Borrowers are reportedly fixing home loan rates, the most since early 2008. According to Australia’s largest mortgage broking group, Australian Finance Group, 21.5 per cent of all new borrowers in September locked in their rates. Many economists have tipped the cash rate will fall below three per cent in the coming months however some industry commentators believe fixed rates won’t move much more.
A new study by Ernst and Young has found 66 per cent of borrowers think there are currently better deals than their existing home loans. Of the 635 people surveyed, 65 per cent wanted lower fees with a third finding mortgage products too complex.
Last week saw, Commonwealth Bank of Australia
(ASX:CBA) and National Australia Bank Limited
(ASX:NAB) reduce their rates by 20 basis points, while Westpac Banking Corporation
(ASX:WBC) cut its rates by 18 basis points. St George lowered its rate by 17 basis points this week to 6.69 per cent. All eyes will be on ANZ later this week as it remains the only bank of the big four to have not lowered rates after the RBA’s 25 basis point cut last week.
Industry figures
Construction activity contracted at its sharpest pace for the year so far, amid a severe building downturn. Construction activity in Australia declined for the 28th straight month in September. The Australian Industry Group’s performance of construction index dipped 1.3 points last month to sit at 30.9, remaining under the 50 level which indicates contraction.
Residential building approvals increased 6.4 per cent, surpassing the 4.7 per cent rise expected according to the Australian Bureau of Statistics.
Residential property market
Auction clearance rates rose at the weekend after last week’s cut in official interest rates. According to Australian Property Monitors, Sydney recorded a solid 63 per cent clearance rate from 292 properties for auction, Melbourne posted a 60 per cent clearance rate from 213 properties, Brisbane had a 51 per cent clearance from 34 properties listed and Adelaide cleared 59 per cent from 16 reported auctions.
Commercial property sector Centro Retail Australia Limited
(ASX:CRF) has confirmed it is in early discussions to sell some of its assets as it addressed speculation that super fund ISPT is close to buying a 50 per cent interest in $400 million worth of shopping centres. The REIT recently sold 50 per cent stakes in three of its premium shopping centres for over $690 million to Perth property billionaire Stan Perron. Should the ISPT transaction proceed, the fund would have raised about $1 billion in less than six months.
Woolworths Limited
(ASX:WOW) has outlined plans to float $1.4 billion worth of properties under the name Shopping Centres Australasia Property Group. The new property fund would de-merge 70 shopping centres and launch a capital raising of up to $500 million. Shareholders will get their chance to cast a vote at the Woolies AGM next month.
Commercial property news
The NSW government will sell $300 million worth of the state’s buildings in order to spur a faltering residential construction industry and to support a growing population. Properties to be sold include Bligh House, the McKell building and the Maritime building in Sydney’s CBD. The O’Farrell government has established the Housing Acceleration Fund that is geared towards developing 76,000 additional dwellings. The Premier announced the sale of the desalination plant, electricity generators, Port Botany and other ports earlier this year.
AMP Capital
(ASX:AMP) has sold its 50 per cent stake in an industrial site in Melbourne for $50 million to the National Pension Service (NPS) of Korea. The other half is owned by DEXUS Property Group
(ASX:DXS). The sale forms part of the new joint venture between Dexus and NPS. The site is currently leased to Coles until April 2022.
Canadian listed property and infrastructure company Brookfield Asset Management Inc.(TSE:BAM.A) has placed its 50 per cent stake in an upmarket shopping centre in Perth on the market. The property which has just undergone a major five year refurbishment was valued at $450 million 18 months ago.
