Mortgage brokers rejoice as new commercial mortgages for Real estate trusts

Mortgage brokers have taken heart at the recent capital raisings by many of Australia's commercial mortgage funders.

Debt refinancing using commercial mortgages will be available real estate investment trust sector soon.

High borrowings were the main source of problems that caused the collapse of the property market in late 2007. Despite this concern, recent successful raisings by trusts indicate that credit markets don't see a problem.

Analysts say the attraction of commercial mortgage-backed securities (CMBSs) for the REITs is that they allow a diversification for refinancing.

The downside is that they are secured against the assets. That has been reflected by the debt stalemate of the past year, as the trusts had to sell assets to unwind the CMBSs. But this was impossible, given the falling value of the underlying assets.

The head of real estate investment banking at Citi, said the recent issues demonstrated the continuing easing of restrictions in credit markets and provided good diversity from the traditional, and expensive, bank debt, which remains mostly frozen.

Macquarie CountryWide Trust has just completed the first Australian issue of CMBSs in two years, selling $265 million of notes.

Strong investor demand resulted in $225 million being issued at a margin of 410 basis points, together with a further subordinated tranche of $40 million.

The securities have a three-year term, with an option to repay after two years.

As a result, the trust has fully repaid the 2006 Australian dollar CMBS notes, using proceeds from the new issue, cash from recent asset sales and funds drawn from a debt facility.

The new securities, arranged by National Australia Bank, will have a AAA rating assigned by Fitch Ratings and Standard & Poor's.

Are mortgage Brokers honest with first time home buyers?

First home buyers are using mortgage brokers and as a first home buyer you need to know if the mortgage broker is acting your best interest or not.
Mortgage brokers are in the firing line of late, and now Westpac bank and the Commonwealth bank are putting pressure on accredited mortgage brokers, telling them that if they don’t have a certain number of loans settle with them within a 6 month time frame, they will lose their accreditation with the lender.
The mortgage brokers have responded by saying that their “Independence” is in jeopardy, because many brokers will bow to the pressure and set loans for clients for the first time home buyers with these lenders, rather than the best loan for the customer.
In my prior article I was a little harsh on these brokers, and this brought up the question of honesty of the Mortgage brokers.
So here is my revised take on this important topic.
The Mortgage Brokers Intent indicates his or her honesty.
Honesty should not be taken on a legal or literal definition of the relationship between the mortgage broker and the lender and the first home buyer in my view, but on the intent of the mortgage broker when they are helping their customer select the best loan for them.
If the Mortgage Broker has the intention of always selecting the very best mortgage lender and mortgage loan product for their customer, then its obvious that the mortgage broker can be considered an honest mortgage broker.
If the Mortgage broker explains to the first time home buyer that they are offering a no cost loan service to them, because the lenders are paying them a commission for introducing the loan to the lender, they are being honest in my view.
If on the other-hand the mortgage is selected favours the mortgage broker and his or her own personal interest, then the mortgage broker would have to be considered dishonest in my opinion.
Banks and other mortgage lenders that offer lenders inducements to put loans through them, compromise the brokers’ impartiality. So do lenders that force lenders to have sales targets. Doing so it seems to me makes mortgage brokers appear commission representatives of the lender.
That has to be a bad thing for the mortgage broker industry and the first home buyer that places their trust in a Mortgage Broker to do the right thing by them according to Mr Mortgage.