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Archive for October 21st, 2008

Tuesday, October 21st, 2008 | Author:

Australian banks recently lowered their interest rates to lure and attract home buyers or investors to loan.. before the crisis.. home loan rate was roughly around 9.25% if i remembered it correctly and now the rate is 8.5% average which will go down further… possibly into 6% to 7% but its still just a hunch or hearsay/prediction… so some people are waiting for the interest rates to go down then buy and invest on a home+land package.. to be honest it is really a tempting offer to buy/invest.. low interest rates plus a first home grant from the government of au$21k but need to consider some factors like are we capable enough to pay the loan which means must have a stable job or have other self generating income/passive income aand like which banks gives a better offer with no hidden charges whatsoever so must do our homework before jumping to the bandwagon.. I have plans to do that but i am still analyzing the situation thorougly before doing so :)

Here are some news details published on October 20, 2008 to give you an insight on what is presently happening…
More cuts in lending rates are expected as the big banks switch their focus from the hard-pressed housing market to the wider business sector.
National Australia Bank yesterday became the second of the Big Four banks in three days to announce another 0.2 of a percentage point drop in its interest rates following the move by ANZ on Friday.
ANZ cut its rates by 0.25%, taking the total of its most recent reductions to slightly more than the surprise economy-boosting 1 percentage point fall announced by the Reserve Bank of Australia two weeks ago.
But in a move that reflects growing concern among political, economic and business leaders, NAB said its lower interest rate would apply not only to its mortgages but also to businesses and farming — two sectors the bank counts as its major customers.
For hard-pressed home owners, the mortgage rate will drop to 8.36% from next Monday in a move that will take the savings on the repayments on an average $250,000 loan to more than $200 a month since the RBA’s reduction.
However, NAB head of Australian operations, Ahmed Fahour, underlined the need to extend the impact of the lower rates to the wider community to try to prevent the slowdown becoming worse.
“We will do everything we can, while still acting responsibly, to help our customers get through these current challenges,” Mr Fahour said yesterday.
The decisions by NAB and ANZ will put increasing pressure on the other two big banks, Commonwealth and Westpac, which are expected to push through matching reductions in the next few days.
The move comes as ANZ and NAB are this week expected each to report disappointing full-year earnings after being hit with hefty write-downs.
NAB, which has suffered an $830 million hit caused by its exposure to complex investments in US subprime housing loans, has already flagged that its profit will be no higher than $3.9 billion. The bank has brought forward its results to tomorrow, in a decision that may be linked to plans to raise up to $2.5 billion to bolster its balance sheet.
The write-downs suffered on various investment portfolios detailed to date are likely to translate to an 11% fall in full-year earnings to the end of September.
ANZ chief executive Michael Smith, will mark his first anniversary at the bank by reporting an even larger drop in profits.
ANZ’s high-profile problems with two failed broking firms, Opes Prime and Primebroker, and the $1.6 billion it has set aside to cover bad debts in its corporate loan book will result in the bottom line taking an $800 million hit.
According to Credit Suisse analysts, the bank should unveil $3.14 billion profit on Thursday compared with last year’s $3.92 billion.
The profit slide will squeeze Mr Smith’s ambitious target to double profit by 2012.
Mr Smith set this deadline last December, when the bank was headed for a $4 billion-plus outcome.
Westpac is expected to round off the big bank reporting season next week, with analysts anticipating an annual profit of $3.74 billion.

Commonwealth Bank drops mortgage rates
Monday October 20, 2008, 6:41 pm
Commonwealth Bank of Australia (CBA) has dropped its interest rates on both variable and fixed home loans after its rivals National Australia Bank, ANZ Banking Group and Aussie Home Loans all reduced their rates over the weekend.
CBA will reduce its standard variable rate home loan by 21 basis points to 8.32 per cent, and its basic variable home loan to 7.81 per cent, the bank said in a statement.
The new rates apply to both new and existing customers and will take effect from Thursday October 30.
CBA also dropped interest rates on fixed home loans by up to 40 basis points for new customers, also effective from October 30.
No change has been made to a one-year fixed rate home loan.
Reductions apply for terms from three years, with the three-year fixed home loan reduced by 40 basis points to 7.29 per cent.
The changes are the result of a reduction in the bank’s cost of funding over the past week, group executive of Retail Banking Services Ross McEwan said.
“We have seen some reduction in our cost of funding over the past week and as Australia’s biggest lender, the Commonwealth Bank is committed to remaining extremely competitive in the mortgage market,” he said.
CBA’s one-year guaranteed fixed home loan rate remains at 7.09 per cent.
This product operates like a variable loan but includes the benefits of an offset option and mortgage interest saver (redraw) option.
CBA said the move was made to remain competitive with its rivals.
Australia’s big banks have entered into a price war on mortgages over the past three days after the ANZ Banking Group Ltd on Friday announced the first move on rates independently of the Reserve Bank of Australia in a decade.
ANZ dropped its interest rates on variable home loans by 25 basis points to 8.32 per cent for new and existing customers, effective from October 27.
National Australia Bank (NAB) announced on Sunday it was dropping its standard variable home loan rate by 20 basis points to 8.36 per cent.
The 0.2 percentage point cut would apply also to business loans, and some rates on fixed mortgages would be reduced by 0.3 percentage points, NAB said in a statement.
NAB’s one-year fixed home loan was cut by 30 basis points to 6.99 per cent.
NAB’s announcement came hot on the heels of Aussie Home Loan’s decision on Saturday to drop its rate on variable home loans for first home buyers by 30 basis points to 7.79 per cent.
Aussie Home Loans reduced interest rates for fixed home loans and will review its loan rates for new and existing customers, in line with its funding requirements, managing director John Symond told AAP.
The move by CBA matches ANZ’s standard variable rate as the lowest on offer among lenders in the banking sector.
Rates on standard variable mortgages from Australia’s major lenders now stand at 8.32 per cent at CBA and ANZ, 8.36 per cent at National Australia Bank, 8.56 per cent at Westpac, 8.57 per cent at St George Bank, and 8.6 per cent at Bendigo and Adelaide Bank.