McGrath laid most of the blame at the underperformance of its 10 former Smollen Group franchise offices, acquired last year at a cost of more than $52 million with revenues 10 per cent below budget due to “unforeseen low volume of listings and sales in the first half of April”.
Earlier this month, ANZ Bank tightened rules on foreign property buyers, telling mortgage brokers that it would not accept mortgage applications where 100% of income funding the mortgage application is foreign, along with implementing tighter lending criteria for other foreign residents.
Today, Australia’s biggest home lender, the CBA, has joined the fray also cracking down on foreign property buyers. From The AFR:
The bank, which accounts for 25 per cent of the nation’s mortgages, has warned mortgage brokers it will no longer accept applications from applicants using self-employed foreign income for loan servicing.
“We constantly review and monitor our home loan portfolio to ensure we are maintaining our prudent lending standards and meeting customers’ financial needs,” a bank spokesman said…
CBA has also announced it will no longer accept mortgage applications where the borrower is a temporary Australian resident receiving foreign currency income…
Under the new CBA arrangements, the maximum loan to value ratios for temporary citizens living and working in Australia and being paid in Australian currency has been reduced from 80 per cent to 70 per cent.
Good to see. And it is having some impact, as John McGrath has found out:
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It also said there would be a continued reduction in Chinese buyer activity in the north-western Sydney region. These factors would hit earnings in the order of $3 million to $4 million, and delays in the launch of several project marketing developments and delays implementing new IT software, would further hurt earnings by another $1 million.
But this is really just the tip of the iceberg.
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The bigger issue is the potentially billions of dollars being laundered through Australia’s homes via non-bank channels, as warned by the Paris-based Financial Action Taskforce (FATF) and the Australian Transaction Reports and Analysis Centre (AUSTRAC).
In 2003, Australia agreed to implement comprehensive anti-money laundering (AML) regulations that captured real estate gatekeepers like accountants, lawyers, real estate agents and other non-financial businesses. However, the second tranche of the reform to the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 has remained in limbo for a decade, and has now been deferred indefinitely by the government.
Unless the government gets serious about stopping dirty foreign money, Australian homes will continue to be a haven for laundered funds.
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