Posted on October 9, 2014 · Posted in Finance Blog

Home Loan Market / Rates

Last update was 20 September 2014

The best available rates for a $400,000 home loan at an 80% LVR shown below (subject to change and various other costs including upfront, monthly and annual fees)

Package Variable (offset account & package fee)…………………… 4.69% (down 0.05% from last update with a new leading lender)

Basic Variable (no offset account)………………………………………… 4.69% (up 0.04% from last update)

1 year fixed rate…………………………………………………………………. 3.99% (wow still)

2 year fixed rate ………………………………………………………………… 4.49% (no change)

3 year fixed rate ………………………………………………………………… 4.69% (no change)

5 year fixed rate ………………………………………………………………… 4.84% (down 0.05%)

Key points:
•Competition remains strong between the lenders.
•The 1 year fixed rate is still exceptional at 3.99%.
•Not a lot of change in the 2, 3 and 5 year rates, with only the 5 year rate sharpening a little since the last update.

Commercial Lending Market

•Competition remains strong between the lenders.
•After two of the major banks lead into the sub $1m Commercial Lo-doc lending space, we have a new player with an OUTSTANDINGLY FLEXIBLE product:
◦Lending from $50,000 up to $1m.
◦Commercial LVRs up to 80%, Residential LVRs up to 100%
◦Income verified by self declaration supported by the most recent BAS statement.
◦Business needs to have traded for at least 2 years with no trading losses in the past 2 years.
◦Needs to have clear ATO Portal.
◦This is an amazingly flexible lending product. An indication of the competition that is out there.
•2 major Commercial lending banks are currently offering up to $10,000 to cover switching costs for clients refinancing from one lender to the other.

SA Economic Update
•The economy remains soft and underperforming compared to the rest of Australia, albeit the have been signs of modest improvement over the past 6 – 9 months. Slow population growth and a high manufacturing concentration have affected this. The next 12 to 18 months are forecast to produce a slight recovery in economic growth supported by the decline in the AUD and low interest rates.
•Business conditions have improved slightly over the past 6 months and are sitting well above the levels of the past 2 or 3 years. Business investment is expected to increase, although non residential construction is likely to ease.
•The unemployment rate has declined slightly, although remains high compared to the rest of Australia (6.6% vs 6.2% approx).
•The housing market continues to show steady growth, assisted by low interest rates. Residential construction activity is expected to pick up with building approvals recently increasing.
•Consumer spending remains subdued with most punters taking a cautious approach.
•Population growth has remained steady over the past 12 months

with a net migration to other states offset by a higher net overseas migration into SA.

Reference: ANZ Research, SA Economic Update September 2014

As at today’s date:

AUD / USD = 0.89 ($0.90 last update)

Cash rate = 2.50% (no change)

30 day BBS2 = 2.64% (2.62% last update)

About the Author

Greg Samuel has worked in the finance industry for over 13 years. He has worked in Corporate, Commercial and Rural Banking and now uses his skills to help his clients as a finance consultant and broker.