Roel Capital

Many of this week’s conversations centered around the recent outcome of the US election – and more importantly its potential impact on the Australian property market & interest rates.   Although one can only speculate, an increase in import tariffs (particularly a large increase in tariffs on Chinese goods) by the US government may lead to a softening in demand for Australian exports. Higher growth and inflation in the US may in turn lead to higher long-term interest rates and consequentially increase funding costs globally.   Approx. 2 months ago, the ASX implied yield curve was forecasting a futures yield of 3.86% in March 2025 (50 bps in cuts compared to the current cash rate). This forecast is now ~40 bps higher, at 4.24% and tends to support the notion that interest rates will remain ‘higher for longer’.   Buyer sentiment is undoubtedly influenced by interest rate forecasts. However, choosing to invest in property should be viewed as a long-term strategy, where ‘time in the market’ will generally outperform ‘timing the market’. Rather than solely focusing on ‘rates’, some key things to consider:   ➡ Does this property represent good value in the current market, relative to other comparable properties? ➡ What are the growth forecasts for the area you are looking to invest in? Is there a high demand for housing relative to supply? Is there access to key amenities (transport, shops, schools, hospitals)? ➡ Does this property fit your budget and are you able to meet the proposed repayments? The consensus is that we are currently at the top of the rate cycle. Accordingly, if you can afford to meet repayments now, you will likely be able to meet repayments on an ongoing basis, all things being equal. Roel Capital Jonathan Roël #finance #propertyinvestment #USelection #interestrates #mortgagebroking Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

Settlement and new business activity remain solid as we head into the end of the calendar year. The market is dynamic and we're seeing shifts in buyer sentiment. Lenders continue to demonstrate strong appetite to workshop transactions to a successful close. On the home loan front, we've delivered exceptional value for several new clients, including: 1. 90% LVR / No LMI / MediCo investment property purchase. 2. Nil equity outlay investment property purchase. The transaction involved an equity release plus 80% LVR transaction. 3. Securing a first home buyer's new residence, inclusive of a $3k cash back with a sharp interest rate and offset. 4. Business owner client home loan refinance, providing more attractive commercial terms for a private banking style client. For one of our corporate clients, we were delighted to assist unlock cash flow locked up in working capital through a new trade finance facility. Aligning a tailored financing package for our clients' unique requirements is the best part of this job. Seeing them succeed is even better. #strategicpartner #mortgagebroking #financebroking #homeloan #investmentloan #propertyinvestment Anthony Nocon Roel Capital Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

Anecdotal notes on property / lending market movements we've seen over the past few weeks: 1. Residential buyer / home loan urgency is softer with many clients now thinking they have 'more time' versus wanting to 'get in' before they expect rate cuts to flow through. 2. Softer residential auction clearance rates, likely corresponding to higher sales stock on the market and general buyer sentiment outlined in point (1). 3. Flattening of the yield curve negating many client's appetite to hedge their interest rate risk, as the cost benefit has become less appealing. It's always interesting to see how market movements can affect buyer sentiment and loan portfolio management. Roel Capital Anthony Nocon #interestrates #mortgagebroking #propertymarket #propertyinvestment Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

Should you consider a regional investment? We’ve been seeing an increasing number of investors exploring purchases in non-metro and regional areas of NSW, WA and QLD. These assets are broad in scope, namely retail shops, pubs and residential properties. These assets are attractive in nature given their lower price point & higher yield relative to metro properties, however there are also many risks and challenges associated with acquisition, ongoing management & eventual disposal. To name a few: 1️⃣ They are more difficult to finance. Many lenders have a limited appetite for regional securities, imposed via postcode and LVR restrictions. With certain assets you may find it difficult to obtain funding altogether unless you have alternative collateral available. 2️⃣ Smaller populations & tenant pool. Generally regional areas have a smaller tenant pool, meaning you may find it more difficult to lease a property once it is vacant. For commercial securities, this can be a major cash-drain and cause significant problems with renegotiating your debt facilities. 3️⃣ Extended selling periods. Regional assets can take longer to liquidate as there is similarly a smaller pool of buyers. There was a mass exodus from the capitals during the COVID period, with people favouring a ‘seachange’ or ‘treechange’ with the increasing work-from-home trend, however this has tapered off in more recent times. There are many booming areas outside of the major cities, such as Wagga, Newcastle & Byron (to name a few), which are without doubt worth considering for any astute investor. Properties in these areas are generally higher yielding, and this cash flow makes it more feasible to hold these assets relative to their metro counterparts in a high-interest rate environment. It is important to balance an appetite for yield and capital growth potential, and to consider all opportunities and risks involved in a transaction. Roel Capital Jonathan Roël #finance #propertyinvestment #propertydevelopment #realestatefinance #mortgagebroking Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

Is now a good time to buy? AFR article below: "Mr Christopher said high spring volumes – with more than 3076 properties sent to auction over the past week – combined with consumer uncertainty were driving the tapering clearance rates." Let's discuss anecdotally what we're seeing in the Aussie property and lending markets. Over the past month or so, market and buyer expectations of rate cuts in late 2024 / early 2025 have been stalled by economic data pointing towards potential rate cuts being delayed (i.e. unemployment holding at 4.1%). We then witnessed some lenders varying pricing 0.3% [upwards] on 2 and 3 year fixed rate mortgages as the market adjusted. So what? There are a few key take outs we've seen: 1. For our corporate clients who hedged prior to this data being released, some hedged positions are now 'in the money' on a marked to market basis, with clients having locked in a lower cost of funds. 2. For our home loan clients, the 'day 1' cost benefit to a fixed rate versus variable rate mortgage is not as wide as it was. This is leading very close discussions on what level of fixed versus variable each borrower chooses to adopt. 3. On the buying / selling side, higher listings may be interacting with reduced buyer sentiment to reduce auction clearance rates. One thing is for sure, most clients certainly "have a view" on when is the right time to transact. Roel Capital Anthony Nocon #realestate #mortgagebroking #propertymarket #propertyinvestment Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

A few pieces of data from the past week: 1. An expected auction clearance rate of c.40% from last weekend; 2. Unemployment remains steady at 4.1%; and 3. Bank fixed rates [for some lenders] expand 30 bps. It's always fascinating to see the lending and property markets adjust to new data. What does this mean for property and lending decisions? (i) The 'day 1' cost benefit to hedging a loan [with some lenders] for 2 or 3 years has been partially eroded versus two weeks ago. (ii) Sellers in a highly leveraged position may find it tougher to achieve their desired sale price. (iii) Buyers with a strong equity and borrowing position may find greater value as supply / demand dynamics shift in their favour. Having a clear strategy is key. We specialise in providing our clients access with bespoke loan options. Roel Capital Anthony Nocon #propertyinvestment #interestrates #propertymarket #fixedrates #mortgagebroking Note: This is general information only and has been prepared without considering your objectives, financial situation or needs. It does not constitute legal, tax, investment or financial advice and you should always seek professional advice in relation to your individual circumstances.

There are several factors at play in the current Aussie mortgage & lending market that we're seeing. I'll outline a few trends: (i) Consumer borrowing power remains constrained with elevated mortgage rates, serviceability buffers, marginal tax and high(er) cost of living pressures. Notwithstanding this, many consumer borrowers with adequate capital & borrowing power consider this to be a 'good' market to transact, with the potential for capital improvement and growth as rates [potentially] moderate over the next 12-18 months. (ii) Fixed rates are back on the table. With inversion in the domestic yield curve [due to market expectations of rate cuts in 2025], we are seeing fixed rates trading at a discount to an equivalent variable rate loan. For savvy clients, some are electing to establish a hedging strategy that blends a lower cost of funding today, with some participation in potential reduction in rates (plus the benefit of offset / redraw etc.). Notwithstanding this, we saw a 30 bps increase in underlying cost of funds for both home and equipment financing with two separate lenders this week, eroding some of the potential hedging benefit versus a pure variable strategy. (iii) For commercial property transactions (investment & development) that 'stack up' we are seeing clients focus more heavily on their expected equity NPV / IRR as opposed to pure rate sensitivity. This is leading to higher LVRs / LCRs, lower presales, lower forecast ICR and a higher cost of debt financing. For sophisticated clients, a higher [and more expensive] leverage package can make sense if their forecast project returns are sufficiently robust. The market is currently dynamic, with many variables at play. We continue to see lenders fighting aggressively to attract and retain the 'right' clients. Feel free to reach out to Anthony Nocon or myself if you'd like to discuss or review your position. Roel Capital #marketdynamics #mortgagebroking #financebroking #fixedrates #commercialproperty #homeloans

Had a great time this week at the #2024ConnectiveConference Aside from experiencing Melbourne’s ‘coffee culture’, it was invaluable to connect with industry peers, lenders and old colleagues to collaborate, share ideas & gather insights. Connective Roel Capital Jonathan Roël Natalie Viney Alex Lazarou CA Loui Daoud Mick Kuzmanoski Tory Pizzolato

Broadly speaking, there are two types of apartment buyers. 1. Retail buyers for owner occupation or investment; and 2. Corporate and institutional buyers for passive investment or transformation. The first class of buyers usually rely on debt as a high percentage of total capital deployed. When those loans are subject to higher rates, buffers, are serviced by post tax cash flow (owner occupiers) and where cost of living pressures are elevated, purchasing power is crimped. The second class of buyers usually rely on rental cash flows to service interest, or for higher holding costs to make sense on a feasibility model. Where construction and finance costs are elevated, and where there is a mismatch between rental yield and capital value, these numbers become stretched. Are we doing deals for retail borrowers to buy property? You bet. Are we doing deals for corporates to fund property development? You bet. Are they harder to get done than when rates were 2% p.a. ? You bet! #propertyinvestment #propertydevelopment #realestatefinance Anthony Nocon Roel Capital

Fixed or variable? With current market pricing fixed rates at a discount to an equivalent variable rate, many of our home loan clients are enquiring about what strategy they should pursue 🤔 The below scenario assumes a $1m loan, with current market rates and the prospect of future rate cuts within 12 months. On ‘Day 1’ the ‘fully fixed’ scenario is superior on a relative cost basis versus the ‘fully variable’ scenario by $5,500 per annum. The '12-month scenario' assumes 1% of rate cuts flow through to variable rates. The numbers then invert where a ‘fully variable’ strategy is superior by $4,500 per annum. The 50 / 50 scenario sits in between these in each case and offers partial protection from rising rates, with partial participation in falling interest rates. Hedging is back on the table for many of our clients, and we’re delighted to align suitable lending structures to their needs and objectives. Jonathan Roël Roel Capital #interestrates #mortgagebroking #fixedrates #variablerates #hedging Note: This is general information only and has been prepared without taking into account your objectives, financial situation or needs. It does not constitute legal, tax or financial advice and you should always seek professional advice in relation to your individual circumstances.