Three rules for refinancing
In 2016 the mortgage refinance market is expected to grow 30 per cent. Here are three simple rules to follow when looking to refinance:
1. Beware of ‘honeymoon rates’ and read the fine print. The revert rate could be much higher.
2. Shop around – This is a no brainer. There are plenty of better offers out there. Do some homework and research.
3. Compare the comparison rate. The comparison rate takes into consideration other regular costs such as fees and what the mortgage reverts to if there is a honeymoon rate.
New law could delay big property purchases
From 1 July 2016, new tax and superannuation laws introduce a 10 per cent withholding obligation on the purchasers of properties over $2 million where the vendor is a foreign resident. Sellers need to obtain a clearance certificate to prove they are Australian for tax purposes
Buyer’s will have to withhold 10 per cent of the property price to ensure the purchaser is compliant with the new regulations.
Big lender eases LVR rules on investment home loan
Australia’s biggest lender to landlords, Westpac, is lowering the size of the deposits it will require from property investors. Westpac is lifting the maximum loan-to-valuation ratio (LVR) for new mortgages for property investors to 90 per cent, up from 80 per cent. This partially reverses last year’s crackdown on investment lending.
Westpac’s lending to investors grew 7.2 per cent in the year to March 2016.
Banks are chasing investor mortgage sales again
Westpac has raised the maximum LVR for property investment home loans from 80 per cent to 90 per cent. St George Bank is offering cut-price variable home loan rates of 4.24 per cent for investors. Other banks are also offering more aggressive pricing for investment loans.
SMSF home loans are increasingly hard to find
Lenders are continuing to wind back their lending to self managed superannuation funds in order to comply with regulator targets. Adviser Samantha Bright said lenders are “dialling down” their activity in the space and some credit unions have left the market altogether. “It’s now a significant challenge for SMSFs with a balance of $200,000 and under to secure a loan,” said Ms Bright.
How much will the May rate cuts save me?
The Reserve Bank of Australia cut interest rates in May by 0.25 percentage points. Some lenders didn’t pass on the rate cut in full, however most customers will notice a drop in the interest they are paying.
On a $300,000, 30-year mortgage, the rate cut will push the average variable home loan rate down to 4.4 per cent and save borrowers about $44 per month. Borrowers can save even more cash by comparing their loan to the cheapest in the market. Refinancing may not be as difficult as you think.
What are you doing with your rate cut savings?
We’ve asked experts what mortgage customers can do with excess cash from the May RBA interest rate cut.
Keep your home loan repayments the same, said MoneySmart’s Miles Larbey. “You will save many months and thousands of dollars in interest over the loan term.”
Another option is to pay off a hefty credit card debt or save it for christmas.
Two banks announce new investor lending policies
Teachers Mutual Bank announced that it is temporarily withdrawing from approving new investment home loans. Teachers Mutual Bank needs to slow down loan sales to investors to be in line with APRA’s annual investor growth cap of 10 per cent.
Westpac has increased the maximum LVR for its investment loan products from 80 per cent to 90 per cent. “This change is bringing us in line with market,” the bank said.
Its a fixed home loan rate cutting frenzy
Suncorp Bank has reduced its two-year fixed rate home loan rate to 3.74 per cent for owner occupiers borrowing $150,000 or more, with a maximum LVR of 90 per cent.
Suncorp Bank’s Steven Degetto said the new offer is available as part of the Home Package Plus product. ME, St George, ING and Advantedge have also announced fixed home loan rate cuts in recent weeks.
A new home loan hits the markets
Sir Richard Branson launched Virgin Money Australia’s new home loan yesterday. Customers can earn 10,000 Velocity points for every $100,000 borrowed on a Virgin Money Home Loan plus 1,000 points per month for each loan split and 30,000 bonus points every three years.
All customers who apply for a Virgin Money Home Loan between 1 June and 31 July (and are approved by 31 August) have the chance to win a share of 1 million Velocity points
Banks ease up on LVR rules
Getting into investment housing has become easier, with some major banks and credit unions now lending up to 95 per cent of the value of a property.
That’s great news for those borrowers wanting to capitalise on historically low mortgage interest rates.
You will still need at least five per cent for a deposit, some cash to pay for upfront costs, and the income to service the loan. But don’t worry too much because some banks will help you out there.
Banks drop their investment loan rates
Banks and credit unions generally raised interest rates on investment loans in 2015 but are now, in 2016, cutting them back.
Most Australian lenders have now dropped their investment loan rates since the last cut in official interest rates early in May 2016.
Investors can now borrow up to 90 or more per cent of the value of the property on rates that are competitive with owner-occupied rates.