Mortage Brokers - your thoughts of current market ?

Discussion in 'Property Market Economics' started by See Change, 1st Sep, 2020.

Join Australia's most dynamic and respected property investment community
  1. fl360

    fl360 Well-Known Member

    Joined:
    15th Jul, 2020
    Posts:
    473
    Location:
    Sydney
    and from ScoMo reaction to VIC's extended lock down you can tell how bad it is on the government's book running jobkeeper/seeker is...

    one factor missing in the discussions is in capital cities, the over building of high density apartments, and if our population is not exploding like they predicted I don't see CGs in those properties.... strata management / servicing will be the big winner !

    no wonder more and more locals are moving 1-2 hrs drive from Sydney / Melbourne to get a house, to avoid all these troubles.... (PPORwise)

    Lucky Australia has a lot of land.
     
  2. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia

    It doesn't have a lot of registered land in locations with medical, schools, good access to major cities , though....
     
    Andrewjh likes this.
  3. fl360

    fl360 Well-Known Member

    Joined:
    15th Jul, 2020
    Posts:
    473
    Location:
    Sydney
    you will be surprised, regional cities (I mean 1-2 hr drive from capital cities) actually undergone some big developments.

    schools - subjective argument.
    medical - inside major cities you could have bad hospitals too.
    good access to major cities - that's the catch, if you moved regional, no point, and no need to linger on the major cities...

    - just get a good car.
     
  4. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia

    You don't need to convince me of the merits of regionals - its what I specialise in :) My point was - just because Australia has a large land mass doesnt mean lots of registered land is available to build residential homes on. The slow speed which regional councils tend to work and release subdivisions has resulted in shortages, which has resulted in regionals ( those with medical, schools and good access at least) struggling to keep up with demand....
     
    Lindsay_W likes this.
  5. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,673
    Location:
    Perth WA + Buderim Qld
    We're flat out. Lots of refinancing, purchases and constructions. It's all happening - main issue is that people who want finance can't get it, due to low servicing or the generous lenders being nervous about covid-related industries, despite regular income for the applicant.
     
    Lions4Eva likes this.
  6. Redom

    Redom Mortgage Broker Business Plus Member

    Joined:
    18th Jun, 2015
    Posts:
    4,607
    Location:
    Sydney (Australia Wide)
    Some random comments:

    - Many lenders are giving process headaches by being so slow and not adapting their processes to change well enough. Causing brokers & clients lots of headaches - some are very avoidable with better systems/processes from lenders. Some of the current wait times and blockages are pretty embarrassing.

    - Overall activity remains weaker than pre-covid, where it was really strong. First home buyer activity is strong, so is upgraders. Investors quieter then normal. The early cycle stage investors will likely come out soon. Lots of homebuilder activity too, but not really my space personally.

    - Price of credit is so so low and a major adjustment to a couple years ago. Lots of people are coming out of fixed's made in a higher rate environment (mid 4s) and actively shopping their loans for better deals. Perhaps it's more time working at home too, or simply the trigger point of fixed rate expiries driving activity.

    - Patchy housing & credit market across major capitals. Melbourne of course would be far worse in terms of credit demand than the rest of the country. This market will be particularly interesting - the income support measures in place may not be enough for Melbourne, but ample for the rest of the country. We'll likely see the two major markets move in different directions soon.The big price falls anticipated by the big banks are looking unlikely in Sydney now given the indices already stabilising, while looking more likely in Melbourne given the pace of declines and what's happening on the ground currently. Our ACT activity remains relatively buoyant too. I assume Perth and other capitals may be doing well.

    - Overall, if we strip out the noise and look solely at the variables impacting credit markets - this is an amazing time. Its very very cheap, borrowing powers have been juiced up for the mass market (OO, investors, FHBs, etc), RBA are turning the taps onto full blast, the regulators are stepping out of the way, and there's a lot of credit options out there across the spectrum. On top of that spreads between yield and credit are now quite high. I.e. positive gearing across major capitals now, even in premium markets. Once there's confidence back, and if the economy recovers well, these are high level macro/prudential conditions for an investor led housing demand again. Credit cost & availability are big factors - you need confidence and an economy out of the doldrums to get it going though.
     
    Last edited: 8th Sep, 2020
    MC1, craigc, Andrewjh and 6 others like this.
  7. bumskins

    bumskins Well-Known Member

    Joined:
    16th Aug, 2015
    Posts:
    528
    Location:
    Sydney
    Majority are way ahead currently from a cashflow perspective.

    No transport, childcare costs.
    Ability to suspend mortgages.
    Accessing Superannuation

    Stimulus is overcompensating a lot of people vs their normal income levels.

    It has also overcompensated a lot of businesses based on the original lax qualification requirements.
     
  8. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    What I need to do is fix my loans at 2% for 10 or more yrs. That would give me peace of mind. It's not plausible (although possible) that credit will remain that cheap for say, a decade.
     
  9. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    1 hr out of the city would get me to Parramatta on a bad day lol.
     
    Anchor, KFC_8 and Terry_w like this.
  10. fl360

    fl360 Well-Known Member

    Joined:
    15th Jul, 2020
    Posts:
    473
    Location:
    Sydney
    not paying for westconnex ? ;-)

    ok, "regional" I mean 100 to 150km out of capital cities then...
     
  11. Tyler Durden

    Tyler Durden Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    350
    Location:
    Australia
    5601.0 - Lending Indicators, Jun 2020

    Personally I think it'll be 6-12mths minimum before @Redom 's early cycle investors show up (unless we're looking west). I'd say that many longer term investors are either busy paying down debt and/or selling to ambitious FHB's and the knee-jerk city escapees. For the regionals especially, it's pretty standard cyclical behaviour - FHB's and OO's ringing the bell at the top.
     
    Last edited: 9th Sep, 2020
    BunnyXiao likes this.
  12. Lacrim

    Lacrim Well-Known Member

    Joined:
    25th Jul, 2015
    Posts:
    6,175
    Location:
    Australia
    I know i was just being a smart arse.
     
  13. BunnyXiao

    BunnyXiao Well-Known Member

    Joined:
    27th Aug, 2020
    Posts:
    435
    Location:
    Estonia
    For me an on the money observation. I own in two regionals. Paying down debit now. Looking to sell up once market picks up
     
    Tyler Durden likes this.
  14. Tyler Durden

    Tyler Durden Well-Known Member

    Joined:
    19th Jan, 2016
    Posts:
    350
    Location:
    Australia
    I don't know where you're invested but keep in mind that many regionals have been on an absolute tearaway since at least 2017, many of the more popular regionals moved in unison with Sydney-Melb from 2014-15. Availability of credit (as noted by @Jess Peletier ) and the slowing of capital city markets may start to temper demand soon?

    We have regional properties, both in areas that are now considered bluechip markets (Noosa Shire) and it feels like a repeat of the GFC to me, perhaps there won't be as much of a correction and subsequent lull as the coast has more services and infrastructure than back then but it'll certainly be felt. I'll run naked down Hastings Street if regionals don't see healthy 10-15% corrections following the major capitals.
     
    John_BridgeToBricks and Redom like this.
  15. Something_Wrong

    Something_Wrong Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    357
    Location:
    Sydney
    We are awaiting on Pre Approval and have been told 30days minimum as Covid has affected ANZ in a big way with their O/S offices. Is that what you are finding?
     
  16. DrunkSailor

    DrunkSailor Well-Known Member

    Joined:
    25th Jun, 2017
    Posts:
    756
    Location:
    Melbourne
    can't see a reduction in demand when there's zero risk anymore. Central banks have made it clear they're going to back stop everything at all costs which means we will see WW3 before we see any meaningful decline in the property market. Melbourne is 6 months into a full lockdown and no immigration yet I still don't see much negative impact. The market has just frozen. No sales neither up nor down.
     
  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    41,667
    Location:
    Australia wide
    I think it was more that $4000 rebate that they had offered - swelled demand greatly. so great that they were taking 7 weeks to look at a file.
     
    Tyla and Something_Wrong like this.
  18. euro73

    euro73 Well-Known Member Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,125
    Location:
    The beautiful Hills District, Sydney Australia
    That's right @Terry_w ..... hence the musical chairs analogy in an earlier post of mine. When WBC group and NAB were throwing cashbacks around late last year and into early this year they got flooded and blew out. Then COVID struck and it got really ugly really fast. At the time ANZ was on the nose. Policies were daft and servicing was more daft. They got back in the game and started the cashbacks and then they got flooded... while WBC and NAB have seen a massive drop off in volume because of it.... Just follow the APRA data folks. Its very clear that we are simply seeing a game of musical chairs where almost all the activity is refinances between the majors- people chasing lower rates and cash backs. Aggregator data tells exactly same tale- everywhere. Connective. AFG, PLAN, CHOICE, Mortgage Choice, Loan Market. Astute and on and on.... but there is almost no material increase in lending overall, and any increase is O/Occ related. There is a decline in INV business and it hasnt been halted by or altered by or helped by lower rates or cashbacks. That tells you all you need to know - servicing is still problematic for most investor; both existing investors seeking refinances or extensions to IO, or those considering becoming investors - loan data makes it very clear that they are not back at this point. So either APRA is telling fibs or people on here claiming investors are back are wrong.... It's true that they may well come back at some point ; but they arent back yet....and if they havent been drawn back by the ultra low rates and improvements to servicing, what would draw them back? Which poses the very reasonable question.....when all the first home buyers from the next 3 or 4 years have been brought forward by various cashbacks, low rates, state and federal incentives etc, and they have all bought ... who will be the next generation of buyers to keep the tide rising?
     
    Tyla, Anchor and BunnyXiao like this.
  19. DueDiligence

    DueDiligence Well-Known Member

    Joined:
    27th Jan, 2020
    Posts:
    439
    Location:
    Sydney, Australia
    You’re right on figures, it’s all OO and they’re big loans. The IO data has been in the gutter since about Nov 19 and to be fair, it hasn’t really recovered from mid 2017. Credit growth for IO loans may mask this though and can’t be conflated with investor activity, especially if cash predominates and IO loans are low LVR.(anyone have these figures?)

    I’ve spent quite a bit of time thinking through and basically for better or worse this was where I got to.

    The next wave of buyers .... Equities are about to come off (in my opinion) and that money will flow for about 6-12 months, some back into property, and I suspect the majority are millennial retail traders. Millennials and under 30s in general must be the most p*ssed generation around, theyve suffered two recessions in a decade, job prospects are terrible, their debts are proportionately high and they’ve been marginalised more in the market than ever before, including the labour market. Their super is now taking a hit , if they even have any left , and the generation above them in the workplace is likely holding them down and blocking their career path as they (the 40 + year olds) double down on their jobs and hedge. This is on top of a highly competitive labour market amongst their own peers who are over educated and under qualified in everything. It’s a mess . The GFC here was nothing, but this is real and policy makers know it , and I suspect they’re going to over react and do it big.

    I see a two way plan at play, get the boomers out of the system , into retirement, with cash and get them spending... whilst , managing heath care and pension budgets. I suspect the solution to this is mortgages.Mortgage debt will be used to fund the retirement costs, and it will be done through the great Australian dream 2.0 , targeted at sub 30s.

    This will be a large block work from home , life balance , digital age, dream. The abandonment of reducing floor plans and urbanisation, a penchant for ‘real’ land and green space re-urbanisation. Notice I said ‘real’ , meaning , implied value has changed, and yet, it hasn’t- torrens has always outpaced strata, and the pandemic will leverage on it along with the increasing left - “it’s time to make a change”

    Family matters now more-than- ever. Hugs, kisses, equity and best wishes- big loans are coming, big block Bank of Mum and Dad tax deductible eye watering loans.All of the kitchen sinks that have previously been thrown and were previously under construction to be thrown will be thrown- whilst they’re building new ones to throw. This is a Keynesian experiment, and whilst everyone is watching the kitchen sink hurling, the real bricolage will be in erasing zeros from the public debt , in private.

    Once the dust settles, banks will use every slice of ponzi equity already in the system to scaffold it. The serpent will eat it’s tail (again).Its time for equity to fund more of itself.

    The client is a generation that trade CFDs off their phone , take more risk than any recent generation and are now conditioned that GDP and recessions don’t matter, low rates and QE keeps it going. They werent raised on dolomite accounts- they’re wired to ignore zeros on the end, and it makes sense, stimulus is now trillions, not billions.

    Theres plenty of them too and I suspect they are going to make boomers look like they lived in austerity, and put everything up to do it.
     
    Last edited: 14th Sep, 2020
    wilso8948 and Andrewjh like this.
  20. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,598
    Location:
    Gold Coast (Australia Wide)
    Having said that, Both ANZ and WBC were hit hard by Covid processing issues offshore in Manilla and Bangalore with lock downs.

    ta
    rolf
     
    Terry_w likes this.