Interest-rate Margins Narrow
The Age
Wednesday February 5, 1997
A WAVE of official interest-rate cuts has produced narrowing margins between no-frill loan rates from the banks and those of mortgage originators such as Aussie Home Loans.
But Aussie managing director John Symond says the mortgage originator, which claims 60 per cent of the non-bank, home-lending market, will "keep the acid on the banking sector on interest rates".
Two factors contributed to Aussie's November record of $345 million worth of business. In October, Aussie announced an interest rate cut, anticipating by two weeks the Reserve Bank's official rate drop. Then news leaked out that Aussie was to launch a credit card for its home-loan customers and a range of insurance products.
Symond says the new initiatives will not reduce Aussie's ability to operate as a low-cost lender. "We won't have the hundreds of shopfronts that banks have and we won't be doing the day-to day administration of accounts," he said.
Surprisingly, the refinancing component of Aussie's business remains strong. Symond says 40 per cent of Aussie's business comes from borrowers refinancing loans, moving from banks to Aussie.
"It has never been stronger," he says. While he agrees that the narrowing margins between banks and Aussie will make it harder to attract refinancing business, he says it's not just low interest rates that attract customers.
Symond identifies a number of other reasons including a wish "for some space".
"People don't want all their eggs in one basket. Some like to separate their business affairs, which they conduct with banks, from their home loan. Others like the way we work."Refinancing a $100,000 home loan from a bank to an Aussie loan costs a Victorian borrower about $1300, Symond says.
There's Aussie's one-off fee of $600, about $400 stamp duty on the new mortgage and other "bits and pieces" costs of about $300. New South Wales and Queensland borrowers do not have to pay stamp duty on a mortgage when they're refinancing.
He says Aussie is lobbying for a change in Victoria. "It's unfair that borrowers have to pay stamp duty twice. It's the same money and they've already paid their tax once."
THE PROPERTY AGE INTEREST RATE MONITOR
OWNER OCCUPIED
HOUSING
Disc Disc
Std Term of Loan Fees
Var- Var- Var-
1Yr 3 Yr 5 Yr
iable iable iable
Fixed Fixed Fixed
Advance 6.95c 1 yr
8.25 7.75 8.25 8.70 $600
AMP's PriorityOne - - 7.47
7.47 - - $600
ANZ 6.75 1 yr 8.25
7.50 8.25 8.65 $600
Asset Backed Mortgages P/L - - 7.75 7.80
8.60 8.95 $600
Aussie Home Loans - - 7.49 7.49 8.40
8.75 $600
Australian Unity 6.75 1 yr *8.00
7.00 8.25 - $700
Bank of Melbourne 6.95f 1 yr 8.25
7.75 8.25 8.75 $500
Bank of New Zealand - - 8.15 - -
- $0-$500
Bendigo Bank 7.45 1 yr 8.00 -
8.10 8.90 $0-$600
BMC Mortgage Corp - - 7.25 7.75 8.55
8.90 $500-$600
Citibank Limited - - 8.49
8.20 8.50 8.85 $600
Colonial State Bank 6.99f 1 yr 8.25 7.70
8.25 8.60 $600
Commonwealth 6.99f 1 yr 8.25 -
8.15 8.55 $0-$600
Enterprise Credit Union - - 8.25 -
- - $0
FAI Home Loans - - 7.30 -
8.25 8.55 $600
GIO Building Society - - 7.95 7.50 8.40
8.85 500.00
IOOF Building Society 6.90f 1 yr 8.45 7.69 8.19
- $600
La Trobe Home Loans - - 7.40 6.99 7.99
8.75 $500
Macquarie Res Mortg Ltd - - 7.75 n/a
8.50 8.95 $500
Melbourne Credit Union - - 7.19 - -
- $0
National Australia Bank 6.99f 1 yr 8.25 7.75
8.15 8.65 $0-$600
National Mutual Home Loans 6.95c 1 yr 8.25 7.75
8.25 8.70 $500
Piccol Community Credit Union 6.90 1 yr 8.15 -
- - $500-0
Pioneer Mortgage Services P/L - - 7.55 7.75 7.90
8.25 $200
RACV - - 7.49
7.49 8.40 8.70 $500
RAMS Home Loans - - 7.79 - -
- $0
Super Home Loans (NMFM) - - 7.30 -
- - $500
St George Bank - - 8.25 7.75
8.15 8.70 $0-$600
Trades Hall Finance - - 7.45 7.75 7.90
8.25 $200
Vic. Teachers Credit Union 6.75 1 Yr 8.20 -
- - $0
Westpac Bank 6.99f 1 yr 8.25 7.70
8.20 8.80 $600
INVESTMENT Standard Term of
loan
HOUSING
Intro Intro
Variable 1Yr 3 Yr 5 Yr Fees
Rate Term Rate
Fixed Fixed Fixed
Advance - -
8.25 7.75 8.25 8.70 $600
AMP's PriorityOne - - 7.47
7.47 - - $600
ANZ - - 8.25
7.50 8.25 8.65 $600
Asset Backed Mortgages P/L - - 7.75 7.80
8.60 8.95 $0
Aussie Home Loans - - 7.49 7.49 8.40
8.75 $600
Australian Unity 6.75 1 Yr *8.00
7.00 8.25 - $700
Bank of Melbourne 6.95f 1 Yr 8.75
7.75 8.25 8.75 $500
Bendigo Bank 7.45 - 8.00 -
8.10 8.90 $0-$700
BMC Mortgage Corp - - 7.25 7.75 8.55
8.90 $750
Citibank Limited - - 7.49
8.20 8.50 8.85 $600
Colonial State Bank 6.99f 1 yr 8.25 7.70 8.25
8.60 $850
Commonwealth 7.25f 1 yr 8.25 -
8.15 8.55 $0-$600
Cornerstone Building Soc - - 8.25 7.25
8.35 - $0
FAI Home Loans - - 7.30 -
8.25 8.55 $600
GIO Building Society - - 7.95 7.50 8.40
8.85 $500
IOOF Building Society 6.90f 1 yr 8.45 7.69 8.19
- $600
La Trobe Home Loans - - 7.40 7.25 7.99
8.75 $500
Macquarie Res Mortg Ltd - - 7.75 n/a
8.50 8.95 $500
Melbourne Credit Union - - 7.19 - -
- $0
National Australia Bank 6.99f 1 Yr 8.25 7.75
8.15 8.65 $0-600*
National Mutual Home Loans 6.95c 1 yr 8.25 7.75
8.25 8.70 $500
Piccol Community Credit Union 6.9 1 yr 8.15 - - -
$500-0
Pioneer Mortgage Services P/L - - 7.55 7.75 7.90 8.25
$200
RACV - - 7.49
7.49 8.40 8.70 $500
RAMS Home Loans - - 7.79 - -
- $0
National Mutual H.L. 6.95c 1 yr 8.25 7.75 8.25
8.70 $500
St George Bank - - *9.25 7.75
8.15 8.70 $0-$600
Trades Hall Finance - - 7.45 7.75 7.90
8.25 $200
Vic. Teachers Credit Union - - 8.20 -
- - $0
Westpac 6.99f 1 Yr
8.35 7.70 8.20 8.80 $750
" *Conditions apply, f=fixed c=capped"
"For a full update of the Interest Rate Monitor, dial 190 294 1007 from your
fax handset. Calls charged at 75 c per minute."
Source: Market faxts Pty Ltd. For assistance call 1800 815 877.
http://www.mfaxts.com.au/bankchoice
© 1997 The Age
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