Making headlines today, the Sydney Morning Herald has reported that Australia’s banks will need to borrow more than $140 billion from local and offshore markets over the next year to help fund their lending books.
According to the paper, demand for credit continues to outstrip growth in deposits, which will put pressure on the banks to raise interest rates.
Commonwealth Bank’s chief financial officer David Craig told the paper that the bank’s reliance on wholesale funds was a long term structural issue for the nation.
Mr Craig said the big bank’s funding task is greater than the domestic capacity to fund. As such, the bank will have to fund offshore which will lift funding costs.
Source: Staff Reporter - The Adviser
09 March, 2010
Which Bank? Not that Bank
Wow, the lack of competition in the Australian Banking industry is causing havoc for borrowers.
In the past year we have experienced massive delays, understaffed lending teams, policy changes, bank reluctance to fund deals, and abysmal service. The banks say they are hurting, however the record half yearly profits for the majors don't really reflect this.
In fact, they are reducing their service teams, reducing their support phone lines (some banks have cut off their enquiry lines as there were too many phone calls chasing them), cutting broker commissions, and even charging brokers to stay accredited with them.
Its a formula of profits before people, just look at their TV ads - they are not joking, they are really that incompetent.
The biggest culprit seems to be the lender with the biggest market share - Commonwealth Bank of Australia.
Currently, I am waiting 2 weeks and 2 days for a simple increase of $60k for a client that is borrowing only 60% Gearing, and is an existing client of the bank.
They told us it would take 1 day to approve - yeah right!
At first, our fax was supposedly lost by their team, and when refaxed, it took them 3 days (we chased them everyday) to tell us that they no longer except the paper form, instead we must now apply electronically.
The request was quite suspicious as the next day they were changing from fax to a paperless system for their loan applications. I think it was just to get rid of the faxed deal from their system.
After calling CBA everyday for updates, 4 emails, the client who needs to settle in a week on another purchase has found finance elsewhere, and we are still no closer to a credit officer looking at the deal in CBA.
And this is after paying CBA that forced us to pay $500!!!! for refresher training, sitting through their propoganda video about them being a determined team to provide customer service.
Well maybe they should strive a little harder - they are failing to turn around a simple request for an existing customer at the moment.
So when someone asks you Which Bank? Please, not that bank - expect to be treated poorly and you wont be disappointed.
Please Australia, start using more lenders and provide some competition - Westpac and Commonwealth are doing 75% of all home loans at the moment....its time to balance the industry, or we will all suffer from their pathetic service.
In the past year we have experienced massive delays, understaffed lending teams, policy changes, bank reluctance to fund deals, and abysmal service. The banks say they are hurting, however the record half yearly profits for the majors don't really reflect this.
In fact, they are reducing their service teams, reducing their support phone lines (some banks have cut off their enquiry lines as there were too many phone calls chasing them), cutting broker commissions, and even charging brokers to stay accredited with them.
Its a formula of profits before people, just look at their TV ads - they are not joking, they are really that incompetent.
The biggest culprit seems to be the lender with the biggest market share - Commonwealth Bank of Australia.
Currently, I am waiting 2 weeks and 2 days for a simple increase of $60k for a client that is borrowing only 60% Gearing, and is an existing client of the bank.
They told us it would take 1 day to approve - yeah right!
At first, our fax was supposedly lost by their team, and when refaxed, it took them 3 days (we chased them everyday) to tell us that they no longer except the paper form, instead we must now apply electronically.
The request was quite suspicious as the next day they were changing from fax to a paperless system for their loan applications. I think it was just to get rid of the faxed deal from their system.
After calling CBA everyday for updates, 4 emails, the client who needs to settle in a week on another purchase has found finance elsewhere, and we are still no closer to a credit officer looking at the deal in CBA.
And this is after paying CBA that forced us to pay $500!!!! for refresher training, sitting through their propoganda video about them being a determined team to provide customer service.
Well maybe they should strive a little harder - they are failing to turn around a simple request for an existing customer at the moment.
So when someone asks you Which Bank? Please, not that bank - expect to be treated poorly and you wont be disappointed.
Please Australia, start using more lenders and provide some competition - Westpac and Commonwealth are doing 75% of all home loans at the moment....its time to balance the industry, or we will all suffer from their pathetic service.
29 January, 2010
Median House Price vs Average House Price
Headline: Melbourne median price jumped 22% in 6 months (July to Dec 2009).
Wow, sounds great. Right?
What it should read is: Melbourne buyers are buying more expensive properties. They are not necessarily paying more for a property, they are just upgrading. No need to get excited.
OR
In Fashion: $600k to $900k homes for home upgraders,
Out of Fashion: First Home Buyer market $500k or lower.
But those headlines won't sell.
Let me explain why...
Beware folks. Reports in the paper about Real Estate House prices and Property Capital Growth can be manipulated quite easily. When reading reports of massive capital growth and good times ahead, always understand what the reporter is actually talking about, or using as evidence.
Maths Lesson 101: Average vs Median Sale Prices
Average House Price: add up all the numbers and divide by the number of numbers.
Example:
$300,000
$300,000
$500,000
$900,000
$1,000,000
add them up equals $3m. Divide $3m by 5 property sales and the answer is $600,000 average sale price.
Median Sale Price: is the exact middle number in a sequence of numbers.
Example: in the above sale prices, the middle number is the third number which is "$500,000" which is the median. In this case the median has exactly two numbers on each side of it. Now if there is no middle number, such as one more sale at $400,000, then average the two middle numbers, which would be an average of $400k & $500k resulting in $450k median sales price. Remember to order all the numbers from low to high before you start computing the median.
So, above we have an average sale price of $600,000, and a median sale price of $500,000.
So what's your house worth? And what affects these prices?
If your suburb has a wide range of property, say small units at $300,000 and a few large homes with big land selling at $2m, the average price is stretched higher when the large homes sell, inflating the reported average price of a home.
Of course the more properties sold in a suburb, the more they average out, however in a smaller population, the average price may not be accurate. Easily skewed.
A more accurate trend indicator is the median price. Median (or middle) just means there is more volume or sales headed in one direction, showing a trend or central tendency. It does not mean property prices have risen, it just means buyers are looking in a certain range of property instead of another.
Current Property Price Trends
You may have read that most median prices have increased by 10% to 15% across some capital cities in the past 12 months. (Melbourne, Brisbance, Sydney)
It sounds great, however this does not mean you will get more dollars for your property.
Currently, First Home Buyers who have traditionally targeted property under $500,000 (to receive the highest amount of Grants and concessions), have now quietened down a little and investors that waited for things to calm down + restless home "upgraders" have moved into a higher priced property market, around $500k to $900k in some capital cities.
In an nutshell, a different group of buyers has taken over. They are still looking for a bargain so don't think you can ask for more for your property just yet.
Conclusion:
In Sydney, the median is now over $630,000 reflecting this shift in buyers.
In Melbourne, the median is now over $540,000, reflecting similar trends.
It does not necessarily mean properties have risen in price (maybe just a little), it merely states that a higher price bracket is in favour right now. Remember, things come back into fashion, like an old pair of "volleys"or your brightly coloured "Wham" T-shirt, so don't feel too disheartened.
So beware of the hype in the press, and understand that the median is not conclusive evidence of property price increases, nor a reason to invest in that city. Buy wholesale, bargain well and invest wisely with solid investment fundamentals like: Buy Low, Sell High.
Now that the maths lesson is over, go do your homework!
Wow, sounds great. Right?
What it should read is: Melbourne buyers are buying more expensive properties. They are not necessarily paying more for a property, they are just upgrading. No need to get excited.
OR
In Fashion: $600k to $900k homes for home upgraders,
Out of Fashion: First Home Buyer market $500k or lower.
But those headlines won't sell.
Let me explain why...
Beware folks. Reports in the paper about Real Estate House prices and Property Capital Growth can be manipulated quite easily. When reading reports of massive capital growth and good times ahead, always understand what the reporter is actually talking about, or using as evidence.
Maths Lesson 101: Average vs Median Sale Prices
Average House Price: add up all the numbers and divide by the number of numbers.
Example:
$300,000
$300,000
$500,000
$900,000
$1,000,000
add them up equals $3m. Divide $3m by 5 property sales and the answer is $600,000 average sale price.
Median Sale Price: is the exact middle number in a sequence of numbers.
Example: in the above sale prices, the middle number is the third number which is "$500,000" which is the median. In this case the median has exactly two numbers on each side of it. Now if there is no middle number, such as one more sale at $400,000, then average the two middle numbers, which would be an average of $400k & $500k resulting in $450k median sales price. Remember to order all the numbers from low to high before you start computing the median.
So, above we have an average sale price of $600,000, and a median sale price of $500,000.
So what's your house worth? And what affects these prices?
If your suburb has a wide range of property, say small units at $300,000 and a few large homes with big land selling at $2m, the average price is stretched higher when the large homes sell, inflating the reported average price of a home.
Of course the more properties sold in a suburb, the more they average out, however in a smaller population, the average price may not be accurate. Easily skewed.
A more accurate trend indicator is the median price. Median (or middle) just means there is more volume or sales headed in one direction, showing a trend or central tendency. It does not mean property prices have risen, it just means buyers are looking in a certain range of property instead of another.
Current Property Price Trends
You may have read that most median prices have increased by 10% to 15% across some capital cities in the past 12 months. (Melbourne, Brisbance, Sydney)
It sounds great, however this does not mean you will get more dollars for your property.
Currently, First Home Buyers who have traditionally targeted property under $500,000 (to receive the highest amount of Grants and concessions), have now quietened down a little and investors that waited for things to calm down + restless home "upgraders" have moved into a higher priced property market, around $500k to $900k in some capital cities.
In an nutshell, a different group of buyers has taken over. They are still looking for a bargain so don't think you can ask for more for your property just yet.
Conclusion:
In Sydney, the median is now over $630,000 reflecting this shift in buyers.
In Melbourne, the median is now over $540,000, reflecting similar trends.
It does not necessarily mean properties have risen in price (maybe just a little), it merely states that a higher price bracket is in favour right now. Remember, things come back into fashion, like an old pair of "volleys"or your brightly coloured "Wham" T-shirt, so don't feel too disheartened.
So beware of the hype in the press, and understand that the median is not conclusive evidence of property price increases, nor a reason to invest in that city. Buy wholesale, bargain well and invest wisely with solid investment fundamentals like: Buy Low, Sell High.
Now that the maths lesson is over, go do your homework!
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