Mortgage Loans, Home Loans, Bad Credit Home Loans

RBA meets for its monthly interest rate decision later this week. Most economists do not expect this meeting to have any interest rate changes in store. In fact majority expect rates to stay on hold for several months – at least until May.

RBA appears to be largely comfortable with the current monetary policy setting.

During the RBA February Board meeting, governor Glenn Stevens said it is unlikely the bank will need to lift rates any time soon as the risks to inflation are almost all to the upside.

According HSBC, there is an expectation of an overall rate tightening of 50 basis points to be implemented during the second half of 2011 and another 50 basis points during 2012.

According to a survey of property investors by the Loan market group – interest rate movements  pose little concern to them. Real estate investors are more interested in purchasing in the right area to achieve maximum property growth, than in the upkeep costs.

Loan Market has interviewed investors to identify what factors impact their purchasing decision and what they will consider when deciding whether to invest in property during 2011.  According to the results, 40% of investors see the house prices and capital growth as their biggest concern. Only 11% named the interest rates as the primary factor in their decision.

Loan Market chief operating officer Dean Rushton said the expectation of interest rate stability in the near term may have caused investors’ rate concerns to diminish.

Additionally just over a quarter on investors named rental returns as an issue that they consider in making the investment decision and a similar number of people saw the direction of the Australian cost of living as having a bearing on the decision to purchase an investment property.

Homeloans ltd has reported that, against the general market trend,  it’s lending volumes during the last quarter of 2010 were very strong.

The company experienced lending volume increases of 59 per cent on the previous corresponding period. Homeloans ltd  loan book has also increased by 3.7 per cent, from A$5.4 billion to A$5.6 billion.

Homeloans’ executive chairman, Tim Holmes, said the business struggled during the dark days of the GFC but is now making up for lost profits.

The business has also spend more funds on advertising their offer across most states of Australia. This included special promotion deals with sporting personalities such as Shane Webcke (rugby league) and Matthew Pavlich (Aussie rules) to appear in new television, online and outdoor campaign.

In an effort to promote itself to the Australian Borrowers as a viable lending alternative to the mainstream banks, Australian First Mortgage has cut 0.1 per cent from one of its variable rate home loan products.

Yesterday Australian First Mortgage announced it would cut 10 basis points from its New Full Doc Flexible Option Product, taking the new rate to 7.09 per cent.

AFM national director Iain Forbes said the business has been growing and performing very well in recent weeks and, as such,  AFM wanted to extend its good fortune to Mortgage Brokers as well as home loan borrowers.

“We have grown our receivables every month and have recently recruited a significant amount of new staff to assist with credit assessment as well as client services in Qld, SA, NSW and WA,” he said.

Recent research of Home Buyers has identified that more buyers prefer to us the services of a Mortgage Broker than applying for a home loan directly to a lender. They appreciate the experience and the professional advice. They also like the idea that someone knowlegable will help them find the best deal and take over all the necessary paperwork.

More than 40 per cent of research respondents said their preferred point of contact for home loan assistance was a broker, followed by a lender.

Parents came in third with 19 per cent of respondents saying they would go to their family for home loan advice.

Mortgage Brokers have long known that this was the case.

Buyers preferred to use mortgage brokers over lenders or the internet. While many will go online to conduct research, they will then then expect to be contacted by a mortgage broker to discuss their requirements in person.

Home Loans are a very personal choice and it is important that the borrowers get to compare and identify the best fit product.

A recent survey by Mortgage Choice has surprisingly identified that more quarter of recent home buyers have no idea about their the current interest rate on their mortgage. These results demonstrate that the current competition for borrower attention on the basis of fees and interest rates may just be a waste of time.

The home loan holders included in the survey have held their mortgage for under 2 years. Almost half of the borrowers interviewed have named interest rates as being their most pressing concern for 2011, ahead of inflation and cost of living.

First homebuyers make up almost a fifth of Australian mortgage holders. They also seem to be the most vulnerable to increases in living costs and the rates. Over the past 2 years, twenty percent of First Home Buyers have built up very large balances of unsecured debt, placing many of these people in a very high risk category in terms of being able to keep up repayments and keep their home.

Mortgage stress is very often caused by additional debt people commit to after they take out their mortgage.

This survey provided proof that First Home Buyers are a segment of the market which is placed under the most financial pressure in the current environment. It is no wonder that their numbers are continually falling away.

Despite the fact that many consumers are dissatisfied with their bank, when it comes to choose a lender for their home loan, a large number of first time borrowers opt to go to their own bank.

It seems that 32% of first home buyers are happy to approach their own bank for a home loan in the first instance, because of their existing relationship with the bank.  A further 19%  borrowers did so based on the perceived security of the bank being a major lender.

Research conducted by Mortgage Choice has identified that most First Home buyers are not prepared to tried a smaller lender for their first home loan. Almost one in every three respondents chose their home lender partially due to their banking history and/or the security of using a major lender.

This is indicative of how far smaller lenders need to go to match up to the big banks the eyes of many new home loan borrowers.

Unfortunately smaller banks and non-bank lenders are often not even considered by First Home Buyers, despite offering some very good mortgage deals.

It was also noted that today’s first home buyers are older than they were in prior years and generally manage to save a fairly substantial deposit.

CBA has retaliated against the NAB offer to its home loan customers made only a few days ago. Now CBA has made an equivalent offer to NAB customers saying it will refund up to $1400 to any NAB customer who wants to refinance to CBA and save.

However CBA has gone one step further, they are offering to pay NAB customers $1200 in a direct cash if they switch their mortgage to CBA, as well as $100 for each credit card and transaction account that the transfer to CBA.

The offer is open to all NAB and HomeSide customers. This offer is available from next Monday and until April 30.

CBA is further offering increased rate discounts off the standard variable home loan rates.  Borrowers can have an 80 basis point reduction on home loans over $750,000.

The battle between the banks is becoming increasingly strategic, after NAB launched a campaign this week to lure Westpac and CBA customers to their bank.

According to new research by RP Data, First Home Buyers have been staying away in droves. Purchasing activity from this sector of the market has slumped to its lowest levels in 6 years.

At the present time, first home buyer activity is 17 per cent under the long-term average levels.

During the 2009 Australia has seen a surge in first home buyer activity partially due to very low interest rates,  as well as better home affordability because of property value drop during 2008, and, most importantly, due to the availability of the First Home Owners’ Grant Boost. The First Home Buyer boost with it’s availability only to a set date – provided the incentive for a lot of first home buyers to enter the market earlier.

During last year, the volume of home purchases by first home buyers was half of the levels during 2009. Between 1993 and 2010, on average there were 116,284 first home buyer finance commitments annually.

Later this year we may see more First Home buyers return to the property market. Property prices are expected to stall and interest rates stabilize.

It is clear beyond any doubt that the big four lenders are vying for your home loan dollars. There is a rice war and the borrower is the one who wins.

Lenders are offering massive discounts off the variable rate to win a mortgage deal. Furthermore some are promising to cover your exit fees, others are increasing LVR – we have not seen such strong competition in the home loan space for quite some time – probably years.

Westpac has come out with a fresh set of offers to lure borrowers away from their competitors.  Westpac was offering selected brokers discounts of 80 basis points on home loans above $500,000.

It also reported that Westpac had increased its mortgage insurance threshold from an 80 to 85 per cent loan to valuation ratio.

Westpac is also understood to be offering waivers on home loan establishment fees and annual fees.

CBA is also currently promoting discounts of 80 basis points on a-frame boards outside some branches.

NAB initialted the mortgage last weekend when it announced that it would pay $700 towards early exit fees charged by CBA and Westpac for borrowers switching to a NAB home loan.

Banks are looking for ways to grow their loan books in the face of falling demand for business finance and weaker growth rates in home lending.