Trending Financial News 24 September 2019

New monthly premium LMI launched

Big lenders mortgage insurance provider Genworth announced the launch of a new LMI product not requiring the premium to be paid upfront, but in monthly instalments.

“To address the increasing demand for ‘entry level’ first homes which are held for less than five years, we recently announced a new monthly premium LMI offering,” said Genworth CEO Georgette Nicholas.

Ms Nicholas said the new offering gives borrowers the flexibility to refinance at a later date without the need for a refund of LMI premium.

“As first home buyer needs continue to evolve, it is important that a range of stakeholders – both public and private – work together to develop solutions that complement each other and continue to support the Australian dream of home ownership,” said Nicholas.

Read more about LMI and the new monthly instalment LMI here.

Most first home buyers funded by mum and dad

Most first home buyers are now relying on family to provide some of the deposit for their first home. Of recent first home buyers surveyed by Genworth (a big Lenders Mortgage Insurance provider) around 70 per cent did not fund all of their deposit from their own savings. 57 per cent relied on family assistance.

60 per cent of prospective first home buyers plan to buy now with less than a 20 per cent in order to capitalise on a current market opportunity.

75 per cent of prospective first buyers plan to apply for the government’s announced first home buyer deposit scheme which will have just 10,000 successful applicants. Read more about guarantor home loans and the Bank of Mum and Dad here.

No Eftpos for Opal

The Berejiklian NSW state government has excluded Eftpos from contactless fare collection systems for Sydney public transport.

The Opal platform now accepts contactless payments from commuters using debit and credit cards issued by Mastercard, Visa and American Express but can’t process Eftpos-based payments on Eftpos debit cards issued by Australian banks.

A spokesperson for NSW transport minister Andrew Constance confirmed to Banking Day that:

“People with those cards will have to use an Opal payment card or an alternative card.”

Rate cut firms for October

Market trading now indicates an 80 per cent chance of a rate cut next week by the Reserve Bank of Australia. Expectations of a cut soared after new unemployment data released last week showed unemployment rose in August to 5.3 per cent from 5.2 per cent in July.

The Australian Bureau of Statistics also reported that underemployment also rose, from 8.4 to 8.6 per cent and the participation rate was also up. Read more about the outlook for interest rates here.

Westpac cuts floor rate, undercuts other three big banks

Westpac Group has announced a big cut to its serviceability floor rate from the start of October from 5.75 per cent to 5.35 per cent. The change also applies to Westpac subsidiary brands: St. George Bank, BankSA and Bank of Melbourne. 

Commonwealth Bank’s serviceability floor rate is 5.75 per cent. ANZ and NAB have each set their floor rate at 5.50 per cent. ME Bank’s serviceability floor rate is 5.25 per cent and Macquarie Bank’s is at 5.30 per cent.

The serviceability floor rate is the minimum rate at which a lender will assess your ability to repay the loan you have applied for. A lower rate can mean a higher loan amount could be approved.

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