Monday, 3 August 2015

4 AUGUST, 2015 NEWS UPDATE



4 August 2015
News Update
Topics –

Second mortgages LRPM - 
“Here’s a first; we can now do a second!”

                        Current First Mortgage Funding                          Auction Results 2 August, 2015
Bank Lending Policies (Opportunities in the Private Market)


 “Here’s a first; we can now do a second”

Most of you are aware that over the years, LRPM has not been involved in second mortgage financing in the private market. Well, now we are. Needless to say, the quality of the proposed security property and exit strategy needs to be of an investible standard, with aggregate gearing (LVR, including the first mortgage) and pricing determined by a number of factors.

At this stage, a loan of $0.200 M to $1.500 M falls within our preferred range.

We will not consider a second mortgage behind another private investor, however, if we are being asked to “blend” senior and junior debt under our own banner to obtain a higher LVR than normal private market parameters dictate, then we will consider it.

Current First Mortgage Funding

We continue to have significant funding available and a shortage of quality proposals. With the capacity to settle within seven (7) days, and a loan range of $0.300 M to $5.000 M per security (and larger amounts available on application), call us.

You should all now be familiar with our “transition finance” approach to private lending, but if you are not, please visit our website, or call me with a specific proposal.

Preliminary Auction Results 2 August, 2015

Preliminary auction results for 2 August, 2015 appear to indicate continuing resilience and strength in the housing market, though with a cautionary tones set in Western Australia, Northern Territory and Tasmania. ACT seems to continue to surprise on the upside despite anecdotal views to the contrary.
Sydney has continued to lead the way in terms of pricing increases, though results may be somewhat skewed by strength in the upper end of the market.
We understand that Melbourne has considerable stock coming online in the near future, and there are observers who believe that Brisbane (will become the city of strength in the medium term.
State
Scheduled Auctions
Clearance Rate
Victoria
760
77%
New South Wales
816
79%
Queensland
140
61%
South Australia
75
72%
Western Australia
23
44%
ACT
40
79%
Tasmania
8
33%

Bank lending policies (Opportunities in the Private Market)

According to Australian Bureau of Statistics, the number of home loans for owner occupiers fell by 6.10% in June this year, the lowest since August, 2013. More relevantly from our perspective, the value of loan approvals for property investors dropped by 3.20%.

It is the investment market which appears to have been the main target of Australian Prudential Regulatory Authority effort to rein in bank lending. APRA desires to slow investment housing credit growth to 10.00% pa from the current 10.40%pa.

Banks have toughened credit policies to meet this demand, and amid concerns that the property market is overheating.

Though a slowing down was widely anticipated, the size of the fall surprised experts in view of the record low-interest environment – rates were further cut in May.

As always, opinions amongst Economists vary, but from LRPM’s viewpoint it appears that while demand momentum in the residential investment market continues, APRA’s aim, plus more strident credit testing by banks may provide finance brokers with greater opportunity to avail themselves of the private market, and we’re always here to discuss your requirements.