1 WHAT’S INSIDE 2-3 Consumer: Comparing fixed vs variable mortgages 4-5 News: PEXA Insights further bolsters its analytics portfolio 6-9 Market: Refinance records continue to tumble 10-11 International: UK go-live for digital settlements edging closer 12-13 Industry: Developments continuing to boom in Queensland PROPERTYNOWISSUE24APUBLICATION
An expert overview of today’s refinancing climate As discussed in-depth within this edition of Property Now, in response to rising interest rates, Australians are refinancing their home loans in record numbers.
Q: Fixed or variable rate – what works best?
For borrowers who currently have a variable rate home loan or are about to borrow money and have the option of a fixed or a variable interest rate product, we think it’s a personal decision. If you want to be absolutely sure that your monthly repayments are going to be ‘x’ dollars a month for three years, get a fixed rate product, and whether rates go up or down, you’re hedged – you’ve locked in your monthly dollar value of repayments. But there are sometimes some hidden costs in that process – for example if you want to pay in more than your set repayments, sometimes there is a penalty to do that, so they don’t have the flexibility of a variable rate.
Q: How should consumers be looking to navigate the current conditions?
Yellow Brick Road Home Loans' Executive Chairman Mark Bouris and Economist Stephen Koukoulas for their expert analysis on the market’s current state, the steps consumers should be taking and the balance between fixed and variable rates.
Unfortunately, when inflation is doing what it’s doing at the moment, the people who bear the brunt of repairing the spike are those who borrowed money to buy a house. While these are definitely complex and uncertain times for borrowers, now is not the time for panicking – it’s time to strategise. You need to be conscious of saving money in everything you do, to make sure you can continue to sustainably pay your mortgage. And the most important step is to check your current interest rate against other competitive offers out there. Any mortgage owner who doesn’t assess their current deal will face growing pressure as rates continue to increase. There are a large number of Australians who never bother to check their interest rate –this means they simply won’t know if they’re paying too much and then never actually refinance – at the end of the day, these are the people who will end up paying over the top.
As we predicted, the RBA announced another 0.50% raise to the official cash rate at the start of August, moving it up to 1.85%. Looking ahead, we feel that we may be looking at another 0.50% increase in September Our current forecast is that by year end, the cash rate will be sitting at around 2.50% to 2.75%.
Q: What do you foresee for the RBA cash rate as 2022 progresses?
Ultimately, when it comes to your mortgage, the most important thing is that you choose one that suits your personal situation. For more tips and tricks, visit https://ybr.com.au/blog/ and https:// yhomeloans.com.au/property-insights/.
But with a number of factors to consider for both new loanees and those with existing mortgages, care must be undertaken by consumers to find the solution which suits them best.
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“The team at .id has developed unique expertise in identifying and converting data into high-quality information, knowledge and insights. This is a skillset that is highly complementary to PEXA Insights’ vision. I am thrilled to welcome .id’s team members to the PEXA Group. I would also like to commend both Ivan and Lailani for their enthusiasm and commitment
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In a second, separate move, PEXA has also acquired a 70% controlling interest in Slate Analytics, a progressive property analytics and technology solution co-developed by the UNSW Sydney and FrontierSI.
The acquisition of .id represents PEXA Insights’ first 100% acquisition and, together with the Slate Analytics investment, represents the third and fourth strategic investments undertaken as part of the PEXA Insights growth strategy.
.id is a land information business that is a trusted provider of demographic and economic data and forecasts at the micro-geographic level to more than 300 local councils across Australia and New Zealand.
PEXA drives data and valuations capability with .id and Slate Analytics investments
Across FY22, PEXA Insights also announced it had acquired a 38% stake in data prop-tech Landchecker and a 25% stake in artificial intelligence software leader Elula.
PEXA Insights can confirm it has acquired 100% of .id – a leading Australian demographic-based consulting company.
Scott Butterworth, PEXA’s Chief Data and Analytics Officer, said: “.id has become the trusted source of demographic and economic information for councils. Together with PEXA’s market-leading data and insights, such as information on internal migration patterns that are key in accurately determining land demand, we will seek to deliver an even greater offering to both councils and the wider property industry.
The investment in both .id and Slate Analytics comes as PEXA Insights seeks to expand its service offering across four strategic focus areas: demand for land; use of land; transaction efficiency; and housing Theaffordability..idacquisition aims to support each of these pillars and expand the position of PEXA and .id as leaders in property data and spatial analytics to deliver on its purpose.
to not only make this acquisition happen, but to ensure a smooth transition for their team and clients. We look forward to working together to provide innovative products and services to Australia’s property market
PEXA will leverage its deep technical capability to accelerate the delivery of Slate Analytics’ tools, allowing financiers, insurers, developers, government and consumers to appropriately benefit from more accurate and interactive property valuation data.
Consistent with its mission of unlocking value for the property industry through timely insights that address demand for land, land use and transaction efficiency and affordability, Slate Analytics’ tools have application for PEXA’s financial institution customers, potentially expediting the mortgage approvals process on behalf of Australian homebuyers.
Graeme Kernich, CEO of FrontierSI, said: “Through Slate Analytics, FrontierSI and UNSW Sydney have realised their vision of bringing cutting edge AI into the property valuation products and services space. The investment by PEXA will be critical to furthering this vision and expanding the impact of this capability in Australia and internationally.”
Professor Chris Pettit, Director of UNSW’s City Futures Research Centre, said: “The current labour-intensive approach to land and property value assessment is expensive, subjective and slow, often relying on out-ofdate property data. Slate Analytics uses the advanced property analytics and technology solutions we’ve co-developed over the last three years to offer a world-class platform that calculates accurate value assessments in minutes so homebuyers, investors, businesses and governments can make more informed decisions on the future of our cities.”
Additionally, PEXA has acquired a 70% stake in Slate Analytics, a progressive property analytics and technology solution co-developed by the UNSW Sydney and FrontierSI – a not-for-profit company that uses its expertise in spatial mapping to support government, industry and the community.
Mrparticipants.”Motley,founder of .id, said: “In conjunction with PEXA, .id will continue our vision to contribute to a good society by informing the decisions facing all players in the business of property and place in developing our cities and regions. This partnership will help expedite our progress towards this vision.”
More Australians than ever are adopting a proactive approach to managing their home loan amidst rising interest rates, with a record 331,976 property refinances recorded across Queensland, New South Wales and Victoria in FY22, up 29% on the previous 12-month period, according to analysis released by PEXA Insights. heightsreachesrefinancingPropertyrecordinFY22
Significant growth in FY22 was observed in commercial new loans across all states, with VIC up 35.8% year-on-year.
COMMERCIAL NEW LOANS, TOTAL VOLUME
NSW QLD VIC 4,845 +24.3% +35.8% 6,021 6,474 5,207 7,071
Whilst VIC posted the highest number of commercial new loans at just over 7K
NSW QLD 4,845 +24.3% 6,021 6,474
Queensland experienced the highest growth in refinances with 73,035 (up 49.8% year-on-year) completed during the year. The Sunshine State was also the first to reach above 200 points on PEXA’s Refinance Index, coinciding with heightened buying activity and rises to the official cash rate in both May and June 2022.
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QLD recorded the most residential new loans in FY22 at nearly 160K
Residential new loans grew in all eastern states with QLD and VIC leading, up over 10% year-on-year.
QLD recorded the most residential new loans in FY22 at nearly 160K
150,951 154,744 +10.3% +2.5%+10.4% 145,005 159,894 142,774 157,666
Source: PEXA, QLD Government 1 FY21 not available due to gradual uptake of the PEXA exchange during the year. Estimate provided for QLD in FY22.
Residential new loans grew in all eastern states with QLD and VIC leading, up over 10% year-on-year.
Source: PEXA, QLD Government FY21 not available due to gradual uptake of the PEXA exchange during the year. Estimate provided for QLD in FY22.
The PEXA Mortgage Insights Report found that all three major eastern states posted significant year-onyear increases in 2022, with Victoria recording the highest volume of residential and commercial refinances at 131,287 (up 23.7% year-on-year), followed by New South Wales with 127,654 (up 25.8% year-on-year).
Residential new loans grew in all eastern states with and VIC leading, up over 10% year-on-year.
FY21 FY22 FY21 AVAILABLENOT1
Significant growth in FY22 was observed in commercial new loans across all states, with VIC up 35.8% year-on-year.
FY21 FY22 FY21 AVAILABLENOT1
RESIDENTIAL NEW LOANS, TOTAL VOLUME
COMMERCIAL NEW LOANS, TOTAL VOLUME Significant growth in FY22 was observed in commercial new loans across all states, with VIC up 35.8% year-on-year.
QLD recorded the most residential new loans in FY22 at nearly 160K Whilst VIC posted the highest number of commercial new loans at just over 7K
RESIDENTIAL NEW LOANS, TOTAL VOLUME 150,951 154,744 +2.5%+10.3% 145,005 159,894 Whilst VIC posted the highest number of commercial new loans at just over 7K
RESIDENTIAL NEW LOANS, TOTAL VOLUME
7
COMMERCIAL NEW LOANS, TOTAL VOLUME
Head of Research, Mike Gill, said: “We have seen heightened refinancing activity over several years,
All three eastern states recorded in excess of 150,000 new residential loans each, with Queensland leading the way again with 159,894 home loans completed in FY22. More than 472,304 new home loans being taken out across the eastern states in FY22. Victoria posted the highest growth in both new residential loans (157,666 loans – up 10.4% year-on-year) and new commercial loans (7,071 loans – up PEXA35.8%).Insights’
QLD Government NSW QLD VIC REFINANCES (RESIDENTIAL & COMMERCIAL), TOTAL VOLUME 101,488 48,769 +25.8% +49.8% 127,654 73,035 +23.7% 106,156 131,287
Refinances in QLD surged a huge 49.8% year-on-year from FY21 to FY22 and while initially Australians were taking advantage of record low interest rates, there is now a clear correlation between the high numbers we saw during FY22 and the Reserve Bank of Australia’s determination to lift interest rates twice before the close of the financial year. “The record levels of new loans coincide with the strong buying and selling activity witnessed throughout the first half of FY22, in particular in Queensland which has experienced a state-based property boom across home buying and selling (as previously announced).”
“We saw a highly competitive landscape between major and nonmajor banks for new loans across all three eastern states, however nonmajor banks recorded higher win/ loss numbers for refinances in the same regions. Strong competition within the lending market can only lead to positive outcomes for consumers,” Gill said.
REFINANCES (RESIDENTIAL & COMMER CIAL), TOTAL VOLUME VIC saw over 131K refinances during FY22, with NSW close behind on over 127K. VIC topped the eastern states for the second year running, recording the most refinances in both FY21 and FY22.
Source:FY22.PEXA, QLD Government NSW QLD REFINANCES (RESIDENTIAL & COMMERCIAL), TOTAL VOLUME 101,488 48,769 +25.8% +49.8% 127,654 73,035
Over 331K refinances were completed in FY22 in the eastern states Refinances in QLD surged a huge 49.8% year-on-year from FY21 to FY22 FY21 FY22
Over 331K refinances were completed in FY22 in the eastern states
PEXA’s latest report also illustrates net increases and decreases for lenders of both new loans and refinances across the financial year, with non-major lenders successful in winning more refinances (residential and commercial) than they lost in Queensland, News South Wales and Victoria across FY22.
8 saw over 131K refinances during FY22, with NSW close behind on over 127K. topped the eastern states for the second year running, recording the most refinances in both FY21
Source:FY22.PEXA,
Over 331K refinances were completed in FY22 in the eastern states Refinances in QLD surged a huge 49.8% year-on-year from FY21 to FY22 FY21 FY22 5 VIC saw over 131K refinances during FY22, with NSW close behind on over 127K. VIC topped the eastern states for the second year running, recording the most refinances in both FY21 and
A number of QLD postcodes also ranked highly including 4350 (Newtown) which appeared in both residential and commercial top 10.
NSW QLD VIC
TOP 10 POSTCODES
Source: PEXA
Source: PEXA residential and commercial new loans NSW QLD
respectively
TOP 10 POSTCODES FOR RESIDENTIAL VOLUME
Source: PEXA NSW QLD VIC
A number of QLD postcodes also ranked highly including 4350 (Newtown) which appeared in both residential and commercial top 10. lists for
TOTALFOR
TOP 10 POSTCODES FOR RESIDENTIAL NEW LOANS, TOTAL VOLUME FY22
Analysis only includes properties settled digitally through PEXA Exchange. Data analysed at postcode level with the prominent suburb in that postcode shown for convenience. Analysis includes VIC, NSW & QLD only. Analysis only includes properties settled digitally through PEXA DataExchange.analysed at postcode level with the prominent suburb in that postcode shown for Analysisconvenience.includes VIC, NSW & QLD only.
Source: PEXA 3029 (Truganina) and 3175 residential and commercial postcodesloansfor
TOP 10 POSTCODES FOR RESIDENTIAL NEW LOANS, TOTAL VOLUME FY22
Source: PEXA NSW QLD VIC
TOP 10 POSTCODES FOR COMMERCIAL TOTAL VOLUME
TOP 10 POSTCODES FOR COMMERCIAL NEW LOANS, TOTAL VOLUME FY22
FY22
TOTAL
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Analysis only includes properties Data analysed at postcode shown for convenience. Analysis NSW QLD
VIC dominated the top postcodes for residential and commercial new loans 3029 (Truganina) and 3175 (Dandenong) topped the lists for residential and commercial new loans respectively
VIC dominated the top postcodes for residential and commercial new loans
A number of QLD 4350 commercial(Newtown)top 3029 (Truganina) and 3175 (Dandenong) topped the lists for residential and commercial new loans respectively
For more information, visit www.pexa.com.au/insights.
This significant milestone follows successful testing of the newly minted PEXA Pay system earlier this year and marks another step towards PEXA’s ambitions to help centralise and streamline the property remortgage and completion process in the UK.
The two lenders are among the first to announce their partnership with PEXA, with further lenders due to be announced and onboarded throughout 2023. Over the coming months, PEXA will onboard both lenders, beginning with Hinckley & Rugby Building Society in September, enabling a streamlined and digitised remortgaging process for UK consumers – reducing associated time, risk and costs, while also providing an improved customer experience. Having facilitated over 11 million property transactions worth circa AUD $2 trillion in Australia, PEXA’s bespoke solution for the UK’s housing market will commence with an initial focus on digital remortgages this Northern Autumn. PEXA expects to bring on further lenders in subsequent waves – working closely to align available landing slots within the Bank of England’s Real-Time Gross Settlement upgrade. Today’s announcement follows the successful launch of PEXA Pay, the 7th active net payment scheme developed in collaboration with leading global technology consultancy firm ThoughtWorks, with the Bank of England acting Hinckley & Rugby Building Society and Shawbrook Bank have been confirmed as the first lenders to commence transacting remortgage cases via PEXA’s UK platform.
First wave of lenders to go ‘live’ in the UK with PEXA digital remortgaging
“Shawbrook, the first bank we have collaborated with in the UK, has shared its deep expertise in specialist mortgage markets including professional buy-to-let. Shawbrook’s approach to leveraging technology for the betterment of its customers is highly aligned with our own.
“Hinckley & Rugby Building Society has a strong track record of supporting new technology entrants into the UK market and will be our first reference site. They have given early and consistent support, working closely with us to bring PEXA to the market and will be undertaking our first transaction in the UK.
11 as the settlement agent. PEXA has also recently announced its partnership with ClearBank to allow for the final disbursement of funds to transaction accounts held with lenders not already integrated with PEXA’s own platform, opening the functionality to the wider market.
James Bawa, PEXA UK Chief Executive Officer, comments: “Since launching in the UK earlier this year, we have been clear in our aim to help improve the remortgage and property completion process through technology and better industry collaboration. It is so rewarding to see this vision shared by lenders.
Marcelino Castrillo, Chief Executive Officer, Shawbrook, comments: “Speed, simplicity and certainty are three critical factors that professional property investors need, not just from their funder but throughout the process. Working closely with their preferred advisers, we have always leveraged data and technology to deliver on these requirements for our customers – consistently and at scale. At Shawbrook we’re incredibly excited about the potential appeal and applicability of the PEXA model to the specialist mortgage market.”
PEXA aims to launch its remortgage platform from September 2022, with a transformed sale and purchase process due for release in 2024.
“The enthusiasm and support received from lenders demonstrates their drive to adopt technology for the benefit of their customers. We are taking a considered approach to entering the UK market as we understand the criticality of the completions process and must ensure we take our time to build and launch the right proposition for the market.”
Colin Fyfe, Chief Executive Officer, Hinckley & Rugby Building delightedcomments:Society,“Wearetohave partnered with PEXA at the very start of their journey in the UK. We recognise the advantages of digitisation within the market and we were keen to offer our expertise to support the development of PEXA’s offering. We are especially proud to be responsible for processing the first transaction, later in the year.”
By Kat Leonard andbenefittingTechnologylawyersdevelopersalike
Today, settling digital is firmly ingrained in Queensland – and Emile McPhee, Special Counsel at McCullough Robertson provided some insight into why PEXA Projects has been a gamechanger for his firm and the industry.
PEXA Projects, which first launched in 2017, streamlines the processes involved in the coordination and execution of settlements for multi-lot developments (off-the-plan sales and sales of vacant land post subdivision).
“For our clients, the largely instantaneous receipt of funds is also
“In particular, the ability to upload information, prepare documents and sign in bulk has introduced a number of real efficiencies, both in the time spent on those tasks themselves as well as the time needed to cross check data and documents, particularly at a senior level.”
“PEXA Projects is now an integral part of our processes,” explains McPhee.
McPhee goes on to describe that aside from the ‘bulk’ benefits, PEXA Projects is also great in being able to manage large developments in real time, with open visibility for all parties involved (including mortgagees and buyers), which reduces the extra time taken to provide updates across the course of the sales.
“Products like PEXA Projects are integral in being able to achieve the large daily settlement rates that we saw on STAR (and for previous projects we have been involved with, such as ARIA’s The Standard).”
“The project overview dashboard, and the ability to complete bulk actions across the workspaces, helps streamline our operations and gives us assurance that all tasks are up-to-date.
“This could all then be coordinated simply by one or two key team members, who had real time access to everything they needed.
Notably, Queensland led the way nationally with 220,692 residential settlements, up almost 12% from FY21 – with the prevalence of multilot developments contributing significantly to the momentum.
14 obviously a key benefit, and the ability to provide quick real time updates on the status of settlements, particularly where there might be a hundred or more in a day, is fantastic.”
“The new integration with the ATO has also been very beneficial – it’s allowed a streamlined experience for all parties with generation of GST Forms 1 and 2 and auto-population of the payment to ATO including the relevant payment
Thereferences.”abilityto settle easily in bulk has been useful as Australia’s east-coast property market powered through back-to-back record-breaking financial years, with more than 628,000 residential property sale settlements – worth an aggregate $554 billion – being completed in FY22, per PEXA Insights.
McPhee also noted that the renowned STAR development, a large residential precinct on the Gold Coast, was seamlessly managed through PEXA “WeProjects.were able to easily allocate (and reallocate) work between staff as needed in order to meet the demands, and staff were able to work on these remotely – gone are the days of a settlement room with hundreds of boxes, thousands of pages and millions of dollars in cheques all being passed around.
Nicole Senese, a lawyer with MBA Lawyers has had a similar experience in her work with a number of prominent property developers.
The Sunshine State has however experienced a noticeable decline in sale settlements from the first half to the second half of the financial year, coinciding with the Reserve Bank of Australia’s decision to lift the official cash rate.
“We are still seeing high volumes from developments commenced in 2021 and earlier, which are looking to complete in the next 12 months.
“While we could expect a slow down into FY24, the outlook still looks good, particularly for larger or more
And McPhee offered his own thoughts on what his FY23 outlook on Queensland developments, volume and his general industry insights.
established developers who are able to ride out the market cycles and spread risk more effectively, but we also expect to see smaller developers come back online once the cautionary period eases.
“Despite the much-publicised interest rate rises and continuing difficulties facing the construction sector, we’re still seeing interest in both mixed use and flat land developments, looking to capitalise on the strong performance of the housing market in Queensland over the last 18 months (and, in more recent months, the strength of units and townhouses).
“Housing affordability, as well as affordable and community housing, continues to be a concern for Queensland (and the broader Australian market), so we’re hopeful that these will continue to be considered and supported in order to meet the rising demand in Queensland – particularly as we head towards the 2032 Olympics.”
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