Home Loan Quotes Online 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.

Mon, 24 September 2007
US interest rate futures point to single cut by Fed
US interest rate futures prices came under pressure again at the weekend, failing to muster any sizeable upside even after a report showing weakness in consumer spending and as stock markets flailed around unchanged levels. Friday's move marked the fourth consecutive session that rate futures prices have fallen, which correlates to shrinking market expectations for multiple rate cuts from the Federal Reserve. Most contracts have now retreated to levels seen before last Friday's reported drop in August payrolls sent prices skyrocketing. Rate futures brokers reported light volume and a lack of interest on behalf of participants, who are in a wait-and-see mode ahead of the Federal Open Market Committee's Tuesday meeting. The market widely expects the Fed to cut its benchmark rate to at least 5 per cent from the current 5.25 per cent. Source: The Australian

Mon, 15 October 2007
Broker pays price for homeless man's loan
A CANBERRA mortgage broker who wrote a $360,000 home loan to a 20-year-old unemployed, dyslexic and homeless man has been ordered to pay $31,000 in compensation to the borrower. Federal Court judge Roger Gyles yesterday found Tonadale, trading as ACT Mortgages, had engaged in "misleading and deceptive" conduct and "unconscionable conduct" in writing the loan, which was secured through Pepper Homeloans. The decision follows a report last month that found almost 40,000 Australian borrowers had been stung by "predatory lending" practices as mortgage providers and brokers pushed home loans on people who could not afford them. That report by management consultancy Fujitsu found some mortgage brokers encouraged clients to make false loan applications by overstating income while others charged "excessively high" loan financing costs. Source: The Australian.

Mon, 15 October 2007
Aust home loans plummet as housing moves out of reach
A lack of affordable housing, coupled with higher interest rates, caused Australian first-home buyer loans and finance for investor-led construction to plummet in August. The August interest rate rise also dented Australian consumer confidence, while loan cancellations surged to record highs, growing 13.6 per cent in the month. Bureau of Statistics figures show the value of housing finance approvals fell 0.3 per cent in August to $A22.2 billion ($NZ26.5 billion). This was mainly due to investor loans falling 4.5 per cent to $A6.9 billion. Despite the August rate rise, 64,365 people secured finance to buy homes, an increase of 1.6 per cent, and the value of owner-occupied housing rose by 1.7 per cent to $A15.3 billion. But higher rates and low affordability continued to lock first-home buyers out of the market, with the proportion of first home-buyer loans falling from 17.4 per cent in July to 17.1 per cent in August. More people also decided to take out insurance against further rate rises, with the proportion of fixed-rate home loans rising from 14.8 per cent to 17.1 per cent. Source: stuff.co.nz

Mon, 12 November 2007
Westpac raises variable interest rates
Westpac Banking Corporation Ltd has passed last week's official interest rate rise onto its variable home loan customers. The bank also said that it had not passed on higher funding costs triggered by the global liquidity crisis at this stage. "Westpac is not immune from the increased funding costs driven by the instability in the US subprime market and we continue to monitor market developments in line with the needs of all our stakeholders," Westpac Group Executive Consumer Financial Services Mike Pratt said. The Reserve Bank of Australia on Wednesday raised the official cash rate by 25 basis points to 6.75 per cent. Westpac variable home lending rates have risen by 25 basis points with the First Option home loan rate increasing to 7.99 per cent and the standard variable home loan rate rising to 8.57 per cent. Interest rates on selected personal deposit accounts have increased by up to 30 basis points including Westpac Reward Saver, Westpac Cash Manager, and Westpac eSaver. Source: The Age

Mon, 12 November 2007
Banks delay for bigger share
MORTGAGE rates are set to rise after the Reserve Bank increased its base interest rate. But banks could watch their non-traditional competition squirm for a while before passing on the increase. BBY banking analyst Peter Rice said banks had held back on raising mortgage rates in response to the subprime mortgage crisis in the US, and were absorbing the higher cost of credit to claw away market share from their more exposed non-bank rivals. Deposits are a ready source of money for loans while non-banks pay market rates for their money. The industry is waiting for one of the large lenders to raise rates independently from the RBA, after which all major lenders will follow suit. Source: The Age

Mon, 10 December 2007
Rate rise regardless, warns NAB
HOME-loan interest rates may have to be increased regardless of the next official hike by the Reserve Bank, the National Australia Bank has warned. NAB chief John Stewart said yesterday that Australian banks were weathering the fallout from the US sub-prime mortgage crisis, but may only be able to absorb higher funding costs for "weeks or months". "Right now it's having next to no effect on the big banks other than we borrow a lot from wholesale international markets," he said. "Those markets are very illiquid just now, and therefore the reaction has been that the price (of funding) has gone up. "Right now, the banks are wearing that, so they are taking the cost. "If it (wholesale price of funds) comes back to somewhere near normal then it shouldn't have any effect. "If it doesn't, and the price stays up, then it could have a knock-on effect -- but we're not at that point just now." When asked how long it would take before the banks began passing on the higher cost of funding loans to borrowers, Mr Stewart said: "It's certainly weeks, and perhaps months." The Australian



Mon, 10 December 2007
Bernanke backs Bush mortgage freeze
PRESIDENT George W. Bush has rolled out multiple measures aimed at preventing borrowers with sub-prime adjustable-rate mortgages from entering foreclosure, but he also blasted Congress for not doing more to help. "There is no perfect solution," he said. "The home owners deserve our help. The steps I've outlined today are a sensible response to a serious challenge." The plan seeks to combat a rising tide of foreclosures by making it easier for lenders to freeze the "starter" interest rate for certain borrowers for five years. The initiative includes an agreement, brokered by Bush administration officials, between the loan servicers who would administer a rate freeze and the investors to whom the mortgage debt has been sold. The agreement sets conditions under which rates on certain loans could be temporarily frozen. It isn't binding, but because it hasthe support of major investors, it is expected to give loan servicers much more flexibility to quickly rework some loans and direct other borrowers toward refinancings. Responding to the Bush administration's plan, New York Democratic senator Charles Schumer said its narrow eligibility requirements would exclude most distressed home owners. "While we certainly all hope this will be a shot in the arm for the housing slump, it is hardly a panacea," Mr Schumer said. Source: The Australian



Mon, 10 December 2007
Average home loan hits $240,000
THE size of the average Australian home loan has risen above $240,000 while more and more people are choosing to fix interest rates on their mortgages. The average loan size for owner occupied housing commitments rose to $240,300 in October 2007 from $239,400 in September, the Australian Bureau of Statistics said today. The average mortage size was largest in NSW at $262,800, followed by Queensland at $240,900 then the ACT at $239,600. Elsewhere, the average mortgage was valued at $238,500 in WA, $234,600 in Victoria, $194,200 in SA, $175,700 in Tasmania and $212,200 in the NT. Despite rising interest rates, the number of first homebuyer loans as a percentage of total owner occupied housing loans approved jumped to 18.7 per cent in October from 17.7 per cent in September 2007. "The data shows first home buyers have been entering the market at a faster pace, despite the higher interest-rate environment this year," said Citigroup economist Shane Lee. Source: The Australian



Mon, 10 December 2007
ASIC warns on reverse mortgages
Giving up a small part of my home equity for a swag of cash now? How hard a decision can that be? When you put it like that, it sounds like a no-brainer. Many older people find themselves asset rich but cash poor and releasing some of that home equity can be appealing. However, a recent Australian Securities and Investments Commission study of consumers' experiences with reverse mortgages found that the upfront benefits are obvious but borrowers were often unaware of the longer-term implications of their loans. What sort of implications? You're not required to make loan repayments on reverse mortgages so there's a direct trade-off between having money now and having less in the future. Reverse mortgages are not a free ride. You're still charged interest on your loan but instead of making regular payments to cover it, the interest is capitalised or added to your outstanding loan. As time goes on, you're paying interest on your interest, which can eat into your home equity. Source: The Age



Mon, 10 December 2007
ECB keeps key interest rate steady at 4%
The European Central Bank held its benchmark rate unchanged at four per cent, despite surging inflation and a stronger euro, as it considers how ripples from the US subprime mortgage crisis will affect the economy. Analysts expect the ECB, which oversees monetary policy the 13 countries that use the euro, to wait until the second quarter of next year before it moves again, in no rush to follow rate cuts in the United States, Canada and Britain - where the Bank of England cut interest rates to 5.5 per cent, from 5.75 per cent. Source: The Age



Mon, 21 January 2008
MORTGAGES; Getting Started, via the Web
NEARLY half of all mortgage shoppers use the Internet to do research on mortgages. How they find reliable information, though, is anyone's guess. As the housing market boomed, and brokers and lenders searched for places to advertise their services to prospective borrowers, the number of mortgage-related informational Web sites mushroomed. A recent Google search for ''fixed-rate mortgages,'' for instance, yielded more than 671,000 results. So how does one choose mortgage sites? Carefully, according to Brad Strothkamp, who reviews financial services Web sites for Forrester Research, a technology consulting firm. ''It's a challenge,'' Mr. Strothkamp said.

For those unfamiliar with mortgages, there are established commercial Web sites like LendingTree.com and Bankrate.com that have tutorials on the borrowing process and the types of mortgages available, and guides for selecting products. Other organizations, like the Mortgage Bankers Association and the Federal Reserve Board, also feature useful online tutorials. (The Mortgage Bankers' home loan guide is at HomeLoanLearningCenter.com, while the Fed's guide is at federalreserve.gov/pubs/mortgage/mortb--1.htm) From there, Mr. Strothkamp said, consumers should choose one of two separate paths, depending on how far along in the mortgage process they are. Those who have just begun considering a new home loan will want to get a sense of the market conditions at a glance, and for them, Bankrate.com and HSH.com are among the popular publishers of current interest rates for various mortgage products. For those who are ready to make a home purchase or a mortgage refinance, Mr. Strothkamp recommended Web sites like LowerMyBills and LendingTree, where borrowers submit financial information and then receive loan offers, via e-mail, from lenders and brokers. Financial counselors also suggest that borrowers consult with a broker or a lender recommended by a friend or family member, and check their local bank for deals before negotiating. Source: The New York Times



Mon, 21 January 2008
Bank Agrees to Buy Troubled Loan Giant for $4 Billion
Bank of America announced Friday that it had agreed to pay about $4 billion in stock to acquire Countrywide Financial, the troubled lender that became a symbol of the excesses that led to the subprime mortgage crisis. The deal will significantly bolster Bank of America’s position in the mortgage market while rescuing Countrywide from the jaws of possible bankruptcy. Amid higher financing costs, mounting losses and lawsuits over its lending practices, the mortgage lender’s survival has been in question for months. The acquisition also further entrenches Bank of America in the consumer economy at a time when the housing market has weakened and analysts project much slower economic growth in the months ahead. “There are near-term challenges which remain in this business as we enter this transaction,” Kenneth D. Lewis, Bank of America’s chairman and chief executive, said on a conference call Friday with analysts and investors. “We expect continued weakness in housing through 2008 and mortgage volumes to decline as a result. But over the longer term, Mr. Lewis said that Countrywide would enhance the bank’s mortgage-underwriting and payment-collection abilities and greatly expand its distribution network, helping it grab a bigger share of the market.

Angelo Mozilo, Countrywide’s founder and chief executive, is expected leave shortly after the deal, though several of the lender’s other top managers may stay on to run the business for Bank of America. The transaction would value Countrywide at $7.16 a share, a 7.6 percent discount to Thursday’s closing price. Countrywide shares closed down $1.42, or 18 percent, at $6.33 on Friday after rising by more than 50 percent on Thursday on reports of the pending acquisition. Source: The New York Times



Mon, 10 March 2008
Home foreclosures create a new class of US delinquents
HOME foreclosures hit new highs and the amount of equity in homes reached new lows as the housing crisis worsened across the United States last year, according to new figures.

Nationwide, nearly 6% of all mortgages were delinquent at the end of the fourth quarter and just more than 2% were in foreclosure, the Mortgage Bankers Association reported.

The number of foreclosures was at the highest level since the association began keeping records in the 1970s.

"The escalation of foreclosures and the delinquency problems are hurting housing prices and hurting consumer wealth," said Lawrence Mishel, president of the Economic Policy Institute, a left-leaning think tank in Washington. "This tells me there are more housing problems in the pipeline."

Doug Duncan, chief economist for the Mortgage Bankers Association, said the number of foreclosures and delinquencies in four hard-hit states - California, Florida, Nevada and Arizona - was high enough to skew the national data, and that the crisis was likely to last longer in those areas.

"It may well be that the rest of the country's housing may be in recovery at the same time you're seeing declines in California and Florida," Mr Duncan said. Source: The Age

Mon, 10 March 2008
A new look at mortgages
Rising mortgage interest rates and low housing affordability are stretching many household budgets to their limits and providing fertile ground for innovative home loans.

Savings & Loans Credit Union reports a sharp rise in the popularity of its 40-year mortgage (launched in April last year), especially among young first-home buyers. Chief executive Greg Connor says the 40-year loan accounts for almost 30 per cent of total sales, with 35 per cent of borrowers aged under 30.

Adelaide Bank and Rismark International report a strong increase in inquiries for the zero-interest rate Equity Finance Mortgage (EFM), despite no advertising or marketing, a limited distribution network and no commissions paid to brokers. Rismark chief executive Christopher Joye says he deliberately chose a soft launch in March last year, offering only the product through Adelaide Bank, because he was worried about a tsunami of consumer interest and limited funding capability.

A fixed-interest version was added in November and, despite Adelaide Bank's fall in market share since the credit crunch hit, Joye says demand was strong in the first two months of this year. He hopes to announce distribution agreements with other parties within the next six months.

With an equity finance mortgage, the lender takes equity in the property and a share of any capital gains or losses when it is sold. In return, the borrower makes no repayments of interest or principal for the term of the loan, up to 25 years.

InfoChoice general manager Denis Orrock says EFM loans are innovative and different, but it will probably take a while for people to understand them.

"If you're struggling with interest payments[it] can reduce payments significantly," Orrock says. Source: The Age



Mon, 28 April 2008
Australian homeowners pay more in loan fees
AUSTRALIAN homeowners are paying higher fees on their home loans compared to some of their overseas counterparts, and the level of fees is stifling competition, according to consumer group Choice.

"Australian consumers pay more in home loan fees than borrowers in the UK, New Zealand and Canada,'' Choice policy and campaigns director Gordon Renouf said today.

Choice said that data from the Reserve Bank of Australia showed that banks grew their income from fees on home loans by an average 13 per cent per annum over the past decade.

Homeowners paid $820 million in housing loan fees in 2006, which represented about one quarter of the banks' total fee income from households.

Choice said the Australian Mortgage application fee index - compiled by consultants Fujitsu Australia and New Zealand - showed Australia was at the top end, with a rating of 17.1 points compared with 15.3 for NZ, 12.8 for Canada, and 11.6 for the UK.

The loan closure fee index showed a similar pattern.

Mr Renouf said the range of fees that lenders charged were designed to lock consumers into a mortgage product for one to five years.

"Vigorous competition between lenders will only happen if consumers can switch institutions readily,'' Mr Renouf said.

He said exit fees, which included so-called deferred establishment fees, should be limited to the loss incurred by the lender.

"The fees should not punish consumers who are simply looking for a better deal in response to rising interest rates,'' Mr Renouf said. Source: The Australian

Mon, 28 April 2008
Online home loan inquiries up 300pc
INTERNET-based home loan provider Myrate.com.au says it has had a record increase in inquiries since the last of the major banks raised interest rates last week.

Myrate.com.au, an internet mortgage lender funded by ING Bank (Australia) said it recorded a 300 per cent increase in daily inquiry volumes in one week.

"In that week the big banks of Australia decided to slug consumers with higher interest rates in order to build their profits despite no official interest rate rise by the Reserve Bank of Australia (RBA),'' the company said.

The online group said the gap in the interest rate on a standard variable home loan between some major banks and Myrate.com.au was pushing over one per cent.

"Online home loan lenders such as Myrate.com.au ... do not have expensive overheads and can easily undercut the major Australian banks,'' it said.

Myrate.com.au managing director Kevin Sherman said as a result of the substantial increase in loan inquiries, the company's staff were working late into the evenings and on weekends.

"We have had to ask consumers to please be patient and bear with us while we process through their applications,'' Mr Sherman said.

On Friday, the last of Australia's big five banks, Westpac and St George raised interest rates on their home loans due to higher funding costs in the wake of the global credit crisis.

All five major banks have now increased mortgage rates by an extra 0.12 to 0.2 per cent. Source: The Australian

Mon, 28 April 2008
RBA needs to add liquidity: Symond
AUSSIE Home Loans boss John Symond says the Reserve Bank of Australia needs to bolster liquidity within the banking sector to spur competition and drive interest rates lower.

Mr Symond said the government and the RBA needed to be more pro-active to ensure Australia doesn't "fall by the wayside" and needed to inject liquidity into the system amid the continuing global credit crunch.

"If the RBA and the government allows liquidity to become rationed, banks will end up upping interest rates on bread and butter products, including home loans," he told Sky Business News.

"They won't have the competition that has been created over the last 16 years, which forced interest rates on housing to drop by about 300 basis points.

"Those interest rates will start edging up if the banks don't have competition, so liquidity needs to be put into the system to enable banks to do their normal banking transactions to keep businesses going and to keep home loans going."

Mr Symond was also critical of the RBA's last two rate rises, labelling them premature, and said he believed interest rates had "topped out" in Australia. Source: The Australian

Mon, 28 April 2008
Home loans increase despite rates hike
A TOTAL of 65,831 people secured a home loan in November - more than in October - despite coinciding with the RBA's most recent interest rate hike.

Housing finance commitments for owner-occupied residences jumped by a seasonally adjusted 4.0 per cent in November, the first increase since August. Economists had forecast a 1.0 per cent increase.

New housing loans in November totalled $22.295 billion, a 0.5 per cent rise on October, according to the Australian Bureau of Statistics.

The latest ABS data were compiled prior to the recent round of standard variable mortgage rate increases by major banks, which they say was in response to higher overseas borrowing costs.

Economists say this action by the banks and the risk of another official rate rise by the central bank next month are likely to dampen demand for loans in coming months.

The Westpac-Melbourne consumer confidence index released earlier today tumbled 8.3 per cent in January, reflecting the impact of rising interest rates, higher petrol prices and weakening share prices.

All states and territories reported an increase in demand for home loans except the ACT, which recorded a 0.4 per cent fall in November.

Home loans jumped 3.9 per cent in NSW - Australia's largest housing market - but Tasmania experienced the biggest surge with a 9.9 per cent increase, followed by Victoria (4.7 per cent) and Western Australia (4.0 per cent).

Elsewhere, home loans increased 3.5 per cent in Queensland, 2.8 per cent in South Australia and 2.0 per cent in the Northern Territory. AAPT

Mon, 07 July 2008
Consumers to feel bank squeeze beyond homeloan sector
THE credit crisis triggered by bad homeloans is spreading to other areas, forcing banks to tighten lending in other consumer-loan sectors.

The development will probably extend a crisis that's already dragged down the economy well into next year and perhaps beyond.

That means consumers are going to have an increasingly difficult time getting bank loans for car purchases, credit cards, home-equity credit lines, student loans and even commercial real estate, experts say.

When financial analyst Meredith Whitney wrote in a report last October that the nation's largest bank, Citigroup, lacked sufficient capital for the risks it had assumed, she was considered a heretic.

However, Whitney was proved correct: Citigroup pushed out its CEO, sought foreign investors and slashed its dividend.

Her comments now carry added weight on Wall Street, and she has a new warning for ordinary Americans: the crisis in credit markets is far from over, and it increasingly will affect consumers.

“In fact, we believe that what lies ahead will be worse than what is behind us,” Whitney and colleagues at Oppenheimer & Co wrote in a lengthy report last month about threats faced by big national banks, including Bank of America, Wachovia and others.

The warning is scary considering what's already behind us in the credit crisis - the resignation or firing since last August of CEOs at almost every large commercial or investment bank; the Federal Reserve lowering its benchmark lending rate by 3.25 percentage points; a Fed-brokered deal to sell investment bank Bear Stearns; and weekly auctions of short-term loans from the Fed worth billions of dollars to keep credit markets functioning.

Whitney argues that the worst is still ahead because the financial tools that enabled credit to flow so freely to homeowners and consumers for most of this decade are likely to remain in a prolonged shutdown indefinitely.

“After years of inherently flawed underwriting, banks face the worst yet of the credit crisis - over $US170 billion in writedowns and charge-offs from consumer loans,” Whitney said. The same kind of losses from housing may be ahead for credit extended to consumers, she said.

At the heart of the nation's lending boom from 1996 to 2006 was a process called securitisation. In housing, this process involved pooling mortgages for sale to investors as special bonds called mortgage-backed securities. Monthly mortgage payments were also pooled and served as the return to investors.

Securitisation meant that most homeloans no longer sat on a bank's balance sheet. Instead, they were sold into a secondary market, where they were sliced and diced in a process that was supposed to spread investment risk a mile wide and an inch deep.

For every dollar of mortgage loans that banks kept on their balance sheets since 2000, another $US7 of these loans were sold to the secondary market and securitised. This led to the industry joke that “a rolling loan gathered no loss”. Source: The Australian

Mon, 07 July 2008
Banks deny change in lending criteria
Australian banks say they haven't tightened their lending criteria, as a mortgage broker claimed that more people were finding it harder to get a home loan.

The global credit crunch has had a more severe impact on non-bank lenders, which rely heavily on borrowings to fund their loan books.

To get funding, many have had to increase credit quality by cutting riskier products or turning people away - if they haven't disappeared altogether.

Commonwealth Bank of Australia (CBA) said it had left its lending criteria the same, despite its own funding cost pressures and an expected slowdown in the local economy.

"We haven't changed it at all - our required loan to valuation ratios have stayed steady," a CBA spokesperson said.

A spokesperson from St George said it had not materially changed any approval standards as a result of the current economic climate.

"Current arrears rates are at low levels and properties in possession across the home loan product range remain low," the spokesperson said. Source: The Age

Mon, 07 July 2008
Home loans, rent hurting more than fuel
HOME loan repayments and rent are hurting struggling borrowers much more than high petrol prices, data from Australia's largest privately owned debt collection agency shows.

Unleaded fuel prices were approaching $1.70 in Adelaide, Melbourne, Sydney and Canberra yesterday even before crude oil prices reached a record $US145 a barrel.

Yet less than two per cent of consumers nominated high petrol prices as their primary reason for failing to pay an overdue bill, an email survey of Prushka's 80 debt collectors taken in June found.

"People perhaps feel that they can do something about it by driving less or making alternative arrangements,'' Prushka Fast Debt Recovery chief strategy officer Andrew Hobday said.

Mortgage repayments were the number one reason why 19 per cent of borrowers broke a default arrangement, entered into when a bill was 60 days overdue.

Falling behind on rent was the top excuse for 18 per cent of defaulters, followed by credit card debt (9 per cent), utility bills (7 per cent, grocery costs and health care expenses (both 5 per cent), and school fees (3 per cent). Petrol prices ranked equal with council fees.

The data covered 215 borrowers that had broken a default arrangement in June.

Petrol costs were still a major issue, with 38 per cent of debt collectors saying fuel rising prices would have a major or significant effect on household budgets.

"Going by the anecdotal side of things, as an underlying issue it's big,'' Mr Hobday said. Source: The Australian

Mon, 07 July 2008
Home loans post slowest growth
Australian home loan approvals have posted their slowest annual growth since the 1991 recession, the Reserve Bank of Australia says.

Meanwhile, total borrowing levels posted their most lacklustre growth in almost three years, while personal loans rose at their weakest pace in six years, following a string of recent interest rate rises.

Economists say this means home owners are more likely to be spared further interest rate pain in 2008.

Housing credit grew by 10.6 per cent in the year to May, which was the slowest annual pace since August 1991 when home loan take-up grew by 10.3 per cent.

Home borrowing levels, which rose by 0.6 per cent in May, moderated for the third month in a row. Source: The Age

Mon, 08 September 2008
CBA buys a third of John Symond's Aussie Home Loans
The Commonwealth Bank said today it had secured a 33 per cent share in mortgage broker Aussie Home Loans.

The strategic stake will result in the nation’s biggest bank by market value having a minority representation on Aussie Home Loan's board.

But Aussie Home Loans founder John Symond said the non-bank broker and lender would remain independent and retain management control.

Mr Symond made a career out of criticising the major banks.

The announcement by the CBA confirmed a report earlier this month in The Australian that the bank was poised to buy a stake in Aussie Home Loans.

The bank today did not disclose in its statement the price of the stake.

“The Australian mortgage and housing industries are the backbone of the economy and the purchase of a home remains the largest single investment made by many consumers, said CBA chief executive Ralph Norris. Source: The Australian

Tue, 07 October 2008
HDFC bags Best Retail bank award
HDFC Bank has bagged the award of Asian Banker's Best Retail Bank in India 2008 for the second consecutive year beating competitors in Asia Pacific, Gulf Cooperation Council and Central Asia on a range of parameters.
The parameters included were perception among peers and in the marketplace, annual financial performance, sustainability and transparency in strategy, ethics, sales capability, risk management, processes, technology and efficiency etc.
HDFC Bank scored high on risk management, sales capability and people skills.
The Asian Banker's Excellence in Retail financial Services award is one of Asia's most prestigious banking industry awards is held in high regard by the financial services sector. Source: Apnaloan

Tue, 07 October 2008
LONG-TERM MORTGAGE RATES BARELY MOVE THIS WEEK
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS®) in which the 30-year fixed-rate mortgage (FRM) averaged 6.10 percent with an average 0.6 point for the week ending October 2, 2008, up from last week when it averaged 6.09 percent. Last year at this time, the 30-year FRM averaged 6.37 percent.
The 15-year FRM this week averaged 5.78 percent with an average 0.6 point, up from last week when it averaged 5.77 percent. A year ago at this time, the 15-year FRM averaged 6.03 percent.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.00 percent this week, with an average 0.6 point, down from last week when it averaged 6.02 percent.A year ago, the 5-year ARM averaged 6.11 percent.
One-year Treasury-indexed ARMs averaged 5.12 percent this week with an average 0.5 point, downfrom last week when it averaged 5.16 percent. At this time last year, the 1-year ARM averaged 5.58 percent.
(Average commitment rates should be reported along with average fees and points to reflect the total cost of obtaining the mortgage.)
"Average mortgage rates were nearly unchanged during the past week, leaving rates above the levels of two weeks ago," said Frank Nothaft, Freddie Mac vice president and chief economist. "Reflecting the rate uptick from two weeks ago, the Mortgage Bankers Association reported that loan applications were down 23 percent last week.
"The Institute for Supply Management's manufacturing index dropped from August's 49.9 to 43.5 in September, indicating further erosion in new orders, a decline in order backlog, and lessened production, suggesting further cutbacks in manufacturing activity in coming weeks. Consumers are feeling the effects of the slowing economy as well. For example, consumer spending was unchanged in August and revised downward for the month of July." Source: Freddie Mac

Tue, 07 October 2008
The Incentives of Mortgage Servicers: Myths and Realities
Finance and Economics Discussion Series Divisions of Research & Statistics and Monetary Affairs

Federal Reserve Board, Washington, D.C.
As foreclosure initiations have soared over the past couple of years, many have questioned whether mortgage servicers have the right incentives to work out troubled subprime mortgages so that borrowers can avoid foreclosure and remain in their homes. Some critics claim that because servicers, unlike investors, do not bear the losses associated with foreclosure, they have little incentive to modify troubled loans by reducing interest rates or principal, or by extending the term.
Our analysis suggests that while servicers have substantially improved borrower outreach and increased loss mitigation efforts, some foreclosures still occur where both borrower and investor would benefit if such an outcome were avoided. We discuss servicers’ incentives and the obstacles to working out delinquent mortgages. We find that loss mitigation is costly for servicers, in large part because servicers currently lack adequate staff and technology; unfortunately, servicers have few financial incentives to expand capacity. Source: LoanSafe Solutions

Mon, 13 October 2008
US economic downturn won't hurt Australia too much
AUSTRALIAN borrowers can look forward this week to a half per cent drop in official interest rates to 6.5 per cent by the Reserve Bank of Australia, with the only major uncertainty being how much of that the banks pass on to borrowers.

Assume that it won't be all of it, and it won't be none: let's assume a politically palatable compromise and split the difference, which will bring home loan rates down by 0.25 per cent and also improve bank profitability.

We are mainly just spectators at what's turned into one of the biggest global financial lurches in the last 100 years, but we can't ignore the consequences of the fact that most of the major Wall Street banks lent far too much money in the last decade to people who couldn't pay it back. It's that simple.

Blaming Wall Street, as the majority of the US House of Representatives did last Monday, missed the point that the pain is being felt by US borrowers who were only doing what humans do: they were borrowing to make their lives better.

The outcome isn't specifically a share market rout: that's just a painful by-product. Far worse has been the credit freeze, the massive loss of confidence in the US banking system, whereby lenders have stopped lending, and that's far harder to visualise. What does a refused loan look like?

The British banking system has gone the same way, in a scale model of the same problem, taking lenders Northern Rock and Bradford & Bingley with it.

Australia's financial system is far stronger than the US equivalent, not least because surveillance was tightened up in the early 1990s after we nearly lost a couple of Big Four banks. They'd been lending too big before the share market crash of 1987 and during the easy credit period that followed, as the RBA dropped rates to keep the wheels turning. Source: The Australian

Mon, 13 October 2008
Homes sold off in the outer suburbs
OUT in Sydney's western and southwestern suburbs, Tony Fountain auctions up to 60 homes a week.

Despite the whopping full percentage point peeled off interest rates by the Reserve Bank of Australia yesterday, Fountain says most people in markets where interest rate rises hit the hardest are too worried about whether they will have a job next year to buy their first home or trade the one they have.

On a $300,000 home loan, they will save just over $200 a week and that is more likely to go towards a new plasma television or provide a boost to retailers than into buying a new home.

Its the investors he already sees sitting at his auctions who will make a play on the back of falling interest rates and rents that rose nationally about 10 per cent in the past year, with a similar rise expected in the next 12 months. Source: The Australian

Mon, 13 October 2008
NAB, Westpac cut fixed interest rates


NAB has joined Westpac in cutting fixed interest rates on home loans.

NAB announced it would cut would cut interest rates on its fixed rate products by up to 1.6 percentage points, effective today.

"Combined with our competitive variable rates, this gives our customers the benefit of locking in some certainty during these economically volatile times," NAB's Australia chief executive Ahmed Fahour said.

Earlier today, Westpac announced it would cut its fixed home loan rates by up to 1.1 percentage points.

The move will drop one year fixed rates to 7.19 per cent and push three year fixed rates to 6.99 per cent.

Bank spokesman Peter Hanlon said the move would help home buyers plan for the future.

"Well for those customers who want to take out a fixed loan to get greater certainty on their home loan repayments this is a fantastic move, because it enables people to save up to $250 on a $250,000 loan," he said. Source: The Australian



Mon, 27 October 2008
PM's Christmas tax bonus as surplus unlocked to lift confidence
A MULTI-BILLION-DOLLAR cash handout to consumers to lift spending ahead of Christmas is under consideration in an attempt to boost the economy and stave off the expected effects of the global economic crisis.

The package is likely to include a one-off tax rebate, some direct infrastructure spending and a payment to pensioners and other welfare recipients, and was discussed at the strategic budget policy committee meeting held over the weekend.

The Government has not yet settled on the size of the package. Sources suggest it will be less than $10 billion, but possibly as much as $5 billion.

The Government is acting as evidence accumulates that the economy is slowing, with new lending to individuals and business in August plunging 30 per cent below levels of a year ago and job advertisements falling for the fifth month in a row in September.

"I believe that the purpose ofhaving a surplus is to make sure you've got a buffer for the tough times. And the tough times have come," Kevin Rudd said yesterday.

"That means making sure that you're taking necessary measures, all necessary measures, to contribute to positive economic growth in the future and to help families on the way through."

The share market responded positively to the Government's package of bank guarantees announced on the weekend, with bank stocks leading a 5 per cent rise in the S&P/ASX200.

Shares in Macquarie Bank, ANZ and St George all rose by just under 9 per cent.

The Hong Kong share market surged 10.2 per cent, recovering some of last week's disastrous losses. European stocks also recovered, with London up 5 per cent in early trading.

Wall Street surged at the market opening. The Dow Jones Industrial Average was up 4.53per cent to 8834.38 early today, with the US Government expected to announce new measures to stabilise major US banks.

European Union leaders have announced a package similar to that unveiled by the Prime Minister, guaranteeing interbank funding, while US Treasury Secretary Henry Paulson is considering following suit.

However, the prospect of a guarantee had no effect on local bank short-term funding costs, which rose from 5.91 per cent on Friday to 6.04 per cent yesterday.

Bond markets reacted negatively to the banking guarantees, with the interest demanded for government bonds rising by about 0.3 per cent to 4.65 per cent for three-year bonds and 5.45 per cent for 10-year bonds.

"Markets are saying that government debt is becoming riskier," Westpac interest rate strategist Damien McColough said yesterday.

Opposition Leader Malcolm Turnbull challenged the Government to explain what additional prudential supervision it planned imposing on the banks in return for the benefit of its guarantee.

"In other countries, guarantees of this kind ... have had the consequence of encouraging risky behaviour by banks, such as offering uncommercially high interest rates to attract depositors or making risky but high-yielding loans to boost income," Mr Turnbull said.

However, Mr Rudd said additional prudential supervision was not required as the regulator, APRA, already had full access to the banks' books. The Government is expecting to make a profit on its guarantees for bank funding, charging banks a fee of between 0.25 per cent and 1 per cent for every loan for which they seek government insurance.

Treasury is still working out the details of how the fee will be structured and will try to make it consistent with the similar package being considered in Britain.

The Government's planned spending package follows the Reserve Bank's interest rate cut, which will lift disposable income by about $10 billion a year.

Banks are now cutting their fixed-rate home loans, with National Australia bank reducing its rate by 1.6 percentage points and Westpac cutting its fixed rate loans by 1.1 percentage points.

Lending figures released yesterday show demand for fixed-rate loans has plunged to a seven-year low. Source: The Australian

Mon, 27 October 2008
Funds call for guarantee
THE Rudd Government is resisting calls to extend its bank guarantee scheme to cash management trusts and mortgage funds ahead of crucial talks with the industry this week aimed at unlocking billions of dollars in frozen funds.

Senior fund managers said the problems that had beset the industry since the Government announced its guarantee scheme earlier this month were likely to continue unless further changes were made.

After the Government announced its free unlimited bank guarantee scheme on October 12, the market-linked funds industry was hit by a surge of redemptions as investors moved their money into the banking system to take advantage of the government promise to protect deposits and wholesale funds in the event of a bank failure.

The flight to the guarantee has forced myriad funds to freeze redemptions of investors' capital, although most funds have continued paying out on their income streams.

Late on Friday, Wayne Swan put a $1 million threshold on the Government's guarantee scheme. From November 28, banks will have to pay the Government a fee of between 0.7 per cent and 1.5 per cent for the privilege of a government guarantee for their wholesale funding. Buying the guarantee will be optional for big deposits, while deposits under $1 million will receive a government guarantee for free.

The move was designed to curb the withdrawals from mortgage trusts and other funds not covered by the guarantee as people rushed for the security of government-backed banks.

But Perpetual chief executive David Deverall, who called for an extension of the guarantee to elements of the managed funds industry, said the reputation and stability of the industry was now under question as a result of the Government's retail deposit guarantee.

The funds group was forced last week to freeze redemptions on its $2 billion mortgage fund for three months.

Assistant Treasurer Chris Bowen yesterday said the deposit guarantee was never meant to include market-related investments. "It's relating to deposits in APRA-regulated financial institutions."

He said it had "never been the Government's intention to guarantee market-related investments, because there is an element of risk there".

People who deposited money with banks were looking for "safety and certainty". But people who invested in market-related investments took greater risks to obtain higher returns.

"If I choose to take a more risky (investment) approach, then I do not get the Government's guarantee. And that's been the situation all the way through," he said.

Respected institutions such as Challenger, Perpetual Investments, ING, Axa Asia Pacific and Australian Unity, among others, have been forced to suspend redemptions by freezing $11 billion in deposits.

The talks between regulators and the managed fund industry will occur amid continuing market turbulence.

The Australian stock market isexpected to again be buffeted after another savage session on Wall Street on Friday night that wiped a further 312 points from the Dow Jones Index.

The benchmark S&P/ASX200 is tipped to open nearly 1 per cent down this morning, and the Australian dollar has also been under heavy pressure.

Mr Deverall said it was now likely that the entire $20 billion mortgage fund industry would be frozen for the next few months, unless the guarantee was extended to the sector. "It's in everyone's interest that we can re-open this sector as soon as possible," he said.

Earlier, he told ABC's Inside Business program: "We believe that there are some solutions that are very, very implementable, particularly around cash management trusts where in America a guarantee-type structure was put in place and it was very effective.

"But similarly, we'd like to speak to the Government about what can be done in the mortgage trust space as well."

Mr Deverall said Perpetual was in discussions with ASIC as to whether redemptions could be allowed for individual "special hardship cases". The Government's policy, he said, had led to investors thinking investment funds outside of retail banks were now unsafe.

"Our sector, the managed funds sector ... is well managed, it's safe," Mr Deverall said. "But (it's) the unfortunate consequences of using the word 'guarantee' that has led some people to think that only part of the industry is safe.

"That is completely ridiculous and an inconceivable conclusion."

The Government has urged calm from investors in the sector, arguing that affected funds continue to pay out income and that the underlying assets of the funds remain sound.

The Government also argues the guarantee has restored stability to the lending system, citing the recent round of home loan interest rate reductions delivered by the major banks outside the RBA's interest rate cycle.

Yesterday Aussie Home Loans made a 0.5 percentage point cut to its variable interest, taking its standard variable rate home loan to 8.05 per cent.

But a prolonged freeze in the managed funds sector risks alienating seniors, particularly self-funded retirees.

National Seniors Australia chief executive Michael O'Neill called on the Government to solve the crisis quickly and demanded arrangements be put in place that are "better than referring people to Centrelink". Source: The Australian

Mon, 03 November 2008
JP Morgan to help struggling borrowers
JP Morgan has launched an ambitious plan to modify the terms of $US70 billion in mortgages for borrowers who are behind on their payments or soon could be.

The move by the New York bank will cover as many as 400,000 borrowers. They'll be moved into loans carrying lower interest rates, smaller principal amounts and other more-affordable terms.

The changes will particularly focus on a type of loan structured in such a way that the borrower's outstanding balance sometimes grows month after month. JP Morgan inherited $US54 billion of such loans with its takeover of the beleaguered thrift Washington Mutual Inc. last month.

The plan comes amid intense national focus on a root cause of global financial turmoil: rising home foreclosures, and what the role of banks and government should be in helping struggling homeowners. The banking industry is under much political pressure address the foreclosure problem.

Rival Bank of America has two loan-modification pools in place, one hashed out with state attorneys general. At the government level, after other programs failed to halt the rise in foreclosures, the Federal Deposit Insurance Corporation recently floated a plan that could help three million troubled borrowers; it is being considered by the White House.

Such moves would tackle one of the last elements of the global financial upheaval as yet untouched by a major federal program. The mortgage crunch that began in the middle of last year spawned the financial crisis. Big financial players had invested trillions of dollars in securities backed by risky mortgages, which starting in mid-2007 became difficult to value. Banks hobbled by these bad investments reined in lending, spawning the wider credit crunch as a result.

The US government has tackled problems in the banking system and credit markets, but thus far hasn't succeeding in stanching the bleeding of failing homeowners. Economists and government officials agree that the economy and financial markets can't fully revive until there's a halt to the decline in housing prices, a phenomenon that is worsened by foreclosures.

"It doesn't make sense for us to wait" to tackle the problem, said a JP Morgan executive, Charles Scharf. "We've heard loud and clear and are listening to what some of the thought leaders around the country are saying." Mr Scharf runs the retail division, which includes mortgages and branch banking, at JP Morgan, the largest US bank in stock-market value.

The move also suggests that banks are realising they can improve the value of their loan portfolios through mass modifications rather than foreclosures, which tend to produce larger losses. Until now, mortgage holders have been reluctant to renegotiate loans or have been doing so one-by-one, a time-consuming process. The bundling of loans into securities that are then sold to investors further complicates matters.

The announcement by JP Morgan steps up pressure on other mortgage companies to respond with relief programs for stressed borrowers, said Stuart Feldstein, president and co-founder of SMR Research., a firm that specializes in consumer lending. "The precedent has clearly been set and we can expect to see more of these," he said.

Nationwide, 7.3 million American homeowners are expected to default on their mortgages between 2008 and 2010, about triple the usual rate, according to Moody's Economy.com, a research firm. Some 4.3 million of those are expected to lose their homes.

JP Morgan's exposure to the problems increased sharply last month when it acquired the assets of the Seattle-based Washington Mutual. WaMu, which was seized by regulators, had a large exposure to the difficult housing market of California. In taking it over, JP Morgan acquired $US16 billion of sub-prime mortgages.

The mortgages affected by JP Morgan's program represent 4.7 per cent of the home loans it owns or that are serviced by one of the bank's units, EMC Mortgage. While the program to the give these mortgages easier terms is likely to cost JP Morgan billions of dollars in interest payments and loan fees, it is also likely to save the bank from the costly and lengthy process of foreclosing homes and selling them. The plan expands upon programs already in place at the bank to help strapped homeowners. Source: The Australian

Thu, 18 December 2008
PM's Christmas tax bonus as surplus unlocked to lift confidence
A MULTI-BILLION-DOLLAR cash handout to consumers to lift spending ahead of Christmas is under consideration in an attempt to boost the economy and stave off the expected effects of the global economic crisis.

The package is likely to include a one-off tax rebate, some direct infrastructure spending and a payment to pensioners and other welfare recipients, and was discussed at the strategic budget policy committee meeting held over the weekend.

The Government has not yet settled on the size of the package. Sources suggest it will be less than $10 billion, but possibly as much as $5 billion.

The Government is acting as evidence accumulates that the economy is slowing, with new lending to individuals and business in August plunging 30 per cent below levels of a year ago and job advertisements falling for the fifth month in a row in September.

"I believe that the purpose ofhaving a surplus is to make sure you've got a buffer for the tough times. And the tough times have come," Kevin Rudd said yesterday.

"That means making sure that you're taking necessary measures, all necessary measures, to contribute to positive economic growth in the future and to help families on the way through."

The share market responded positively to the Government's package of bank guarantees announced on the weekend, with bank stocks leading a 5 per cent rise in the S&P/ASX200.

Shares in Macquarie Bank, ANZ and St George all rose by just under 9 per cent.

The Hong Kong share market surged 10.2 per cent, recovering some of last week's disastrous losses. European stocks also recovered, with London up 5 per cent in early trading.

Wall Street surged at the market opening. The Dow Jones Industrial Average was up 4.53per cent to 8834.38 early today, with the US Government expected to announce new measures to stabilise major US banks.

European Union leaders have announced a package similar to that unveiled by the Prime Minister, guaranteeing interbank funding, while US Treasury Secretary Henry Paulson is considering following suit.

However, the prospect of a guarantee had no effect on local bank short-term funding costs, which rose from 5.91 per cent on Friday to 6.04 per cent yesterday.

Bond markets reacted negatively to the banking guarantees, with the interest demanded for government bonds rising by about 0.3 per cent to 4.65 per cent for three-year bonds and 5.45 per cent for 10-year bonds.

"Markets are saying that government debt is becoming riskier," Westpac interest rate strategist Damien McColough said yesterday.

Opposition Leader Malcolm Turnbull challenged the Government to explain what additional prudential supervision it planned imposing on the banks in return for the benefit of its guarantee.

"In other countries, guarantees of this kind ... have had the consequence of encouraging risky behaviour by banks, such as offering uncommercially high interest rates to attract depositors or making risky but high-yielding loans to boost income," Mr Turnbull said.

However, Mr Rudd said additional prudential supervision was not required as the regulator, APRA, already had full access to the banks' books. The Government is expecting to make a profit on its guarantees for bank funding, charging banks a fee of between 0.25 per cent and 1 per cent for every loan for which they seek government insurance.

Treasury is still working out the details of how the fee will be structured and will try to make it consistent with the similar package being considered in Britain.

The Government's planned spending package follows the Reserve Bank's interest rate cut, which will lift disposable income by about $10 billion a year.

Banks are now cutting their fixed-rate home loans, with National Australia bank reducing its rate by 1.6 percentage points and Westpac cutting its fixed rate loans by 1.1 percentage points.

Lending figures released yesterday show demand for fixed-rate loans has plunged to a seven-year low. Source: The Australian

Thu, 18 December 2008
NAB picks up Wizard brand, network and loans for $30m
THE National Australia Bank will pay up to $30 million for Wizard Home Loans, just one-tenth of the sale price realised four years ago by founder Mark Bouris.

The NAB yesterday confirmed that it was about to finalise a plan to purchase Wizard's brand and distribution network plus one-third of the loan book.

The Wizard mortgage book is worth $12 billion, and NAB plans to take on one third of the value.

The deal is similar to the purchase of RAMS by Westpac, and comes after Wizard effectively placed itself on the market in May.

The purchase is expected to be worth about $30 million, given current market conditions and that Wizard has been a forced seller.

It is understood the transaction is small enough to be handled by NAB's internal bankers, rather than by investment bankers.

The Wizard lending book is made up of prime mortgages that are fully insured and have a maximum loan to valuation ratio of 90 per cent.

Thu, 18 December 2008
Ombudsman besieged with financial disputes
THE global financial crisis has caused a large increase in the number of customer disputes arbitrated by the Financial Ombudsman Service.

Complaints about managed investments and financial planning advice, along with a big jump in banking and finance matters, dominated in a 22.8 per cent surge in the number of new disputes received by the service in the year to June.

Chief ombudsman Colin Neave has outlined a broad cross-section of financial disputes, including aggrieved home buyers who had locked into fixed-rate home loans as variable rates dived.

There was also a 152 per cent increase in complaints about managed investments and a 55 per cent jump in financial planning disputes involving allegations of inappropriate advice and sub-standard service. Source: The Australian

BOOKMARK THIS WEBSITE
To add Home Loan Quotes Online to your favourites, simply click here.

|  home  |  news  | links  |