- the team with a difference

Sunday, December 13, 2009

New mortgage values to slump by $14 billion

Higher interest rates and the end of the first home buyers' boost will blow a $14 billion hole in the mortgage market next year, experts have warned.

The value of all new home loans was expected to fall by $14.4 billion in the 12 months to September 2010, down 8.8 per cent from the same period a year earlier, a report by independent consultants Market Intelligence Strategy Centre (MISC) says.

"This will reflect a slower return of investor lending and still strained funding, which will restrict small-lender activity, as well as further rate increases," the MISC report released on Monday said.

An MISC spokesman said the $14.4 billion decline, if realised, would be the largest total fall since 2003, when the value of all new home loans written backpedalled by about $35 billion.

The bulk of the contraction was expected to take place in the December and March quarters, before the housing market returns to growth in June next year.

"The bottom of the market will not be reached till the March 2010 quarter," the report said.

"MISC believes this quarter will see the lowest point in new mortgage demand for the 2010 year and that June and September quarters will show positive growth, albeit still far les than 2009 experience."

The Reserve Bank of Australia (RBA) has lifted the cash rate at its past three meetings to 3.75 per cent, and market economists anticipate further rate hikes in 2010.

Data from MISC, which conducts research on behalf of the banks, found the value of all new home loans written fell by 5.9 per cent in the September quarter.

It was the first contraction in five quarters as lending was negatively influenced by tighter lending criteria, higher loan-to-valuation ratios and increased rates on fixed rate home loans.

The MISC report also said that rising house prices had eroded the effect of the boost to the first home owner grant, which ends on December 31.

The federal government grant currently provides $10,500 for those buying a home and $14,000 for those building a home or buying a new home

Source: Money
14/12/2009 7:30:00 AM

Thursday, December 10, 2009

NAB lays down challenge to other majors

NAB has thrown down the gauntlet to the other two majors, after raising its variable mortgage rate by just 25 basis points – in line with the Reserve Bank.

The bold move from NAB flies in the face of some other majors who have been citing higher funding costs as a driver for moving their rates above the official cash rate.

Westpac was the first bank to move after the RBA announcement, upping its standard variable rate by 45 basis points.

From today, NAB customers will pay a standard variable rate of 6.49 per cent compared to Westpac’s 6.76 per cent, which equates to a saving of $51 per month on a $300,000 mortgage.

NAB’s decision to raise rates by the same amount as the Reserve Bank has opened up the biggest mortgage rate gap between the majors on record.

Lisa Gray, group executive NAB personal banking, said the last time there was such a wide gap between the majors was “decades ago.”

“We are determined to be competitive, to offer our customers a better deal and attract new customers to NAB. Today we are sending a message to customers at Westpac, and the other banks, that NAB can offer them a better deal,” Ms Gray said.

“NAB has offered the cheapest standard variable interest rate amongst the major banks for the past six months and the new rate of 6.49 per cent p.a. is likely to remain unbeaten amongst the major banks.

“We have been very considered with this announcement given funding costs and the cost of raising deposits continues to fluctuate and is expected to increase further. However we believe that improving our reputation and relationships with our customers and the community is core to the long term sustainability and success of our business.”

Friday, 04 December 2009 Source REB