CBA – Commonwealth Bank Increase Interest Rates by 0.15%

 

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Following Westpacs 0.20% move to increase variable interest rates the Commonwealth Bank has today announced an increase in its variable home loan rates by 0.15%pa (15 basis points), citing that they are  partially offsetting costs associated with recent changes to capital requirements. Their Fixed rates and business lending rates remain unchanged.

For home loan customers, the standard variable rate for owner occupied loans will increase to 5.60% per annum and the standard variable rate will rise for investment home loans to 5.87% per annum. These changes will become effective on Friday, 20 November 2015.

The change is just under a month away so those considering new finance within this time should take into account the interest rate change.

There are many deals out there and you can compare home loans and compare investment loans at our home loan comparison pages.

If you need help with your home, investment or commercial finances we have professional mortgage advisors Australia wide that offer free mortgage help by simply contacting us.

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Property Investment Loans – New Regulations Shake Up Lending

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In the last months we have seen lenders tightening up their lending to property investors for both existing and new customers.

The Australian Prudential Regulation Authority (APRA ) recently moved to tighten lending criteria for property investment loans, many lenders are forced to reduce their lending risks.

 Why?
The reason for the stricter lending criteria is that APRA set a benchmark of 10% maximum growth for residential investment mortgages. The big banks were beginning to exceed this benchmark level and APRA had to take action.

By taking these measures, APRA is attempting to make the property market conditions safer for consumers. Rapid growth in property investment lending can be perceived as risky as investors may be placing ‘all their eggs in one basket’ rather than having investment diversification.

Lending criteria to reduce growth varies from lender to lender but we have seen changes across the board from banks to non banks. Some have already implemented the changes while others will be applying them soon in the coming months.

What do the changes mean for investors?
While banks and other non bank lenders have announced varying policies here is an overview of some of the measures that have been put in place for both new and current borrowers:

Stricter criteria to approve investor loans
This includes excluding certain properties for investment purposes. For example, not lending in certain postcodes or types of properties that are deemed high risk. Rural properties and high density apartments are prime examples.

Increased Interest Rates for Investment Loans
We have seen an increase in investment loan interest rates from the major banks and non-banks. This means that banks are no longer offering discounts for investment loans as they previously did and packaged.

Lenders are also penalising borrowers with “interest only” loans but will offer a discount for property investment loans that are paid with “principle and interest” repayments.

Deposits raised up to 20%
Lenders have also increased the required deposit. Previously, property investors could borrow up to 95% of the property’s value but some lenders require a 20% deposit where they can only borrow up to 80% of the property’s value.

Some lenders are not allowing investors with a current investment property to use the existing equity in that property to leverage for further investments where the LVR falls outside the 80% LVR benchmark – effectively forcing them to refinance.

Rental Income For Servicing Decrease
Lenders have reduced the amount of rental income taken into consideration when assessing an applicant’s income. Some have also taken out the negative gearing component in the assessment. This means that property investors will need to show other income outside their property investments to obtain a loan if servicing the loan is tight.

What do the changes mean for owner occupier buyers?
Predictions are that the owner occupier market will increase as a result of tightened criteria for property investment loans. Many lenders have recently announced a raft of changes to new owner occupier loans including lower interest rates, cash back offers and the waiving of annual fees.

Where to From Here?
While these changes affect banks and non-banks in different ways there are discounts that still can be found.

You can compare property investment loans at our mortgage comparison pages.

If you are looking for a home loan deals for owner occupied properties go to our compare home loans page.

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Interest Rates On Hold – Lenders Reducing Rates

August brought about another interest rate hold bringing relief to many mortgage holders. Mixed messages from economists is making it difficult to get an indication on where the interest rate market is heading. The Reserve Bank of Australia considered raising rates but left them on hold and are adopting a wait and see approach for now.

The debt worries of the United States and Europe are increasing concerns of another global financial crisis which could lead to falls in interest rates as predicted by Westpac. Fixed rates are also falling and this could be another indication that the market feels rates are likely to fall than rise. Until all these factors become clearer we will just have to wait and see.

In the mean time the banks and non banks are trying to undercut each other regarding interest rates and product. Here are just a few examples of the types of loans that can be found;

6.80% Professional Package ongoing  variable rate for loans greater than $500,000

6.90% 100% Offset variable rate for loans between $250,000 to $500,000

6.85% for a basic loans

3 Year fixed rates have at 6.59% with a professional package

5 Year Fixed at 6.99% with a professional package

To find out if any of these suit your lending needs please contact one of our consultants by sending a mortgage enquiry form.

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Interest Rates On Hold for Now!

The Reserve Bank of Australia have decided to give mortgage holders a reprive this month by keeping the cash rate at 4.75%.

This is the sixth straight month the RBA have kept interest artes on hold but they have been keen to raise interest rates at some stage in the future. Softer housing prices, the floods and housing pressures were the main reasons for not increasing rates.

Most economists predicted that rates would remain steady for this month; however, they are predicting a rate rise in August and perhaps another before Christmas.  Future business investment is predicted to come into the country and the RBA is on the lookout for higher growth and inflation later in year which may lead to an increase in interest rates.

For now it is a waiting game and we will have to wait latter in the year to see if mortgage rates are going

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Latest Mortgage and Interest Rate News for July 2010

  Below you will find the latest mortgage news from the last couple of weeks. For more information and links to these headlines follow us on twitter@MortgageBrief

  • Reserve Bank of Australia says that the election won’t stop us raising rates Wednesday 21st July 2010
  • Inflation the key to rate rises RBA
  • Lenders may increase rates independent of RBA due to higher funding costs – Monday19th July 2010
  • 95% loans are still available
  • Interest rates remain on hold at 4.50% – Tuesday 6th July 2010

  

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