Trending News 2 May 2019

Tough mortgage buffer rules under fire

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Too many potential mortgage borrowers are having their home loan applications rejected because of tough ‘mortgage buffer’ rules, say many lenders. Banks are required by the banking industry regulator, the Australian Prudential Regulatory Authority, to assess an applicant’s ability to repay their mortgage if rates were to rise by 2.0 percentage points.

ANZ chief executive Shane Elliott said that meant retail home loan borrowers were being assessed for loans with an interest rate of 7.25 per cent, which was unlikely “any time soon.”

“I think we need to rethink it,” said Mr Elliott.

Lenders are now also required to verify living expenses and other debts. Industry experts have reported that potential upsizers and refinancers are finding their loan and credit limits have gone down.

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Which bank account is growing in popularity FAST?

Aussie depositors are rejecting the big four banks in droves and finding new, better banking account options elsewhere according to new official data from the government banking industry regulator, the Australia Prudential Regulatory Authority.

In the last month ING continued to outperform the big four banks int eh deposit market and has increased market share continuously for the last few years. ING Direct’s Orange Everyday account has no monthly fees and repays ATM fees back to you.

ING Australia began operating in Australia in 1999 and is now clearly the fifth biggest deposit taker in the country. ING grew it’s deposit book by 17 per cent or $5 billion in the 12 months to 31 March 2019.

ING will overtake ANZ as Australia’s fourth biggest deposit taker within ten years according to Industry newsletter Banking Day.

Compare savings accounts from all the significant Australian Deposit Taking Institutions here.

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Which banks are most popular with owner-occupiers?

Commonwealth Bank remains the market leader in owner-occupier home loans, followed by Westpac, then ANZ Bank and NAB fourth, according to the latest official data from the government banking industry regulator, the Australia Prudential Regulatory Authority.

ING Direct is now the fifth largest home lender in Australia and has overtaken Bendigo Bank, Suncorp and Macquarie in the top ten lenders list over the last 12 months. ING’s Mortgage Simplifier Loan product is currently set at 3.80 per cent variable for owner occupiers with an LVR under 80 per cent (comparison rate 3.82 per cent).

Other popular market leading Australian lenders in the owner-occupier market include Bank of Queensland, Members Equity (ME), HSBC, AMP Bank, Heritage Bank and Teachers Mutual Limited.

Compare home loans from all the major Australian lenders here.

Aussies are getting on top of credit card debt

Australian consumers are getting on top of their credit card debts according to new official data from the banking industry regulator, the Australian Prudential Regulatory Authority.

Australian credit card debt is down almost 5 per cent in the year to March 2019. Analysis by shows Aussies have become “increasingly wary of debt”.

“Aussies are saving more and spending less” reported CommSec

New credit card rules have tightened the amount that lenders and credit card companies are willing to approve to new credit card applicants. New balance transfer credit card offerings and lower rate cards are helping many consumers manage their spending and repay their card debts.

Infochoice currently list 72 balance transfer credit cards available from major Australian banks or credit card issuers and 131 low rate credit cards.

Compare credit cards from all the major Australian banks and credit card companies here.

Will Labor’s negative gearing policy affect me?

Labor will end the negative tax gearing of property investment expenses by 1 January 2020 if elected in May. Negative gearing will still be able to be applied to newly built investment properties only. Negative gearing allows investors to deduct rental losses from income, thereby reducing overall tax.

However, all existing investments made before 1 January 2020 will be exempt from the new policy.

“All investments made prior to 1 January 2020 will be fully grandfathered,” according to the Australian Labor Party official housing policy document.

The federal Labor opposition’s Treasury spokesperson Chris Bowen said the new policy would encourage investment in new housing. Industry experts said the Labor policy could lead to short term price falls in some capital city markets.

The federal election will be held on 18 May 2019.

Compare investor home loans from all the major Australian banks, credit unions, mutual banks and other home loan providers here.

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