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Australian Finance Group (AFG) March Report - Best February Ever on Record; And RateCity says 69% of home loans offer LVR 95% or higher in 2012
Topic Started: 1 Mar 2012, 02:33 PM (6,067 Views)
Yossarian
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peter fraser
14 May 2012, 03:22 PM
Yes it looks as though you are correct.

How would you like me to consume that humble pie - orally or otherwise.

That seems like a large deviation - has AFG taken over another large group, or have they won over large numbers from various smaller groups. What did Hewy tell you?

Nathan Webb over at Macro has been graphing the AFG index for some time, and it has until now been reasonably reliable - Link to Nathan's Graphs.

So something must have changed to upset that balance. This isn't just slow progressive market share growth, this must be a large change in numbers to get this error.

Anyway the upshot of all of that is that I owe you an apology.
A knowing nod will do :D

The AFG numbers were simply inconsistent with what I was seeing in my own book and "conversationally" elsewhere.

Though AFG is generally a reasonable proxy, compositional changes in their membership base can make big difference and they seem to have picked up some decent groups relatively recently.
Edited by Yossarian, 14 May 2012, 08:30 PM.
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peter fraser
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Lefty
14 May 2012, 07:22 PM
Peter, you are more gracious in defeat than almost anyone I have come across.

Thanks lefty - having had the benefit of some art lessons I know that mistakes are 100% learning opportunities. What you get wrong is more important than what you get right.

Cheers...
Any expressed market opinion is my own and is not to be taken as financial advice
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peter fraser
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Yossarian
14 May 2012, 08:28 PM
peter fraser
14 May 2012, 03:22 PM
Yes it looks as though you are correct.

How would you like me to consume that humble pie - orally or otherwise.

That seems like a large deviation - has AFG taken over another large group, or have they won over large numbers from various smaller groups. What did Hewy tell you?

Nathan Webb over at Macro has been graphing the AFG index for some time, and it has until now been reasonably reliable - Link to Nathan's Graphs.

So something must have changed to upset that balance. This isn't just slow progressive market share growth, this must be a large change in numbers to get this error.

Anyway the upshot of all of that is that I owe you an apology.
A knowing nod will do :D

The AFG numbers were simply inconsistent with what I was seeing in my own book and "conversationally" elsewhere.

Though AFG is generally a reasonable proxy, compositional changes in their membership base can make big difference and they seem to have picked up some decent groups relatively recently.
Thanks Yossarian,

I'm actually sorry that I won't be going to LA - I think that I would have enjoyed a chat with you, and maybe a glass of vino. Clearly you have close ties with a 3rd party channel of some size.

I'm amazed that I haven't seen a reaction to the latest rate reduction as yet. What are you seeing?

Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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peter fraser
14 May 2012, 09:19 PM
Thanks Yossarian,

I'm actually sorry that I won't be going to LA - I think that I would have enjoyed a chat with you, and maybe a glass of vino. Clearly you have close ties with a 3rd party channel of some size.

I'm amazed that I haven't seen a reaction to the latest rate reduction as yet. What are you seeing?
My friendly real estate agent is very very chirpy today. She was already happy on Friday, having sold two properties last week, and she sold 2 more over the weekend, so at least in her little world (Auchenflower, St. Lucia, Toowong, Indooroopilly, Taringa in Brisbane) she had a very good week.

I also saw the listings of units in St. Lucia units and apartments on realestate.com.au drop from 48 to 39 over the weekend. No idea if they were withdrawn from sale or sold, though. One of the distressed hi-rise along the river also went from "REDUCED BUY BUY BUY!" to "under contract".

So a little blip of positive noise in the signal there...
The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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peter fraser
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miw
14 May 2012, 09:43 PM
peter fraser
14 May 2012, 09:19 PM
Thanks Yossarian,

I'm actually sorry that I won't be going to LA - I think that I would have enjoyed a chat with you, and maybe a glass of vino. Clearly you have close ties with a 3rd party channel of some size.

I'm amazed that I haven't seen a reaction to the latest rate reduction as yet. What are you seeing?
My friendly real estate agent is very very chirpy today. She was already happy on Friday, having sold two properties last week, and she sold 2 more over the weekend, so at least in her little world (Auchenflower, St. Lucia, Toowong, Indooroopilly, Taringa in Brisbane) she had a very good week.

I also saw the listings of units in St. Lucia units and apartments on realestate.com.au drop from 48 to 39 over the weekend. No idea if they were withdrawn from sale or sold, though. One of the distressed hi-rise along the river also went from "REDUCED BUY BUY BUY!" to "under contract".

So a little blip of positive noise in the signal there...
Thanks - I know almost every street in those suburbs. They are good areas - close to the city, rail links except for St Lucia. I would imagine that many of the unit blocks along the river at St lucia had water damage on the bottom floor. Good demand for rentals there though.

Those areas are largely above median value areas so it will be interesting to see what price ranges are being affected. An RE agent I know contacted me to see if I wanted to sell my house a couple of weeks ago, in fact they don't have enough listings in my area, and yet I see homes that I regard as bargains unwanted.

It would be interesting to see how the upmarket agents like Josephone Johnson are going.

I confess that I'm a littled puzzled at present. Lower prices and lower interest rates usually have an effect. Perhaps prices need to fall a little more and rates go a little lower.

Any expressed market opinion is my own and is not to be taken as financial advice
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miw
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peter fraser
14 May 2012, 10:11 PM
Thanks - I know almost every street in those suburbs. They are good areas - close to the city, rail links except for St Lucia. I would imagine that many of the unit blocks along the river at St lucia had water damage on the bottom floor. Good demand for rentals there though.

Those areas are largely above median value areas so it will be interesting to see what price ranges are being affected. An RE agent I know contacted me to see if I wanted to sell my house a couple of weeks ago, in fact they don't have enough listings in my area, and yet I see homes that I regard as bargains unwanted.

It would be interesting to see how the upmarket agents like Josephone Johnson are going.

I confess that I'm a littled puzzled at present. Lower prices and lower interest rates usually have an effect. Perhaps prices need to fall a little more and rates go a little lower.
Yes. Having lived in St. Lucia for 15 years, I kind of like the area too.

Most of the apts along Macquarie St. had their basements flooded. Didn't get into the bottom apt on the one I know well, but building regs mean that all the electrics have to be in the basement on those hi-rise so they all suffered damage to electrics and lifts which is exy. The big problem is that a significant percentage of the buyers won't even enter those zones on the flag map. As the REA put it to me, "St. Lucia is Bruised". Love that real-estate speak!

You probably know this better than me - when exactly do the sales get into the stats? I note that if you read the RPdata reports, the date of sale listed is the date of the contract signing and not the date of settlement - or even the date of going unconditional. This seems wrong to me, given that at that point the property is most certainly not sold. I cannot believe those sales got into the index stats on the day the contrcat was signed, though....

With respect to the interest rate cut not having much effect, I am wondering if there is some lag in there for finance approvals. In the early 2000s when I applied for finance, it took less than a week for the approval to come through, but for an application I made last year it took 16 days, which I thought was excessively long, given that all the relevant info was there day 1.

The truth will set you free. But first, it will piss you off.
--Gloria Steinem
AREPS™
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peter fraser
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miw
14 May 2012, 10:29 PM
Yes. Having lived in St. Lucia for 15 years, I kind of like the area too.

Most of the apts along Macquarie St. had their basements flooded. Didn't get into the bottom apt on the one I know well, but building regs mean that all the electrics have to be in the basement on those hi-rise so they all suffered damage to electrics and lifts which is exy. The big problem is that a significant percentage of the buyers won't even enter those zones on the flag map. As the REA put it to me, "St. Lucia is Bruised". Love that real-estate speak!

You probably know this better than me - when exactly do the sales get into the stats? I note that if you read the RPdata reports, the date of sale listed is the date of the contract signing and not the date of settlement - or even the date of going unconditional. This seems wrong to me, given that at that point the property is most certainly not sold. I cannot believe those sales got into the index stats on the day the contrcat was signed, though....

With respect to the interest rate cut not having much effect, I am wondering if there is some lag in there for finance approvals. In the early 2000s when I applied for finance, it took less than a week for the approval to come through, but for an application I made last year it took 16 days, which I thought was excessively long, given that all the relevant info was there day 1.

Buying a property with marginal flood damage wouldn't concern me at all, but I wouldn't buy one that was completely inundated. In the not too distant future you will hear the story that the "Water Authority completely messed up and this property will never be flooded again" and buyers willing to pickup a waterfront bargain will eat that up. Good capital gains when the flood fades from memory and high end properties make a comeback.

In fact another large flood may never happen again in our lifetime. The units that were surrounded with water but not badly affected will only have sewerage difficulties to overcome, as unit owners above continue to flush with nowhere for the effluent to go. I don't know how you could overcome that. Don't buy on the lowest floor?

RPData figures are voluntarily noted by the agents. I have always thought that they noted them sold when the contract became unconditional, but I could be wrong. You can imagine that if all agents noted the sale at that point then RPData will have very solid stats. I know that they keep adjusting the calculation to allow for changing habits and market share. Having started in Brisbane, RPData have a strong market share here so the data is good. They have the best real estate database in Australia, but they are not strong everywhere.

ABS data is collected from the state titles office's. The basic format is:-

* Sign contract today.
* Get finance approval 14 to 21 days.
* Settle 30 to 60 days after original signing.
* It then takes up to 30 days for the banks to lodge documents and for the sale to be recorded on title.

So up to 3 months to come to the notice of the ABS. Not that long ago that is all we had, now we have a daily product courtesy of Rismark/RPData. The official process has almost no errors, so the time taken is forgiveable in my opinion.

Bank approval times vary from 1 day to 20 days - it can vary quite a bit. I remember a time in 2009 when St George to over 30 days to pick up the file, so approvals ran at about 60 days then - it was horrific. They completely under estimated demand and ran a low rate special just as demand was peaking, and then they were too stupid to pull the offer.

Complete cockups happen in every industry.

Any expressed market opinion is my own and is not to be taken as financial advice
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Lefty
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peter fraser
14 May 2012, 09:19 PM
Thanks Yossarian,

I'm actually sorry that I won't be going to LA - I think that I would have enjoyed a chat with you, and maybe a glass of vino. Clearly you have close ties with a 3rd party channel of some size.

I'm amazed that I haven't seen a reaction to the latest rate reduction as yet. What are you seeing?
Perhaps people no longer trust the banks to keep passing on the RBA's cuts in full and instead incrementally push them up of their own accord?
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Yossarian
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peter fraser
14 May 2012, 09:19 PM
Thanks Yossarian,

I'm actually sorry that I won't be going to LA - I think that I would have enjoyed a chat with you, and maybe a glass of vino. Clearly you have close ties with a 3rd party channel of some size.

I'm amazed that I haven't seen a reaction to the latest rate reduction as yet. What are you seeing?

A drink would be good but then I'd have to out myself which would limit the fun. :oo:

We're not seeing a big reaction to the latest rate cut nor did I expect much. Although refi activity will pick up as lenders track the swap rates down for a while and fixed rates get sexier in relative terms, I've held the view since '08 that people have simply changed their attitude to indebtedness.

Deleveraging continues and each rate reduction is as likely to be reflected in increases in offset balances as in increased borrowing. The pavlovian response isn't what it was IMHO.

It's trite but I see the current level of lending growth as the new normal and a Good Thing.

I've banged on about it for ages but business models and investment strategies predicated on the credit environment - in terms of both both appetite and availability - that existed between about 1990 and 2007 need to adjust.
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TED BULLPIT
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Great thread Mr Fraser , thats all I'll say in my mellow state :D

I heard ther day that investment borrowing for housing was down 2.0% for March and then the following day hear it is only 1% , can you confirm this Mr Fraser.
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