Trending Financial News 18 November

Aussies set to trim spending this Christmas

New research from St.George Bank suggests Aussie households are tightening their belts this Christmas with 43% of Aussies having set a spending limit on gifts to family and friends, and almost 31% planning to give fewer gifts this year.

To limit spending, many Australians have devised cheap holiday plans like ‘holing up at home’ (29%), simple and thrifty Christmas lunch (29%), and easing up on alcohol (20%).

“While most Australians are confident they can stay within their festive budgets,” said Ross Miller, General Manager for St.George Bank, “over two-thirds admit that, if anything, they are most likely to overspend on presents for their loved ones.

Banks told – ease up on loan applications

The treasurer Josh Frydenberg will today tell banks to ease up on loan applications. In a speech to bankers, reported in the Australian Financial Review, Mr Frydenberg will call for “appropriate” adherence with responsible lending rules and respect for “personal responsibility and personal accountability.”

Lenders have recently eased serviceability and affordability guidelines for loan applicants following reviewed guidance from regulators.

“It’s in everyone’s interest that the aspirations of hard-working families are not collateral damage in this regulatory process … If responsible lending laws are applied too stringent, they will also negatively impact consumer behaviour.”

One in one hundred home loans are in trouble

Banks are more lenient with home loan borrowers who get in trouble with repayments than in previous years said Guy Debelle, deputy governor of the Reserve Bank.

“The mortgage arrears rate, at 1 per cent, is low by both historical and international standards,” said Guy Debelle.

Mr Debelle said a rise in longer term arrears indicated that borrowers who fall behind in repayments were being assisted by lenders.

“Liaison with banks suggests that more lenient forbearance and foreclosure policies have also contributed to the increase in longer-term arrears rates.”

Mortgage stress growing in Western Australia

A higher proportion of home loan borrowers are falling behind with loan repayments in Western Australia than in other states of Australia.

Guy Debelle, deputy governor of the Reserve Bank, said mortgage arrears rates have been increasing steadily over recent years to the highest it has been for around a decade.

“In Western Australia the unemployment rate has risen from 4% to 6%, housing prices have fallen by 20%, incomes have declined and strong inward migration turned to outward migration such that population growth declined from over 3 per cent to under 1 per cent.

“These conditions have seen the mortgage arrears rate rise from 0.7 per cent to 1.8 per cent.

“This is a significant rise and associated with financial stress for a number of households.”

RBA raises expectations of NO MORE RBA RATE CUTS

Market expectations of a RBA rate cut in December are low (22 per cent) according to ASX Futures on Friday).

“The RBA may be signalling the end to rate cuts as it assesses the impact of the last three cuts,” said Vadim Taube, CEO of InfoChoice.

“All eyes are on the RBA governor’s speech next week, when he will talk about unconventional monetary policy, code for quantitative easing.”

“The days of stimulating the market with rate cuts that inflate the property market only look like they are over,” said Vadim Taube.

The lowest variable home loan rate is 2.7% pa

The lowest variable home loan comparison rate now listed on InfoChoice is 2.7 per cent pa with 13 lenders with variable loan rates under 3 per cent pa.

Market leading variable home loan rates are now available from lenders such as Reduce, FreedomLend, G&C Mutual Bank, Athena Home Loans, UBank, and others.

InfoChoice currently lists 1800 home loan products from 145 banks and other institutions in Australia. Compare home loans and find a better deal today.

Variable home loans for owner-occupiers, lowest rate per lender, 17 November 2019 (P&I, OO), now listed on InfoChoice.*

Car Loans crash under 5 per cent

The market leading variable and fixed car loan products have moved their rates to under 5 per cent pa with comparison rates under 7 per cent pa. 

“You would have to say it is good time to be looking for a car loan. Rates are very low and there are plenty of new lenders in the market,” said Vadim Taube, CEO of InfoChoice.

NRMA has a fast new car loan with a comparison rate of 6.39 per cent pa.

For used cars, NRMA charges 7.7% pa comparison rate.

Right now, mobile app-based lender Harmoney is offering unsecured personal loans, approved in minutes, with rates starting from 7.69 per cent pa (comparison rate).

Personal loans get personal rates

Increasing numbers of personal loan providers currently listed on InfoChoice are using credit scores to set rates.

Higher credit scores can obtain lower rates, with lower credit scores being approved for loans with higher rates, set according to the risk profile of the borrower.

“Some new online lenders offer conditional loan approval and ID verification in minutes, then, often, if you get onto it in the morning, same-day deposit for the funds,” said Vadim Taube from InfoChoice.

“And you can do it all on your phone, with just your license or passport number, address and a good comparison site,”

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