"Banks get into rates battle"

Hi Followers

I came across this article this morning and thought id share it with you all:

Big banks are unleashing aggressive home loan interest-rate discounts to compete for customers as the lending market dries up.

Fixed rates for popular mortgage packages have fallen by up to 0.65 of a percentage point in the past two months as Commonwealth, Westpac, NAB and ANZ jostle for extra business, analysis for the Herald Sun shows.

Some variable rates fell by up to 0.15 of of a percentage point, according to Canstar Cannex calculations, based on $250,000 loans.

The discounts arrived as a RateCity report released yesterday found the first-home buyer market was in freefall, mainly because of steeper variable rates. There have been 40,000 fewer buyers in the past 12 months, translating to a borrowing black hole of more than $11 billion.

Canstar spokesman Mitchell Watson said competition was intensifying as the number of people taking out loans retracted in the turbulent economic environment.

Customers with big deposits, or loans of more than $500,000, usually got the best deals. Mr Watson said: "They are fighting each other for new customers or to get people to switch. There is genuine competition between the majors as they clamour for business and try to drive people into the market."

Westpac is the latest to up the ante, yesterday announcing further fixed-rate reductions of up to 0.2 of a percentage point.

It is also offering a limited-time 20 per cent discount on the first year of new home and contents insurance with Premier Advantage packages.

Commonwealth recently vowed to beat any rate advertised by its big rivals until the end of this month on fixed or variable interest loans worth at least $100,000.

The CBA was rated the worst major mortgage lender in review site Mozo's poll of 23,000 people.
ING Direct was voted best overall bank for the second year in a row.

Mr Watson said fixed-rate home loans were now below variable rates and locked in stability, but he warned some carried significant penalties for breaking the term early. Customers also could potentially lose out if variable interest rates dropped in the future.

This information was gathered from:
http://www.perthnow.com.au/business/business-old/banks-get-into-rates-battle-as-lending-market-slows/story-e6frg2qu-1226148740330

For further information please contact Deb Brady on 0405 570 903 anytime.

DEB BRADY
0405 570 903