CBA pulls out of construction finance

Discussion in 'Loans & Mortgage Brokers' started by Blacky, 6th Aug, 2015.

Join Australia's most dynamic and respected property investment community
Page 1 of 2
  1. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    2,066
    Location:
    Bali
    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
     
    Blacky, 6th Aug, 2015
    #1
  2. Peter_Tersteeg

    Peter_Tersteeg Mortgage Broker Business Member

    Joined:
    18th Jun, 2015
    Posts:
    8,171
    Location:
    03 9877 3000
    Peter_Tersteeg, 6th Aug, 2015
    #2
  3. OC1

    OC1 Well-Known Member

    Joined:
    6th Jul, 2015
    Posts:
    216
    Location:
    Melbourne
    Same with ANZ based on what my business banking manager told me last week.
     
    OC1, 6th Aug, 2015
    #3
  4. 380

    380 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,353
    Location:
    Australia
    Quickly saw a headline on epaper today ;"end of construction boom"

    If that to be believe.:(
     
    380, 6th Aug, 2015
    #4
  5. Hanison

    Hanison Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    249
    Location:
    Brisbane
    What does this mean ?

    Serious question ...
     
    Hanison, 6th Aug, 2015
    #5
  6. alexm

    alexm Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    492
    Location:
    Sydney
    alexm, 6th Aug, 2015
    #6
  7. Corey Batt

    Corey Batt Well-Known Member

    Joined:
    14th Jun, 2015
    Posts:
    2,091
    Location:
    Adelaide, SA
    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.
     
    Corey Batt, 6th Aug, 2015
    #7
  8. sash

    sash Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    15,663
    Location:
    Sydney
    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....

     
    sash, 6th Aug, 2015
    #8
    ej89, blw101, Sackie and 2 others like this.
  9. 380

    380 Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    1,353
    Location:
    Australia
    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!
     
    380, 6th Aug, 2015
    #9
  10. Guest

    Guest Guest

    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 ;)
     
    Guest, 6th Aug, 2015
    #10
    sanj and OC1 like this.
  11. AndrewTDP

    AndrewTDP Well-Known Member

    Joined:
    1st Jul, 2015
    Posts:
    764
    Location:
    Newcastle
    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.
     
    AndrewTDP, 6th Aug, 2015
    #11
    TheSackedWiggle and OC1 like this.
  12. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    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.....
     
    Natedog, 7th Aug, 2015
    #12
  13. Hanison

    Hanison Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    249
    Location:
    Brisbane

    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.
     
    Hanison, 7th Aug, 2015
    #13
  14. spludgey

    spludgey Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    3,523
    Location:
    Sydney
    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.
     
    spludgey, 7th Aug, 2015
    #14
  15. Kangabanga

    Kangabanga Well-Known Member

    Joined:
    21st Jun, 2015
    Posts:
    1,497
    Location:
    Brisbane
    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.
     
    Kangabanga, 7th Aug, 2015
    #15
    380 likes this.
  16. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,654
    Location:
    Gold Coast (Australia Wide)
    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
     
    Rolf Latham, 7th Aug, 2015
    #16
    Natedog and ashalim like this.
  17. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    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?
     
    Natedog, 7th Aug, 2015
    #17
  18. HD_ACE

    HD_ACE Game-Changer

    Joined:
    18th Jun, 2015
    Posts:
    491
    Location:
    Perth
    Your valuation will come up short due to lack of comparables.
     
    HD_ACE, 7th Aug, 2015
    #18
    Jess Peletier and Natedog like this.
  19. Natedog

    Natedog Well-Known Member

    Joined:
    18th Jun, 2015
    Posts:
    373
    Location:
    Brisbane
    Bugger! I'll need to catch a leprechaun with his pot of gold....time to chase some rainbows to get the LVR down
     
    Natedog, 7th Aug, 2015
    #19
  20. Marty McDonald

    Marty McDonald Mortgage broker Business Member

    Joined:
    22nd Jun, 2015
    Posts:
    881
    Location:
    Sydney North Shore and Norther beaches
    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
    Follow us: @FinancialReview on Twitter | financialreview on Facebook
     
    Marty McDonald, 10th Aug, 2015
    #20
Page 1 of 2