Mortgage Loans, Home Loans, Bad Credit Home Loans

According to new research by the NAB, Australian Residential property price growth is expected to slow over the coming 12 months.

It seems that Australian house price growth expectations have dropped to just 1.4 per cent growth – down from 5.2 per cent recorded in the March quarter.

Following very fast growth over the past 12 months, Melbourne has experienced  the most significant change, leading last quarter’s expectations at 5.8 per cent but now finishing last nationally at 0.7 per cent.

Properties with the price of under $500,000 are expected to outperform the market, with properties valued over $2 million expected to fall.

Overseas investors are expected to make up approximately 9 per cent of all residential purchases over the next year.

First Home buyers generally prefer to buy low at around $250k – $500k price range. Such properties, because of their affordability, are expected to realise the highest percentage capital growth over the next 12 months, for both housing and the apartment sector.

While properties with a price point of over $2 million are seen to offer the smallest prospect of growth to investors.

While Virgin Money has made quite a splash in the marketplace this week with the launch of new financial products through its strategic alliance with Citibank, it’s mortgage operation in Australia is subject to a number of restrictions.

Virgin Money entered the Australian home loan market in 2006 with Macquarie Bank as an off the balance sheet funding partner. By 2008 Macquarie, , could no longer securitise and exited the mortgage market leaving virgin and others in the lurch.

Macquarie’s contract with Virgin Money is still in force and runs until later this year. Virgin Money are legally barred from launching a home loan product with its new partner until that contract expires.

Under the terms of the deal Virgin Money cannot market a home loan but it can process applications. To be able to do this it signed up with Firstfolio to use its Bloom wholesale mortgage platform.

Firstfolio chief executive Mark Forsyth said Virgin Money  has already processed some loans through Bloom and may continue to use the platform after it puts new Citibank funded product into the market.

Meanwhile, Bloom is expanding its portfolio. Yesterday it announced that LJ Hooker would offer a “house brand” mortgage product using Bloom for wholesale funding, telephone and web-based loan administration services and training of 140 home loan consultants.

Westpac is intending to centralise and overhaul its online banking system. A new system is to be developed which will allow for segmentation of customers into individual, business banking and corporate services.

The online customer service system will be provided by Fiserv. Fiserv has made it known to the market that they have signed a contract with the bank to provide the system.

The bank is intending to rollover customers from the current system to the new system by the end of 2011. Around two million customers currently use online banking services at Westpac, including subsidiaries St George and BankSA.

Features of the new system include language settings, customisable interface, support for mobile platforms and personal financial management tools, Fiserv said.

Westpac have been working with Fiserv from 1990.

Virgin Money is intending to enter the Australian Mortgage Market with a competitive home loan product developed in conjunction with Citibank. Virgin is also making a comeback to Australian banking with two new credit cards and an online savings account.

The next logical step, according to Virgin Money’s chief executive in Australia, Matt Baxby, is to progress to transaction accounts as well as home loan products.

Mr Baxby has explained that the roll-out process will be a gradual one. Virgin Money are partnering up with Citibank on all of it’s financial products.

The Virgin Money credit card has “no annual fee ever” and charges 2.9% interest on balance transfers for the first six months and then 16.95%. The Virgin Flyer card allows users to collect frequent flyer points and offer two-for-one flights and a free flight when customers use the card before 15 October.

The Virgin Saver online account has an introductory variable interest rate of 6.75% per annum, which decreases after four months to 5.35%.

Those in the know are forecasting a slowdown in business activity for Australian banks. This in turn will have an effect on expected banking profitability.
According to revised profit forecasts issued by Goldman Sachs JBWere for the 2010 financial year, National Australia Bank’s is expected to experience a decline in net profit of 0.5 per cent,  while ANZ’ should have a drop of  0.3 per cent, Westpac’s profit is expected to be 0.2 per cent lower while the CBA is expecting to stay at current levels of profitability.
The main reason behind the expected drop in bank earnings is the softening of the global equity markets. This has an unfavorable impact on the  wealth management divisions of Australian banks.
Despite expecting a significant drop in its earnings, NAB is Goldman Sachs JBWere’s preferred exposure to the sector. NAB is trading on a 2011 forecast price earnings multiple of 8.6 times, which is a 19 per cent discount to peers.

Macquarie Research is also expecting a slowdown in the banking sector but for a different reason. Essentially the tightening in business loan regulation will result in businesses looking to reduce their loan exposure and consequently cut prospective bank earnings.

According to Mortgage Insurer QBE, organised crime gangs are targeting recent migrants and the elderly, by taking out mortgages against their properties without their knowledge.

QBE LMI reports that mortgage fraud is costing the finance sector millions of dollars every year.

Criminal rings defraud banks of millions of dollars by forming alliances with real estate agents, valuers, developers, accountants and loan originators.

They simply concentrate on stealing identity documents which allow them to impersonate property owners and borrow against their property.

In most cases, victims are unaware they have been targeted until they are contacted by a bank looking to collect loan repayments.

People need to be aware of the dangers of this crime and be very vigilant with where and who they give access to their personal information.

When mortgage fraud occurs it is generally the lender not the borrower who pays for it, but it raises costs throughout the industry, which flow through to customers.

New migrants and the elderly are less aware of the rules in the finance industry and can be easy victims for crime gangs.

Phil Ruthven, the founder and chairman of business information forecaster IBIS World and an economist, has told delegates at the FAST Business Excellence Conference in Palm Cove, Queensland, that Australian interest rates in Australia could double over the next six years.

Ruthven believes as the world  economy fully recovers from the GFC, it would also re-establish its appetite for finance. He added that while international markets such as China and India were able to service their own needs, other countries in the developed world like Australia didn’t have such a culture for saving which could force rates up.

Ruthven suggests that interest rates could reach 12.5% in 2016, which is still significantly under the rates in the early 1990s.

He also predicted that Australia could experience its next recession in 2018 based on previous cycles and praised the Howard government for helping Australia avoid the worst of the global financial crisis which hit other countries far harder.

According to Cameron Kusher from rpdata, there are still affordable properties to be had in most capital cities. The trick is knowing where to look.

While the affordable homes may not be in the top premium suburbs, the price tag can be reasonable and the land sizes surprising.  Whats more some of these properties are only located 10 km out of the CBD. Therefore to find an affordable home buyers do not need to look 20-30 km out. The level of prices in suburbs that are not considered prestige but are nonetheless very convenient is surprising.

In NSW inner west, the suburb of Sydenham which is just 10 kilometres from the Sydney CBD has reasonably priced homes with a median price of around $600,000.

In WA, home buyers can find an inner city house for $420,000 in a suburb such as Cloverdale. While, within 10 kilometres of the Melbourne and Brisbane CBD’s, buyers will be able to find reasonable detached home under $400,000 in the suburbs of Braybrook and Rocklea respectively. In Adelaide there are now several inner city ring suburbs with a median house price as low as $264,00