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Archive for the ‘Bank & Lender News’ Category

More options for low deposit Home Loans

Posted by Tamara McDowell on August 24, 2010

For potential property buyers with only a small deposit, the news on the home loan front keeps getting better.

After announcements earlier in the week from a handful of lenders that low deposit (95%) home loans were back on the agenda, more lenders have added low deposit products back into their home loan suites.

First home buyers often find low deposit home loans useful, particularly as the time taken to save a deposit has blown out in recent years.

Conditions do differ between lenders, but there may also be the option of capitalizing your Lenders Mortgage Insurance, effectively taking your borrowings to 97%, again something that will benefit first home buyers in particular. Check with your mortgage broker for details.

Despite the return of the low deposit loan, it is unlikely that no deposit home loans will be revived, in part due to bank and lenders not having the appetite for risk, and in part due to new legislation for the industry requiring more in-depth investigation into a borrower’s ability to repay a loan.

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Posted in (LMI) Lenders Mortgage Insurance, Bank & Lender News, First Home Owners, Loans, Mortgage Broker Service | Tagged: , , , | 2 Comments »

RBA says No Housing Crisis Here

Posted by Tamara McDowell on June 9, 2010

Speaking on recent developments in the housing market the RBA’s Head of Financial Stability, Luci Ellis recently stated that any housing collapse like that seen in the US at the start of the global financial crisis is unlikely to occur in Australia.

Ellis notes that if the current benign picture of the financing of the housing market is to continue it is crucial that lending standards in the mortgage market remain prudent.

“Past experience has clearly shown that in the long run, you don’t improve housing affordability by easing lending standards. That just gets capitalised in the price.

“In fact, easing mortgage lending standards too far can be outright damaging to long-run affordability. This has been amply demonstrated in the recent United States housing meltdown,” Ellis said.

In Australia, lending standards never eased that far, and conditions didn’t get that grim.

Ellis notes that first-home buyers have long faced greater risk than more established home owners who have more equity in their homes. She states that there appears to have not been a drop in lending standards to first-time buyers, even when the First Home Owners Boost was in effect.

“Indeed, across the mortgage market as a whole, lending standards are a little tighter than they were a couple of years ago,” says Ellis.

In summary Ellis said that the global economic slump may still have a way to go and with consumer confidence still low financial conditions could remain tight for several years.

Mortgage holders should expect then, that current lending criteria will remain in force – which generally means borrowers will be required to provide a minimum deposit of  5 per cent as well as provide evidence that genuine savings forms part of that deposit.

Borrowers who require assistance finding a home loan, or who are looking for a low deposit option, should talk to a good mortgage broker for assistance.

Posted in Bank & Lender News, House Prices, Interest Rates, Loans, Mortgage Broker Service, Real Estate News | Tagged: , , , , , , , , | Leave a Comment »

RBA Holds Cash Rate

Posted by Tamara McDowell on June 1, 2010

Tuesday 1 June 2010

The Reserve Bank of Australia today announced that the official cash rate would remain unchanged at 4.50%p.a. Click here for the full statement by the RBA Governor Glenn Stevens.

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RBA to hold rates at 4.5%

Posted by Tamara McDowell on May 19, 2010

Minutes from the last Reserve Bank meeting showed that, while the decision to increase the cash rate from 4.25% to 4.5% was pretty much cut and dry, the central bank will keep rates at this level as it evaluates the impact of the six rises in seven months.

“The decision to raise rates followed a material upgrade to the Bank’s economic and inflation forecasts and so reflected the RBA’s desire to head off the inflationary impact of Australia’s commodity boom mark II,” said ANZ economist Katie Dean.

“ The minutes show that at the time of the May policy meeting, the bank regarded the problems in Greece as predominantly European issues that were having little impact on Australia. However, as the contagion has spread the RBA is mindful that Europe’s problems could turn into Australia’s problems.

“Since the May policy meeting we have seen further strong data out of China but also a notable rise in global risk premia from European sovereign debt issues,” Dean said.

“The latter should be more than enough to keep the RBA on the sidelines for now.”

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

Major banks pass on rate rise

Posted by Tamara McDowell on May 5, 2010

All four of the nation’s biggest banks passed along the rate rise yesterday following the Reserve Bank’s decision to push rates up by 25 basis points.

It’s the RBA’s sixth increase in eight months, bringing the official cash rate to 4.5%.

Treasurer Wayne Swan said it was “unfortunately one of the difficult consequences of an economy recovering better than other advanced economies”.

CBA was the first the react to the RBA’s decision announcing its own change to interest rates within minutes of the announcement. But ANZ, NAB and Westpac were not far behind. The banks also passed on the full rate rise to their high-interest deposits accounts.

The changes will bring Westpac’s variable loan to 7.51%, while ANZ and CBA’s variable home loan sits at 7.41% and 7.36% respectively. NAB’s variable rate product is the lowest at 7.24%.

Repayments will increase by another $48 per month on an average $300,000 mortgage.

Posted in Bank & Lender News, Interest Rates, Mortgage Broker Service | Tagged: , , , , , , | Leave a Comment »

May Rate Rise not Warranted : CBA

Posted by Tamara McDowell on April 21, 2010

CBA released a new report today showing consumer spending in March was the strongest it has been in eight months.

The Commonwealth Bank Business Sales Indicator (BSI) rose 0.7% for the month. However, the bank warned that this was no excuse to raise official interest rates further, despite indications from the RBA that rates may go up again in May.

“While the latest figures appear solid, it’s important that the Reserve Bank doesn’t overreact,” CBA executive general manager of local business banking Symon Brewis-Weston said. “Interest rates have lifted sharply since late last year, and the effects are being felt, with housing loans down five months in a row.”

The BSI recorded an increase in sales in all states and territories. The ACT topped the list with 1.2% growth, followed by Western Australia on 1.1%. Sales growth in NSW and Tasmania was a more sluggish 0.6%.

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Home loan demand falls for fifth month

Posted by Tamara McDowell on April 13, 2010

The Reserve Bank of Australia (RBA) will raise the cash rate one more time before giving borrowers a long reprieve, economists say, after new data showing that housing finance commitments fell for the fifth straight month in February.

Australian housing finance commitments for owner-occupied housing fell 1.8 per cent in February, seasonally adjusted, to 50,287, the Australian Bureau of Statistics said on Monday.

It was below market forecast of a 1.0 per cent fall in the month and was the fifth straight month of decline.

ICAP economist Adam Carr said the lending data would concern the RBA, causing the Bank to reassess the pace of future interest rate rises.

“It’s pointing to a sharp, broad-based decline in lending activity,” Mr Carr said.

“That would suggest to me that we’re getting to the point where the pace of rate hikes will slow, markedly.

“The RBA will only hike once more and then ease off.”

The central bank has lifted the cash rate five times in the past seven months.

The current interest rate is 4.25 per cent.

Meanwhile, RBA assistant governor Guy Debelle told a Senate committee in Sydney the central bank isn’t trying to suppress demand by raising interest rates.

“We’re trying to ensure growth is at a sustainable pace,” he was reported by Bloomberg to have told the Senate Inquiry into Access of Small Business Finance.

Mr Carr said Monday’s ABS data showed activity already was being dampened.

“It’s already happening,” he said.

“So I would imagine that there’s not a lot left in the tightening cycle in the near term at least.”

He could not predict whether the bank would next raise the rate in May or June, however. Read the rest of this entry »

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It just got a bit harder for First Home Buyers!

Posted by Tamara McDowell on April 9, 2010

Along with the interest rate rise came the news for WA first home buyers that Keystart have issued a change in policy.

Keystart is a Government owned scheme primarily aimed at assisting first home buyers at the lower income level into essential housing for owner occupancy only.

Purchase Price

The maximum purchase price below the 26th parallel was previously $412,000 – It has now been reduced to a maximum of $400,000.

Maximum LVR (Loan to Value Ratio)

 Keystart was almost the only option for some buyers with litte deposit by allowing a 96% lend. The maximum LVR on all loans is now reduced to 94% – i.e. a 6% deposit is now required, previously a 4%.

Deposit Requirements

 Of the 6% plus fees now required – The Applicant(s) must be able to evidence a minimum of 3% genuine savings. The monies must be held or accumulated in a savings account (In the applicant/s name only) for a minimum period of 3 months. “Please note any lump sum deposit in the 3 month period will not be considered genuine savings.”….previously 2%. The balance of the deposit plus fees can be from the first home owner grant, gifted funds etc.

Income Reduction

 Maximum income for single applicants has been reduced to $70,000 per house hold . The maximum income for couples has been reduced to $90,000 per house hold – a couple can be defined as two applicants in a married or defacto relationship. Please note this income does not include Family Tax A & B.

Establishment Fee

 Effective immediately Keystart’s Establishment Fee will increase from $500 to $600.

“Keystart is still committed to helping West Australians into home ownership in its capacity as the lending arm of the State Government. We are confident these policy changes will ensure our longevity in the WA home loan market.”

One of the great benefits of using Keystart is that they do not charge Lenders Mortgage Insurance  and I am relieved that this still stands.

Although a large portion of first time buyers-to-be are prepared for interest rate rises and appear to be quite knowledgeable about the market, it is difficult to enter home ownership with low deposits.

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Bank Update

Posted by Tamara McDowell on April 7, 2010

It is interesting to note the speed at which lenders are able to make the decision to increase rates after a move by the central bank when compared to the consideration that was taken when the cash rate was on its way down

The first to move were the Commonwealth Bank of Australia and Westpac – they have raised their variable mortgage rates by 25 basis points, relieving some mortgage holders by only matching the Reserve Bank’s hike.

Followed closely by ANZ and NAB – they have fallen in line with Westpac and CBA and lifted the rates on their mortgages by 25 basis points.

NAB continues to have the lowest standard variable rate mortgage at 6.99% and is the only Big 4 bank to have one less than 7%. CBA is next in line with standard variable rate mortgages at 7.11%, followed by ANZ at 7.16% and Westpac with 7.26%.

The move by the Reserve Bank to increase rates 25 basis points is being heralded as a smart decision by economists who believe that getting the cash rate to a neutral setting will save much higher interest rates in the long term.

“This will help to contain growth and moderate inflation risks in an otherwise strong economic environment,” ANZ chief economist Warren Hogan said in an investor note. “Importantly, an early return to neutral monetary policy settings, that is, a level of interest rates neither stimulatory nor restrictive to overall economic activity, will reduce the risk of inflation and a larger increase in rates later.”

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Interest Rate Rises Inevitable

Posted by Tamara McDowell on March 26, 2010

Australian interest rates will continue to rise to more normal levels despite global jitters as holding off with increases risks falling behind on inflation, according to a top central banker.

Meanwhile Businessspectator reported RBA assistant governor Philip Lowe as also issuing the clearest warning yet against a speculative bubble in home prices, while welcoming a higher local dollar as part of boom in the country’s terms of trade. 

The Australian dollar duly rallied after his speech while bill futures slid as investors revised up the chance of a rise in the cash rate as early as next month. 

“The RBA remains very upbeat and that means a rate hike in April is more likely than not,” said Rory Robertson, interest rates strategist at Macquarie. 

The central bank has already lifted rates by a full percentage point in six months and the market was now implying a 57% probability of a move to 4.25% at the next policy meeting on April 6.  Read the rest of this entry »

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Lenders Lifted Rates 0.22% more than RBA since July

Posted by Tamara McDowell on March 26, 2010

A look at more than 200 standard variable mortgages has shown that home loans have risen, on average, 1.22% since July – 22 basis points more than the RBA’s 1% increase in the cash rate.

The research, conducted by financial comparison site RateCity, found that the average standard variable rate mortgage sat at 2.31% above the RBA’s cash rate of 3.75% in February.

Over the past two years the gap between the cash rate and the standard variable mortgage rate was just 1.75%.

The RBA’s cash rate now sits at 4% after the 25 basis point rise on March 2.

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Wayne Swan on Westpac

Posted by Tamara McDowell on March 24, 2010

| 24 Mar 2010

Federal treasurer Wayne Swan has again slammed Westpac, claiming the bank has become a “serial offender” in “taking its customers for a ride”.

Referring to Westpac’s latest decision on credit card interest rates and its supersized home loan rate hike in December, Swan said this was “exactly why people don’t like the big banks”.

At 7.01%, Westpac’s variable home loan rate is the highest of all the major lenders. By contrast, Credit Union Australia announced yesterday it was cutting its variable rate by 25 basis points, opening up a yawning gulf between it and the big banks. CUA’s standard variable rate is now 6.37%, 0.64% lower than Westpac’s.

A professor of finance at the University of NSW, Fariborz Moshirian, told The Australian Financial Review that there was in fact no justification for extra rate rises by the banks, as international credit markets had settled in recent months. Read the rest of this entry »

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