When Ian Blevin needs to buy a new truck for his business, he no longer  bothers shopping around at Perth car yards. Instead, he boards a plane to  Melbourne, buys a truck on the east coast and drives it 3500 kilometres across  the Nullarbor.

”It’s cheaper than to buy a truck here,” says Blevin, the managing director  of Perth company WOMA, which makes and sells high-pressure water cleaners so  strong they can cut through metal and concrete.

Keeping costs down is crucial at WOMA, a company that operates in what may  appear to be the sweet spot of the Australian economy – mining services.

Based in boomtown Perth, WOMA’s cleaning instruments are used in mining and  resources operations all over Australia, from the Gladstone alumina refineries  in Queensland, to the LNG plants of WA’s North-West Shelf.

But WOMA, like many other Perth businesses, is not coasting on the mining  boom – far from it. (more…)

The euro came under renewed pressure on Friday, falling to an 11-year low against the yen as a fresh round of downbeat data intensified fears the troubled region is heading for recession.

The single currency also hit new lows against the dollar and the pound, as a combination of falling retail sales in the eurozone and a sharp drop in German factory orders knocked investors’ confidence.

The Federal Government has consolidation 70 different property registers into just one repository to simplify the monitoring of personal-property securities.

When people use a piece of their property as security against a loan, the property can be registered in a number of databases, including the ASIC Register of Company Charges, the State Registers of Encumbered Vehicles and Vehicle Securities Registers, and various other Bills of Sale, stock mortgage and crop lien registers.

Now the government has decided to cull these different repositories of data, and instead have just one national record of property that has been used as security for a loan. This will make it easier for consumers and businesses to buy used property without worrying that that piece of property has a security interest over it. (more…)

The Mermaid Beach beachfront attracts the highest prices on the Gold Coast – and thereby attracts the greatest attention in both buoyant and depressed markets.

The latest resale hasn’t had much publicity, but at 56% less than its 2007 pre-global financial crisis sale price, it’s the highest yet recorded luxury price decline.

The 199 Hedges Avenue property has been bought by Parkdon Pty Ltd, a company associated with Avi Silver from Caulfield. The vendor, Max Twigg, also comes from Melbourne.

It cost $17.5 million in 2007 and resold recently at $7.7 million, meaning the price dropped by about $50,000 a week during his four-year ownership. (more…)

“Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Federal Reserve Chairman Ben Bernanke said in a letter to the top lawmakers on the Senate Banking and House Financial Services committees.

The paper noted “there is unfortunately no single solution for the problems the housing market faces,” as tight standards for mortgage lending, a 33% decline in home prices since 2007 and a huge number of vacant foreclosed homes on the market make it hard for the housing market to recover. (more…)

A debate is raging as to whether Australia’s housing market is a bubble about to burst. The debate, which has split the property industry, has been triggered by price falls in most capital cities. The falls have raised the question – is this the start of something bigger?

Some say the market is up to 40 per cent too high and could plummet if the Reserve Bank of Australia hikes rates steeply or the commodities boom ends. Others say the market is fairly valued and China and population growth have created unprecedented prosperity, meaning another leg-up in prices looms.

To Lawrence Roberts, a US-based real estate blogger, investor and author of The Great Housing Bubble, such a debate is nothing new. He was one of the few who predicted the housing crash in the US, which has seen house price declines of 30 per cent. Prices there are still falling. “The parallels between the debates in Australia and the debates here in the United States are remarkable,” he says. “Everyone here in the US was in denial because so many people were benefiting from the run-up in prices that nobody wanted to see the truth.” (more…)

Banks  and building societies have repossessed 22.5 per cent more homes than in 2010,  with western Sydney and big regional centres in NSW  hardest hit.

Lenders  asked the NSW Supreme Court to issue 2466 writs of possession against borrowers in default in the 10 months to November last year.

The number of writs issued in the same period in 2010 was  2143, indicating heavier financial pressure on mortgage holders.

Graham Evans has lived in Dampier, on the Pilbara coast, for 43 of his 50  years. As a boy, he rode the school bus with the famous  Red Dog, and swam off  the beach in a now-vanished children’s enclosure, near where a busy hub for  commercial seacraft now sits.

Evans’ livelihood is linked to the resources sector that dominates Dampier  and nearby Karratha; his business, Australian Marine Services, runs a fleet of  vessels that services the enormous and bustling Port of Dampier, from where 140  million tonnes of iron ore are shipped  each year.

Yet Evans is ambivalent about the changes that have followed the boom.  Karratha, the dusty town earmarked by the state government to become a  50,000-strong ”City of the North”, is bursting at the seams with its  population of 14,000, and a fly-in-fly-out workforce that – at any given time -  swells the shire’s population by thousands.

It has meant that, after 23 years in business, Evans has never struggled so hard  to find, keep and house his staff. (more…)

WESTPAC has infuriated the peak banking regulator and the opposition has called for an explanation after the bank revealed that it had incorrectly classified $28.8 billion in property loans for up to three years.

Australia’s second-largest bank had been recording the loans as belonging to owner-occupiers since November 2008, when in fact they had been used for investment purposes. (more…)

A shared equity or shared appreciation mortgage (SAM) works differently from a normal home loan:

• You borrow, say, 20% of the value of the property as a SAM and instead of paying interest on it, you’re charged a percentage of the capital gain when you sell.
• For the remaining percentage of the home’s value (minus your deposit) you take out a normal home loan.
• This means your monthly repayments are lower than they would have been if you’d borrowed the whole amount under this loan.

What paying back a portion of the capital gain means is that as the value of the property increases, so also does the repayment amount. And, of course, it’s very hard to predict just how much the capital gain is going to be.

For example, in the last 20 years in Sydney, annual changes in the value of house prices ranged from a decrease of 3.9% (2004/05) to an increase of 46.1% (1988/89).

The RISMARK/ADELAIDE BANK Equity Finance Mortgage (EFM) was (more…)

Your lender may ask you for a guarantee from someone, such as your parents, if it thinks you might not be able to cover the loan repayments yourself. If you don’t have a deposit, a guarantee may also mean you don’t have to pay mortgage insurance and have a wider choice of loans.

Guarantors usually use their home as security, and traditionally they were liable for the full amount of the home loan. Now new-style versions like the ANZ Family Guarantee allow the guarantor to limit their liability to a specific portion of the home loan, such as 20%.

However, even in this case, if something goes wrong and the borrower gets into default, the bank can sell their home and/or the guarantor’s home. (more…)

Several financial institutions offer a home loan for the full purchase price, or close to it.  However, this comes at a cost:

• Mortgage insurance usually applies if you have less than a 20% deposit.
• No-deposit loans can also have a higher interest rate, especially compared to basic loans.

Mortgage insurance doesn’t insure you, but the lender. It protects the lender if you default on the loan and your home is sold for less than your loan amount. The insurance will compensate the lender, but you’re still not absolved from the debt — the insurer can chase you for it. It’s worth taking the cost of mortgage insurance into account when shopping for a home loan, as it varies between lenders. (more…)

CHOICE crunched the numbers and found that extending a mortgage to 40 years doesn’t make it much more affordable, and costs you many thousands of dollars more in the long term.

• On a $250,000 loan with an interest rate of 8%, your repayments would be about $100 per month cheaper: $1738 per month over 40 years instead of $1834 over 30 years.
• But it’ll cost you. Over the 40 years you’ll pay nearly $585,000 on the $250,000 loan in interest alone, which is more than double the amount borrowed — and about $174,000 in interest more than you’d pay over 30 years.
• If you borrowed $400,000 you’d pay $935,000 in interest over a 40-year term, about $278,000 more than over a 30-year term. Your repayment reduction is just $150 a month. (more…)

With first homes averaging $430,000 and housing affordability at a record low, new types of loan may seem an answer to the prayers of desperate home buyers — but are they?

In this article,  Choice takes a look at these new loans:

• 40-year mortgage   Spreading your repayments over a longer period means lower minimum repayments, but you’ll pay much more in interest.
• No-deposit home loan   With these loans, the typical 20% deposit (about $80,000 for a $400,000 loan) is no longer required. Some banks lend you the full amount, and specialist lenders even offer you the money for legal fees and extras as well — but this comes at a high cost.
• Guarantee   (more…)