Banks Drop 100% Home Loans

Yes that is right, due to the Credit Crunch

restricting the funds Banks have available,

they have now taken aim at the First Home Buyers.

First Home Buyers are facing high borrowing barriers

despite falling interest rates as the credit crisis

breaks loose on the nation’s real economy.

The Commonwealth Bank of Australia,

following ANZ Bank became the latest of the

primary Australian banks to announce

the end of no-deposit home loans last week.

Other mainstream lenders have “very minimal”

appetite for no-deposit lending,

with applications for low-deposit lending being

“looked at more critically than ever before”.

The Australian Banks have welcomed the

Government’s latest Home Loan scheme increases,

where up to $21,000 is now available from

the Australian Government

which is then topped up by the Victorian State Government

by between $3,000 and $8,000 depending on location

and whether it is newly constructed.

The Banks lower interest rates are available on

lending up to 95% of a home’s value.

Above 80%, borrowers need to cover

the cost of mortgage insurance,

which some of the Banks will add to the loan,

while others require the borrower to pay in full.

Practically all of the Banks have reduced their rates

by between 1.7% and 1.8%

following the Australian Reserve Banks

cutting of rates by 2% over the past 3 months.

First-time buyers will generally require

a minimum deposit of 5%.

The maximum loan to value ratio for an owner-occupied

residential property is now 95%  and

90% for investment properties.

BIS Shrapnel Believes Residential Building Recovery To Begin In 2009

While several Major Developers and Home Builders have already recorded

record sales over the last few months,

fuelled by the increased First Home Owners Grant,

this is now showing the trend to what will come in 2009.

Residential construction is forecast to be a key support

for the Australian economy during 2009,

according to leading industry analyst and economic forecaster,

BIS Shrapnel.

 

The national number of dwelling starts is forecast to rise by 10 per cent next year,

which will be the first calendar year of growth since 2002.
 
BIS Shrapnel believes that if the Federal Government’s recent First Home Owner Boost Scheme

is extended until at least December 31, 2009,

then in addition to there being more substantial momentum

in the recovery in detached house construction,

there would also be an improvement in the funding availability

for apartment development in the second half of 2009,

which would help alleviate the current rental crisis.

 

BIS Shrapnel senior economist, Jason Anderson,

says there is likely to be a reduced number of affordable apartments

on the market over the next six months.

“Given the current difficulties for developers to get finance

for medium or high density unit/apartment development,

we do not expect them to be in a position to schedule additional construction,

even if they do see increased sales to first home buyers,” he says.

 

“The First Home Owner Boost Scheme is scheduled to end on June 30, 2009,

and it will be difficult for many projects to resolve

financing issues over the next few months.”

National Housing Finance Figures – September 2008

Housing Finance September 2008

Source: ABS Cat No 5609.0

On a seasonally adjusted basis the national value of housing loan commitments (owner occupation) in September was $11.891 billion,

down by 1.9% on August.

On a state basis, the respective statistics were:

 

NSW $3.809 billion (-3.6%)

Victoria, $2.752b (-0.8%),

Qld, $2.523b(+1.6%),

SA, $0.803b (-4.3%),

WA ,$1.533b (-1.9%),

Tas, $167m (-1.2%),

NT, $87m(+4.8%),

ACT, $194m (+4.9%).

 

 

Investment Housing – Total

Source: ABS Cat No. 5609.0

The value of investment housing loan commitments

($5.317billion, seasonally adjusted)

fell by 1.1% on August.

 

The drivers of this result were a fall in the

construction of dwellings for rent or resale (-26.4%),

a rise in the purchase of dwellings

for rent or resale by individuals (+1.4%)

and by others (+5.2%)

The total value of housing finance commitments

- $17.209b fell by 1.6% on August.

 

 

MELBOURNE MEDIAN HOUSE PRICES SEPTEMBER QUARTER UPDATE

 

Melbourne experiences a decline of 3.3 per cent

The REIV median prices for the September quarter show that Melbourne’s median has experienced a decline of 3.3 per cent. This can be directly attributed to continuing economic uncertainty, a tightening of liquidity markets and a decline in investor and consumer confidence. The suburbs that have shown the greatest decline in median values in the quarter are in the more expensive end of the market and are the same suburbs that enjoyed unsustainable growth throughout 2007. Of the top 20 growth suburbs for the quarter: only five have a median price in excess of the September median, $435,000. This is a result of the increased demand for affordably priced properties – and this demand is driven by three factors: Melbourne’s strong population growth; a undersupply of newly constructed properties and a further tightening in the rental market.