We are living in very strange times. It is difficult to tell what will be tomorrow. Business is down, stock market is experiencing extreme volatility and property prices have also come off the boil. Now lenders are forced to work a lot harder to find a home loan customer with many competing for business in any way possible. Banks and non-banks are offering discounts of up to 1 per cent on their standard variable home loans to stimulate the home loan market prior to the spring selling campaign.
With home loan growth across the Australian market heading south , lenders are offering extreme discounts as well as extra bell sand whistles to win a customer.
The push is being driven by the banks’ own lower lending costs as they recycle a huge increase in customer deposits into home loans.
A reduction in deposit interest rates in recent weeks has given lenders greater flexibility to counter high mortgage rates that are about 7.8 per cent for a standard variable home loan.
CBA for example, is now funding 61 per cent of its loan needs from deposits as opposed to the more costly channel of borrowing from international credit markets.
While banks have traditionally offered discounts between 0.4 and 0.7 per cent to entice customers to borrow, the lacklustre growth in home lending caused by the fall in consumer confidence has encouraged lenders to go an extra mile.
Suncorp and ANZ are leading the way, according to published rates, with as much as 1 per cent off their standard variable rates.
Suncorp is looking to rebuild its small market share by offering a discount of 1.03 per cent, while ANZ will knock almost the same amount off new loans of $500,000 or more. For ANZ borrowers below that figure, the discount is 0.9 per cent.
ANZ currently has 13 per cent of the Australian home loan market and is looking to hold off National Australia Bank, which has made an aggressive push over the past year to undercut its fellow big four rivals, in particular the sector leaders, CBA and Westpac.
NAB is still claiming it has the cheapest mainstream mortgage rate of the majors at 7.67 per cent, which, with a built-in discount of 0.7 per cent, takes the charge down to 6.97 per cent.
If you are looking to purchase your first home or an investment property – it is a buyers market not only for properties but also for home loans.
There are offers galore for cheap home loans both fixed and variable. Those in the know expect that rates will be coming down, which is only likely to generate further activity in both the property and the finance markets.