Tag: Mortgage Rates

AMP Bank raises investor rates

From Australian Broker.

AMP has announced changes to investor lending to manage its portfolio responsibly and align with regulatory requirements.

The pricing and policy changes for investment property loans, include:

  • Variable interest rates for new and existing investment property loans will increase by 35 basis points
  • For all new investor property loans, the maximum loan-to-value ratio (LVR) is reducing to 50%. This change applies to all new loans with an investment property as security and includes loans to SMSFs

The changes to interest rates are effective 23 June 2017 for new customers and from 26 June 2017 for existing customers. LVR change is from 21 June for new investment property loans and 1 July for SMSF investor loans.

Sally Bruce, Group Executive AMP Bank commented: “These measures are needed to ensure we operate within our regulatory obligations.

“We’re committed to managing our portfolio responsibly while balancing this with the interests of our customers.

“We are managing our loan book in a very active market and these changes follow recent shifts in competitor activity.  We will continue to take the necessary steps for sound management of our regulatory requirements,” she said.

Bank West Tweaks Mortgage Rates

From Australian Broker.

The wave of adjustments to mortgage rates and underwriting requirements continues.

Bankwest has announced a series of pricing and policy changes affecting principal & interest as well as interest only loans for new borrowers.

By tweaking the bank’s various products, this maintains the appropriate balance across the lender’s home loan portfolio and brings it in line with regulatory guidelines, said Bankwest general manager of policy and pricing Paul Vivian.

“We aim to balance the needs of our customers, shareholders, regulators and the community when reviewing our products and pricing,” he said. “As always, we are mindful of our broader obligations as a responsible lender.”

The following changes will come into effect from today (16 June):

  • The maximum LVR for IO lending has been reduced to 80%
  • Fixed home loans in the Complete Package will only be available on a P&I basis
  • The 3-Year Complete Fixed Loan rate for owner-occupiers has been reduced by 31 basis points to 3.78% p.a. (4.36% p.a. comparison rate)
  • Interest rates for the Standard Fixed Rate Home Loan product for investors and owner-occupiers will increase between 0.04% p.a. and 0.34% p.a.
  • The bank will reinstate applications from non-Bankwest customers for standalone refinance of P&I investor purpose loans
  • The Complete Variable Home Loan rate for new P&I investment lending with LVR less than or equal to 90% (including LMI) will drop by 30 basis points for loans between $200,000 and $499,000 and by 40 basis points for loans of $500,000 or greater

“We will continue to assess our capacity to provide interest-only lending based on regulator guidance,” Vivian said.

Teachers Mutual Bank Lifts Mortgage Rates

From Australian Broker

Teachers Mutual Bank is increasing home loan variable and fixed interest rates by 0.10% per annum, effective from today for new business. It has 174,000 members and more than $5.3 billion in assets.

The changes are in response to higher cost of funds, and regulatory requirements on the mix of home loans.

Teachers Mutual Bank CEO Steve James stated that this small change to the variable rates is a necessary measure in the current low interest rate/higher cost of funds environment.

“As a mutual bank, our commitment to the long term stability and growth of the bank for our members drives every decision we make,” he said.

“While we have had to make a small interest rate increase, this is balanced by a range of benefits we offer. Our home loan fees remain lower than those of the major banks; and we offer fee-free redraw, no monthly fees, no fees for additional repayments, and no fees for paying a loan out early on variable rate products.”

“Our offset facility is available across the majority of our home loan products, something that is quite rare in the market,” said James.

The home loan variable and fixed interest rate change will be implemented across Teachers Mutual Bank’s three brands: Teachers Mutual Bank, UniBank, and Firefighters Mutual Bank.

The rate change will be effective for existing home loan borrowers from 1 July 2017

ANZ Ups IO; Lowers P&I Mortgage Rates

ANZ has announced changes to loan rates today, effective 16 June.  They are using the price lever to throttle bank interest only loans, whilst seeking to gain owner occupied P&I share.

ANZ today announced a five basis point reduction in variable interest rates for customers paying principal and interest on their home loans, taking the bank’s standard variable rate for owner-occupiers to the lowest of major banks at 5.20%pa

The decrease will benefit more than 80% of ANZ’s customers with an owner-occupier home loan. Customers with an investor loan paying principal and interest will also benefit from a five basis point reduction on their standard variable rates.

Variable interest-only home loan rates for investors and owner-occupiers will increase 30 basis points in response to regulatory and market conditions.

ANZ Group Executive Australia Fred Ohlsson said: “Many Australians are finding it difficult to manage household budgets at present and ANZ is pleased to be able to reduce rates for the majority of our customers who are working hard to pay off their homes.

“While we know those only paying interest on their loans will be disappointed, we need to manage our regulatory obligations and we are now required to hold additional capital against our home loans. We also need to better balance our portfolio towards those paying off their homes.

“There are clear benefits for our customers to be paying off their loans and we have made this as easy as possible by removing fees associated with moving across from interest-only loans.

Mr Ohlsson added: “Today’s decision is not in response to the recently announced bank levy and we are still to determine the final impact of the tax.

“We do however recognise the work regulators are doing to manage the growth of both investor and interest-only loans and we will continue to be transparent on the impact this will have on how we structure and price our home loan products,” he said.

 

Suncorp Rejigs Mortgage Rates

Suncorp has today announced several changes to its home lending interest rates to better balance the needs of investors and owner-occupiers, whilst adhering to industry-wide regulatory settings.

For owner-occupiers, Suncorp will reduce two and three-year fixed rates by 0.10% p.a. effective 3 July, 2017.

It will also maintain its exclusive offer for first home buyers, with Suncorp’s Home Package Plus Special Offer for First Home Buyers allowing customers to choose from a standard variable rate, or a five-year fixed rate of 3.99% p.a. on new lending of $150,000 or more.

Variable interest rates on all new and existing investor home loans, as well as new one and two-year investor fixed rates will increase by 0.12% p.a from 3 July, 2017.

The change will bring the Standard Variable rate for investor loans to 5.99% p.a. Investor rates for three and five-year fixed rates remain unchanged.

Suncorp banking & wealth CEO David Carter said the decision would ensure the bank maintained its position relative to regulatory changes, and give additional support to customers in the owner-occupier market.

“We have made a decision to prioritise the owner-occupier market to help customers who are wanting to buy and live in their own home,” Carter said.

“The bank’s interest only and investor profile remains within APRA’s macro-prudential settings because we have been deliberate in shaping the portfolio through our focus on risk selection.

“We responded early to signals by the regulators to improve our position relative to updated macro-prudential settings and with an expectation for modest growth across the portfolio, we need to implement these changes.

“With the market having effectively repriced investor lending and with some lenders having opted out of certain aspects of the investor market, it’s important for us to manage the demand for new business.

“The measurement of new business includes refinancing existing investor loans from other lenders, as well as loans for new investment properties.

“The decision to increase some investor lending rates was also influenced by incremental increases to funding costs, along with the costs involved in compliance.

“The rates across the portfolio remain highly competitive and the majority of customers will continue to pay rates well below the headline rate, due to our products’ various features and benefits.”

Aussies expect mortgage rates will keep rising

From The Real Estate Conversation.

Despite most economists predicting the Reserve Bank board will leave rates on hold at today’s board meeting, many Australians expect mortgage rates will rise this year, and are considering switching to fixed rate loans.

Despite most economists predicting the Reserve Bank board will leave rates on hold at today’s board meeting, many Australians expect mortgage rates will rise within six months, and are considering switching to fixed rate loans. The trend towards fixed-rate mortgages was strongest amongst young Australian homeowners.

A new survey by Gateway Credit Union shows that almost one in five respondents with a variable or split-rate home loan are considering making the switch to a fixed-rate loan.

Gateway CEO, Paul Thomas, said the results could reflect increased household financial pressure.

Household debt is at all-time high, said Thomas, adding that “a rise in home loan interest rates may very well tip some households over the edge financially.”

“Borrowers might be seeking the certainty of a fixed rate home loan,” said Thomas.

The research revealed that men were more likely to switch to a fixed-rate home loan than women (22.4 per cent compared with 14.7 per cent).

“Traditionally women tend to be more risk averse than their male counterparts when it comes to investment decisions. However, it seems like men may be more conservative when it comes to home loan repayments, opting to hedge their bets,” suggested Thomas.

Younger Australians were most likely to be considering shifting to fixed-rate loans. Of survey respondents aged between 18 and 29, 32.6 per cent were considering switching, compared with 20 per cent of those aged between 30 and 49, and only 9 per cent of those aged 50 or older.

Thomas said the fact that Australians are considering shifting to fixed-rate loans indicates that homeowners are feeling cautious.

“The fact that mortgage holders are looking to switch their home loans to fixed rate products over the next 3–9 months just goes to show that there is a sentiment of concern. Factors such as out-of-cycle rate hikes, the new bank levy, stagnant wage growth, and high levels of household debt are all converging to create an environment where borrowers need to act with caution,” he said.

Fixed-rate loans “secure certainty and help households avoid financial distress”, said Thomas.

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.

Bank West Hikes Higher LVR Mortgage Rates

From Australian Broker.

Effective 2 June 2017 Bankwest has made the following changes to >90% LVR lending. Existing lending will not be affected.

Complete variable home loan (P&I)

The existing >90% LVR tier for owner occupiers will change to 90.01%-95% LVR including LMI. Rates for these tiers remain unchanged.

A new LVR tier of >95% including LMI will be introduced for owner occupiers, with new pricing as below.

LVR (incl LMI) Current Variable Rate Current Comparison Rate New Variable Rate New Comparison Rate
<=90% 3.99% p.a. 4.41% p.a. 3.99% p.a. 4.41% p.a.
90.01% – 95% 4.53% p.a. 4.94% p.a. 4.53% p.a. 4.94% p.a.
>95% 4.53% p.a. 4.94% p.a. 5.29% p.a. 5.69% p.a.

Regular saver home loan

New lending on the Regular Saver Home Loan will be capped at 95% LVR including LMI.

“Bankwest takes a balanced approach to product and pricing changes, and we are mindful of our broader obligations as a responsible lender,” the bank said in a statement.

“Bankwest reviews its products and pricing on an ongoing basis with the aim of balancing the needs of our customers, shareholders, regulators and the community.”

Combination IO/P&I loan introduced

From Australian Broker.

Teachers Mutual Bank (TMB) has announced changes to its interest-only lending policy for fixed and variable rates by introducing a new type of combination mortgage.

From last Tuesday (30 May), borrowers at TMB as well as the bank’s other brands UniBank and Firefighters Mutual Bank will be limited to paying IO on a maximum of 50% of their total mortgage with principal and interest repayments covering the rest.

While this means that borrowers will have to take out two loans to cover their mortgage, the process will not be complicated, Mark Middleton, TMB’s head of third party distribution, told Australian Broker.

“It’s still the one loan. All the broker is doing is selecting two different products. It still comes through the NextGen.Net system or through their CRM platform on to us. In essence, it involves very minor additional work that the broker has to do for that loan to come to us. We’ll still assess the two loans as one requirement from that customer.”

Potential borrowers who have been conditionally approved for a home loan but have yet to settle will not be affected by the change. However, if an application exceeds the 90-day approval and then requires re-assessment, the new conditions will apply.

These changes have been in response to regulatory moves by ASIC and APRA giving guidance to ADIs, Middleton said, as well as to meet the needs of members out there in the market.

“To do that, we thought we’d take a different approach to the market and be able to offer interest-only out there. With that in mind though, we’ve gone 50/50.”

This benefits borrowers, he added, since this combination loan gives them equity in the property as well instead of simply paying off the interest.

“They’re still in the market and it’s a great way of staying in there but it also helps them think about ways to look at it differently and get themselves a greater stake in the property.”

TMB has also increased rates for its IO home loans by 40 basis points across one to five year terms for owner occupiers and investors. This means rates for owner occupiers lie between 4.34% and 5.01% per annum while those for investors sit between 4.64% and 5.31% per annum.

ABC The Business Does Bank Re-Rating

The Business looked at the impact of S&P’s down grades on 23 smaller banks in Australia, and highlighted the impact on funding and competition, especially in the longer term. It will more than offset the bank levy the big banks will have to wear!

They also looked a funding costs and explained why mortgage rates may rise and the potential adverse impact on household debt.