INTEREST RATES REMAIN UNCHANGED
Despite some speculation of another interest rate cut, the Reserve Bank of Australia decided to leave the official cash rate unchanged at 3.25% at their meeting on 3 March 2009.
It would seem that the RBA is waiting to observe the outcome of the recent global economic stimulus packages, as well as the effects of the recent Australian interest rate cuts, before deciding whether another interest rate cut was necessary.
In his statement, RBA Governor Glenn Stevens said “Market and mortgage rates are at very low levels by historical standards and business loan rates are below recent averages, reducing debt-servicing burdens considerably. Together with the substantial fiscal initiatives, the cumulative decline in interest rates will provide significant support to domestic demand over the period ahead. On this basis, notwithstanding evident economic weakness at present, the Board judged that the stance of monetary policy was appropriate for the moment.”
Most Australians with mortgages are only just getting used to lower minimum repayments, and it is arguable whether or not another interest rate cut at this time would have caused any noticeable boost to the economy. The RBA have left room for future cuts should economic conditions and confidence worsen.
BIG BANKS TIGHTEN CREDIT
The Commonwealth Bank stated recently that it may not be able to pass on any future interest rate cuts in full due to continued tightness in the global credit markets. The CBA has also changed its policy to now requiring all borrowers to contribute at least 3% genuine savings, even on top of the First Home Buyers Grant. It also increased its servicing amount (the mark-up added to the current variable interest rate to test whether a potential borrower could still make repayments if interest rates increased) from 0.75% to 1.5%.
Both NAB and ANZ recently increased their minimum deposit requirements, with the NAB now requiring 5% deposit, and the ANZ now requiring 10% deposit.
These new responsible lending practices will be beneficial for borrowers in the long term with lower Lenders Mortgage Insurance premiums and lower loan repayment amounts. It will also give first home buyers time to prepare for the commitment of a mortgage and managing their finances.
There are, however, still lenders who offer 100% loan products to assist borrowers with no deposit. Their products are competitively priced so if you cannot wait to save a deposit call one of our loan consultants for more information.
TURNAROUND TIMES VARIED
Some lenders are still experiencing unacceptable processing times for new loan applications, while others are providing approvals without delays. In order to meet purchase contract due dates, borrowers ought to consider turnaround times when choosing a home loan. Our loan consultants can provide you with information on current lender service levels so feel free to call for an update.
If you have any questions, or would like us to undertake a comparison for you, please call 1300 307 771 any time, or use the Quick Application or Contact Us buttons above. Of course there’s no obligation and our service to you is free.
Andrea Hookham
0412 753 166
Senior Loan Consultant
Leading Home Loans |
May News -
06 May 2009 
March News -
03 Mar 2009 
