Low Reserve Bank Rates Keeping Summer Market Hot
P2C News - Monthly update for families building wealth 10 November 2015

With the Reserve Bank of Australia keeping the official cash rate at a record 2%, home buying remains strong as property owners are keen to be in a new house by Christmas.

Sydney sellers still wanted more for their properties than any other capital cities with a median asking price for houses of $1,143,300 and units $639,600.

Figures released by SQM Research reveal property listings rose to 363,653 during October, up 7.3 per cent on September.

As a result of the market pressures from interest rates, price and competition many first home buyers are resorting to their parents to assist them make their home purchase. The P2CTM (Parent-to-Child) Mortgage product from La Trobe Financial means that a responsible third-party intermediates between the parents and the children. Greg O’Neill, President and Chief Executive Officer of La Trobe Financial said the innovative product was a better way to address the affordability gap and protect the inter-generational transfer of wealth. “This is the first time a lender has given parents the opportunity to protect their wealth by means of a regulated investment while assisting their children to leap onto the property ladder,” he said.

A P2CTM mortgage formally documents the arrangement, registering a mortgage on the security property, and then independently managing the loan to ensure it is repaid in accordance with the agreed terms. The P2CTM product is designed to protect the parents’ “investment” without exposing their assets or credit file profile to any risks associated with their child running into difficulties with repayments. The parents, however, can still provide the much needed assistance to their children, with interest rates starting as low as 3.4% per annum.

Best regards,

Martin Barry
Vice President,
Chief Wealth Management Officer

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La Trobe Financial is one of Australia's leading independent credit specialist Fund Managers. Its business includes residential mortgages, commercial mortgages, and investment services operating one of Australia's largest Credit Funds under AFSL 222213. It employs over 150 staff and has managed over AUD$10 Billion covering over 100,000 investment grade assets since inception in 1952.

Copyright 2014 La Trobe Financial. All rights reserved. No portion of this may be reproduced, copied, or in any way reused without written permission from La Trobe Financial.

La Trobe Financial Services Pty Limited - Australian Credit Licence Number: 392385
La Trobe Financial Asset Management Limited - Australian Credit Licence Number: 222213

This publication does not constitute financial advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek your own financial or other professional advice before acting or relying on any of the content.
- The rates of return from the Fund are not guaranteed and are determined by future revenue of the Fund and may be lower than expected. Investors risk losing some or all of their principal investment. The investment is not a bank deposit.
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- Withdrawal rights are subject to liquidity and may be delayed or suspended.
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