The global financial crisis claimed plenty of victims among home lenders, especially those that were at the pointy end of the mortgage market.
Most independent mortgage brands, including RAMS and Aussie Home Loans, were paralysed by the crisis and were each eventually acquired by major banks.
At the height of the GFC, Sydney-based lender Mortgage House was investing heavily in a new funding strategy with the aim of becoming one of the leading home loan originators in the country.
It also embarked on an aggressive marketing program, which included naming rights sponsorships of AFL and NRL clubs.
The big investments bore few rewards, and at the end of 2007 the company’s auditor was warning that the lender might not be able to pay its own creditors.
However, Mortgage House was subsequently restructured and re-emerged this year as a price leader in the home loan market.
It is now marketing variable rate home loans to borrowers as low as 3.89 per cent.
To get that offer, borrowers need to stump up a 50 per cent deposit on their home purchases.
If you can’t afford such a large deposit, it’s also selling standard variable loans at 3.95 per cent to owner-occupiers who can afford a 20 per cent deposit on their new home.
Only one other lender – Homestar at 3.94 per cent – has a lower standard variable rate, according to financial services research provider Mozo.
“At the moment Mortgage House is quite aggressive about growing its mortgage book,” said Mozo’s manager of product data Peter Marshall.
More lenders lower fixed rates
Commonwealth Bank is the latest of the major banks to reduce its fixed rate offers, after lowering its two-year term rate for owner-occupiers by 0.2 per cent to 4.29 per cent.
The bank has also cut its three-year fixed rate by 0.1 per cent to 4.39 per cent.
To get these offers borrowers need to sign up to the bank’s “Wealth Package”, which requires an annual fee of $395.
In return, the bank will waive the establishment fee on your home loan and provide incentives on other products including the following:
• no fees on transaction accounts
• no annual fees on some credit cards
• discounts on home & contents insurance
Mr Marshall cautions that prospective borrowers should do some number-crunching to ensure the package delivers overall savings.
“With the one-off establishment fee at around $600, there’s no doubt that most borrowers would benefit from this offer in the first year of the loan, but the $395 package fee has to be paid each year,” he said.
CBA’s latest repricing brings its fixed rates into line with those of the National Australia Bank that were adjusted in the third week of August.
Members’ Equity Bank also signalled last week that it would be lowering its range of fixed rate loans from September 15.
ME currently markets its three-year fixed rates mortgage at 4.28 per cent but this will reduce to 4.19 per cent from the middle of September.
From September 1, Suncorp will market its three-year fixed rate home loan at 4.24 per cent to package borrowers. This is 0.2 per cent cheaper than Suncorp’s standard three-year fixed rate of 4.44 per cent.
Investor borrowers cop more hikes
While owner-occupiers are clearly benefitting from the impact of recent regulatory action taken by the Australian Prudential Regulation Authority, investment borrowers are losing out.
More lenders increased their rates on investment borrowing last week and the trend is set to continue as financial institutions scramble to comply with the regulator’s call to rein in lending.
Leading non-bank lender Homeloans is increasing its rates on its range of Optima investment loans again after announcing 0.27 per cent hikes at the end of July.
A string of other lenders including ME Bank, Adelaide Bank and Suncorp all announced rate increases on investment loans last week.
In a notification sent to mortgage brokers, AMP Bank announced that variable rates for existing investment borrowers would rise by 0.47 per cent on September 7.
The bank froze investment lending in July and is not able to say when it will re-enter the market.
“As announced on 29 July 2015, for an interim period, we are not accepting applications for investor property loans,” AMP Bank told brokers.
“This is expected to last until later in 2015, depending on market conditions.”
Best bonus saver accounts
The miserable plight of depositors mostly worsened last week after 10 financial institutions cut rates on term deposits.
However, a couple of institutions – Suncorp and Macquarie Bank – provided some relief on six- and nine-month term deposits.
Suncorp raised its rate on six-month deposits by 0.15 per cent to 2.8 per cent, while Macquarie lifted nine-month rates by 0.05 per cent to 2.75 per cent.
According to Mr Marshall, RAMS continues to offer the best-returning bonus saver account with an ongoing bonus rate of 3.6 per cent.
ING Direct’s Savings Maximiser is second best at 3.5 per cent.
National Australia Bank’s direct banking arm UBank is offering 3.37 per cent.