortgage website, sold A$600 million of top class AAA rated notes at a spread of 98 basis points over the bank-bill swap rate, according to an e-mailed statement. It issued a further A$358 million of AAA rated notes at spreads ranging from 115 to 195 basis points, while the remaining A$42 million of securities carried lower credit scores or were held onto by the issuer.

    “The Firstmac bonds have been well received by an investor market keen to take up an offering with a strong track record,” Firstmac Chief Financial Officer James Austin said.

    Non-bank issuers have priced almost A$3 billion of mortgage bonds in public deals so far in 2015, while banks have issued A$7.9 billion, data compiled by Bloomberg show. That compares with about A$9.9 billion of total RMBS at the same stage in 2014.

    RMBS are a major source of funding for credit unions, building societies and other non-bank lenders that don’t have access to deposits. Firstmac has issued more than A$13 billion of the securities since 2003, it said.

    The Firstmac offering attracted money from 22 different investors and was managed by Australia & New Zealand Banking Group Ltd., Westpac Banking Corp., National Australia Bank Ltd. and JPMorgan Chase & Co., according to the issuer.

    Bloomberg Business 15 May 15