The Bank of Queensland announced today that they will pass on the full 0.25% interest rate cut but what’s the catch.

The catch is they will not reducing their interest rates until the 16th December and this will bring their standard variable rate to 7.36%.

Assuming that the other banks and lenders pass on the full rate cut there are much better offers.

If you would like to compare your mortgage to hundreds of other loans complete the contact form below to speak to one of  our licence mortgage brokers. A 0.25% difference on a mortgage of $300,000 will save you $750 yearly.

It came to our attention today that 2 year and 3 year fixed rate home loans and investment loans have dropped below 6%.

As discussed last week we saw a trend that fixed rates falling and now 3 year fixed rates have dropped below six percent.

These rates are available  from Australia’s most recognised lenders. To take advantage of this offer please contact one of our brokers by completing the form below. They will show you what type of fixed rate loan suits you lending needs.

More than ever mortgage brokers can significantly save you time finding a home or investment loan due to the new  regulatory requirements.

The new legislation requires that all lenders and brokers assess an applicant before they can recommend products. Often this requires supporting documentation that includes;  tax returns, pay slips, identification, other loan statements such as car, personal and home loans and other forms of documentation. Also, if there are two applicants then both have to be present at the interview.

If you were to shop around for a mortgage then this process can be very time consuming. Using a mortgage broker can take one lot of documentation, one interview and compare your requirements to hundreds of loans. It is really that simple.

Most brokers have at least up to 30 lenders to choose from that include the major banks, second tier banks as well as non bank lenders. Therefore, you are likely to get one of the most competitive loan solutions based on your finance needs.

If you are interested in speaking to a licensed and experienced mortgage broker in your local area please submit a mortgage quote.

Have you tried our mortgage offset calculator. This is a powerful tool that shows how extra repayments and money held in an offset account helps pay your mortgage quicker.

Here are a few examples;

1. Jim and Mary have a $300,000 loan over 30 years at an interest rate at 7% per annum. They place $10,000 in their offset account over the life of the loan and they save $63,043 in interest and take 3 years off their loan duration.

2. Tom has a $350,000 loan over 30 years at an interest rate at 7.25%. He pays $300 extra into his loan each month above the minimum repayments. Over the life of the loan he saves $165,257 on interest and reduces his loan term by  nearly 9 years

3. In the above example with Jim and Mary and they make extra repayments of $200 per month plus have $10,000 in their offset account they would save $153,056  on interest and pay out the loan in 21 years and 2 months.

To access this calculator and many other loan calculators at the mortgage calculator page or directly at the Mortgage Offset Calculator page

Today ING reduced the interest rate on its Orange Advantage product by 0.80%. This effectively brings the interest rate to 6.71%.  This is available for new and existing customers who initially  borrow more than $300,000.

This product is the first from ING Direct that offers a 100% offset facility that acts like a transactional account.

ING – Orange Advantage Products

Minimum Borrow Amount – $300,000

Interest Rate Discount – 0.8% or 6.71% as of 16th August 2010

Application Fee – Nil

Ongoing Fee – $199 yearly

Valuation Fee – $200 for rural areas

Offset Facility – 100% Offset, transactional, ATM, EFTPOS, VISA Debit, Phone Banking

Redraw Facility – No minimum amount or fees

Early Exit Fees -  Year 1: $1,400, Year 2: $1,050, Year 3: $700, Year 4: $350

Advantages

• Competitive interest rate but there are better for a similar product
• 100% offset account that is full transactional
• Solid lender and held up well during the GFC here in Australia
• No up front fee or fees for redraw

Disadvantages

• Annual fee expensive at $199 yearly
• Early exit fee for first two years higher than most major banks
• No branch access (if that is important to you)

Are There Better Products on The Market

We believe there are better products on the market that offer similar features but at a greater interest rate discount and lower ongoing fees.

To find out if this loan or any other loan is suitable for your lending needs submit a free mortgage quote to compare multiple lenders.

Low doc lending over the last 18 months has tightened significantly. Lenders are increasingly making it harder for self employed borrowers who do not have full financials to borrow. Some of the new changes of low doc loans are as follows;

• 1 year BAS statements required for loans that borrow between 60 and 80 percent of the properties value (LVR 60 to 80%)
• Cash out restrictions apply between the 60 and 80% LVR bracket and can also apply for loans less that 60% which is at the lenders discretion
• The lender may want to look at trading and banking statements
• Variety of product has decreased and interest rates are higher for LVRs between 60 and 80%

The new National Consumer Credit Protection (NCCP) laws require that mortgage brokers, banks and non banks will have to prove that  the borrow is suitable for a loan. This applies to both home loans for the principle place of residence and investment property loans.

Therefore, both brokers and lenders will require added documentation to ensure the borrower is suitable for a loan.

This does not mean that tax returns need to be completed but a broker or lender may need some or all of the following documents to ensure the borrower can afford to make the repayments regardless of loan to value ratio (LVR);

• Minimum 1 year BAS statement
• Bank trading statements for at least 12 months
• Accountants letter
• Projected income
• A declared statement

No doc loans will no longer be available as the NCCP laws make it impossible to legally accept a loan application with out making financial checks.

However, the NCCP Act does not apply to low doc loans that apply to credit of a commercial nature. Low  doc commercial loans and no doc will still operate in this space

It seems the election has slowed things down and the Reserve Bank are in a holding frame of mind. All the economic indicators are showing that growth may be slowing and interest rates are likely to remain on hold for a little while.

Fear in the US of a double dip recession could be on the cards but most econimists are predicting a slower economic recovery rather than another dip.

As mentioned in a earlier post, it seems the Banks are determined to increase interest rates beyond the RBA’s recommendations. Commonwealth Bank after reporting a record profit announced that future rate rises are likely and other banks have not counted themselves out. I am not sure why they have to slug their customers for increased profit; however, one major lender has committed to keeping rates in line with the Reserve Bank.

The Reserve Bank Of Australia left rates on hold at 4.5% on Tuesday as inflation figures fell within their guidelines.

There are some home loan and investment loan specials out there from reputable lenders.

Ongoing variable rates at 6.47%

Fixed rates are falling and you can find a 3 year fixed rate at 6.99% and a 5 year fixed rate at 7.49%

The Reserve Bank of Australia announced that it is leaving interest rates on hold at 3.75%. In a surprise move that stunned most economists the RBA wants to see if the effects of earlier rate rises.

More to come…

As we know that the Reserve Bank of Australia cut interest rates by 1%. Analysts are predicting further rate cuts in March and after Easter. How much the RBA will reduce rates will depend largely on global and local economic factors.

Most lenders this time round passed on the full rate cut. Whether they continue to do so is “under constant review” as stated by many of the major banks.

Updated below are the better home and investment loans for February showing interest rates from lenders with the most competitive offerings. Please note that home loan rates have very similar pricing to investment loan rates.

Introductory Rate Home Loans

St George Professional Package  – 4.39% first year then 5.19%, Comparison Rate = 5.33%

NAB – 1 Year Discounted Variable – 4.65% first year then 5.74%, Comparison Rate = 5.71%

RAMS Home Loans – Rate Relief – 4.69% first 2 years then 5.29%, Comparison Rate = 5.22%

Bank West Rate Tracker – 4.92% first 3 years then 5.68%, Comparison Rate = 5.53%

Basic Variable Home Loan

Heritage Building Society Basic Loan – 5.07% – Comparison Rate = 5.09%

RAMS Home Loans – 5.09% – Comparison Rate = 5.12%

St George Basic Home Loan – 5.17% – Comparison Rate = 5.20%

Professional Packaged Home Loans (Recommended for $250K plus borrowers)

Commonwealth Bank Wealth Package – 5.04% – Comparison Rate = 5.22%

ING Home Loans – Smart Pack – 5.13% – Comparison Rate = 5.15%

Westpac Home Loans – Premier Advantage – 5.21% – Comparison Rate = 5.41%

Low Doc Loans

Commonwealth Bank Low Doc – 5.04% – Comparison Rate = 5.22%

ANZ Home Loans -  Simplicity Plus – 5.21% – Comparison Rate = 5.23

Westpac Home Loans – Premier Advantage – 5.21% – Comparison Rate = 5.41%

Line of Credit Loans

Commonwealth Bank  - 5.09% – Comparison Rate = 5.22%

Suncorp Line of Credit – 5.20% – Comparison Rate = 5.35%

NAB Home Equity – 5.22% – Comparison Rate = 5.33%

Fixed Rates

St George 3 Year Fixed – 5.49% – Comparison Rate = 5.47%

Westpac 3 Year Fixed Rate – 5.49% – Comparison Rate = 5.49%

NAB 3 Year Intro Fixed Rate – 5.49% – Comparison Rate = 5.86%

RAMS  5 Year Fixed – 6.29% – Comparison Rate = 5.91%

Need Help

The loans mentioned above may not be suitable for your lending needs. Please contact us of submit an online enquiry.

Important Notes

 The interest rates mentioned are only available on the date published and are subject to change.

Comparison rates are based on a $250,000 loan for 25 years. This Comparison Rate applies only to the example or examples given. Different amounts and terms will result in different Comparison Rates. Costs such as redraw fees or early repayment fees, and costs savings such as fee waivers, are not included in the Comparison Rate but may influence the cost of the loan.