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Tuesday, 06 March 2012

Staff Reporter

The Reserve Bank of Australia has left the official cash rate on hold for the second consecutive month.

In the minutes of the Monetary Board Meeting, the Board said that “the expectation that the world economy will grow at a below-trend pace this year, but does not suggest that a deep downturn is occurring.

“Most information on the Australian economy continues to suggest growth close to trend overall, with differences between sectors and considerable structural change. Labour market conditions softened during 2011 and the unemployment rate increased slightly in mid year, though it has been steady over recent months. CPI inflation has declined as expected and will fall further over the next quarter or two.”

“Interest rates for borrowers have generally risen slightly since the Board’s previous meeting, but remain close to their medium-term average. Credit growth remains modest. Housing prices have shown some sign of stabilising recently, after having declined for most of 2011, but generally the housing market remains soft.”

The decision was largely expected, with most economists now expecting rates to stay on hold until mid-year.

RP Data’s research director Tim Lawless said capital city home values were down just 0.2 per cent over the three months leading up to the interest rate decision.

“A return to stability in the housing market is precisely the outcome the RBA have been aiming for with respect to housing market conditions,” Mr Lawless said.

“The full impact of the rate cuts from November and December last year is yet to be seen, however to date there has seen a subtle improvement in transaction numbers prior to the Christmas slow down.

“Housing finance data from the ABS has also been trending upwards suggesting we are likely to see the number of home sales continue to show modest increases over the coming months.

“Based on the recent data flows it is becoming increasingly clear that the housing market is likely to be less of a concern to the RBA.

“Mortgage arrears appear to be in check, home values are stabilising and transaction volumes are starting to tick up.”

Mr Lawless said any future downwards movement in the cash rate is likely to be more reflective of ongoing global uncertainty rather than a response to a further slowdown in housing market conditions.

“In fact, we believe that the RBA is likely to be quite comfortable with the current state of Australian housing market but will continue to closely monitoring conditions over the coming months to measure the ongoing affect of the interest rate environment on borrowing and value movements.”

Source – The Advisor. Industry news for mortgage and finance brokers

NFC National Finance Corporation Pty Ltd – Mortgage Broker www.nfc.com.au

Tuesday, 06 March 2012

Jessica Darnbrough

Regardless of what the Reserve Bank does when the Board meets later today, Australia’s banks could lift their rates for the second consecutive month.

Speaking to The Adviser, Advantedge’s general manager distribution, Brett Halliwell, said the costs of funds have risen by approximately 100 basis points in the past few months, which is having a huge impact on Australia’s banks.

“On average, banks source approximately 30 per cent of their funds from markets that have seen costs of funds rise by 100 basis points at least,” he said.

“That is why we have seen out of cycle rate hikes and I wouldn’t be surprised to see more still as the banks look to pass on the higher costs of funds.”

ANZ was the first lender to move out of cycle last month, lifting the interest on its standard variable rate by 6 basis points.

All of the three remaining majors then followed suit, with Westpac and CBA both lifting their standard variable rates by 10 basis points, while NAB increased its SVR by 9 basis points.

ANZ’s monthly rate meeting is set to take place again this Friday, with many industry watchers now predicting the lender will look to lift rates for the second consecutive month.

If this comes to pass, it will be interesting to see whether or not the other lenders follow suit given they lifted their rates by more than ANZ last month.

Source – The Adviser. Industry News for Mortgage and Finance Brokers

Rates could remain on hold for months to come as the RBA is tipped to leave the cash rate at 4.25% when it meets today.

Despite new inflation figures leaving the Reserve Bank leeway to cut rates, a survey of 24 economists by Bloomberg has shown the unanimous prediction that the RBA will not move on the official cash rate today. The TD Securities – Melbourne Institute Monthly Inflation Gauge posted only a 0.1% rise in February, leaving trimmed mean inflation at 2.1%, at the bottom range of the bank’s target band. TD Securities has claimed the result still will not provide the Reserve with enough motivation to cut rates.

"For the RBA Board meeting today, members will note that there has been next to no evidence of a ‘material softening of domestic demand’ in the last four weeks, the Bank’s clearly stated hurdle for further easing," TD Securities head of Asia-Pacific Research Annette Beacher said.

Beacher said employment, housing finance and exports had provided "upside surprises". And while fourth quarter GDP is expected to be flat, Beacher said an "outsize resource-led private investment boom" would remain on track into the next year.

"The easiest decision is to leave the cash rate at neutral for another month, and indeed it is increasingly likely to remain the case for several months to come," Beacher said.

Source – Key Media. Australian Broker News. By Adam Smith

This is great news for first home buyers and for borrowers who are rebuilding and have not had the chance to meet the genuine savings requirements.

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This table is a summary of how we achieve this –

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New Discount Table Below and is available until 31 May, 2011.

New Discounts:

Total New Borrowings	Loan to Value Ratio (LVR) is greater than 75%	Loan to Value Ratio (LVR) is less than or equal to 75%
$250,000 to less than $499,999	0.75%	0.80%
$500,000 to less than $749,999	0.85%	0.90%
$750,000 or more	0.90%	0.95%

Note: These discounts only apply to new money Home/Investment Home Loan and Line of Credit applications on the Standard Variable rate (SVR) and Residential Equity Rate (RER) under Mortgage Advantage.

Example scenarios:

Total New Borrowings	Product combination	Eligible Discount p.a.	Eligible rollover discount p.a.
$250,000 (LVR >75%)	$200,000 – SVR $50,000 – Fixed	0.75% 0.15%	N/A 0.75%
$250,000 (LVR ≤ 75%)	$200,000 – SVR $50,000 – Fixed	0.80% 0.15%	N/A 0.80%
$500,000 (LVR >75%)	$300,000 – SVR $200,000 – Fixed	0.85% 0.15%	N/A 0.85%
$500,000 (LVR ≤75%)	$300,000 – SVR $200,000 – Fixed	0.90% 0.15%	N/A 0.90%
$800,000 (LVR >75%)	$600,000 – SVR $200,000 – VLOC	0.90% 0.90%	N/A N/A
$800,000 (LVR ≤75%)	$600,000 – SVR $200,000 – VLOC	0.95% 0.95%	N/A N/A

Conditions apply and only applies to new borrowings to CBA.

Source Australian Broker News 12.4.2011

February has seen lending finance drop across the board, new Australian Bureau of Statistics data has shown.

The ABS figures, released yesterday, show a 4.8% seasonally adjusted decline in home loan lending for February. Likewise, lending for personal, commercial and lease finance have all declined over the month. Commercial finance saw a 6.6% decline during the month, seasonally adjusted, with finance for investment properties dropping a seasonally adjusted 1.4%.

The data follows on last week’s figures on housing finance, which showed a 5.6% decrease for total housing finance commitments in February after a 13.5% decrease in January. The numbers showed commitments for the purchase of new homes falling by 12%, and lending for the purchase of established homes dropping 6%.

_{By Ben Abbott | 12/04/2011 7:00:00 AM |}

_{Source Australian Broker News 12.4.2011}

The non-bank lending sector will disappear when the exit fee ban becomes law in 1 July, and are already going backwards despite the government’s focus on mortgage competition, according to the MFAA.

Referring to Australian Bureau of Statistics figures released last week, the association said in a statement released to media that smaller lenders are losing ground, while the banks’ 90.2% market share was the highest since September 2010.

The MFAA said that in contrast, non-banks managed only 1.9%. This contrasts with the 13.6% share that non-banks had achieved in competition with the banks prior to the financial crisis. The ABS figures found that credit unions and building societies held a 7.9% market share in February.

MFAA CEO Phil Naylor said that these ABS figures support our contention that the upcoming elimination of exit fees will not increase competition.

“Most of the major banks have already dropped their exit fees ahead of government regulation and this has clearly resulted in a churning of loans among the major banks but to the detriment of non-bank lenders," he said.

“On the basis of this trend, non-bank lenders will disappear when exit fees are totally banned in July. How can it be good for consumers when the most competitive lenders are forced out of the market?” he said.

Naylor said the MFAA had asked the government to exempt smaller lenders from the ban on exit fees.

“Non-bank lenders are synonymous with bringing down the margin on home loans in Australia, making them more affordable for all Australians,” Naylor said. “Those loans offered by Aussie and Wizard were built on the deferred establishment fee – it allowed them to compete with the banks.

“Without deferred establishment fees, competition will reduce and Australians will eventually pay more for their mortgages.”

Non-banks and mortgage managers have already begun ditching DEFs prior to 1 July, with many considering broker commission clawback as part of their revised cost structure, in order to remain competitive.