Bad Credit Loans, Bad Credit Home Loans – Bad Credit Finance Australia

There will be no big price crash in the Australian residential property market because there is no price ‘bubble’ said the director of research at RP Data, Tim Lawless. “Bubble is a word that has been used pretty loosely in relation to Australia’s real estate market since about 2003. Generally I would disagree with using this term,” he said. “

Across Australia’s capital cities, home values have increased by just 6.2 percent per annum over the last five years – a rate of growth that is in line with wages growth which has been 6.0 per cent per annum over the same time frame.

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Business Finance Limited is set to tap deposits from retail investors as the company makes a fresh start after getting a combination of equity and loan injection from Australia’s Liberty Financial in November last year.

The company has filed a prospectus for issue of up to NZ$25 million of debentures. It recently obtained a BB rating from Standard & Poor’s.

In November 2009 Business Finance received an overall investment of about NZ$22 million from Liberty. This investment comprised NZ$2.05 million for a 50 per cent equity stake, while the remaining NZ$20 million was received in the form of unsecured 10-year loans that were reinvested in mortgage notes of Liberty.

Business Finance is covered under the New Zealand government’s retail deposit guarantee until October 2010 and is still deciding on the merits of applying for an extension. This means the debentures may not have the benefit of extension but the company said the deposits are being guaranteed by Liberty. The guarantee is irrevocable and has been reviewed by S&P as part of its rating process though no Australian independent legal advice was obtained.

In addition, the deposits have an indirect guarantee from the mortgage-backed notes as the two companies have agreed that the principal amount of the loan will be reduced to the extent of any permanent reduction in the principal amount of the notes.

Business Finance currently has no deposits on its books, having repaid all the existing deposits prior to March 2009 and has advances of NZ$1.78 million with no provisions against them as all non-recovered balances from previous impairments have been written off.

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AUSSIE Home Loans boss John Symonds is once again spreading his wings to find new funding for an expansion of his house-branded mortgage business.

The Aussie operation maintained its profitability during the financial crisis by relying on funding from its 33 per cent shareholder, Commonwealth Bank.

While CBA will continue to support the business, Mr Symonds is looking for alternative lines of funding to boost lending capacity.

Industry sources told BusinessDaily that Mr Symonds has already spoken to other major banks about cutting a financing deal, but as yet no agreements have been finalised.

CBA is expected to slow down volume growth in home lending this year as it embarks on the massive challenge of refinancing a large part of its mortgage book.

Most of the refinancing is being done at significantly higher costs than before the financial crisis paralysed global credit markets in 2007.

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AUSTRALIAN families are paying more than $50 a week each in bank fees and low-paid workers are ploughing almost $30 a week into bank profits, according to research by a leading think tank.

The finding comes as The Daily Telegraph launches an exclusive new national survey Banks v Battlers in an effort to gauge just how much you are being slugged by your financial institution.

And bank workers have accused bosses of pressuring them to push debt and credit on to consumers.

Australia Institute analysis has found the total burden of fees on households of two people or more averages out to $53.20 per week.

The institute also calculated a worker on $50,000 a year – under the national average wage of more than $60,000 – is paying $28.85 a week towards bank profits.

The Australian Bankers Association has disputed the figures, saying much of banks’ profits were derived from superannuation,

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WEAK official lending finance figures highlight the fragile state of the economic recovery and may urge the Reserve Bank to hold the cash rate steady in the coming months, economists say.

Total personal finance commitments rose a moderate 0.7 per cent in February, seasonally adjusted, to $6.988 billion, from $6.943 billion in January, the Australian Bureau of Statistics (ABS) said on Tuesday.

In the year to February, total finance commitments among consumers, business and home buyers grew by 1.6 per cent in adjusted terms.

CommSec economist Savanth Sebastian said the data was not consistent with a strong economic recovery and should give the Reserve Bank reason to stay its hand with lifting the cash rate further.

“The central bank would want to be careful about lifting rates in this environment … it clearly highlights that a rate pause should be on the Reserve Bank’s agenda over the next couple of months,” he said.

“Over all it highlights the weak environment that we’re in. It’s not a guaranteed recovery that we’re in.

“If you look at the annual figure, its almost anaemic. It’s not consistent with a strong economic recovery.”

The Reserve Bank has lifted the cash rate five times over the past seven months, with its most recent 25 basis point rate rise taking the cash rate to 4.25 per cent.

Total commercial finance was up 5.6 per cent in February, seasonally adjusted, to $28.082 billion, from $26.581 billion in January, the ABS data also showed.

Mr Sebastian said the commercial finance figures were a good result, but were coming from a very weak base.

“It’s an early sign that business investment is starting to come back and gain traction,” he said.

Nomura Australia chief economist Stephen Roberts said the commercial finance figures would give the Reserve Bank some comfort, but he noted the volatile nature of the series gave a limited snapshot of the economy.

“It’s one of those pieces of data that … doesn’t provide that much information on one month’s data,” he said.

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Borrower demand for fixed rate loans has fallen once again, with variable rate loans coming out on top last month, according to a recent study by Mortgage Choice.

Despite a lift in demand for fixed rates in February, the study showed demand fell slightly in March, accounting for only 1.7 per cent of all approvals.

According to Mortgage Choice senior corporate affairs manager Kristy Sheppard, even with rising interest rates fixed rate products are not something new borrowers are enthusiastic about.

“Victoria and Queensland were the only states where fixed rate demand increased, though by less than one percentage point for each. The highest demand for fixed was in South Australia, where it was two percent of approvals,” Ms Sheppard said.

The study also showed that standard variable loan demand remained steady at 49 percent of approvals and held its position as the most popular choice for new borrowers.

“It is no wonder – there are so many quality ‘professional packages’ on offer with this type of loan,” she said.

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The Australian Securities and Investments Commission has given Centrebet an ultimatum: stop rates betting or prepare to be sued.

According to BusinessDay, ASIC senior manager Jonathan Coultas gave Centrebet written notice that the conduct of allowing betting on whether the Reserve Bank will or will not lift the official cash rate is in breach of the ASIC financial services guidelines.

“It has come to the attention of the Australian Securities and Investments Commission that you may be carrying on a financial services business without holding an Australian Financial Services (AFS) licence,” the notice reportedly said.

ASIC is said to be particularly concerned about the trading in derivatives without an AFS licence, which carries a penalty of up to 2 years imprisonment.

“We believe the financial bets you offer over the ASX 200 share index and RBA interest rate changes may be ‘derivatives’, as defined in the Corporations Act,” the notice read.

In response to the notice, Centrebet has removed the ASX 200 and Reserve Bank markets from its website.

Centrebet public relations manager Neil Evans has told BusinessDay: “We didn’t know we were selling derivatives.”

“We thought we were taking bets, the same as we do on the outcome of sporting events and elections.”

“We’ve been doing it for two years without complaint. Now ASIC says it has come to its attention.”

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SURGING property prices appear to be driving a spending spree in Australia, with home owners taking out bigger mortgages to help fund the purchase of big-ticket items, from new cars to holidays.

While many struggle to get a foothold in the housing market, home owners buoyed by double-digit rises in property prices are increasingly using their homes as ATMs.

It has rekindled memories of the early 1990s when banks encouraged home owners to borrow for a holiday or new car and add it to their mortgage.

But regulators and economists fear that the borrowing binge could leave home owners vulnerable to rising interest rates, while any sudden reversal of housing prices might tip many into negative equity – when the size of the loan exceeds the value of the property.

Before this week’s 25-basis point rise in interest rates, Reserve Bank governor Glenn Stevens took the unusual step of appearing on breakfast television to say that property prices were ”getting quite high” and warn of the dangers of people taking on too much mortgage debt.

Mortgage refinancing hit a record high of 37.2 per cent of all home loans arranged in March.

Fujitsu Consulting executive director Martin North said there had been a significant jump in the proportion of those refinancing to help finance acquisitions ranging from shares to big-ticket consumer items.

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DEMAND for home lending could soon outstrip supply, as the major banks restrict mortgage credit after a period of rapid market-share expansion, according to a report by JPMorgan and Fujitsu.

JPMorgan banking analyst Scott Manning said the big four, which have expanded their share of the mortgage market from 65 per cent to 76 per cent since the onset of the financial crisis, could now switch their focus to profitability rather than volume growth.

“While demand for housing credit is unlikely to abate, the Australian major banks will look to achieve the best possible returns on the increasingly scarce wholesale funding they are able to secure,” Mr Manning said.

Mortgage giants Commonwealth Bank and Westpac, he said, had grown their household assets by $75 billion in the 18 months to last December, leaving a funding gap of $50bn after deposits grew by only $25bn.

While corporate de-leveraging had lessened the burden, the wholesale funding requirements for the two banks had risen by about $20bn each.

Mr Manning said there would be no credit crunch, because the increased funding task was spread over a five-year period. However, signs of credit tightening were already emerging, including reduced loan-to-valuation ratios, lower discounts on professional packages and tightening of credit scoring, and a greater emphasis on multi-product relationships rather than plain lending.

The re-emergence of business credit growth would also divert funding to business banking.

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Bank of Queensland (BOQ) says it will raise its variable interest rates on home and business loans by 25 basis points from Friday.

BOQ said on Thursday its standard variable rate on mortgages would rise to 7.26 per cent from 7.01 per cent.

The bank was silent regarding its interest rates on deposits.

Bendigo and Adelaide Bank also moved rates on Thursday in reaction to the Reserve Bank of Australia’s (RBA) 25 basis point rate rise on Tuesday.

All other major and regional lenders have announced they will pass on the RBA’s rate rise.

Commonwealth Bank of Australia (CBA) subsidiary BankWest still has its interest rates under review.

The SVR for mortgages offered by the major banks now stands at 7.26 per cent at Westpac, 7.16 per cent at ANZ Banking Group, 7.11 per cent at CBA, and 6.99 per cent at National Australia Bank.

The SVR among other lenders stands at 7.26 per cent at BOQ, 7.20 per cent at Bendigo, 7.19 per cent at AMP and Suncorp Metway Ltd, and 7.18 at Westpac subsidiary St George Bank.

Bendigo on Thursday said it would increase its interest rates applied to home and business loan customers by 25 basis points from next Monday.

Bendigo’s standard variable rate (SVR) for mortgages will rise to 7.20 per cent, while variable mortgage rates across the bank’s third party mortgages business also will increase by 25 basis points.

The bank also will raise interest rates paid on “a wide range” of deposits, it said in a statement, without specifying the products of the quanta of the rises.

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