Australian Mortgage Finance News

Wed, 2 May 2007
Interest rates on hold: reprieve for homeowners
In a boon for the nation's mortgage belt, the Reserve Bank decided at its quarterly meeting on May 1 to leave the official cash rate unchanged at 6.25 per cent. The Reserve Bank's decision followed the publication of a much lower than expected March-quarter consumer price index, which showed inflation rose just 0.1 per cent for the quarter and 2.4 per cent for the year. This was well within the Reserve Bank’s target of 2-3 per cent. In a rare show of consensus, many economic forecasters are now predicting a further easing in inflation and most believe interest rates will stay on hold for the rest of 2007, particularly given the impending federal elections.

Thu, 16 August 2007
Non-bank lenders set to increase rates above RBA
HOMEOWNERS already feeling the squeeze after last week's interest rate rise could face further pain after the current global lending crisis yesterday reached Australian shores. Aussie Home Loans boss John Symond today today said increases in the cost of borrowing on international credit markets could force Australian home lenders to charge higher interest rates, regardless of moves by the Reserve Bank of Australia (RBA).

Sun, 19 August 2007
RBA Stevens says rate rises a necessary evil
RESERVE Bank of Australia Governor Glenn Stevens says he knows interest rate rises cause financial pain, but they are the best way to control spending. Mr Stevens was asked at a House of Representatives economics committee inquiry on the Gold Coast today whether interest rate rises were being used as a blunt instrument to control inflationary pressure. "To some extent it is a blunt instrument, however it's the instrument we have and the one that works,'' Mr Stevens said. "What history shows is that if you've got inflation pressure you have to act against that with a monetary policy.

Tue, 04 September 2007
Mortgage broker market to consolidate
The Australian mortgage market will consolidate in the wake of a cocktail of margin pressures and the recent US ructions, a leading Australian mortgage advisory group has said. The mortgage industry is due a shake up in the wake of the current domestic and global conditions Firstfolio managing director Mark Forsyth said. Speaking at the ASX-listed group's annual conference in Port Douglas last week, Forsyth said further consolidation was inevitable.

Thu, 13 September 2007
Perth misses out on house price boom across the country
High demand coupled with tight supply are fuelling a solid rise in house and rental prices, according to the June quarter edition of the Mortgage Choice/Real Estate Institute of Australia Real Estate Market Facts. Melbourne properties were the best performers in the three months ending June with the median house price jumping by 10.2% to $420,000. Brisbane followed closely with a healthy 6.2% increase in the median price to $366,250. Sydney edged slightly higher but Perth prices fell by 3.8% to $466,500.

Fri, 05 October 2007
Westpac to Rescue Rams, Refinance Debt, Buy Branches
Westpac Banking Corp. agreed to take over Rams Home Loans Group's branch network and provide A$1.5 billion ($1.3 billion) in funding after the Sydney-based lender failed to refinance its short-term debt.

Westpac, Australia's fourth-biggest bank, will pay A$140 million for the 92 outlets and assume all future loans, it said in a statement today. Rams will retain its current mortgages and remain traded on the stock market, it said in a separate statement.

Thu, 18 October 2007
Bank Of Queensland profits up 22 per cent
Bank of Queensland has beat expectations reporting a 22 per cent increase in profits and expressing confidence that the bank will see off the global credit crunch by forecasting earnings growth of 10-12 per cent in the current year. The bank reported a headline profit of $129.8 million which included a one off after tax profit of $29.1 million from the sale of the banks credit card business to Citigroup. The bank reported 27 per cent growth in loans under management, 31 per cent growth in housing lending activity, whilst the bank also reported strong growth of 33 per cent in deposit accounts.

Fri, 02 November 2007
Mortgage Finance Rates Rise a Good Bet After the Cup
INVESTORS are certain gome finance interest rates will increase on Wednesday as the Australian economy continues to surge.

A Credit Suisse index of investor expectations on home mortgage finance interest rates shows they are pricing in a 92 per cent chance of a mortgage loan rate rise, to be announced as Victorians shake off the post-Melbourne Cup day blues.

And anticipation that the Reserve Bank will increase home loan rates from 6.5 per cent to 6.75 per cent is creating waves in financial markets, particularly when married with yesterday's US Federal Reserve interest rate cut.

Wed, 07 November 2007
Variable loans cost less
TAKEN out a fixed rate home loan any time since 1990?

Chances are your efforts to outmaneouvre the Reserve Bank's rate rises have cost you thousands of dollars in extra interest.

According to new research, a massive 83 per cent of those with fixed rate home loans have ended up worse off than their counterparts who have standard variable loans.

That means less than one in every five people who picked fixed rates has walked away with the better deal.

Analysing Reserve Bank data since 1990, mortgage provider QuickDirect compared basic variable rates and the big banks' average three-year fixed rate every month to 2004.

In one example, a fixed rate loan taken out in late 2000 would have cost $47,250 in interest over three years, as opposed to only $43,260 with a basic variable loan - a saving of almost $4000.

Fri, 07 December 2007
Fixed home loans soar to an all-time high in November
Australian households have taken out a record number of fixed rate loans in November in anticipation of further rate hikes in the year ahead, according to recent data from AFG.

Mon, 07 January 2008
Loan rates on the rise - ANZ
With fixed rate home loans going up a quarter of a percentage point, future ANZ home loan customers are facing higher rates.

ANZ bank is the second to raise mortgage rates after last week's move by the NAB to hike its variable rate mortgage by 12 basis points.

The Commonwealth and Westpac haven't decided whether or not they'll need to move but both say their rates structures are under review.



Thu, 06 March 2008
St George ponders interest rate rise
St George Bank says it would have to lift its interest rates by 0.15 of a per cent more than this week's official rise to recoup the higher costs it is facing.

But the bank is yet to announce any change to its rates.

Yesterday Adelaide Bank announced its wholesale mortgage rate is rising by 0.4 of a per cent.

St George chief executive Paul Fegan says it is a highly political issue, but he believes there is an understanding of why banks are lifting their rates by more than the RBA.

"From the Reserve Bank's comments only yesterday... there's a very implicit if not explicit expectation that some of the slowing of consumer demand will be taken by the banks acting outside of the 25," he said.

Source: ABC News

Sun, 25 May 2008
Annoyed customers keen to switch banks
First, it was the mass closure of bank branches and long queues at those that remained open that made bank customers angry.

They were eventually weaned off face-to-face banking and actively pushed towards ATMs, and telephone and internet banking.

However, it was far from the last thing the banks did to earn the wrath of their customers.

The next source of frustration came via those pesky penalty fees and charges for a whole range of seemingly straightforward transactions.

More recently, there has been anger about rises in lending rates over and above official increases by the Reserve Bank of Australia (RBA), as well as delays in processing loan applications.

Little wonder then that customer loyalty, according to a recent survey, is a thing of the past.

An online poll conducted by mortgage broker Loan Market Group, found 55 per cent of respondents would "definitely" change banks once federal government proposals to make it easier to switch come into law.

Thirty-six per cent said they would adopt a "wait and see" approach, while just nine per cent said they would stick with their current provider because changing was "too much hassle".

Loan Market Group chief executive Jennifer Nielsen said the survey confirmed something that was well-known about Australians and banks.

"Australians are among the most cynical of banks in the world," Ms Nielsen said.

"It's a fact and the banks know that. It's been surveyed to death over the years.

"We've just always loved to hate our banks."

Ms Nielsen said the survey showed customers felt frustrated and trapped by the banks, particularly when it came to home loans.

"They believe that when home loan rates rise by more than official rates the bank hasn't done the right thing by them, yet it seems too difficult to change accounts," Ms Nielsen said.

The difficulties in global money markets has made accessing money more expensive for everyone, but especially smaller, non-bank lenders.

Ms Nielsen said the situation had led to a reduced range of products in the market.

"One of the things that competition does in the market is it means there is innovation and it keeps the cost of money down," Ms Nielsen said.

"I definitely think it's imperative that we have as much competition in the banking and lending space as we possibly can.

"All that stuff that's going on at the moment is serving to reduce it."

In February, the federal government released a four-part plan designed to encourage more competition between banks, by enabling customers to switch bank loans without copping large exit fees.

The Australian Bankers Association said at the time banks "had been working on initiatives to make switching easier for some time".

"These new initiatives will make it easier for the customer to move their transaction accounts," the ABA said in a statement.

SOURCE: Sydney Morning Herald

Wed, 11 June 2008
Fixed home loans fall out of favour
BORROWERS are shying away from fixed-rate home loans, a sign of growing belief that the economy is slowing enough to ward off interest rate rises.

But traders in financial markets are punting on the opposite. Yesterday, they lifted their bets that the Reserve Bank will raise rates more than once by the end of the year.

The percentage of new borrowers signing up for fixed-rate home loans has grown steadily since mid-2005.

By March, almost one in four borrowers chose to lock in their home loan rate to avoid being caught out by more increases.

But the demand for fixing loans waned in April, and fixed-rate loans dropped back to 17.5 per cent of the total market.

A Deutsche Bank economist, Phil O'Donaghoe, said the fall could suggest borrowers were becoming more pessimistic about the state of the economy - and therefore confident that inflation and rates could fall.

Financial markets, however, are taking a different tack. After a wild day of bond trading, investors who bet on rate movements are now factoring in about 0.4 percentage points of rate rises by the end of the year. Before yesterday, only 0.25 percentage points - or one typical Reserve Bank rate rise - were reckoned on.

"It was pretty savage," a senior economist at nabCapital, David de Garis, said of the day's trading.

Comments from the US Federal Reserve chairman, Ben Bernanke, triggered massive market swings. Dr Bernanke warned about the need for central banks to lift rates to combat inflation expectations.

The market gyrations came amid more evidence of a dramatic fall in confidence among prospective home buyers.

Housing finance figures released by the Bureau of Statistics showed the value of new housing loans dropped 3 per cent in April - the third month in a row of solid falls.

"Recent rate hikes have clearly spooked home buyers," a CommSec economist, Savanth Sebastian, said.

Loans for owner-occupied housing slumped by 4.9 per cent in the month, while loans for investment purposes increased by 1.4 per cent.

"The housing market is in the midst of a serious decline," said Joshua Williamson, a senior strategist at TD Securities.

"This is despite strong migration and population growth rates that add to the underlying demand for new housing."

There are also signs the jobs market is starting to weaken. Employment has been a pillar of strength for the economy as the housing and retail sectors groan under the weight of higher interest rates.

But the total number of jobs advertised in major newspapers and on the internet fell by 1.7 per cent in May, which was the third decline this year in the series compiled by the ANZ.

Official jobs figures to be released tomorrow will give a clearer picture of whether employment has started to weaken alongside the broader economy.

The building and construction industry said it was likely the housing market would continue to weaken.

"For the residential building market, a recent spike in petrol prices, on top of higher interest rates, runs the risk of worsening consumer confidence and affecting home buyer behaviour over the remainder of the year," the chief economist at Master Builders Australia, Peter Jones, said.

SOURCE: Jacob Saulwick - Sydney Morning Herald

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