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BFCSA investigates fraud involving lenders, spruikers and financial planners worldwide.  Full Doc, Low Doc, No Doc loans, Lines of Credit and Buffer loans appear to be normal profit making financial products, however, these loans are set to implode within seven years.  For the past two decades, Ms Brailey, President of BFCSA (Inc), has been a tireless campaigner, championing the cause of older and low income people around the Globe who have fallen victim to banking and finance scams.  She has found that people of all ages are being targeted by Bankers offering faulty lending products. BFCSA warn that anyone who has signed up for one of these financial products, is in grave danger of losing their home.

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BFCSA: Property Council of Australia urges RBA, APRA to let banks lend

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Property Council of Australia urges RBA, APRA to let banks lend

The Australian 12:00am May 16, 2019

Ben Wilmot

 

EXCLUSIVE  Property chiefs have appealed directly to the Reserve Bank and the Australian Prudential Regulation Authority during a private meeting for a loosening of the strict lending policies imposed on banks, as a credit squeeze starts to bite key parts of the industry.

In a meeting with the nation’s top financial regulators this week, the property industry chiefs called on banks to be given the headroom to start lending again, according to people present at the briefing.

The move comes in the wake of a collapse in a housing approvals to a near five-year low and puts the real estate industry on the same course as bank chiefs who have called for a relaxation of loan buffer repayment rules that have crimped lending to home buyers.

Their input — delivered by Stockland chief executive Mark Steinert, Dexus chief executive Darren Steinberg and Charter Hall chief executive David Harrison, as well as representatives from Mirvac and the peak industry body — comes at a time when lending to the property groups by major banks has tightened, even for commercial real estate.

But the main focus has been addressing the fragile state of the housing market, as some developers buckle under price declines amid fears about the potential impact of the ALP’s negative gearing policy, which may lead to a period of turbulence.

The property groups, in private meetings with the regulators, signalled their interest in longer-term structural changes to lending rules that came into force in the wake of the global financial crisis. They are hoping regulators will address their concerns to avoid a supply shortage emerging in the next decade as a raft of apartment projects are pulled.

While some groups are forging ahead with their high-rise towers, scores of projects have been dumped, which could cut supply and drive up prices in future.

The property groups are joining other industry sectors and lenders in calling for an overhaul of tough home lending rules that apply to borrowers.

ANZ chief executive Shayne Elliott last month argued for the banking regulator to rethink loan repayment buffers built into mortgage assessments for new home loan borrowers, saying they had become less useful as official interest rates hovered at record lows and further cuts loomed.

The current measure that banks apply is the benchmark mortgage rate plus 2.25 per cent, or 7.25 per cent, whichever is ­higher.

The meetings, under the auspices of the Property Council of Australia, are part of the regular dialogue the regulators have with key sectors in the economy and to explore the impact of their rules.

The timing was unrelated to the election but comes as both high-rise units and housing estates are being hit by slowing sales and the prospect of defaults as buyers are knocked back by ­lenders.

Earlier this month the RBA attempted to put pressure on the banking sector to do the heavy lifting on interest rates, pointing out that mortgage rates remain unchanged despite lower bank funding costs.

“Some lending rates have declined recently, although the average mortgage rate paid is unchanged,” Dr Lowe said following this month’s RBA board ­meeting where it kept the official cash rate on hold at 1.5 per cent.

UBS economists this week warned that housing had not bottomed and predicted ongoing credit tightening would see loans collapse by 30 per cent, with a risk of the fall becoming “disorderly”.

The economists said that housing credit was likely slow to 2 per cent year-on-year by 2020, with an increasing risk of a record peak-to-trough drop in prices of 14 per cent, with Sydney and Melbourne facing 20 per cent drops.

The tight lending environment is also flowing through to the broader economy with real GDP forecast to slow sharply to 1.9 per cent year-on-year in 2019, the weakest since the global financial crisis, UBS has warned.

Stockland, the largest listed housing developer, last month warned residential sales had declined and said that they were expected to remain weak this year as it confirmed its earnings guidance.

At the time Stockland’s Mr Steinert blamed “challenging market conditions, reduced credit availability and buyer uncertainty due to the upcoming federal election”. Mirvac chief executive Susan Lloyd-Hurwitz said at the time the group was performing well but noted that house prices had declined across Australia’s capital cities and credit conditions remained tight.

Much of the pain has fallen on private developers who do not disclose their sales but industry sources have said that banks were looking to manage marginal developers out of the industry as their sales dry up and some had already pulled out of new apartment building.

Meanwhile, the commercial property sector is trading at its best in a decade with office towers and warehouses at record highs.

But lenders have adopted a tougher stance towards retail assets with greater scrutiny of businesses viewed as vulnerable to competition.

Property figures have privately expressed concerns that while the broader economy is holding up their operations are being squeezed as prospective buyers are unable to secure loans, with the conditions reflecting the lack of access to finance rather than instability in the economy.

 

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