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Yahoo
an hour ago
- Business
- Yahoo
Westpac's huge mortgage change set to benefit millions
Westpac is changing its borrowing rules to benefit the millions of self-employed people across Australia. At the moment, many lenders require those who work for themselves to present far more evidence of their finances than someone who is employed through a company. Marina Michael, a mortgage broker who specialises in self-employed Aussies, told Yahoo Finance every bank had a different appetite for these types of borrowers. Traditionally, every lender needed at least two years of financials, including your individual tax returns, company tax returns, and your notice of assessment. But the Big Four bank is aiming to make this process slightly easier by slashing the amount of financial evidence by half. Tax time mortgage warning for millions as dad exposes $500,000 issue Woolworths payment change hits dozens of supermarkets today Aussie earning $300,000 a year in job after completing three day course For comparison, people employed by a company usually only need to provide three months of documentation to show they're in a good position to take on a loan. Westpac hopes that by dropping the requirement for sole traders to just one year, it will speed up application move comes after the bank saw a 30 per cent surge in the number of sole traders applying for loans. An estimated 15.7 per cent of all working Australians are self-employed, according to Australian Bureau of Statistics data. 'By introducing a one-year income assessment, we are making the home loan process faster and simpler by requiring less documentation, helping more self-employed Australians to secure their home or investment property sooner," James Hutton, Managing Director Mortgages at Westpac, said. "Additionally, reviewing just the latest year of income can help with providing a clearer representation of recent business performance and borrowing capacity. 'This is also backed by the expertise and experience of our home lending teams, who understand the unique needs of self-employed applicants and can guide them through the home lending process." Hutton explained that self-employed people were required to present more financial documentation because their income can be "more variable, or require additional verification" compared to regular payslips. Great Southern Bank recently released research showing 40 per cent of people thought it was harder to get a home loan as a small business owner. They acknowledged that being seen as too high risk, the complex process of getting all the documentation needed, and their own instability of income were the biggest issues preventing them from getting approved. Sydney dentist Frank Farrelly told Yahoo Finance he was recently knocked back by a mortgage broker for a loan to upgrade his home due to being self-employed. Even though he had decent savings and his husband is a lawyer, the broker said their application was "riskier" because Farrelly runs his own dental practice. 'Staff wages have gone up, costs of everything else have gone up, but it's also everyone feeling the pinch, so it's hard for us to justify price rises," he said. 'At the same time, we're getting a lower number of people through the door. Business conditions are poor, which I think is across the economy in general.' Sydney builder Tim Nelson has been through this process twice and has welcomed Westpac's policy change. 'The process did involve a stack of paperwork. Any change that cuts down the time and admin for business owners like me is going to mean more time for what really matters – delivering for my clients, building my business and supporting my family,' he said. Michael explained that self-employed applicants were seen as riskier because, historically, businesses failed within the first two years. Recent data showed more businesses have entered insolvency in the 2024-25 financial year than in any previous year. According to the corporate regulator, there were a whopping 14,105 businesses that were unable to pay their debts, which was a 26.8 per cent jump from the 11,053 recorded in the year prior. 'Cost increases – rents, insurance, interest rates, wages, electricity and gas – weaker consumer demand, especially in discretionary areas and the ATO's renewed collections activity are the key themes,' CreditorWatch chief economist Ivan Colhoun said. 'The ATO was more lenient on companies during the pandemic, when there was so much uncertainty and at times great business stress from the unique circumstances the pandemic produced." This is why lenders can be so hesitant when handing out big sums of cash and why they require far more information than your average borrower. Westpac now joins Commonwealth Bank and a few other non-bank lenders who only require the most recent financial year of documentation for a self-employed loan. Some lenders can also offer low doc home loans where they accept alternative documents such as business activity statements (BAS), bank statements, or an accountant's letter instead of full tax returns. However, they can often come with higher rates and fees.
Daily Telegraph
15 hours ago
- Business
- Daily Telegraph
National Housing Accord 60,000 new homes short in first year
Australia is set to fall 60,000 homes short of the number of new home approvals needed to fix its housing crisis in the first 12 months of a five-year campaign to fix the problem. Major industry groups are predicting shortfalls of up to 285,000 on the 1.2 million homes needed to be built by the 2029 deadline set by the nation's leaders in 2024. Australian Bureau of Statistics data released today shows 168,981 new homes have been approved in the 11 months since the Accord commenced on July 1 to the end of May, including a 3.2 per cent rise to 15,212 given the go ahead by planners in the past month. RELATED: Australia predicted to miss National Housing Accord annual targets until 2028 'Train wreck' housing approvals mean nation needs to build 260k homes a year to meet target Federal budget 2025: Nation's biggest builder says housing crisis needs 'wartime response' In the most recent full year of data, from June 1, 2024, to May 30, 2025, there were 181,643 new homes approved — up from about 165,000 in the prior year. But a National Housing Accord that commenced on July 1 last year required at least 240,000 homes be built each year until 2029 in order to build the 1.2 million homes needed to address the housing crisis. And the cost of building a house is still becoming more expensive, hitting a $513,000 national average in May. Victoria has approved the most homes since the Accord began, with 51,876 in the 11-month period and 55,531 in the full year. New South Wales was next with 43,000 approvals since July, and 45,680 in the past 12 months. The shortfalls in approvals are just the tip of the iceberg, with industry groups warning the number of homes actually being built is substantially less than the number being given the green light for construction. The Housing Industry Association has calculated about one in six apartments approved nationwide not under construction within two years, while about 5 per cent of houses and townhouse approved are also not commenced in that timeline. With just 168,050 new homes started in 2024, the Housing Industry Association is predicting just 986,000 homes will actually be built over the five years. HIA senior economist Tom Devitt said interest rate cuts were likely beginning to help raise confidence among buyers, explaining a wider increase in housing approvals — but warned the figures were not all that they seemed. 'Multi-unit approvals in the last three months were 25 per cent higher the same quarter a year earlier, but recent activity is likely driven by 'phantom approvals',' Mr Devitt said. 'Some apartment projects that were already approved for construction but hadn't commenced yet, are returning for re-approval ahead of the introduction of the National Construction Code 2022 which will increase construction costs further. 'But you can't live in an approval. These projects, which have not been viable over recent years, are unlikely to get the necessary sales to commence construction over the next couple of years.' How 'phantom approvals' are hurting housing construction in NSW, Victoria and Queensland. The economist said approvals of apartments would need to double from current levels to reach those needed to reach the 1.2 million target. 'And, regardless of the increase in approvals, the volume of commencements will fall more than 20 per cent short of the government's goal of building 1.2 million homes,' Mr Devitt said. Master Builders Australia chief economist Shane Garrett said new home approvals were currently on track to deliver just 915,000 new homes in five years — a 285,000-home shortfall on the target. Despite this rising numbers of new homes are believed to be having an impact. 'Rents are still rising, but the speed at which they are doing so has slowed,' Mr Garret said. 'Conditions for renters could be improved further if we achieve further gains in higher density home building.' Master Builders chief executive Denita Wawn said governments should have one goal now. 'It's not governments that build homes, it's private businesses; what we need is for them to clear the path so we can get on with the job,' Ms Wawn said. Who is approving the most homes Victoria: Approved – 51,876; NSW: Approved – 45,680; Queensland: Approved – 34,301; Western Australia: Approved – 21,069; South Australia: Approved – 13,113; Tasmania: Approved – 2153; ACT: Approved – 2034; Northern Territory: Approved – 496; *Approval figures show 11 months from July to May Source: Australian Bureau of Statistics The Property Council of Australia's latest expectations are that we will fall short by 262,000 homes. The powerful lobby group's policy and advocacy group executive Matthew Kandelaars said while there had been a modest uptick in May, it was still a 'long way from mission accomplished' and too many projects were still being slowed by 'red tape, slow planning and environmental approvals' as well as high costs. 'To hit the Accord's 1.2 million homes target by mid-2029, we need to be approving at least 20,000 new homes every month and we're still falling short of that mark,' Mr Kandelaars said. 'Today's numbers confirm what we've long known – we don't just have a housing crisis, we have a productivity problem. 'As the Treasurer rightly plots a course to lift national productivity, we must remember that when building slows, the whole economy feels it. Productivity in property means productivity for the nation. We're building homes half as fast as we were 30 years ago. That must change.' Property Council of Australia chief executive Mike Zorbas added that it was also time for state governments to review property taxes. 'With states in debt through the next decade, we also need a grown-up conversation about state-based apartment-killing foreign investor taxes that drive institutional investors away from partnering with Australian companies on new housing, industrial and commercial projects,' Mr Zorbas said. Oxford Economics Australia lead economist Maree Kilroy said while they were now revising their forecasts for housing construction upward, they were not expecting the target to be reached by 2029. Ms Kilroy said improvements in apartment approvals in NSW and Victoria, as well as a lift in house approvals in Victoria were positive signs, 'but nothing you would right home about'. 'We are at the beginning of an upturn, and we would expect that the approval figures per state will pick up, particularly for housing as interest rates flow through,' she said. 'But it's still really muted for housing at the moment.' The economist added that it's likely numbers aren't accelerating more rapidly at least in part because the cost of building homes continues to rise, rising to $513,000 for the typical house around the country in May. Institute of Public Affairs research director Morgan Begg said they believed the National Housing Accord would come up 55,300 new homes short in its first year. 'In its first year of operation, the National Housing Accord as failed to hit a single target,' Mr Begg said. Further analysis of separate ABS data by the group shows the time it takes to build homes around Australia and the cost of them has risen by about 50 per cent over the past decade. From 2014 to 2024, their analysis shows Western Australia has had the biggest timeline blowout, with an 85 per cent increase in construction time, alongside a 45 per cent increase in material costs. South Australia was next with a 74 per cent increase in building times, and a 51 per cent lift in costs. Queensland has had a 58 per cent increase in material prices and timelines. NSW had a 39 per cent uptick in times and a 55 per cent cost increase, similar to Victoria where increases were pegged at 37 per cent and 56 per cent respectively. Tasmania had a 29 per cent increase in timelines for builds, with a 55 per cent increase in building costs. 'IPA research shows between the 2022 and 2024 calendar years, the housing supply shortfall in Australia was almost 180,000 homes, highlighting the huge effect of the construction slowdown,' Mr Begg said. Experts have varyingly suggested key ways to address the shortfalls in housing approvals would be to tweak property tax arrangements, particularly around international investment in property, increase tradie numbers both through training and migration, and to address land shortages and planning red tape. Sign up to the Herald Sun Weekly Real Estate Update. Click here to get the latest Victorian property market news delivered direct to your inbox. MORE: Behind the rent crisis: Agents reaching breaking point Australian home values hit record high as rates fall National housing accord on track to be at least 300k homes short
Bloomberg
a day ago
- Business
- Bloomberg
Australian Retail Sales Miss Estimates, Adding to Rate-Cut Case
Australian retail sales rose by less than expected in May, prompting traders to cement expectations for a third interest rate cut as soon as next week. Sales advanced 0.2%, up from a flat result in the prior month and compared with a forecast 0.5% increase, figures from the Australian Bureau of Statistics showed Wednesday. The data follow a series of reports that point to weakening economic momentum from easing price pressures to surprising job losses and cautious consumer sentiment, reinforcing the case for further rate cuts by the Reserve Bank.
Yahoo
7 days ago
- Business
- Yahoo
Australians' insane net worth revealed
Australia's household wealth has surged again in the March quarter off the back of rising house and land prices. Australia's net wealth rose by $125.3bn, new Australian Bureau of Statistics figures show. Overall, households are now worth $17.3 trillion. This was in part driven by house price rises, which were up 0.7 per cent in the 2025 March quarter. While house prices have risen for eight consecutive quarters, year-on-year growth has slowed to 4.2 per cent from 8.0 per cent in March 2024. At the same time, household borrowing grew by 1.4 per cent, or $42.4bn, reducing the overall growth in household wealth by 0.2 percentage points. The demand for credit was up $136.1bn in the March quarter, including $25.9bn in household borrowing, $45.9bn in private non-financial corporation borrowing and $45.5bn in government credit. ABS head of finance statistics Mish Tan said the growth in credit was likely to continue. 'The RBA's cash rate cut in February this year was the first easing of interest rates since November 2020, giving some relief to household budgets in the March quarter through lower mortgage interest payments,' Dr Tan said. 'We expect to see the broader impact of recent cuts, including another in May, on house prices and credit growth later this year.' The May interest rate cuts will be included in next quarter's figures. Household deposits rose 1.7 per cent ($29.5bn) in the March quarter, contributing 0.3 percentage points to the overall rise in household wealth. Superannuation assets fell 0.4 per cent, or $16.4bn, reducing the overall growth in household wealth by 0.1 percentage point. The fall was driven by slowing domestic and overseas equity markets. 'Household superannuation balances fell for the first time since the September quarter 2022, as global uncertainty weighed on share prices,' Dr Tan said. Error in retrieving data Sign in to access your portfolio Error in retrieving data
Yahoo
7 days ago
- Business
- Yahoo
Household wealth hit as Trump threatens super balances
More than $16 billion was wiped from superannuation balances at the start of the year as uncertainty over Donald Trump's tariffs impacted Australians' net worth. The nation's collective household wealth grew by 0.8 per cent to $17.3 trillion in the first three months of 2025, the Australian Bureau of Statistics reported on Thursday. But it would have increased by more if not for the value of super accounts falling for the first time since September 2022 as global uncertainty weighed on share prices, ABS head of finance statistics Mish Tan said. The increase in wealth was again mainly driven by an increase in residential property values, which rose 1.2 per cent to $125.3 billion. House prices have rebounded from a brief slowdown at the end of 2024 as interest rate cuts boosted buyer demand. With as many as three more cuts predicted by December, and market expectations rising for the next one as soon as July, property values are set to keep growing. Superannuation balances fell by 0.4 per cent, or $16.4 billion, as Mr Trump's tariff threats sparked fears of trade disruption and slower economic growth. Equity markets reacted even more violently when Mr Trump unveiled his "liberation day" tariffs on April 2, but share prices have since recovered as tensions eased between the US and China. However, the US president poses another risk to super funds. The $4.2 trillion industry has warned that a section of Mr Trump's proposed "big beautiful bill" would include a "revenge tax" on investors from countries that have imposed taxes on US investors and companies the administration deems unfair. With more than $600 billion of investments parked in the US, super funds have warned the tax could deal a multibillion-dollar hit to returns. In a conversation with his US counterpart, Treasurer Jim Chalmers on Wednesday urged Scott Bessent to spare Australian investors. "We do not want to see our investors and our funds unfairly treated or disadvantaged when it comes to developments out of the US Congress," Dr Chalmers said. "And once again, I'm very grateful to Scott Bessent for hearing me out and for also undertaking to make what progress he can to try and resolve these issues. I'm confident he understands these issues." With more demand for mortgages, household borrowing grew 1.4 per cent, or $2.4 billion, reducing the overall growth in wealth by 0.2 percentage points. "The RBA's cash rate cut in February this year was the first easing of interest rates since November 2020, giving some relief to household budgets in the March quarter through lower mortgage interest payments," Dr Tan said. "We expect to see the broader impact of recent cuts, including another in May, on house prices and credit growth later this year." Three of Australia's big four banks predict the Reserve Bank will cut interest rates by 25 basis points at its next meeting on July 8 following better-than-expected inflation numbers. Despite predictions of inflation remaining steady, headline inflation for May fell to 2.1 per cent from 2.4 per cent the previous month, driven by a drop in the cost of fuel and rental prices. Trimmed mean inflation, which removes volatile price movements, dropped from 2.8 per cent to 2.4 per cent. Westpac analysts joined those from NAB and Commonwealth Bank in bringing forward their next forecast for rate cuts to July, with ANZ the last holdout of the big four tipping August. But Westpac chief economist Luci Ellis said a July cut was no shoo-in, with Australia's tight labour market and slow productivity growth still making the Reserve Bank uneasy about inflation pressures. A 25 basis point reduction in the cash rate would shave $90 off monthly repayments for a mortgage holder with a $600,000 loan. Error in retrieving data Sign in to access your portfolio Error in retrieving data
