WEEKLY BANKING NEWS
10 August 2009 - Big borrowers get rate discounts
Source: Herald Sun
Homeowners in well off suburbs are paying less per dollar of debt than people living in poorer suburbs according to property consultants Residex. Borrowers in outlying Melbourne suburbs Frankston, Wyndham Vale and Coolaroo pay about $620 per month on each $100,000 of debt, compared to $580 for borrowers in wealthy Toorak.
Residex says that translates to about $30,000 is additional repayments over the course of a 25 year mortgage. Residex chief executive John Edwards said lenders offer discounts to borrowers who can afford to borrow more money.
The findings parked outrage from consumer groups and local government councillors.
10 August 2009 - Borrowers reject fixed rate loans
Source: AFG
Australia’s biggest mortgage broking group, AFG is reporting that fewer borrowers are choosing fixed rate loans. The AFG Mortgage Index shows a dramatic decline in the popularity of fixed rate mortgages, which fell from 8.3 per cent of all mortgages lodged in June, to only 5.0 per cent in July – a fall of almost 40 per cent.
Given that fixed rate mortgages now factor in future interest rate rises, the decline in consumer interest suggests that many buyers feel they may have missed the boat in locking in low rates earlier this year.
10 August 2009 - Credit card tips and tricks
Source: The Daily Telegraph
If you can’t pay all of your debt within the interest free period you may be better off with a card that features no interest free period and a lower interest rate.
If your card debt is getting out of control you may like to consider using a cash advance from a low rate card to pay off a high rate card.
Interest free periods do not apply to cash advances.
Many store cards are issued by finance companies and come with a high interest rate and little or no interest free period.
10 August 2009 - Huge mortgages now the norm
Source: AFG
The average new mortgage lodged in Australia rose to $354,000 in July – the highest figure on record, according to AFG, Australia’s largest mortgage broker. AFG’s Mortgage Index shows that average mortgage sizes have been on the rise since May this year, after falling to a low of $339,000 in January.
As other institutions report rises in house prices, the AFG data shows that borrowers in New South Wales, Queensland and Victoria are especially willing to take on more debt.
Queensland’s average mortgage size hit a new record of just over $339,000. The average mortgage sizes for New South Wales ($407,000) and Victoria ($321,000), though lower than some of the peaks recorded in late 2008, are the highest for 2009, well up on figures for earlier this year.
10 August 2009 - Investors flocking back to property
Source: AFG
Australia’s biggest mortgage broking group, AFG is reporting that the number of loans issued to property investors is rising fast. AFG data confirmed the trend of investors returning to market, with 30 per cent of all mortgages arranged for investors – up from a low of 24.5 per cent in March.
The investment trend was particularly high in New South Wales and Queensland, where 34 per cent and 33 per cent respectively of all loans arranged were for investors. The share of first home buyers remained steady at 19 per cent of the mortgage market.
Mark Hewitt, AFG’s General Manager Sales and Operations says: ‘As every week goes by we’re seeing growing signs of confidence in the property market. Recent reports of house price increases are stimulating the market as a whole, and encouraging investors in particular. That said, because interest rates remain at forty year lows, we’d encourage buyers to take into account the fact that their mortgages will almost certainly cost more to service as the overall economy picks up.’
10 August 2009 - Revolutionary fee-free account coming soon
Source: Herald Sun
The Orange Everyday account from ING Direct is a completely fee-free transaction account. ING Direct will cover fees charged by rival bank’s ATMs, giving customers free access to every ATM in Australia. There are no overdraft fees, no penalty fees and no monthly account keeping fees.
The account will be offered to ING’s 1.25 million customers next month, ahead of a national launch next year.
Consumer advocate Christopher Zinn said the account had the potential to revolutionise banking in Australia. “This will put enormous pressure on the other banks and could force charges down across the board.”
10 August 2009 - Sydney, Brisbane auction results improving
Source: Australian Property Monitors
Almost 70 per cent of 248 residential properties put up for auction in Sydney on Saturday sold on the day. That result was an improvement on last week’s results when the auction clearance rate was 67 per cent of 205 properties. On the same weekend last year, just 48 per cent of 248 properties sold.
In Melbourne, 79 per cent of 437 properties put up for auction sold on the day, continuing the very good results for Melbourne auctions that have been recorded over the last few months. Last week, 85 per cent of 413 properties sold at auction. On the same weekend last year, just 50 per cent of 400 properties listed for auction sold on the day.
The Brisbane auction market shows signs of improvement, with 40 per cent of 65 properties sold at auction on the weekend, up from 31 per cent of 37 properties last week and 25 per cent of 75 properties on the same weekend last year.
In Adelaide, 40 per cent of 24 properties sold under the hammer o n Saturday.
7 August 2009 - Aussies look to fix rates
Source: Aussie Home Loans
Aussie Home Loans has recorded a dramatic rise in the number of customers looking to fix rates as the Reserve Bank of Australia has indicated any future interest rate moves could be upwards.
Of those customers contacting Aussie’s call centre in July to discuss their home loan options, just 15 per cent of them decided to follow through and fix their mortgage. In the first week of August, call volumes are already much higher and 53 per cent of customers who have inquired about fixed rates have moved their mortgage across from variable.
Aussie CEO Stephen Porges said the public’s appetite for fixed loans has increased given the commentary surrounding any potential interest rate moves. Mr Porges said research has shown that customers are financially better off over time with a variable rate.
However, a fixed rate can be an effective way home owners can keep their repayments at the same level and effectively manage their risk.
7 August 2009 - Don’t get fees? Get on the phone
Source: Australian Bankers Association
Bank fees are disclosed in the terms and conditions of the documents you sign when you open an account with your bank. You can also check the fees that apply to the type of account you have by going to your bank’s website, or by calling your bank.
Any fees charged to your account are clearly listed on your account statements, including what the fee was for, how much it was, and when it was charged. Be sure to check every account statement you receive. If you ever see a fee on your account statement that you don’t understand, or don’t think you should have been charged, contact your bank.
7 August 2009 - Parents confused by tax returns
Source: The Daily Telegraph
The fifty per cent education rebate, overseas investment income, dividends, rental properties, car and uniform expenses and interest are the main areas where taxpayers are making mistakes on their tax returns this year.
"We have already seen confusion by parents in claiming the 50 per cent rebate of eligible education expenses,'' Accountants R Us chief executive Adrian Raftery says. He says only parents who receive the Family Tax Benefit Part A payment are eligible. If the eligible parent doesn't lodge a return, the rebate can't be claimed by the working spouse.
"There is also confusion with what items can be claimed for the rebate, he says. "Computers, textbooks, internet and software can be claimed, but school fees, uniforms, library fees, tutoring and transport cannot.''
7 August 2009 - Rates likely to rise
Source: The Age
Interest rates are likely to rise in coming months after the latest labour force figures from the Australian Bureau of Statistics showed that unemployment was not rising.
The unemployment rate appears to have stabilised at 5.8 per cent, with economists suggesting that government predictions of a jobless rate of 8.5 per cent will have to be revised down.
ANZ economist Riki Polygenis said the Reserve Bank will be “increasingly uncomfortable with its current cash rate (3.0%) which is set for severe economic recession.
7 August 2009 - UBank offers 5.11% on savings
Source: The Sheet
National Australia Bank’s online brand, UBank, has reached the milestone of becoming an operating, online banking platform 10 months after the bank introduced the brand to the market. UBank yesterday launched the USaver account, an at-call savings account featuring an impressive, and unsustainable, interest rate of 5.11 per cent.
Gerd Schenkel, General Manager UBank, says it is a variable rate that may be adjusted in the future. UBank will cap deposits at $1 million per customer. The UBank internet banking interface is described by Schenkel as “content rich” and features a visual calculator that plots and projects the customer’s progress towards their savings goal.
7 August 2009 - UBank promises service
Source: The Sheet
Gerd Schenkel, General Manager UBank, says the typical customer of the online banking brand owned by NAB is a highly engaged, high net worth individual who probably heard about UBank through word of mouth.
UBank’s term deposit product aimed at self managed super funds, launched in February, has been particularly successful in attracting balances to the brand, says Schenkel. To appeal to its high net worth target audience, UBank plans to expand into mortgages and transaction accounts. Schenkel mentions investment home loans in particular.
UBank customer service is provided by its North Sydney call centre. “Calls are less scripted than most so our staff can have a more free-flowing interaction. For a branchless model where there is no face-to-face interaction, the telephone is as rich an interaction as you are going to get so the experience has to be very, very good.”
6 August 2009 - ANZ says we will raise rates
Source: Herald Sun
ANZ chief executive Mike Smith told business leaders yesterday that banks may have to act independently of the Reserve Bank and raise interest rates themselves because improving conditions on markets are pushing up the cost of funds.
“Banks will have to raise rates as the funding costs rise, and that may be out of cycle with RBA rate movements,” he said.
Macquarie Bank interest rate strategists Rory Robertson said any move by banks to raise rates independently of the RBA would be audacious and premature.
6 August 2009 - ANZ thinking about penalty fees
Source: The Age
ANZ Bank is working on a restructure of its fees and penalties said CEO Mike Smith yesterday. In the last week all three other big banks have announced significant changes to their penalty fees.
Smith said ANZ was working on ways to make its penalty charges more transparent and allow customers to select the costs that they would be prepared to pay. Smith said an announcement about the changes was still weeks away.
6 August 2009 - Cashed up ANZ wants to ‘bulk up’
Source: Sydney Morning Herald
ANZ chief executive Mike Smith says ANZ wants to “bulk up” and increase its 16 per cent market share. Smith said the bank may still try to buy a regional bank in Australia despite warnings from the head of the competition regulator, the ACCC, that further consolidation in banking would trigger a wide-ranging inquiry into the industry. ANZ still has $4 billion from its recent $4.7 billion capital raising to spend on acquisitions.
6 August 2009 - CBA not proud of Storm loans
Source: Courier Mail
Commonwealth Bank says its’ staff were pressured by former colleagues who defected to go and work at failed Townsville based financial planning firm Storm Financial to approve bigger loans than the bank’s systems would normally allow.
The Commonwealth said it was "not proud" of its shortcomings and admitted its lending behaviour "fell below our usual and expected standard.
We have discovered that, when it came to providing loans, mostly secured by property, we failed at times to follow our own policies and lending practices.
Additionally, a property valuation assessment system known as VAS was misused on occasion by some staff with the effect that loans against some properties were larger than they would otherwise have been."
About 3,000 Queenslanders lost their life savings and some lost their homes as a result of the collapse of Storm Financial.
6 August 2009 - CommBank slashes penalty fees
Source: Commonwealth Bank
The Commonwealth Bank today announced it will dramatically reduce exception (penalty) fees across a range of personal and business transaction accounts, as well as implementing a number of safety nets to help customers avoid these fees in the future.
Commonwealth Bank will significantly reduce dishonour fees from $35 on business and personal transaction accounts to $5, and overdraft fees from $30 to $10. It will also reduce the late payment fee on Home and Personal Loan accounts from $45 to $25.
The Bank has also announced a new no annual fee credit card for its existing customers, provided that they spend over $1000 per annum with the card.
Commonwealth Bank will not reduce exception fees on credit cards, instead will introduce functionality next month that allows customers to put their own stop on transactions that will exceed their credit limit at the point of sale.
The fee changes will take effect on 1 October, 2009.
6 August 2009 - End of day loophole nets $200K
Source: Herald Sun
A New Zealand woman has been jailed for 12 months for defrauding the National Australia Bank of more than $112,000 and helping others to do the same. In total the bank lost more than $200,000.
Airiana Moana Paul said she came across the end of day loophole by accident whereby the NAB online banking system allowed her to make transfers out to another account, even if there were not enough funds in the account to cover the transaction, which were not picked up and corrected by the bank until the next day. The loophole allowed her a window of opportunity to withdraw the cash.
6 August 2009 - Woolies card falling behind
Source: The Sheet
HSBC Australia’s newly appointed chief executive Paulo Maia said he was happy with the progress of the bank’s credit card joint venture with Woolworths, dismissing reports that it has been a disappointment. Maia said: “It is in line with our expectations.” The talk in the credit card industry is that take-up of the card has been poor.
The responsibility appears to lie with Woolworths, which is handling distribution through its retail outlets but has not done a good enough job training frontline staff to sell the product. Sources compare the poor take-up of the Woolworths card with the much stronger acceptance of the David Jones American Express, which is also being distributed in-store.
Maia said: “The credit card business in Australia is relatively new. Woolworths is a small part of it but it is an important relationship and it is developing well.” HSBC has 350,000 cards on issue though its own direct sales and through partnerships with Woolworths and other retailers.
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