Hi Property Lover's
I came across this article on Australian Property Investor that i thought had some good information regarding interest rates.
Interest rate cuts at two Australian mortgage lenders are a sign of renewed competition in the home loan market and should provide borrowers with greater bargaining power, according to industry experts.
Credit Union Australia (CUA) has cut its standard variable home loan rate by 0.25 percentage points, putting it more than half a percentage point below the standard variable offerings of the big four banks.
AMP Bank also cut its lending rates last week.
Greater competition is the silver lining that comes with a rising interest rate environment, says Damian Smith, chief executive of online loan comparison site RateCity.
"Rising interest rates tend to allow greater price competition between institutions, and so we're expecting to see more players follow CUA and price aggressively below the big four banks," he says.
"Smaller institutions have also been able to get access to wholesale funding more readily in recent times, which will allow them to offer more home loans at attractive rates.
"When rates were at historic lows, it was difficult for any one institution to break out of the pack and be substantially cheaper than the rest. Now, with higher rates, there's more room for a wider spread of rates, and we're seeing evidence of that."
While the rate cuts will have an immediate and obvious benefit for borrowers at CUA and AMP Bank, Smith says they could also have flow-on benefits for other mortgage holders.
"It's important that customers of other institutions don't sit back and assume nothing can change for them. In many cases, institutions can and will offer better rates than their headline deals imply.
"If customers do the comparison and research work online... they can then start negotiating with their branch manager to get a better deal, using the lower rates from CUA and AMP as examples."
Mortgage Choice senior corporate affairs manager Kristy Sheppard says the rate cuts are a sign that smaller lenders are beginning to find it easier to fund their home loan offerings.
"The rate reduction provides us with further indication that smaller lenders are returning as real competitors in the Australian mortgage market, which is a wonderful thing for both potential borrowers and those looking to refinance," Sheppard says.
"When it comes to home loans, innovation, competitive pricing, the range of available features and high quality servicing are all heavily influenced by the level of competition between lenders."
This information was gathered from:
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