Nov 30

Macquarie Bank is intending to purchase 17.5% stake in the mortgage firm Bluestone Group via the subscription of newly issued Ordinary shares.

According to Bluestone Chairman, Alistair Jeffery, Bluestone are very excited to have the support of such a significant player. The business is intending to use the proceeds of the capital raised  to support Bluestone’s expansion in Europe, and develop further on its business in Australia and New Zealand.

“In our view there are a wide range of attractive investment opportunities emerging in the wake of the global financial crisis, and this investment positions Bluestone to benefit from the diverse opportunities we are seeing,” Mr Jeffery said.

Bluestone Group exited the non-conforming mortgage market in Australia in September 2008 when the cost of funding became too high.

However, with Macquarie now taking a large stake in the business, there is speculation that Bluestone could resume lending to borrowers with tarred credit histories.

Nov 29

Liberty Financial as well as the Australian First Mortgage have both announced a drop in variable interest rates down to 7.09%, following  moves by the four major banks to increase variable interest rates from 0.35% – 0.45% earlier this month..

Fresh interest in non bank lenders from both mortgage brokers and borrowers has lead to both players revisiting their home loan offers. AFM has reduced the rate on its Complete Option range of products by 0.08%, which brings the interest rate on the full-doc product to 7.09% – 0.77% below that of Westpac which currently sits at 7.86%.

The new rate comes with no application fee, and a free valuation report up to $220, which amounts to a $500 saving.

AFM director Iain Forbes said by cutting its rate, AFM was positioning itself at the forefront of the home loan market. “AFM is committed to working with brokers and consumers by showing non-bank lenders are a good alternative to the banks. Non-banks offer competitive pricing and quick approvals.”

Liberty Financial’s John Mohnacheff, in announcing Liberty’s move, said the debate over the dominance of the major banks has intensified in recent weeks, so the group had decided “to do something about it”.

“This is a clear sign the non-bank industry is back,” he said. “Brokers and non-bank lenders like Liberty have a real opportunity to work together to drive a competetive revival,” he said.

The rate applies to Liberty’s Prime loans, with the non-bank lender having recently announced it would add additional facilities on this product suite, such as split loans and redraw.

Forbes said that Australian First Mortgage has seen a new business boost in all states during the month of November, and is expecting to record its best month in new settlements in December.

Forbes said in coming weeks AFM will be launching its online lodgement portal, which will allow brokers to lodge their deals at any time over the internet. “We expect December to record our best month in new business settlements for the year 2010,” he added.

Nov 26

The average Australian family is paying $300 more per month in home loan repayments than they did one year ago. This represents an additional $3600 per year. It is no wonder that so many families are experiencing mortgage stress.

According to new research conducted by RateCity, the standard basic variable rate of the major lenders has increased by 168 basis points since 1 December 2009 , which is equivalent to $311 per month in mortgage repayments for a $300,000 home loan.

Out of the large home loan providers,  CBA seems to have increased its variable rates the most since December 2009– with its basic variable rate increasing by 182 basis points to the current 7.30 per cent.

RateCity’s chief executive officer Damian Smith said some Australians would be feeling the strain of higher mortgage repayments.

“As the majority of Australians have a home loan with one of the major four banks, many households will be feeling the pinch this Christmas with an extra $300 per month needing to be allocated towards home loan repayments.

Nov 25

Many Australian home owners and investors are tired of the monopoly of the big four and would love to find a suitable alternative.  What is stopping borrowers from considering a mortgage refinance is the potential of refinance costs.

Many were concerned about the exit fees they may incur while some were not interested in putting in the time to collect all the required paperwork.

Abacus head of public affairs Mark Degotardi said recent interest rate rises by the major banks had left customers unhappy and looking for alternatives.

Borrowers are feeling trapped. They are not happy with the service they receive from the major banks, but are unsure about how they can change and worried about being hit with unfair costs if they do. It is therefore the fear of the unknown that is keeping may borrowers with their current lenders.

Nov 24

THE proportion of “low-doc” home loan borrowers behind on mortgage payments is now up at  levels experienced at the height of the GFC.

According to the ratings agency Fitch, one in every 17 low doc home loan customers are at least 1 month behind in their mortgage.  Low doc mortgages are generally held by the self-employed or small business owners.

But the broader mortgage landscape is better, with only a marginal increase in payment arrears among borrowers with a conventional mortgage, who account for the vast majority of home loan customers.

The loan arrears numbers suggest that low doc customers, already paying higher interest rates, were experiencing more mortgage stress than the rest. Many low doc loans come at a higher cost to the borrower. The recent rate increases are creating a problem for may low doc borrowers.

Across the broad “prime”, or conventional, mortgage market, the effective proportion of borrowers at least a month behind on payments climbed from 1.33 per cent to 1.37 per cent – about one in every 70.

Fitch’s figures are based on the performance of securitised mortgages – those bundled up by lenders and re-sold to investors.


Nov 23

With the Victorian state elections coming up this weekend, both parties are trying to win votes by introducing plans to reduce stamp duty fees for First Home Buyers.

Both parties believe that Victorian home buyers are paying too much stamp duty and that housing affordability continues to be a serious issue.

Liberal Leader Ted Baillieu was promising to slowly introduce new and reduced tax rates over four years, with a 20 per cent cut from July, followed by another 10 per cent each year if elected.

While the ALP has said it will cut stamp duty for all first home buyers of new homes in regional Victoria if elected.

REIV is very pleased with the promises made by both parties and see any reduction to stamp duty as a welcome change for Victorian home buyers.

“The REIV has been campaigning for cuts to stamp duty for many years and we welcome the announcement of the policies by both ALP and Coalition today,” Mr Raimondo said.

Rather than introduce stamp duty reduction for all home buyers, both parties are targeting the most disadvantaged buyer sector – First Home Buyers.

Nov 18

Significant activity in the home loan market since the recent interest rate announcements has generated a large number of alternatives for borrowers looking to purchase or refinance.

Some lenders have decided to abolish exit fees. Others have come out with cash back offers. Still others have decided to concentrate on rate rise fears by offering very competitive fixed rate home loans.

Borrowers should take the time to become familiar with what is available. Looking around could generate substantial savings.

The RBA’s decision to lift the cash rate by 0.25 per cent to 4.75 per cent had led to all the major banks increasing their variable rates by larger margins than the central bank. Some lenders are still holding their rate increases back.

While the standard variable interest rates being offered by the major banks were between 7.67 per cent and 7.83 per cent, there were a large number of variable rates on offer for less than 7.0 per cent.

Then there are also new three-year fixed rates on offer for between 7.0 per cent and 7.10 per cent. Taking up one of these loans will remove any element of risk that rates could keep going up.

There is a lot out there in the market for home owners and would-be home owners to consider with more changes to come as smaller lenders make their decisions.

Nov 16

According to the Managing Director of Yellow Brick Road, Mark Bouris, many of the big-four customers are approaching non-bank lenders to arrange a mortgage refinance.

The latest round of interest rate rises from the major banks has resulted in a three-fold increase in inquiries, according to News.com. Yellow Brick Road for one, is intending to step up its expansion plans to take advantage of the number of customers looking to switch home loans.

The major banks increased rates over and above RBA movements, triggering a political storm fuelled by public outcry.

ING Direct and Opportune Home Loans are indicated their inquiry levels have trebled. New rules around exit fees have also encouraged consumers to look and potentially “walk down the road”.

In a subsequent move,  ING direct has also announced that they will be increasing the interest rates on their loans by 38 basis points and slashing exit fees.

This is an indication that borrowers should consider the chance of the lender they are looking to refinance to, also increasing interest rate in a few weeks or months.

Nov 15

Some of Australia’s smaller lenders are offering home owners cash to induce them to refinance their mortgage from one of the larger lenders.

Newcastle Permanent Society yesterday announced it would pay borrowers $700 to refinance their home loans away from major banks – the same amount as its own mortgage exit fee, which it will scrap if all the major banks drop these charges.

This follows a similar offer made by ING last week – were people were offered $1000 to refinance.

The cash rewards were meant to cover some of the inconvenience and costs borrowers may face in taking their home loan to another lender.

Nov 11

According to the Mortgage and Finance Association of Australia(MFAA) , it’s brokers have been flooded with Mortgage refinance inquiries in recent days. In fact, MFAA claims that brokers have not seen that level of inquiries since the introduction of the FHOG.

Most borrowers are looking to refinance to a cheaper loan but there are also other motivations such a s debt consolidation, renovation and investment.

Lenders, finance brokers and comparison websites have reported increases of more than 200 per cent in the number of inquiries from people considering their loan options since the Reserve Bank of Australia increased the official cash rate last week by 0.25 per cent and lenders started to push up rates to their customers.

Certainly borrowers are fed up with the big banks and are considering refinance options to smaller institutions. Even the exit fees that may be levied by their current lenders are not deterring inquiries.

It could well be that a borrower’s best home loan is still their current home loan but for peace of mind they should at least check the choices available to make sure there aren’t savings to be made. Especially keeping in mind the current discrepancies between lender offers.

Most borrowers considering refinance are asking upfront what will be the set up and exit fees as well as on-going costs.


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