In a further sign that Westpac is finding it tougher to fund new loans, they have today withdrawn their subsidiary - RAMS, from the broker market.
Mind you, they are a small player really, due to their crappy level of service and less than competetive loan products, so won't be missed by most brokers anyhow.
Their other subsidiary, St George has today confirmed their ongoing commitment to the Broker channel as has Westpac themselves.
It's just that Westpac now want to write fewer loans, and want only to write "gold brick" type loans.
Fortunately, there is still a lot of competition in the market place, so there are still may options out there.
Brad
Wednesday, January 20, 2010
Monday, January 18, 2010
Banks tighten the reins
We are now starting to witness a little tightening of the reins by the Major Banks.
For example, one major lender who previously had very flexible policies has now told us that unless an application “ticks all the boxes” it would be declined with no reviews possible.
This lender, along with the other major Banks, approved over 90% of all home and investment loans last year. They dominated the market.
The Majors, in particular CBA and Westpac, have really “filled their coffers” with heaps of lending business, so they no longer need as much business.
This combined with their claimed funding pressures, means they are not as desperate to lend out funds.
In fact, today Westpac announced they will reduce the amount they will lend to NEW customers to no more than 87% of valuation.
They still want to do business, but will “cherry pick” the best loan applications.
Fortunately though, a lot of the smaller Non Bank lenders that struggled last year are now starting to recover and are keen to do business.
This will generate the re emergence of the Non Bank sector. Their pricing is pretty sharp as well….in most cases just as good as or even better than the Major Banks.
So don’t be surprised if you see a lot of advisors now recommending some of these non Bank lenders as an alternative.
I think that most current property investors will be OK though, as you generally have a great track record with your lender and probably a strong equity position. So you will likely be one of the “cherries” that your Bank wants to pick
Remember, your chances of approval are much higher when you use a mortgage professional rather than going direct to the lender yourself.
Any time you would like us to asses your borrowing capacity for another property simply send us an email (first@firstchoicehomeloans.com.au) or go to our website www.firstchoicehomeloans.com.au and click on the Pre Approval section.
Or, simply give us a call at the office.
Brad Oliver
07 3420 0044
For example, one major lender who previously had very flexible policies has now told us that unless an application “ticks all the boxes” it would be declined with no reviews possible.
This lender, along with the other major Banks, approved over 90% of all home and investment loans last year. They dominated the market.
The Majors, in particular CBA and Westpac, have really “filled their coffers” with heaps of lending business, so they no longer need as much business.
This combined with their claimed funding pressures, means they are not as desperate to lend out funds.
In fact, today Westpac announced they will reduce the amount they will lend to NEW customers to no more than 87% of valuation.
They still want to do business, but will “cherry pick” the best loan applications.
Fortunately though, a lot of the smaller Non Bank lenders that struggled last year are now starting to recover and are keen to do business.
This will generate the re emergence of the Non Bank sector. Their pricing is pretty sharp as well….in most cases just as good as or even better than the Major Banks.
So don’t be surprised if you see a lot of advisors now recommending some of these non Bank lenders as an alternative.
I think that most current property investors will be OK though, as you generally have a great track record with your lender and probably a strong equity position. So you will likely be one of the “cherries” that your Bank wants to pick
Remember, your chances of approval are much higher when you use a mortgage professional rather than going direct to the lender yourself.
Any time you would like us to asses your borrowing capacity for another property simply send us an email (first@firstchoicehomeloans.com.au) or go to our website www.firstchoicehomeloans.com.au and click on the Pre Approval section.
Or, simply give us a call at the office.
Brad Oliver
07 3420 0044
Wednesday, January 13, 2010
Interest rates on the rise
Well, wasn’t 2009 a turbulent and fascinating year!
Record interest rate reductions, a soaring first homebuyer market, and the Australian economy dodging a hail of bullets.
So good was our recovery, that now the Reserve Bank is trying to put the brakes on the economy in an effort to tame that nasty inflation monster.
Many investors are now asking….what’s going to happen with interest rates and how far will they go?
Well, let me give you my honest and professional opinion based on years of experience and also the chatter I hear from economists and Banks.
Rates are going to “normalise” over the next 12 – 18 months….so what’s normal I hear you ask?
Well the cash rate that is considered to be fairly normal, or neutral (by the Reserve Bank board) is around 5% pa. Currently it sits at 3.50% pa, so that means about another 1.50% pa or so of interest rate rises in store over the next 12 – 18 months.
So what does this mean to you?
It means retail rates (that’s what you pay on your mortgage) will likley climb back to around 7 to 7.50% pa, but it won’t happen overnight.
Fixed rates are already well over 7.00% pa, so my advice is to continue to ride the variable wave…unless of course you think that what I am saying here is absolute rubbish….that’s your call.
Remember, I don’t have a crystal ball (I wish!), but I intend to leave ALL of my loans on the variable rate for the time being.
Property investors have pretty much sat back and watched happenings this year whilst the first homebuyers rushed in, and now that has subsided, I am starting to see a lot of investor interest. This will no doubt equate to increased property sales in the New Year. Expect to see prices rise, particularly as demand is heavily outweighing supply.
As always, don’t hesitate to call us at First Choice Home Loans for any advice.
The team here wish you all a very merry Xmas and a safe and prosperous New Year.
Brad, Robyn and Sandy.
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