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Banks get generous to hook clients

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Advisers warn mortgage deals offering electronics, cash, furniture may cost people more in long run

Banks are offering cash, TVs and furniture vouchers to entice customers into taking out home loan. Photo / Thinkstock

Banks are offering cash, TVs and furniture vouchers to entice customers into taking out home loans – but experts warn consumers not to be taken in, or it could cost them tens of thousands of dollars.

ASB is offering potential customers a Sony 48-inch TV and PlayStation 4 with new loans of $250,000 or more, while Kiwibank recently offered $2000 cash or a $2500 Freedom Furniture gift card for those willing to transfer their everyday banking and loan to the bank.

ANZ is offering between $1500 and $2000 cash, depending on the loan amount, while Westpac is offering a “healthy cash bonus” with loans worked out with customers “on a case-by-case basis”.

But Karen Tatterson of the Professional Advisers Association said consumers should be wary because there was “no such thing as a free lunch”.

Some people could be tempted by gimmicks and inadvertently sign away tens of thousands of dollars refinancing their loan for a bit of extra cash, she said.

“You have to be very careful your loan isn’t going back to a term that’s longer than you’ve currently got. Banks always write a loan over 30 years, so if you refinance to another bank and you’re 22 years into your home loan, make sure you keep it at the current loan term.

“If you go from a 22 to a 30-year term it could add $20,000 or $30,000 interest to the cost of your loan.”

David Chaston of finance website interest.co.nz said the value of loan incentives depended on how they were used.

“If you’re able to negotiate a good deal with the bank, ignoring the incentive, and then you add the incentive as a bonus you have a very good deal,” he said.

“And you have an even better deal if you can use the cash incentives to pay down your loan.”

Real Estate Institute head Helen O’Sullivan said an increase in marketing activity from banks usually coincided with the spring property uplift, but also warned consumers to be wary of temptation.

“You’ve got to weigh up the value of it with the overall package that is being offered …

“Don’t get blinded to the downside of the financial cost of something because of the excitement of getting a new PlayStation.”

ASB’s head of home lending and small business Vince Clark said the bank’s spring package was in reaction to it being a typically busier season for house sales activity.

Kiwibank spokesman Bruce Thompson said its promotion was designed to keep the bank on mortgage shoppers’ radars.

“It’s a very competitive market and Kiwibank has never taken the approach of sitting back and waiting for the phone to ring.”

ANZ head of mortgages Sarah Berry said the bank had offered cash with home lending since 2012 and the home loan market in New Zealand was very competitive.

Westpac said every customer’s situation was different and the bank worked with them on a case-by-case basis to ensure they have the right solution for their circumstances.

NZ Herald

[…]

ANZ New Zealand records biggest first-half profit gain among units of Australian lender


ANZ New Zealand records biggest first-half profit gain among units of Australian lender

Thursday 1st May 2014

Text too small?

ANZ New Zealand posted a 27 percent gain in first-half cash profit, recording the biggest gain among the four operating divisions of Australia’s third-largest lender after growing its home loan book and cutting costs.

Cash profit, which excludes non-core items, rose to $887 million in the six months ended March 31, from $697 million a year earlier, the Auckland-based lender said in a statement. Statutory profit rose 31 percent to $853 million. Operating income rose 8 percent to $1.9 billion and operating expenses fell 5 percent to $725 million.

ANZ New Zealand is the nation’s biggest lender, having merged its operations with National Bank last year and phased out that brand. Its commercial operations were the biggest contributor to statutory profit, rising 14 percent to $377 million, while retail banking profit rose 25 percent to $222 million.

Its ANZ Wealth unit, which accounts for 25.8 percent of New Zealand KiwiSavers, lifted earnings to $121 million from $38 million, while earnings from its institutional arm slipped 2 percent to $163 million.

Cash profit for Melbourne-based parent Australia & New Zealand Banking Group rose 11 percent to A$3.52 billion, beating estimates in a Bloomberg survey. Net income climbed 15 percent to A$3.38 billion.

The parent’s results record a 38 percent gain to A$546 million in cash profit from New Zealand, the biggest quarterly growth among its divisions. That was driven by “above system growth in mortgages, a reduction in credit impairment charges (reflecting strong improvements in credit quality across the lending book), a 6 percent decrease in operating expenses and favourable foreign exchange translation.”

Cash profit from Australia rose 5 percent to A$1.48 billion and earnings from international and institutional banking rose 14 percent to A$1.37 billion. Global wealth earnings climbed 11 percent to $226 million.

The company will pay a first-half dividend of 83 Australian cents, or a total of A$2.3 billion, up 14 percent from a year earlier.

(BusinessDesk)

BusinessDesk.co.nz




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[…]

Rising mix and match mortgages

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Increasingly savvy home-owners splitting mortgages into fixed and floating loans as rates start to rise, banks say.

Until recently, the most popular rate for those wanting to fix was the one-year rate. Photo / Greg Bowker

More mortgage holders are opting to split their home loans into fixed and floating rate portions after the recent cash rate increase, say banks.

The Reserve Bank increased the official cash rate from 2.5 per cent to 2.75 per cent this month after years of holding it at a record low, prompting banks to increase their floating and short-term home loan rates.

Westpac head of retail banking Ian Blair said there had been a trend towards people fixing their mortgage rates in the last 12 months and the activity had increased in the last month or so.

“People began thinking about it more when they came back from their post-Christmas holiday.”

Until recently, the most popular rate for those wanting to fix was the one-year rate but that had switched in the last week and data showed one, two and three-year fixed rates were now equally popular at the bank.

“A lot was going into the one-year fixed rate but now we are seeing customers spreading it.”

Blair said a trend that had emerged since the last time rates rose was a decision to mix and match the floating and fixed rates.

He believed that was being driven by better products and people having a better degree of financial literacy than what they might have in the past.

It’s a change that has also been noted at rival bank ASB. Shaun Drylie, general manager of products and strategy at ASB said people were opting for more partial fixed and floating splits.

“People are starting to box the field rather than putting it all on the nose.”

Banks have seen their loan books heavily weighted towards floating mortgages in recent years, bucking the past trend of most lenders being on fixed loans.

In the past, around 70 to 80 per cent of bank mortgages were on fixed rates.

Blair said he had little doubt the market would return to where it was in the past with high levels of fixed-rate mortgages.

“We are not there yet … but I think we will get back to levels we were at in the late 2000s.”

That posed problems for the Reserve Bank as changes to the official cash rate typically took around 18 months to have an impact.

Blair said it was not for him to say if the Reserve Bank’s policy would be effective, but fixed rates had already started moving up.

“Six months ago, people were able to get a one-year fixed rate in the late fours.

“Even if they come out of that fixed rate into another fixed rate there will be a jump.”

Blair said very few people were choosing to fix on long-term rates a year ago.

Mark Brown, a fixed-interest fund manager at Harbour Asset Management, believes it will take at least six months before the full impact of the cash rate increase will be felt by mortgage holders.

Brown said that timeframe was based on a judgment of how people were feeling going into the increase.

“The economy is in such a good shape, people are confident about their jobs,” he said. “I’m not sure it will change things a whole lot [straight away].”

Cash used to lure custom

Banks have ditched free electronic devices in favour of cash in a bid to attract new customers.

Ian Blair, head of retail banking at Westpac, said cashback offers had become popular across the banks since competition heated up after the ANZ/National bank merger.

The merger in 2012 sparked an advertising drive from ANZ’s competitors, with offers of free TVs, mobile phones and tablets.

But cash appears to now be king with three of the major banks offering deals. Blair said ultimately people wanted to decide for themselves what the money was spent on.

Blair said mortgage holders had also got more savvy demanding better rates, features and flexibility.

“In years gone by home loans were quite homogenous – people didn’t question what the rate was. Now there is a lot more discussion around the rate, features and flexibility.”

NZ Herald

[…]

Kiwibank hikes interest rates

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Kiwibank has followed ANZ’s lead by lifting its home loan interest rates.

Kiwibank has announced it will lift its home loan rates in response to yesterday’s Reserve Bank decision to increase the Official Cash Rate.

The banks floating rate and its revolving credit home loan product will increase by 0.25 per cent to 5.90 per cent and its Offset Mortgage rate will increase from 5.25 per cent to 5.60 per cent, Kiwibank said in a statement.

The home loan increases will take effect from 31 March for existing customers.

ANZ was the first cab off the interest rate hike rank yesterday, lifting rates on its floating and flexible home loans and its headline deposit product, Serious Saver by 0.25 per cent.

Reserve Bank governor Graeme Wheeler has signalled “an aggressive, front-loaded start” to the interest rate cycle now under way.

He delivered the rise he had all but promised in the official cash rate from 2.5 to 2.75 per cent yesterday and indicated that the only question in the bank’s mind at this stage – if the facts change it will change its mind – is whether there will be another three or four similar increases by the end of the year.

The interest rate projections the monetary policy statement has pencilled in suggest further OCR hikes April, June and July.

Also read – Liam Dann: How much the rate rises will cost me?

Click here to view a history of the OCR movements since its introduction in 1999.

Brian Fallow: OCR hike ‘just the start’:

Video

OCR increased to 2.75pc – Graeme Wheeler’s announcement:

Video

Read the full Monetary Policy Statement here.

MPSmar14 (PDF)
MPSmar14 (Text)

NZ Herald

[…]

ANZ drops one-year fixed rate to 4.95%

ANZ today announced a drop in its one-year fixed interest mortgage rate to 4.95%p.a., down from 5.19%p.a., for lending when there is at least 20% equity.

The new rate, effective from tomorrow, is one part of ANZ’s best-ever home loan offer – a package that provides customers a great deal for their overall banking.

The package includes $1,000 cash on new lending of more than $100,000, fee-free banking and a free ANZ Visa Debit card with the ANZ Freedom account and a credit card with no account fee for one year.

Kerri Thompson, ANZ Managing Director Retail, said the new offer was about providing people with an excellent deal for their ongoing, everyday banking.

“More Kiwis choose ANZ for their home loans – and for their everyday banking – than any other bank,” she said.

“We want our value, service and expertise across all our banking services to be the reason people choose a home loan with us.

“We have more branches in more locations with more people ready to help than any other bank.

“We have a team of home lending and residential investment experts, mobile mortgage managers who come to customers, and educational resources designed to give our customers the latest information on the market,” Mrs Thompson said.

ANZ’s home loan prize draw – in which 10 home loan customers each month win back the value of their annual mortgage repayments – will continue through until 30 September.

[…]

Battle for buyers heats up

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Source: RateCity.com.au, RBA

Westpac has fired the latest salvo in the fixed-rate home loan wars as lenders battle for new borrowers following the Reserve Bank’s cash rate cut.

The bank dropped its one-year fixed-rate home loans to 4.79 per cent, while its Bank of Melbourne and St George divisions lowered their one to five-year fixed rates to below 5 per cent. Mortgage rates are at their lowest since the global financial crisis.

”It’s a further continuation of injecting more competition into the home loan marketplace, and also a confidence booster given that we’ve got the lowest government cash rate for 53 years,” Bank of Melbourne chief executive Scott Tanner said.

Shorter plank as interest rate battle intensifies. Photo: Bloomberg

The Reserve Bank’s decision to slash the cash rate to 2.75 per cent on May 7 saw a flurry of lenders, including the big four banks, pass on the 25-basis-points cut in full.

Advertisement

ANZ took a step further by dropping its standard variable mortgage rate by 0.27 percentage points to 6.13 per cent, matching NAB.

Westpac has the highest standard variable mortgage rate among the big four with 6.26 per cent.

Commonwealth Bank and ANZ were contacted for comment. A NAB spokesman said the bank had no comment at this time.

The moves came amid lower funding costs for banks and strong profit growth.

”I think it presents a bit of a borrowers’ dilemma about whether to lock in now or hold back and see if rates fall further,” said Kirsty Lamont, of comparison site Mozo, adding that the Greater Building Society had the lowest fixed one-year rate at 4.74 per cent.

”The fact that the banks are cutting their fixed rates again so aggressively shows they are pricing further rate cuts from the Reserve Bank down the track.”

Rising fixed-rate ratio

In March, 18.45 per cent of home loans financed through financial comparison website RateCity were fixed, the highest proportion in five years, said its spokeswoman, Michelle Hutchison.

Changing lending conditions such as ”out-of-cycle” mortgage rate cuts independent of the RBA’s actions and the banning of early exit fees on variable rate mortgages in mid-2011 were contributing factors, she said.

A Westpac spokesman said the bank’s take-up levels for fixed home loans doubled from about 8 per cent to between 15 and 20 per cent after it slashed its two-year rate to 4.99 per cent in February.

Mr Tanner expected the proportion of St George’s fixed-rate loans to rise from about 10 per cent to about 30 per cent as mortgage rates drop.

Financial markets were pricing in a 20 per cent chance of a 25-basis-point interest rate reduction for June, and tipping at least one 25-basis-point cut by the end of the year, Credit Suisse data showed.

The housing market has experienced patchy growth since the financial crisis. At the same time, auction clearance rates in Sydney and Melbourne have improved.

At the weekend, Sydney’s auction clearance rate was 78.6 per cent – its highest in three years, while Melbourne recorded its highest auction clearance rate for the year at 73.6 per cent, Fairfax Media’s Australian Property Monitors data showed.

[…]

Battle for borrowers heats up

Thumbnail

Source: RateCity.com.au, RBA

Westpac has fired the latest salvo in the fixed-rate home loan wars as lenders battle for new borrowers following the Reserve Bank’s cash rate cut.

The bank dropped its one-year fixed-rate home loans to 4.79 per cent, while its Bank of Melbourne and St George divisions lowered their one to five-year fixed rates to below 5 per cent. Mortgage rates are at their lowest since the global financial crisis.

”It’s a further continuation of injecting more competition into the home loan marketplace, and also a confidence booster given that we’ve got the lowest government cash rate for 53 years,” Bank of Melbourne chief executive Scott Tanner said.

Shorter plank as interest rate battle intensifies. Photo: Bloomberg

The Reserve Bank’s decision to slash the cash rate to 2.75 per cent on May 7 saw a flurry of lenders, including the big four banks, pass on the 25-basis-points cut in full.

Advertisement

ANZ took a step further by dropping its standard variable mortgage rate by 0.27 percentage points to 6.13 per cent, matching NAB.

Westpac has the highest standard variable mortgage rate among the big four with 6.26 per cent.

Commonwealth Bank and ANZ were contacted for comment. A NAB spokesman said the bank had no comment at this time.

The moves came amid lower funding costs for banks and strong profit growth.

”I think it presents a bit of a borrowers’ dilemma about whether to lock in now or hold back and see if rates fall further,” said Kirsty Lamont, of comparison site Mozo, adding that the Greater Building Society had the lowest fixed one-year rate at 4.74 per cent.

”The fact that the banks are cutting their fixed rates again so aggressively shows they are pricing further rate cuts from the Reserve Bank down the track.”

Rising fixed-rate ratio

In March, 18.45 per cent of home loans financed through financial comparison website RateCity were fixed, the highest proportion in five years, said its spokeswoman, Michelle Hutchison.

Changing lending conditions such as ”out-of-cycle” mortgage rate cuts independent of the RBA’s actions and the banning of early exit fees on variable rate mortgages in mid-2011 were contributing factors, she said.

A Westpac spokesman said the bank’s take-up levels for fixed home loans doubled from about 8 per cent to between 15 and 20 per cent after it slashed its two-year rate to 4.99 per cent in February.

Mr Tanner expected the proportion of St George’s fixed-rate loans to rise from about 10 per cent to about 30 per cent as mortgage rates drop.

Financial markets were pricing in a 20 per cent chance of a 25-basis-point interest rate reduction for June, and tipping at least one 25-basis-point cut by the end of the year, Credit Suisse data showed.

The housing market has experienced patchy growth since the financial crisis. At the same time, auction clearance rates in Sydney and Melbourne have improved.

At the weekend, Sydney’s auction clearance rate was 78.6 per cent – its highest in three years, while Melbourne recorded its highest auction clearance rate for the year at 73.6 per cent, Fairfax Media’s Australian Property Monitors data showed.

[…]

Westpac cuts fixed home loan rates

Thumbnail

Shorter plank as interest rate battle intensifies. Photo: Bloomberg

Westpac has fired the latest salvo in the fixed-rate home loan wars as lenders battle for new borrowers following the Reserve Bank’s cash rate cut.

The bank dropped its one-year fixed rate home loans to 4.79 per cent, while its Bank of Melbourne and St George divisions lowered their one to five-year fixed rates to below 5 per cent.

“It’s a further continuation of injecting more competition into the home loan marketplace, and also a confidence booster given that we’ve got the lowest government cash rate for 53 years,” Bank of Melbourne chief executive Scott Tanner said.

The Reserve Bank’s decision to slash the cash rate to 2.75 per cent on May 7 saw a flurry of lenders, including the big four banks, pass on the cut in full.

Advertisement

ANZ took a step further by dropping its standard variable mortgage rate by by 0.27 percentage points to 6.13 per cent, matching NAB’s level.

Westpac has the highest standard variable mortgage rate among the big four with 6.26 per cent.

The moves came as banks enjoy lower funding costs and strong profit growth.

“I think it presents a bit of a borrower’s dilemma about whether to lock in now or hold back and see if rates fall further,” Kirsty Lamont of comparison site Mozo said.

“The fact that the banks are cutting their fixed rates again so aggressively shows they are pricing further rate cuts from the Reserve Bank down the track.”

The Commonwealth Bank and ANZ have been contacted for comment. A NAB spokesman said the bank had no comment at this time.

Rising fixed-rate ratio

About 18.45 per cent of all home loans financed through RateCity in March were fixed, the highest proportion in five years, the spokeswoman for financial comparison site RateCity, Michelle Hutchison, said.

Changing lending conditions such as ‘‘out-of-cycle’’ mortgage rate cuts independent of the RBA’s actions and the banning of early exit fees on variable rate mortgages in mid-2011 were also contributing factors, Ms Hutchison said.

A Westpac spokesman said the bank’s take-up levels for fixed home loans doubled from about 8 per cent to between 15 and 20 per cent after it slashed its two-year rate to 4.99 per cent in February.

Mr Tanner said he expected the proportion of St George’s fixed-rate loans to rise from about 10 per cent to about 30 per cent as mortgage rates drop.

Financial markets were pricing in a 20 per cent chance of a 25 basis points interest rate reduction for June, and tipping at least one 25-basis-points cut by the end of the year, Credit Suisse data showed.

The Australian housing market has experienced patchy growth since the financial crisis. At the same time, auction clearance rates in Sydney and Melbourne have improved.

At the weekend, Sydney recorded an auction clearance rate of 78.6 per cent – its highest in three years, while Melbourne recorded its highest auction clearance rate for the year at 73.6 per cent, Fairfax Media’s Australian Property Monitors (APM) data showed.

‘‘[Sydney’s] result is over 20 per cent higher than the 57.8 per cent recorded over the same weekend last year,’’ APM senior economist Andrew Wilson said.

[…]

Home loan wars heating up

Thumbnail

Shorter plank as interest rate battle intensifies. Photo: Bloomberg

Westpac has fired the latest salvo in the fixed-rate home loan wars as lenders battle for new borrowers following the Reserve Bank’s cash rate cut.

The bank dropped its one-year fixed rate home loans to 4.79 per cent, while its Bank of Melbourne and St George divisions lowered their one to five-year fixed rates to below 5 per cent.

“It’s a further continuation of injecting more competition into the home loan marketplace, and also a confidence booster given that we’ve got the lowest government cash rate for 53 years,” Bank of Melbourne chief executive Scott Tanner said.

The Reserve Bank’s decision to slash the cash rate to 2.75 per cent on May 7 saw a flurry of lenders, including the big four banks, pass on the cut in full.

Advertisement

ANZ took a step further by dropping its standard variable mortgage rate by by 0.27 percentage points to 6.13 per cent, matching NAB’s level.

Westpac has the highest standard variable mortgage rate among the big four with 6.26 per cent.

The moves came as banks enjoy lower funding costs and strong profit growth.

“I think it presents a bit of a borrower’s dilemma about whether to lock in now or hold back and see if rates fall further,” Kirsty Lamont of comparison site Mozo said.

“The fact that the banks are cutting their fixed rates again so aggressively shows they are pricing further rate cuts from the Reserve Bank down the track.”

The Commonwealth Bank and ANZ have been contacted for comment. A NAB spokesman said the bank had no comment at this time.

Rising fixed-rate ratio

About 18.45 per cent of all home loans financed through RateCity in March were fixed, the highest proportion in five years, the spokeswoman for financial comparison site RateCity, Michelle Hutchison, said.

Changing lending conditions such as ‘‘out-of-cycle’’ mortgage rate cuts independent of the RBA’s actions and the banning of early exit fees on variable rate mortgages in mid-2011 were also contributing factors, Ms Hutchison said.

A Westpac spokesman said the bank’s take-up levels for fixed home loans doubled from about 8 per cent to between 15 and 20 per cent after it slashed its two-year rate to 4.99 per cent in February.

Mr Tanner said he expected the proportion of St George’s fixed-rate loans to rise from about 10 per cent to about 30 per cent as mortgage rates drop.

Financial markets were pricing in a 20 per cent chance of a 25 basis points interest rate reduction for June, and tipping at least one 25-basis-points cut by the end of the year, Credit Suisse data showed.

The Australian housing market has experienced patchy growth since the financial crisis. At the same time, auction clearance rates in Sydney and Melbourne have improved.

At the weekend, Sydney recorded an auction clearance rate of 78.6 per cent – its highest in three years, while Melbourne recorded its highest auction clearance rate for the year at 73.6 per cent, Fairfax Media’s Australian Property Monitors (APM) data showed.

‘‘[Sydney’s] result is over 20 per cent higher than the 57.8 per cent recorded over the same weekend last year,’’ APM senior economist Andrew Wilson said.

[…]

Home loan battle intensifies

Thumbnail

Shorter plank as interest rate battle intensifies. Photo: Bloomberg

Westpac has fired the latest salvo in the fixed-rate home loan wars as lenders battle for new borrowers following the Reserve Bank’s cash rate cut.

The bank dropped its one-year fixed rate home loans to 4.79 per cent, while its Bank of Melbourne and St George divisions lowered their one to five-year fixed rates to below 5 per cent.

“It’s a further continuation of injecting more competition into the home loan marketplace, and also a confidence booster given that we’ve got the lowest government cash rate for 53 years,” Bank of Melbourne chief executive Scott Tanner said.

The Reserve Bank’s decision to slash the cash rate to 2.75 per cent on May 7 saw a flurry of lenders, including the big four banks, pass on the cut in full.

Advertisement

ANZ took a step further by dropping its standard variable mortgage rate by by 0.27 percentage points to 6.13 per cent, matching NAB’s level.

Westpac has the highest standard variable mortgage rate among the big four with 6.26 per cent.

The moves came as banks enjoy lower funding costs and strong profit growth.

“I think it presents a bit of a borrower’s dilemma about whether to lock in now or hold back and see if rates fall further,” Kirsty Lamont of comparison site Mozo said.

“The fact that the banks are cutting their fixed rates again so aggressively shows they are pricing further rate cuts from the Reserve Bank down the track.”

The Commonwealth Bank and ANZ have been contacted for comment. A NAB spokesman said the bank had no comment at this time.

Rising fixed-rate ratio

About 18.45 per cent of all home loans financed through RateCity in March were fixed, the highest proportion in five years, the spokeswoman for financial comparison site RateCity, Michelle Hutchison, said.

Changing lending conditions such as ‘‘out-of-cycle’’ mortgage rate cuts independent of the RBA’s actions and the banning of early exit fees on variable rate mortgages in mid-2011 were also contributing factors, Ms Hutchison said.

A Westpac spokesman said the bank’s take-up levels for fixed home loans doubled from about 8 per cent to between 15 and 20 per cent after it slashed its two-year rate to 4.99 per cent in February.

Mr Tanner said he expected the proportion of St George’s fixed-rate loans to rise from about 10 per cent to about 30 per cent as mortgage rates drop.

Financial markets were pricing in a 20 per cent chance of a 25 basis points interest rate reduction for June, and tipping at least one 25-basis-points cut by the end of the year, Credit Suisse data showed.

The Australian housing market has experienced patchy growth since the financial crisis. At the same time, auction clearance rates in Sydney and Melbourne have improved.

At the weekend, Sydney recorded an auction clearance rate of 78.6 per cent – its highest in three years, while Melbourne recorded its highest auction clearance rate for the year at 73.6 per cent, Fairfax Media’s Australian Property Monitors (APM) data showed.

‘‘[Sydney’s] result is over 20 per cent higher than the 57.8 per cent recorded over the same weekend last year,’’ APM senior economist Andrew Wilson said.

[…]