Tag: ING Direct

ING Lifts Mortgage Rates

Another bank has decided to increase its mortgage interest rates, the third rate change it has made in the last seven months, via Australian Broker.

ING has announced that from 7 February variable rates for all customers will increase by 0.15%.

The hike comes after ING previously lifted variable rates by 0.10% in July last year and by 0.15% for investors in September.

This means ING owner occupier customers on a variable rate are facing a total increase of 0.25% on their home loan rate since July.

Research director at RateCity.com.au, Sally Tindall, said it is disappointing to see ING hiking rates again.

She added, “Today’s announcement will come as a surprise to some ING customers who weren’t expecting a second out-of-cycle rate hike.

“The cost of funding pressures are real and here to stay, and we expect more lenders to follow in a second round of hikes.”

While ING is not the only bank to have increased rates in the first month of 2019, other lenders have managed to cut rates [for new business – DFA]. 

Fixed investment rates at the Teachers Mutual Bank, Firefighters Mutual Bank and UniBank have decreased for new customers.

ING Direct Battles Turnaround Delays

Further evidence of a shift in mortgage applications from majors to other smaller lenders is provided by the fact that ING Direct has acknowledged lengthier processing times for incoming home loan applications and has promised to work through the issue.

According to Australian Broker, “As has been the case in the past, it is important we are transparent and keep you informed on how we are addressing these challenges,” Mark Woolnough, head of third party distribution & direct mortgages, wrote in a note to brokers on Thursday (13 July).

“We have all available resources working towards getting our turnaround times back to much shorter levels.”

The primary cause for the delays has been elevated application flows, Woolnaugh told Australian Broker.

“A combination of other factors have also exacerbated the extended delays, namely the introduction of requirements regarding Common Reporting Standards and re-work on incomplete applications; in many cases multiple re-works on the same files.

“It is vital that our competitive positioning remain strong; this won’t be compromised by our processing challenges.”

The bank has created separate assessment queues for purchase and refinancing, he said, which would assess purchase applications in a faster manner and address extended queues for refinancing.

Credit assessment staff have also been brought in both over the weekends and on weeknights, while a recruitment effort for additional assessment and processing staff is underway.

At the time the broker note was sent out, ING was assessing purchasing applications received on 6 July and refinance applications received on 23 June.

“We are doing everything we can to get back to acceptable turnaround times. We thank you for your continued support and patience.”

ING was making real progress in solving these issues, Woolnaugh said, with purchase applications now at a four day turnaround time. He promised that this figure will continue to be brought down whilst ING also worked on refinances in parallel.

“We expect to be back within turnaround times of below four days within the next few weeks. We will also do everything we can do ensure we hold and further improve these and avoid any return to the turnaround times we’ve experienced over the past few weeks.”

S&P lauds ING broker approach

From Australian Broker.

The relationship of ING Australia (trading under ING Direct) with its brokers has positioned the bank well in the current economic environment, according to analysts from ratings agency S&P Global.

A note written by S&P analysts affirmed the current A- issuer rating given to the bank and said that the outlook on the long-term rating remains stable.

As a subsidiary of the wider ING Group, ING Direct was likely to be supported by its parent company in almost all foreseeable circumstances if required, they wrote.

Growth in ING Bank puts it on the same level as Suncorp, Bendigo and Adelaide Bank, and Bank of Queensland, the analysts added, with a cost-to-income ratio of around 38% – one of the lowest in the Australian banking sector.

The analysts also pointed to ING’s continued success in the third party channel despite some heavy competition.

“We believe the bank’s approach to third-party brokers – primarily one premised on simple and consistent product structures and ease-of-engagement – positions the bank well to maintain its momentum within this channel, even though it leaves the bank susceptible to business disruption akin to outsourcing risk.”

In the past this reliance on the third party has played to the lender’s strengths. Whether this continues in the future will depend on the degree to which borrowers want to use mortgage brokers versus approaching ING directly through its digital platforms, Michael Puli, associate director of financial institutions ratings and co-author of the note, told Australian Broker.

“Where we do see brokers as a part of ING Australia’s ability to manage at the moment is the speed of their systems, their consistency, and the ease of interaction. Also brokers have offered ING a degree of diversification across the country which is supportive of their creditworthiness.”

ING Direct has been better at leveraging the broker distribution network than some of its peers and new market players such as the mutuals despite recent regulatory changes, Puli added.

One risk to ING Direct related to the third party channel has to do with commission and broker incentives, Puli said.

“A company with a branch network has complete responsibility over their bank staff. However, ING Direct is reliant on brokers sourcing business so if there are any instances of unscrupulous brokers – and I think that there would be very few in this instance – then that may impact their business model.”

Plans to move into non-mortgage lending would also diversify ING Direct’s revenues and solidify its business profile over the next few years.

Despite these strengths however, S&P’s analysts noted that ING Direct’s long-term issuer rating would be unlikely to change in the coming two years. A downgrade would occur if the creditworthiness of ING Group deteriorated, they said, while an upgrade would occur if ING Group increased its ability to support ING Direct or if ING Direct itself grew to take up a stronger role within its parent company.

“In this case, ING Australia as a standalone institution is BBB+. However we expect its status within the wider group and the group’s financial strength which is an A to essentially mean that the group would step in to support ING Australia to a level that’s commensurate to an A-,” Puli said.

ING Direct Joins The IO Rate Hike Dance

From Australian Broker.

ING Direct has announced is will be making a number of changes to variable rates across its home loan portfolio, effective Friday 7 July.

 

Reference rates for the following segments will change as follows:

  • For owner-occupier borrowers with ING’s Orange Advantage home loan, the principal and interest rates will decrease by 0.05% p.a.
  • For owner-occupier borrowers (with either an Orange Advantage or Mortgage Simplifier home loan), interest-only rates will increase by 0.20% p.a.
  • For investor borrowers (with either an Orange Advantage or Mortgage Simplifier), interest-only rates will increase by 0.35% p.a.

ING said it will waive any switching fees until the 31 August for existing customers with Interest Only loans wishing to switch to Principal and Interest repayments. With a Principal and Interest loan customers may be eligible for lower interest rates.

ING Eliminates New Fixed Interest Only Loans

From Australian Broker.

ING Direct has eliminated interest-only repayments on new applications for its owner occupied fixed rate loans, effective from today (6 June). These fixed rates will still be available for principal & interest owner occupied loans.

A number of fixed rate changes have also come into effect from today on ING Direct’s owner occupied three and five year fixed rates (combined with Orange Advantage) to 3.79% p.a. and 4.19% p.a. respectively.

The bank has also made reductions to its standard owner occupied three and five year fixed rates as well as its three year investment fixed rate. All changed rates are outlined in the table below:

Fixed rate loan type New interest rate New comparison rate
Owner occupied with Orange Advantage
3 year fixed rate 3.79% p.a. 4.48% p.a.
5 year fixed rate 4.19% p.a. 4.51% p.a.
Owner occupied
3 year fixed rate 3.89% p.a. 4.51% p.a.
5 year fixed rate 4.29% p.a. 4.56% p.a.
Investment
3 year fixed rate 4.39% p.a. 4.82% p.a.

ING Bank compensates Living Super customers due to potentially misleading costs and fees statements

According to ASIC, ING Bank (Australia) Limited, the promoter and investment manager of the ING Direct Superannuation Fund (Living Super), will compensate around 24,500 members approximately $5.38 million following ASIC concerns that statements made in its promotional material about the fees paid in connection with its Living Super product were potentially misleading.

Investment--PIC

In particular, ASIC was concerned that ING Bank promoted Living Super, between March 2015 and September 2016, as having ‘No Fees’ for the ‘Cash Investment Option’, ‘No Investment and Administration fees’ for the ‘Balanced Option’ and having low fees options without making it clear that customers were paid a lower interest rate on the cash portion invested with ING Bank than the rate paid by ING Bank to its Saving Maximiser customers for the relevant investment options. Some of the promotions also did not indicate the “no fees or low fees” features may not continue should ING Bank no longer be the investment manager.

ASIC discussed its concerns with ING Bank that some members of Living Super may have been misled into believing they would receive the same returns on cash investments held with ING bank as ING Direct banking customers with the Savings Maximiser product.

ING Bank has acknowledged that its communication could have been clearer and is writing to all members of Living Super to inform them that the interest rates paid on Living Super may be different to the rates paid to direct banking customers and further, that the fees for Living Super may change should ING Bank no longer be the investment manager.

ING Bank have advised ASIC they will also write to affected members informing them of the compensation paid and will not retain any of the financial benefit from the lower interest rate that was applied.

ING Bank has told ASIC that it will no longer be promoting Living Super based on No Fees or No Investment and Administration Fee. It has made changes to its internal policies and procedures to help ensure that similar potentially misleading promotions are not undertaken.

ASIC also expressed disappointment that ING Bank was promoting Living Super using product inducements to clients separate from the superannuation product such as cash payments. ASIC observes that promotions of this type are a bad practice that may encourage decisions to be made on the basis of short term considerations that may not reflect the needs of a member. ING Bank has advised ASIC that it will stop offering separate product inducements in relation to Living Super.

ASIC Commissioner Greg Tanzer said, ‘This action reflects ASIC’s ongoing focus on the disclosure of fees and costs in superannuation.

‘Consumers need to be able to make informed decisions about their superannuation and managed investments, based on accurate and consistent fees and costs disclosure.

‘Promotion of superannuation products based on low or no fees can be very influential on consumers. This makes it very important to ensure any such promotion is not potentially misleading by reducing the benefits consumers receive in exchange for the no fees or low fees features’, Mr Tanzer said.

ING Direct Cuts Mortgage Rates by 12 Basis Points

ING DIRECT will reduce its Orange Advantage variable home loan rates for existing and new customers by 0.12% p.a. effective Monday 15 August, 2016.

Housing-KeyOwner occupier – Orange Advantage (100% offset) LVR of 80% or less with minimum borrowings of $150k:

3.67% p.a. (3.89% p.a. comparison rate)

  • Investor – Orange Advantage (100% offset) LVR of 80% or less with minimum borrowings of $150k:

4.12% p.a. (4.34% p.a. comparison rate)

All other variable home loan rates for new and existing customers will reduce by 0.10% p.a. effective from Monday 15 August, 2016.

Commercial variable loan rates will also reduce by 0.10% p.a. effective from Monday 15 August, 2016.

More Ultra Low-Rate Mortgage Offers

ING DIRECT has introduced its lowest ever variable rate of 3.79% p.a. on its Orange Advantage loan for owner occupiers.  This new rate is a reduction of 0.15% p.a. off the current rate and is effective from Monday 25 July for Orange Advantage formal approvals with a minimum LVR of 80%.

The bank is also introducing changes across its range of fixed rate residential owner occupier loans, with a rate of 3.69% p.a. available for a three-year fixed term when taken as part of a split package with an Orange Advantage loan.

Further evidence momentum enabled by the shape of the yield curve, which we discussed recently.

Yield-Curve-June-2016

ING Direct Throttles Back Apartment Lending

From Australian Broker.

Non-major lender ING Direct has announced changes to its underwriting guidelines relating to apartments and unit dwellings. In a note sent to mortgage brokers on Friday, ING announced restricted LVRs on unit dwellings with an internal floor space of less than 60 square metres.

Where a proposed security property has an internal floor space of less than 60 square metres, excluding balconies and car spaces, and is less than 5 years old, the non-major will limit the maximum LVR on the loan to 70%.

N-SydneyIn addition, where a proposed security property has an internal floor space of greater than 50 square metres and less than 60 square metres, excluding balconies and car spaces, and is older than 5 years, ING will limit the maximum LVR on the loan to 80%.

According to data from CoreLogic, there are 92,102 new units set for completion over the next 12 months with that figure rising to 231,129 over the next 24 months. Sydney and Melbourne have the greatest increases in stock over the next two years, with 81,696 and 80,503 units to be completed respectively.

Australians’ growing property debt in retirement calls for super planning

Data from ING DIRECT reveals that Australians are increasingly taking property debt into their retirement years, with the number of over 65 year olds still holding a mortgage rising by 28 per cent in the past three years. This finding aligns with data from our own surveys, as shown in this data extract from DFA analysis of owner occupied loans held by those over 50.

Old-Mortgages

Of those in their retirement years that still have a mortgage, 26 per cent hold an investor loan while 74 per cent are owner occupiers. The average debt they are holding is $158,000.

Mark Woolnough, Head of Third Party Distribution at ING DIRECT commented: “As property prices climb and people wait longer to get onto the property ladder, it’s not a surprise that people are holding their home loan debt later in life.  However, proper planning is critical to make sure that this debt doesn’t cause stress in later years and people can enjoy the retirement they have worked hard for.”

According to ING DIRECT’s Autumn Buyers Guide, since June 2012 the average capital city residential property has increased in value by 32 per cent, with growth of 7.6 per cent in the past 12 months alone. The average age of a home buyer has also risen in recent years to 38.

Mr Woolnough added:  “We talk about superannuation and property as the barbells of a person’s financial lifecycle – in most cases they are the two biggest investments that a person will ever make.

“Research has shown us that people are very open to discussing broader financial needs when they are sourcing a mortgage, such as their superannuation, and brokers are in a great position to encourage and support their clients to consider and sort their super in light of this growing property debt trend.”

The analysis is based on ING DIRECT’s own customer base. ‘Retirement years’ considers those customers aged between 65 and 79.