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Rate cuts passed on by different lenders

Discussion in 'Property Finance' started by Redom, 2nd Aug, 2016.

  1. Redom

    Redom Mortgage Broker Business Member

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    Another rate cut - great news for property investors. The early indication is that it may not be passed on by the banks.

    • CBA 0.13% cut to their SVR and an 0.10% cut to their LOC, effective 19 August.
    • NAB 0.10% cut, effective 19 August.
    • ANZ 0.12% cut, effective 12 August.
    • Westpac & St George cut 0.14% for P/I loans and 0.10% for I/O loans, effective 23 August.
    • Suncorp 0.10% cut, effective 24 August.
    More to follow...
     
    Last edited: 3rd Aug, 2016
  2. Lacrim

    Lacrim Well-Known Member

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    Good idea for a thread so we can localise the info of the reductions. Re: CBA's 0.13%, boooo!
     
  3. D.T.

    D.T. Adelaide Property Manager Business Member

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    Our profit just grew (rent minus related expenses), celebrate!
     
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  4. MTR

    MTR Well-Known Member Premium Member

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    if AMP follows I will be down to 3.79% , who would have thought we could get this low..... nice:)
     
  5. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    The CBA has been one of the most aggressive lenders for pricing discounts to date. No surprise that they're now clawing some of it back by only a partial rate cut.

    It's also easy to make the case that by making their announcement so quickly (less than 30 minutes) after the RBA that they're trying to influence other lenders into not passing on the full cut either. No doubt some of the other lenders will pass on a little more (0.15% makes the others look better than the CBA) simply to gain a 'marketing advantage'.

    What this really means is rate cuts are pretty much irrelevant. The culture to individually price loans with the major banks has become the standard procedure. Lenders can dictate their profits by simply tightening or loosening the valve on rates, consumers are pretty much at their mercy.

    Today you might get a 1.3% discount, but this is at the expense of someone who only has a 0.7% discount for a loan now 5 years old. Their problem not yours, but you might find yourself on the nasty end of this in a few years when the going discount is 2.0% and you've still only got 1.3%.
     
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  6. Redom

    Redom Mortgage Broker Business Member

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    More detail from CBA:

    • The Standard Variable Rate will reduce by 13 basis points (0.13%pa) to 5.22%pa
    • The Investment Home Loan Standard Variable Rate will reduce by 13 basis points (0.13%pa) to 5.49%pa
    • No Fee Variable Rate, Extra and Base Variable Rate home loans will also reduce by 13 basis points (0.13%pa)
    • LOC down 0.10%.
    • Base variables down 0.13%.
    Note that CBA have been providing noticeably larger discounts (1.50% is not uncommon) for the last few months compared to their majors. Having a higher SVR over time (as a result of rate cuts not being passed on) may be one way to offset it.

    Here's hoping others follow with larger reductions.
     
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  7. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Set the precedent for the others to follow suite.
     
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  8. Lacrim

    Lacrim Well-Known Member

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    I think rents are going to head south though D.T. (in general). Hold onto your tenants.
     
  9. Delfredo

    Delfredo Member

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    Also means that you should review your current loan with your broker every year, refinance to a better deal if opportunity arises. Of course if you do this within 12 months of existing loan, your broker may lose on existing lender clawing back on your broker's commission. In the real world, are brokers sensitive to clients refinancing within 12 months?
     
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  10. D.T.

    D.T. Adelaide Property Manager Business Member

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    Yea my WA property rent is heading south. My SA rents are heading up.
     
  11. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    Depends on the client and the level of loyalty and respect for previous work carried out.

    If this was not agreed to in the original Credit Guide / Quote then the broker is not in a position to claw-back a cent, and what the average broker does as far as I am aware.

    It is an unfair system and was originally introduced to stop loan churning but is now applied in a blanket format no matter the reason. I have read more and more that brokers are having some success in being reimbursed by the lender if it was due to a sale of property of divorce for example.

    I had one client who sold their house and I got a claw-back. I called to find out why and it tuns out they sold up to move int their dads house as he had just had a near fatal car accident. Our circles overlapped and I new this to be true and that they where not rolling in doe so let it go to the keeper and told my client I should be donating to your cause if anything.

    So it is a case by case basis and I can count on one hand the number of times I have requested payment for services rendered to be reimbursed by the client and if I went into detail a reasonable person would agree it was fair enough!
     
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  12. mcarthur

    mcarthur Well-Known Member

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    For those lucky enough to have a few IPs already, remember that refi = review of you on the servicing calculators. You may not even qualify for what you already have!
     
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  13. Colin Rice

    Colin Rice Mortgage Broker Australia Wide Business Member

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    This ^^^^^ is becoming more and more common unfortunately.

    Pre APRA it was rare I could not place a deal now its a once a week event :eek:

    Bring back OFI (other financial institutions) repayments at actual I say, but wont hold my breath. Used to have 9 on my panel now its been reduced to one which is ole mate Liberty, being a non bank lender and not under the current regime!
     
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  14. Redom

    Redom Mortgage Broker Business Member

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    NAB @ 0.10% according to SMH.
     
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  15. hash_investor

    hash_investor Well-Known Member

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    evidence enough the cut wasn't required?
     
  16. oracle

    oracle Well-Known Member

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    Only way remaining is to pick up the phone and demand higher discount or wait for a really low 2 year fixed rate and lock it in around 3.50%

    Cheers,
    Oracle.
     
  17. Azazel

    Azazel Well-Known Member

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    Hurrah!
    Better than a poke in the eye with a blunt stick.
     
  18. hash_investor

    hash_investor Well-Known Member

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    Still waiting to hear an update from RAMS
     
  19. Peter_Tersteeg

    Peter_Tersteeg Finance broker and strategist Business Member

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    ANZ now down with 0.12%.

    Objectively this is a bit of a joke. Lenders have already been slashing rates, this cut was already factored in months ago. At this point the RBA is fairly ineffectual as far as lender rates are concerned.

    After the CBAs announcement, NAB and even ANZ have had a massive opportunity to look good. It could have been a marketing bonanza. They've missed a massive opportunity which the smaller lenders are sure to capitalize on.

    They could easily make up for a full rate cut by reducing their discounting tactics. Effectively they've have the same margins, but still look good to the general public.
     
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  20. Corey Batt

    Corey Batt Finance Strategist Business Plus Member

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    Agreed - ANZ in particularly could have used this chance to claw back marketshare, considering they have been relatively absent in the price war as of late - so they could cut deeply only to end up being market average.