Future looks bright for investors
While the heat has come off the property market, investor interest remains strong, and brokers are being encouraged to talk to their clients about different loan options
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A RAPIDLY changing real estate market presents both challenges and opportunities for property investors in 2022.
The RBA has now lifted the official cash rate for the fourth consecutive month, bringing the rate to 1.85%, dampening the property market, especially in Sydney and Melbourne, with prices falling and prospective sellers deciding to wait until conditions improve before they list.
On the flip side, there are still plenty of regional locations experiencing strong property price growth.
While the latest Australian Bureau of Statistics lending indicators, for June 2022, showed that new finance for investor housing fell 6.3% to $10.5bn, it still remained 101% higher than the pre-pandemic level seen in February 2020.
Current market
“We are seeing growing demand from investors as they seek to take advantage of the current rental market and strong rental yields,” says Croucher.
At CommBank, investors currently account for 29% of all new business written, up from 27% for the six months to the end of December 2021.
“Looking ahead, we would expect to see further growth in this space, as rental yields continue to rise, and with the expected return of international students and overseas migration,” Croucher says.
Finance options
Croucher says in addition to CommBank's array of interest-only investment home-loan options, through the broker channel the bank can also offer investors access to a range of finance options to help them achieve their property goals, including property share, co-borrowing, and construction loans.
“Property Share, for example, is an easy-to-manage home-loan option that allows multiple borrowers to purchase one property and split the cost, whilst keeping their finances separate – helping investors get into the property market sooner,” he says. “Through CommBank, investors can also access loans with an LVR of up to 90%.”
ubank helps property investors pick a home loan that works best for them, Srbinovski says.
June-04
New loan commitments for housing in June 2022 (seasonally adjusted)
“As we move into spring, we may see increased property stock become available, which will offer more supply to both investors and owner-occupiers.”
Srbinovski says with falling property prices, there are certainly bargains to be found for investment.
“However, mixed with rising interest rates and inflation, investors need to ensure their finances are in order,” he says.
“ubank provides automatic analysis of real income and day-to-day expenses so customers will be more confident in what home they can afford and how much they can borrow when choosing to leverage and grow their property portfolios.”
Middleton says in recent years Teacher Mutual Bank Limited has experienced a trend in which its members bolster their savings and take advantage of historically low interest rates to buy a home or an
investment property.
At CommBank, we know brokers deliver exceptional outcomes for customers, which is why we are focused on delivering simpler, better, and easier processes to provide brokers with an enhanced level of support every step of the way. Our strategy has been designed based on broker feedback, and focuses on how we can improve the experience and build a strong and more sustainable third-party banking channel that helps you – our broker partners – to support more customers in achieving their home-ownership goals. If you’re not already accredited with CommBank, now’s a great time to join us, as we‘ve simplified our accreditation process. Head to commbroker.com.au to find out more. And if you are already accredited with CommBank, check out our free 24/7 training hub – it’s all part of our commitment to being better together, and supporting you every step of the way.
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At ubank, we want to empower the digital generation to be more successful with money. It’s why we’re building one app for all our customers’ money needs. Think of us as a daily money companion – one that allows customers to see their money in one place, with smart features and real-time insights designed to help them get ahead. With ubank, our customers can discover what it feels like to save more, see where they are spending, and own their own home faster. In short, we want to help them achieve real momentum with money. Australians can open a ubank account in just two minutes, giving them instant access to great rates, no monthly fees, and digital payments.
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“We offer a wide variety of products that can help homebuyers ensure they’re on the financial fast track, including Neat and Own, that include fixed rates and variable rates,” he says.
“We also extend loans to PAYG applicants and support investors through our smart statements process, which enables our applicants to have a better understanding of their monthly expense position.”
Middleton says the trend in recent years in a low interest-rate environment saw many investors with home loans lock-in a fixed rate to provide certainty in a COVID-affected environment.
“As these rates roll off and, with home-loan interest rates trending upward, new investment loan requests coming to our bank are predominantly seeking to get a better deal and to refinance using the equity in their portfolio.
As a mutual bank, Teachers Mutual Bank Limited is member-centric, says Middleton.
“We work for our members, and we are committed to offering competitive rates on our investment home loans and to working with our members to tailor their investment-loan needs.
“We recommend all borrowers and investors seek the guidance of both their accountant and financial adviser in addition to their broker to assure that all factors are considered when structuring their end financial requirements in combination [with a view to] their potential end taxation position.”
Teachers Mutual Bank Limited is one of Australia’s largest mutual banks, with over 220,000 members and more than $10 billion in assets in its fifty-sixth year of operation. It is comprised of five divisions: the original Teachers Mutual Bank; Firefighters Mutual Bank; Health Professionals Bank; UniBank; and digital bank Hiver. Teachers Mutual Bank Limited is passionate about providing banking for those who do good, and we have a long history of giving back to the education community. Teachers Mutual Bank Limited advocates for a more diverse and inclusive society, and we’re proud to be supporting the creation of the Refugee Scholarship Fund.
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“ubank provides automatic analysis of real income and day-to-day expenses so customers will be more confident in what home they can afford and how much they can borrow when choosing to leverage and grow their property portfolio”
George Srbinovski,
ubank
In Partnership with
Inflationary pressures brought about by a higher cost of living are also having an impact on investors’ confidence and bottom line.
But for those investors with access to capital and the ability to finance property purchases, falling house prices mean there are some bargains to be had in some areas.
A new report from property investor research company Suburb Help has identified the top 20 investment locations in Australia for investors with a $100,000 deposit, with which they can buy a property valued at up to $1 million.
MPA caught up with Commonwealth Bank of Australia (CommBank) general manager, third-party banking Adam Croucher; George Srbinovski, head of broker distribution at ubank; and Mark Middleton, head of third-party distribution at Teachers Mutual Bank Limited to find out how they can assist property investors with finance options and what’s happening in the market.
When it comes to loans that are ideal for brokers’ investor clients, Srbinovski says ubank’s Neat and Own products come with ubank’s award-winning app, which is ideal for investors who want to see all of their home loans in one place.
“Universal search also allows customers to search through all of their transactions in one place – meaning they can quickly see when rent was paid, and anticipate any upcoming bills to ensure they’re never late.”
At Teachers Mutual Bank Limited, Middleton says that, with most members working in education, emergency, and health, the Your Way Plus Home Loan is an ideal product for brokers and their investor clients.
“Essential workers get an extra 0.05% p.a. discount on variable rates and a range of flexible options within the product that offer investor clients choice when structuring their portfolio,” he says.
“It’s important all investor clients consult with their financial advisors to further consider other components, such as principle and interest versus interest only (or a combination thereof) as part of the overall financial structure.”
Broker conversations
Mortgage brokers are ideally placed to assist their property-investor clients in a complex,
ever-changing market.
Croucher says it’s important for brokers to have a broad range of conversations with their clients, including assessing the current market conditions and what impact this changing market may have on asset prices and rental yields over the short, medium, and longer term.
“CommBank’s range of property reports and insights can help inform these discussions,” he says.
“Additionally, brokers will be best placed to assess what finance options might be most suitable for their investor customers to support their existing and new investment decisions.”
Croucher says given their expertise, brokers are well positioned to add value to their investor customers and make the entire process of buying an investment property both simple and easy.
“We are seeing growing demand from investors as they seek to take advantage of the current rental market and strong rental yields. Looking ahead, we would expect to see further growth in this space”
Adam Croucher,
CommBank
Industry experts
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Mark Middleton
Teachers Mutual
Bank Limited
George Srbinovski
ubank
Adam Croucher
Commonwealth Bank
Industry experts
Adam Croucher has been in the industry for over 25 years, with over 12 of those years within mortgage broking. In the first 17 years of his career, Croucher managed retail branches. By 2014 he had moved into third-party banking as state manager, then in 2019 he became head of third-party. Last year, Adam hit a huge milestone – being named in the 2021 Mortgage Global 100, industry professionals who are making a positive difference and helping drive change across the sector. He continues to guide and support his teams on the importance of transparent communication for brokers so that together we can support more Australians in reaching their homebuying goals.
Commonwealth Bank
Adam Croucher
After serving as 86 400’s head of broker distribution for more than three years, George will continue to oversee the broker distribution and support team at ubank. Prior to his time at 86 400 and ubank, George worked as a senior recruitment and portfolio manager at the Australian Finance Group (AFG).
ubank
George Srbinovski
With over 30 years of experience in the financial services industry, Mark Middleton leads the third-party distribution team and is responsible for the growth and maturing of Teachers Mutual Bank Limited’s offering to the broker network. Connect with Mark on LinkedIn.
Teachers Mutual Bank Limited
Mark Middleton
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Mark Middleton
Teachers Mutual
Bank Limited
George Srbinovski
ubank
Adam Croucher
Commonwealth Bank
Industry experts
Adam Croucher has been in the industry for over 25 years, with over 12 of those years within mortgage broking. In the first 17 years of his career, Croucher managed retail branches. By 2014 he had moved into third-party banking as state manager, then in 2019 he became head of third-party. Last year, Adam hit a huge milestone – being named in the 2021 Mortgage Global 100, industry professionals who are making a positive difference and helping drive change across the sector. He continues to guide and support his teams on the importance of transparent communication for brokers so that together we can support more Australians in reaching their homebuying goals.
Commonwealth Bank
Adam Croucher
After serving as 86 400’s head of broker distribution for more than three years, George will continue to oversee the broker distribution and support team at ubank. Prior to his time at 86 400 and ubank, George worked as a senior recruitment and portfolio manager at the Australian Finance Group (AFG).
ubank
George Srbinovski
With over 30 years of experience in the financial services industry, Mark Middleton leads the third-party distribution team and is responsible for the growth and maturing of Teachers Mutual Bank Limited’s offering to the broker network. Connect with Mark on LinkedIn.
Teachers Mutual Bank Limited
Mark Middleton
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Christopher Lee
Share
Share
Share
Adam Croucher
Commonwealth Bank
George Srbinovski
ubank
Mark Middleton
Teachers Mutual Bank Limited
Christopher Lee
MFAA head credit adviser, Finsure Finance and Insurance
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
MFAA head credit adviser, Finsure Finance and Insurance
Mark HarChristopher Leeon
With over 30 years of experience in the financial services industry, Mark Middleton leads the third-party distribution team and is responsible for the growth and maturing of Teachers Mutual Bank Limited’s offering to the broker network. Connect with Mark on LinkedIn.
Teachers Mutual Bank Limited
Mark Middleton
After serving as 86 400’s head of broker distribution for more than three years, George will continue to oversee the broker distribution and support team at ubank. Prior to his time at 86 400 and ubank, George worked as a senior recruitment and portfolio manager at the Australian Finance Group (AFG).
ubank
George Srbinovski
Adam Croucher has been in the industry for over 25 years, with over 12 of those years within mortgage broking. In the first 17 years of his career, Croucher managed retail branches. By 2014 he had moved into third-party banking as state manager, then in 2019 he became head of third-party. Last year, Adam hit a huge milestone – being named in the 2021 Mortgage Global 100, industry professionals who are making a positive difference and helping drive change across the sector. He continues to guide and support his teams on the importance of transparent communication for brokers so that together we can support more Australians in reaching their homebuying goals.
Commonwealth Bank
Adam Croucher
“Essential workers get an extra 0.05% p.a. discount on variable rates, and a range of flexible options within the product that offer investor clients choice when structuring their portfolio”
Mark Middleton,
Teachers Mutual Bank Limited
June-07
June-10
June-13
June-16
June-19
June-22
5
10
15
20
25
30
35
$ billions
Total (ex. refinancing)
Owner occupier (ex. refinancing)
Investor (ex. refinancing)
Top 20 property investment locations for investors with a $100,000 deposit
Source: ABS Lending Indicators, June 2022
Source: Suburb Help $100k Investment Report, August 2022
Langwarrin
1
VIC 3910 Unit
$590,000
Median price
$59,000
10% deposit
2
Charlestown
$620,000
Median price
$62,000
10% deposit
NSW 2290 Unit
3
Bellerive
$625,000
Median price
$62,500
10% deposit
TAS 7018 Unit
4
eden hills
$760,000
Median price
$76,000
10% deposit
SA 5050 House
5
Medowie
$775,000
Median price
$77,500
10% deposit
NSW 2318 House
6
Macquarie Hills
$786,000
Median price
$78,600
10% deposit
NSW 2285 House
7
Pasadena
$787,000
Median price
$78,700
10% deposit
SA 5042 House
8
Kahibah
$792,000
Median price
$79,200
10% deposit
NSW 2290 Unit
9
Ngunnawal
$801,000
Median price
$80,100
10% deposit
ACT 2913 House
10
Mcgregor
$825,000
Median price
$82,500
10% deposit
ACT 2615 House
11
Holt
$832,000
Median price
$83,200
10% deposit
ACT 2615 House
12
Cardiff heights
$840,000
Median price
$84,000
10% deposit
NSW 2285 House
13
Belgrave
$845,000
Median price
$84,500
10% deposit
VIC 3160 House
14
CurraN HILLS
$845,000
Median price
$84,550
10% deposit
NSW 2567 House
15
nARELLAN VALE
$875,000
Median price
$87,500
10% deposit
NSW 2567 House
16
dUNLOP
$880,000
Median price
$88,550
10% deposit
ACT 2615 House
17
bONNER
$882,000
Median price
$88,200
10% deposit
ACT 2914 House
18
fLETCHER
$896,000
Median price
$89,600
10% deposit
NSW 2287 House
19
eVATT
$935,000
Median price
$93,500
10% deposit
ACT 2617 House
20
ADAMSTOWN HEIGHTS
$985,000
Median price
$98,500
10% deposit
NSW 2570 House
CommBank has a range of strategic partners, such as :Different property management, who can provide investors with a fresh and proactive take on their property management.
Middleton says elements such as interest-rate risk and associated movements should be discussed by brokers with their clients, especially considering the current environment involving RBA cash rate movements that could affect overall future servicing capacity.
He says brokers should also be talking with their clients about vacancy rates and repairs for the future.
“My advice for brokers is to engage in conversations with investor clients to understand the investment goals of their clients’ portfolios.
This understanding will enable brokers to identify the value proposition that aligns with these goals.”
Teachers Mutual Bank Limited has seen an increasing number of members with investment home loans seeking a bank with responsible lending and social responsibilities credentials.
“We are a Certified B Corporation (or B Corp), which means we meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose,” says Middleton.
Srbinovski says with a rising interest-rate environment, brokers should be working very closely with their customers to ensure they have suitable cash flow and can withstand any future rate rises or potential challenges ahead.
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“Essential workers get an extra 0.05% p.a. discount on variable rates, and a range of flexible options within the product that offer investor clients choice when structuring their portfolio”
Mark Middleton,
Teachers Mutual Bank Limited
“Essential workers get an extra 0.05% p.a. discount on variable rates and a range of flexible options within the product that offer investor clients choice when structuring their portfolio,” he says.
“It’s important all investor clients consult with their financial advisors to further consider other components such as principle and interest versus interest only (or a combination there of) as part of the overall financial structure.”
Broker conversations
Mortgage brokers are ideally placed to assist their property investor clients in a complex, ever-changing market.
Croucher says it’s important for brokers to have a broad range of conversations with their clients, including assessing the current market conditions and what impact this changing market may have on asset prices and rental yields over the short, medium and longer term.
“CommBank’s range of property reports and insights can help inform these discussions,” he says.
“Additionally, brokers will be best placed to assess what finance options might be most suitable for their investor customers to support their existing and new investment decisions.”
Croucher says given their expertise, brokers are well positioned to add value to their investor customers and make the entire process of buying an investment property both simple and easy.
CommBank has a range of strategic partners, such as :Different property management, which can provide investors with a fresh and proactive take on their property management.
Middleton says elements such as interest rate risk and associated movements should be discussed by brokers with their clients, especially considering the current environment involving RBA cash rate movements that could impact overall future servicing capacity.
He says brokers should also be talking with their clients about vacancy rates and repairs for the future.
“My advice for brokers is to engage in conversations with investor clients to understand the investment goals of their client’s portfolio. This understanding will enable brokers to identify the value proposition that aligns with these goals.”
Teachers Mutual Bank Limited has seen an increasing number of members with investment home loans seeking a bank with responsible lending and social responsibilities credentials.
“We are a Certified B Corporation (or ‘B Corp’), which means we meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose,” says Middleton.
Srbinovski says with a rising interest rate environment, brokers should be working very closely with their customers to ensure they have suitable cash flow and can withstand any future rate rises or potential challenges ahead.
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“Essential workers get an extra 0.05% p.a. discount on variable rates, and a range of flexible options within the product that offer investor clients choice when structuring their portfolio”
Mark Middleton,
Teachers Mutual Bank Limited
Croucher says given their expertise, brokers are well positioned to add value to their investor customers and make the entire process of buying an investment property both simple and easy.
CommBank has a range of strategic partners, such as :Different property management, which can provide investors with a fresh and proactive take on their property management.
Middleton says elements such as interest rate risk and associated movements should be discussed by brokers with their clients, especially considering the current environment involving RBA cash rate movements that could impact overall future servicing capacity.
He says brokers should also be talking with their clients about vacancy rates and repairs for the future.
“My advice for brokers is to engage in conversations with investor clients to understand the investment goals of their client’s portfolio. This understanding will enable brokers to identify the value proposition that aligns with these goals.”
Teachers Mutual Bank Limited has seen an increasing number of members with investment home loans seeking a bank with responsible lending and social responsibilities credentials.
“We are a Certified B Corporation (or ‘B Corp’), which means we meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose,” says Middleton.
Srbinovski says with a rising interest rate environment, brokers should be working very closely with their customers to ensure they have suitable cash flow and can withstand any future rate rises or potential challenges ahead.
Looking ahead
So what will the next 12 months bring for property investors?
“Over the next 12 months we expect to see continued growth in the investor market, as investors continue to try and take advantage of the higher rental yields,” Croucher says.
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Looking ahead
So what will the next 12 months bring for property investors?
“Over the next 12 months we expect to see continued growth in the investor market, as investors continue to try to take advantage of the higher rental yields,” Croucher says.
“While we can’t speculate on what investors will be looking at in the next 12 months, at ubank, we’re continuously examining our processes to ensure that we’re offering a best-in-class experience for those who choose to fulfil a home loan,” says Srbinovski.
“As the MFAA Fintech Lender of the Year, we’ve designed our home loans to help Australians build wealth through their homes, and will be here to support our customers as they embark on one of the biggest purchases of their lives.”
“As the property sector recalibrates and stabilises, I anticipate in the next 12 months we’ll see buoyancy return,” says Middleton.
“In a moderated interest-rate environment, investor clients will continue to seek value – both on new properties for their portfolios and from their lender.”