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CBA pulls out of construction finance

Discussion in 'Property Finance' started by Blacky, 6th Aug, 2015.

  1. Blacky

    Blacky Well-Known Member

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    A little birdie just told me that CBA has just announced they are completely withdrawing from the construction segment.

    Can anyone confirm?
    Anyone have any more details?

    Blacky
     
  2. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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  3. OC1

    OC1 Well-Known Member

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    Same with ANZ based on what my business banking manager told me last week.
     
  4. Be Developer

    Be Developer Property Developer Business Member

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    Quickly saw a headline on epaper today ;"end of construction boom"

    If that to be believe.:(
     
  5. Hanison

    Hanison Well-Known Member

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    What does this mean ?

    Serious question ...
     
  6. alexm

    alexm Well-Known Member

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  7. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    A number of lenders are being prudent and looking at the risk profiles for commercial developments a little more - what does this mean in reality for the majority of posters on this forum? Not all that much.
     
  8. sash

    sash Well-Known Member

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    Aahhh...panick sets in luv it........shut down development finance...rents go up.

    What a bunch of rocket scientists we have in APRA...dumb and dumber..I could probably run a better shop. I would have cooled Sydney and Melbourne by having higher LVRs by post code...would have been a lot more targeted. What a bunch of toss bags....

     
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  9. Be Developer

    Be Developer Property Developer Business Member

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    I don't think it is time to panic..

    Plenty more opened channel to fund development finance at favourable terms...just need to look outside of square solution!
     
  10. Bullion Baron

    Bullion Baron Well-Known Member

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    If you're going to panic, panic early :eek:

    Time to sell that overpriced OTP apartment purchase before you can't get finance for it anyway ;)
     
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  11. AndrewTDP

    AndrewTDP Urban Planning Consultant Business Member

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    There should be greater incentive to develop land rather than just buy and hold.

    Propping up an investment vehicle that doesn't actually do anything instead of encouraging people to release new housing options is a poor outcome for the nation imo.
     
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  12. Natedog

    Natedog Well-Known Member

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    You could say the same of the share market. The nations future retirement funds are predominantly held in "existing paper asets" being bought and sold with zero productivity. At least a house provides shelter.....
     
  13. Hanison

    Hanison Well-Known Member

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    Let me rephrase.

    What does this mean in a broader sense?
    If banks are heavily tightening lending criterias for investors and ceasing all lending to developers.

    I can't help but think that someone, somewhere knows a little more than is being let on, and let out.

    I'm only young and also young at this game.
    If banks stop lending money. It's got to mean more than just being prudent. Something is up.

    Older and more experienced players - please enlighten me. I've never seen or heard of this situation before.

    If it has happend before.

    Tell me why. Share your knowledge of what's going on please.
     
  14. spludgey

    spludgey Well-Known Member

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    That's exactly what I thought when I read the title of this thread.
    For me, it would be a good thing if development finance was shut down. For Australia as a whole, it would be quite a bad thing.
     
  15. Kangabanga

    Kangabanga Well-Known Member

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    If I am not wrong, Aus banks have to adhere to the international Basel regulations (The Basel Accords is a set of recommendations for regulations in the banking industry. Basel I, Basel II and Basel III—issued by the Basel Committee on Banking Supervision (BCBS), in order to maintain their triple AAA ratings. APRA kinda regulates these and has to be pretty strict. The basel committee consists of people from G-20 nations and smaller nations like HongKong/Singapore

    A drop in the triple AAA status could see a big foreign investment and funds outflow which would have significant impacts on the Aus financial sector.

    The banks seem to have taken on too much risk at the moment and whilst things are still stable, APRA is trying to whip them back into shape.

    well at least that's what I believe is happening.doesn't seem like there is anything they are not telling us. The only other thing is that the real economy is tanking and business investment is drying up at a very fast pace and not represented in the official gov numbers.
     
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  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    CBA is not quitting any form of resi build lending...............your canary is more like a bush turkey

    But they will now also do 95 + cap MI on unicorns

    ta
    rolf
     
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  17. Natedog

    Natedog Well-Known Member

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    Good to know, I am about to make an offer on the loch ness monster, will CBA cap LMI up to 97% on this deal based on the scarcity factor?
     
  18. HD_ACE

    HD_ACE Game-Changer Premium Member

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    Your valuation will come up short due to lack of comparables.
     
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  19. Natedog

    Natedog Well-Known Member

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    Bugger! I'll need to catch a leprechaun with his pot of gold....time to chase some rainbows to get the LVR down
     
  20. Marty McDonald

    Marty McDonald Mortgage broker Business Member

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    Haven't seen anything on this yet BUT below in the AFR which may have been what the OP was about.

    I really don't see the big deal as most land is not settled until the infrastructures is in anyway I thought.

    Commonwealth Bank of Australia plans to curb loans to new housing developments, a decision that will hit first-home buyers and investors in outer suburbs.

    A CBA presentation to brokers, marked "confidential", outlines a plan to delay the approval of finance for buyers of lots until the land is ready for development and all preliminary work such as roads has been completed.

    Developers said the change will limit land development, putting further pressure on already-surging prices by limiting the supply of houses.

    This policy will restrict pre-sales of houses. Many developers have to pre-sell up to 50 per cent of all lots on a planned site before a bank will lend money needed to start earthworks and install water, sewerage and electricity services that make it developable for houses
    .



    Read more: http://www.afr.com/real-estate/residential/cba-now-tightens-lending-to-mortgagebelt-punters-in-growth-corridors-20150809-giv53s#ixzz3iNcV8I8g
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