Mortgage Loans, Home Loans, Bad Credit Home Loans

Based on a recent results from the Homebuyer Confidence Index, created by Genworth Financial, First Home Buyers have a higher level of confidence than is present with the rest of the market, despite the fact that they are concerned about the prospect of future interest rate increases and the potential problems of repayment  affordability in relation to their new home.

The index identified that first homebuyers were less likely to have experienced  mortgage stress in the past year at 17%, compared to the market average of 21%. These results are quite surprising given that First Home Buyers are generally carrying a higher level of debt than the rest of the market with many taking out home loans at the rather high 95% LVR.

However, nearly one in four or 24% of FHBs surveyed expected to find it difficult to meet repayments over the next 12  months, compared to a national average of 19%.

Almost 66% of respondents have stated that the rising cost of living is their primary concern, well above the interest rates.

Clearly first home buyers are the ones that have to juggle a higher level of debt without the buffer that may be available to the older home owners with equity in their property.

Overall, the Homebuyer Confidence Index has shown a 1.5% drop since September 2010, which was driven largely by the geographically based natural disasters striking Australia and our neighbors.

St George is intending to streamline its lending processes and improve it’s home and business loan products in an effort to expand its third party volumes by 10 per cent over the coming years.

Speaking to The Adviser, the bank’s chief executive officer Rob Chapman said while the bank has seen a drop in lending volumes 12 months ago, St George is now ready to grow its loan book and market share.

Having pulled back from the market for a while, the bank is now back to compete with the big four and the rest.

In addition to the launch of the Bank of Melbourne in Victoria, Mr Chapman said that the bank is eyeing growth in New South Wales and in Queensland – and much of this will be driven by mortgage brokers.

Home Loans written by our broker channels are really important to our business and much more focus will be made on boosting this business. The broker channel accounts for just under 40 per cent of home loans and commercial mortgages written to date, and we want to grow that by another 10 per cent,” he said.

To improve market share the bank understands that they will need to come out with a very strong consumer offer.

Mr Chapman said the bank wouldn’t just look to improve one area, but rather look to improve every area of their proposition including product, policy, process and price.

“There will be some product development for the broker channel – and there is the prospect of a new product that we’re looking to bring to market.

And the bank will also look to streamline back office processes through sharing resources with parent group Westpac.

According to a new study by the National Land Survey Program, only 30% of the sales in new housing estates during the end of 2010, were affordable to first home buyers on an average income. The problem is both the escalating home prices and the higher deposit requirements for home loans.

Affordability issues are a problem for First Home Buyers in Melbourne, with just 26 per cent of lot sales meeting the first home buyer affordability benchmark of $200,000 – a serious drop from 90 per cent only two years ago.

Queensland First Home Buyers have an even harder time than the Melbourne buyers. It is only Perth and Adelaide that are still producing adequate volume of affordable land blocks.

Property developers have continually blamed escalating property prices on low levels of suitable land stock, calling for more rural land to be rezoned for housing and faster planning processes for new estates.

The sales of residential housing blocks have dropped by a huge 74 per cent in the year to September 2010, yet median land prices grew by 25 per cent to $225,750 in the year to last December, despite house blocks getting smaller.

ING Direct have come out in support of the government announcement of a couple of days ago, that the proposal to remove exit fees on all new home loans from 1st July 2011 will become law.

Head of ING mortgage products has said that the bank supports any initiative that will result in the borrower getting a better home loan in the market place. ING Direct did acknowledge that they change in legislation may make it more difficult for the smaller players to compete with the big banks, but the full results are yet to be seen.

ING DIRECT abolished its deferred establishment fees to both new and existing home loans in November 2010, well before the recent regulation .

It is official – from the first of July 2011, exit fees on home loans are no more.

Parliment approval was not required to pass this regulation

Federal Government believes that the banning of mortgage exit fees will make it easier for borrowers to find avail themselves of a better home loan deal. Nothing to pay if you wish to leave your current lender in favor of a different one.

The proposed regulation became law as of yesterday – 24th March 2011.

The banning of exit fees is aimed at making it easier for borrowers to refinance however chances are they will simply find that all loans will become more expensive as a result.

The exit fee ban covers variable interest home loans, and applies only to loans taken up after July 1.

While ASIC will monitor to prevent any lender from re-baging unfair exit fees as another charge – it is important to understand that in majority of cases the exit fees are simply a way of ensuring that the rate and fee discounts given to customers in their initial period with the lender are at least partially recouped.

While this decision is clearly going to be a popular one with the electorate…it will not be too long before borrowers will realise that cheap home loan deals are a thing of the past. Banks will stop rate discounting the way they do today because they will no longer have the smaller non-bank lender to contend with as these players will go out of business as they will not be able to compete with the big 4 without the presence of exit fees – Well done Mr Swan!

The internet inquiries for no deposit home loans are escalating every month. Unfortunately no deposit home loans are no longer available through any lender. These products were discontinued at the start of the Global Financial Crisis to prevent the property and finance meltdown that occurred in the US from occurring here.  The lack of these home loans is proving to be a serious issue for First Home Buyers who are finding that they need a deposit of at least 5% in order to be able to qualify for a home loan. Whats more, many lenders will require the borrower to demonstrate genuine savings – ie. that the 5% deposit was actually saved by them from their income over a period of time.

Borrowers with a bad credit history are in an even more difficult position – they will need to have a deposit of at least 20% to qualify for a home loan. Some of these are also First Home Buyers.  What chance does a person have of saving 20% deposit if they have never had a property in the past?

There appears to be a lack of knowledge in the community about what is possible in the way of home loans and mortgage refinance. We also regularly turn people away who would like to consolidate their debts on top of 100% home loan. This is simply not possible.

The extensive marketing by NAB in the home loans space is beginning to pay dividends.

Based on recent statistics, NAB has seen an increase in owner occupied home loans of e1.2 per cent during the month of January.

The value of NAB owner-occupied home loans now stands at $107.9 billion, up from $106.6 billion in December 2010.

Much can be credited to the mortgage war that has been waging for a number of weeks in the media. NAB in particular has spent a significant amount of money on it’s offer to cover exit fees of any borrower who chooses to leave one of the big 4 and switch their home loan to NAB.

It seems that the next expansion will follow in the offer being made via mortgage brokers.

The bank is committed to the broker channel and wants to do everything possible to ensure an unbeatable service proposition is offered.

But NAB wasn’t the only major to increase its market share last month.

“Both ANZ and Westpac experienced minor growth in January, with the value of their owner-occupied loans at $111.0bn and $188.7bn respectively. The Commonwealth Bank of Australia saw no significant monthly change and the value of its owner-occupied home loans remained at $171.0bn in January 2011,” the RFi report read.

Westpac maintains the largest market share of all the majors, accounting for 27.1 per cent of all loans written.

NAB now accounts for 15.5 per cent of the market.

Australia’s non bank lenders as well as the smaller banks have limited access to affordable home loan funding and are therefore finding it more and more difficult to compete with the big four banks.

High funding costs make it very difficult for the smaller lenders to enter into competition with the big four banks and win the current home loan war.

While there have been some improvements in the availability of funding, unfortunately, these improvements are very small and slow and they really do not make any significant difference in the ability of smaller home loan providers to compete with the biggest banks in Australia.

Over the past few weeks the second tier banks have done their best to compete in the home loan arena with some fantastic fixed loan products as well as rate reductions on a wide range of home loans.

For example, ING Direct has cut 35 basis points from its one and two year fixed rates, while Citibank cut 0.85 per cent from its standard variable rate for customers with an LVR of 70 per cent or less.

Furthermore, Bankwest introduced a heavily discounted variable loan in February, which offers borrowers an interest rate of just 6.9 per cent.

Effective tomorrow, ING direct has joined the other banks competing in the fixed rate home loan arena – they will be reducing their 2 year fixed home loan by 35 basis points, taking it to one of the lowest in Australia at 6.99%.

From Friday the 18th of April, 2011, ING DIRECT will reduce their  one year fixed rate to just 6.89 per cent, while its two year fixed rate will be brought right down to 6.99 per cent p.a.

This announcement was only made days after ING Direct decided to reduce their interest rates on the bank’s 3 year fixed home loans.

The bank is confident that this announcement will generate numerous refinance inquiries as borrowers seem to be very aware of the impending interest rate increases later in 2011 and many are seeking to secure fixed rate home loans.

All of the ING direct fixed rate home loan products revert at the end of the fixed period to the bank’s Mortgage Simplifier loan.

In yet another edition to an ongoing was between mainstream lenders – ANZ has announced that it’s fixed rate home loans will enjoy a rate reduction.

Last week, ANZ announced that it will be cutting its two year fixed rate by 5 basis points, taking it  down to a low 7.19 per cent.

Days earlier, both ING DIRECT and Westpac announced rate reductions for their own suite of fixed home loan products.

ING DIRECT cut 14 basis points from its three year fixed rate, taking it to 7.30 per cent.

ING has issued a comment to the media that the bank is very keen to grow it’s share of the Australian home loan market and is consequently looking to offer competitive deals that will enable mortgage brokers to generate more volume.

A Westpac representative has also said that all lenders need to pretty much be on their toes in order to ensure that their offer is relevant and attractive as compared to that of their competitors.

Westpac cut the interest on its two, three, four, five and 10 year home and investment property fixed loans.