<p>Australia&rsquo;s biggest bank, CBA, has increased its 2- and 4- year fixed home loan rates by 0.05 per cent for owner-occupiers paying principal and interest.<br />
&nbsp;<br />
It is the third time CBA has hiked its 4-year fixed rate this year, but the first time the bank has hiked its 2-year rate for owner-occupiers.</p>

<p>&ldquo;CBA is factoring in a rise in the cost of funding over the next couple of years, particularly now the RBA&rsquo;s term funding facility has closed.&rdquo;<br />
&nbsp;<br />
A recent economic insights report from CBA shows around half of its new owner-occupier loans settled in June were fixed, with the two-year rate the most popular.<br />
&nbsp;<br />
&ldquo;Despite today&rsquo;s hikes, CBA still has one rate under 2 per cent &ndash; the bank is not going to let go of that easily,&rdquo; said RateCity.com.au research director, Sally Tindall.<br />
&nbsp;<br />
&ldquo;CBA&rsquo;s two-year rate was extremely competitive and attracting significant interest. By keeping it just under 2 per cent, the bank is trying to keep momentum going at a more sustainable price,&quot; she said.<br />
&nbsp;<br />
Analysis of the RateCity.com.au database shows over the last two months, there have been more hikes than cuts in every fixed rate category with the exception of 1-year rates.<br />
&nbsp;<br />
But ME Bank has cut rates across a few home loans from early August, while boosting its refinance cashback offer to $3,000.</p>

<p>The cuts were across its two-year fixed and variable home loan range.</p>

<p>The two-year fixed rate Member Package home loan was cut by 20 basis points to 1.89% p.a. (3.17% p.a. comparison rate*) - a &quot;record low&quot; for the lender.</p>

<p>This particular comparison rate applies to owner occupier borrowers with 80% LVR i.e. a 20% deposit, paying principal &amp; interest.&nbsp;</p>

<p>The same advertised rate applies to other LVRs in the product line, but different comparison rates apply.</p>

<p>A number of other home loans - both fixed and variable - with different LVRs were also cut by between 5 and 31 basis points.</p>

<p>While the majority of changes to fixed rates in the last two months have been hikes, RateCity advise the opposite is happening in the variable rate market.&nbsp;<br />
&nbsp;<br />
RateCity.com.au home loan database analysis shows 49 lenders have cut at least one variable rate in the past two months while 10 lenders have hiked variable rates in that time.</p>

<p>The vast majority of variable rate cuts are reserved for new customers, not existing ones, RateCity research director, Sally Tindall, said.</p>

<p>&ldquo;Variable rates are at record lows, however, most of these deals are reserved for new customers, not existing ones, unless you specifically ask,&rdquo; she said.<br />
&nbsp;<br />
&ldquo;Before you call, check what rate your bank is giving new customers for the same home loan, but also find out what other lenders have on offer.</p>

<p>&ldquo;If you are paying significantly more than a new customer, pick up the phone and ask your bank &lsquo;why?&rsquo;.</p>

<p>[smartcode_project:default project_id=7363 project_image_fid=41840]<br />
&nbsp;<br />
&ldquo;If you have a good track record of paying down your debt, and the bank thinks you might switch to a more competitive lender, they&rsquo;re likely to play ball.<br />
&nbsp;<br />
&ldquo;A lot of people think a handful of basis points won&rsquo;t make much of a difference, but if the discount is permanent, then the savings can potentially run into the thousands in just a few years,&rdquo; she said.</p>

<p>ME has also increased its cashback offer to $3,000 for externally-refinanced home loans.</p>

<p>The new lending amount must be minimum of $250,000.</p>

<p>Eligible refinancers must apply by Friday 27 August inclusive, and settle by Friday 29 October.</p>

<p>ME Bank CEO Adam Crane said the cuts would assist borrowers &quot;looking to maximise their borrowing in a challenging property market.&quot;</p>

<p>In February, ME Bank merged with Bank of Queensland with the deal expected to be finalised this month.</p>


But ME Bank cut rates across a few home loans, while boosting its refinance cashback offer to $3,000

jchancellor-FAypfDUnLy

Home loan mortgage rate rises continue

<p>CBA has&nbsp;hiked its 3-year fixed rate for owner-occupiers in a further sign that Australia may soon see the end of ultra-low fixed rates.</p>

<p>Australia&rsquo;s largest bank has increased both its 3&nbsp;and 4-year fixed rates for owner-occupiers paying principal and interest by 0.05 per cent, as well as increasing some interest-only loans by 0.10 per cent.</p>

<p>[smartcode_project:default project_id=2407 project_image_fid=77652]</p>

<p>This follows hikes of 0.20 per cent by CBA in March to its 4- and 5- year fixed rates. CBA now only has one rate under 2 per cent &ndash; fixed for 2-years.</p>

<p><strong>CBA home loan changes for owner-occupiers paying principal and interest:</strong></p>

<ul>
	<li>
	<p>3-year fixed rates have been hiked from 2.14% to 2.19%, an increase of&nbsp;0.05%</p>
	</li>
	<li>
	<p>4-year fixed rates&nbsp;have been hiked from 2.19% to 2.24%, an increase of&nbsp;0.05%</p>
	</li>
</ul>

<p>RateCity.com.au research director, Sally Tindall, said CBA has become the first major lender to increase its 3-year fixed rate from the bank&rsquo;s record low.</p>

<p>&ldquo;Today&rsquo;s rate hikes might be small, but they point to a fixed rate market that&rsquo;s starting to rise,&rdquo; she said.</p>

<p>&ldquo;When CBA hiked its four-year rate in March, a flurry of lenders followed in its wake. We expect the same thing will happen with three-year rates in coming months.</p>

<p><img alt="" height="354" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/lowest_may_rates.jpg" width="850" /></p>

<p>&ldquo;Banks are anticipating a rise in the cost of funding over the next few years, with the next cash rate hike expected in 2024, if not earlier, and the end of the RBA&rsquo;s term funding facility in just over one month.</p>

<p>&ldquo;The funding, which offers banks cheap money fixed for three years, has helped lenders offer record low rates to its customers. When the funding wraps up, many banks are likely to recalibrate their rates,&rdquo; she said.</p>


This follows hikes of 0.20 per cent by CBA in March to its 4 and 5-year fixed rates in a further sign that Australia may soon see the end of ultra-low fixed rates

jordan_55689

CBA has hiked its 3 and 4-year fixed interest rates

<html><body>
<p>CBA has today cut its one- and two-year fixed rates for owner-occupiers, but bucked the trend by hiking its four-year rate.</p>

<p>Following pressure from rivals Westpac and NAB, CBA has brought its two-year fixed rate to under 2 per cent.</p>

<p>However, the most significant change was the hike to its four-year fixed rate. This is the first big four bank to hike its four-year owner-occupier rate since October 2019 – a sign the bank is pricing in a higher cash rate from 2024.</p>

<p><img alt="" height="128" src="https://s3-ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/pictures/article-images/cba_rates.jpg" width="791"></p>

<p>Sally Tindall, research director at RateCity.com.au, said the cuts to the bank’s four-year fixed rates could be a sign of things to come.</p>

<p>“CBA has bowed to market pressure by cutting its two-year rate to under 2 per cent,” she said.</p>

<p>[smartcode_project:default project_id=3490]</p>

<p>“However, the bank is giving with one hand, and taking away with the other, hiking its four-year fixed rate by the same amount for new customers."</p>

<p>“After the last RBA rate in November 2020, all four big banks responded by cutting fixed rates, in particular their four-year rates. Less than five months later, CBA has taken this deal off the table."</p>

<p>“It’s not surprising CBA has decided to raise its four-year fixed loan – the bank is pricing in at least one cash rate hike over this time."</p>

<p>[smartcode_project:default project_id=89720]</p>

<p>“Governor Lowe has repeatedly said the first round of cash rate hikes wouldn’t be until at least 2024, but that’s only three years away."</p>

<p>“Someone who fixes their rate for four years today could very well see variable rates go up within that time, provided the economic recovery stays on track."</p>

<p>“Other banks could start hiking their four- and five- year fixed rates in coming months to factor in a potential rate rise in 2024,” she concluded.</p>
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CBA has today cut its one- and two-year fixed rates for owner-occupiers, but bucked the trend by hiking its four-year rate.

CBA is the first of the Big Four banks to hike rates

<html><body>
<div class="shortIntro parbase">
<p class="vertical-animate desktop transition"><span style="color: #333333; font-family: Tahoma, Helvetica, Arial, sans-serif; font-size: 12.15999984741211px;">By late April some 1000 Australians have now purchased a property with Commonwealth Bank under the Australian Government's First Home Loan Deposit Scheme.</span></p>
<p class="intro">The scheme, launched on January 1, 2020, helps eligible first homebuyers purchase a home with a deposit of as little as five per cent.  </p>
</div>
<div class="bodyText base page basicpage">
<div class="article article_no_image article_no-hover article-wrapper">
<div class="inner inner-padding-left-off">
<div class="content">
<p>In addition to the 1,000 customers who have purchased a home, CBA has helped a further 2,400 customers secure a place under the scheme.</p>
<p>CBA announced that customers who have reserved a place under the Scheme who have not yet found a property, can now request to extend the deadline to find a property and enter a contract of sale for another 90 days. </p>
<p>It will give customers a total of six months to find a property and provide them with the peace of mind they need during this difficult period that their place under the scheme is safe. </p>
<p>CBA Group Executive Retail Banking Services, Angus Sullivan said, “There is a lot of interest and uncertainty about the impact the coronavirus will have on the Australian property market so it’s encouraging that we have crossed this exciting milestone in the current environment. </p>
<p>“As Australia's largest home-loan lender, our Australian-based call centres remain open for business and we continue to have industry leading processing and turnaround times for home loan applications. </p>
<p>“Whether you are purchasing your first home or looking to buy a new home we want to reassure customers that we are open for business and here to help them realise their home ownership goals. </p>
<p>“We also realise that some customers are looking for support during this difficult period and we have a range of measures to assist them including deferring repayments and reducing repayments to free up cash.” </p>
<p>Rebecca Dore, a 32-year-old from Victoria, was the thousandth customer to purchase her dream home with CBA in Pakenham, Victoria.</p>
<p>“I was saving for a deposit but was a few years off buying a property so when my Lender contacted me and explained that I would be able to purchase a home much sooner by participating in the Scheme I was ecstatic."</p>
</div>
</div>
</div>
</div>
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j.ballantyne1990-6AQqhLzZaK

Commonwealth Bank secures 1000 first home loan deposit scheme purchasers

<html><body>
<p>CBA, the nation's largest mortgage lender, is axing residential and commercial loans for self managed super funds (SMSF).</p>
<p>The bank will be withdrawing its SMSF lending product, SuperGear, from October 12.</p>
<p data-gtm-vis-first-on-screen-7770372_137="3501" data-gtm-vis-total-visible-time-7770372_137="4000" data-gtm-vis-has-fired-7770372_137="1">Westpac Group, the nation's second largest mortgage lender, already pulled out of the sector in July.</p>
<p>But the <em>Australian Financial Review</em> said the move had shocked mortgage brokers and financial advisers. </p>
<p>"We are seeing the writing on the wall for leveraged SMSFs," said Sally Tindall, director of research for RateCity, which monitors rates for financial service products. </p>
<p>"This calls into question the viability of the leveraged SMSF sector."</p>
<p>"CBA has decided to withdraw its SMSF lending product that allows SMSF trusts to purchase both residentially and commercially secured properties," a spokesman said.</p>
<p>"This is part of our strategy to become a simpler, better bank.</p>
<p>"We are streamlining our product portfolio and have decided to discontinue SuperGear."</p>
<p data-gtm-vis-first-on-screen-7770372_137="14516" data-gtm-vis-total-visible-time-7770372_137="1900">The bank said it will be writing to customers who hold a SuperGear loan outlining the changes.</p>
<p>It will continue to support existing loan accounts.</p>
<p data-gtm-vis-first-on-screen-7770372_137="15518" data-gtm-vis-total-visible-time-7770372_137="1900">Regulators fear problems arising from SMSF investors leveraging their superannuation to invest in a single residential property because of the lack of diversification and increasing dangers of loss in a falling property market where it is difficult to find tenants. </p>
<p data-gtm-vis-first-on-screen-7770372_137="16517" data-gtm-vis-total-visible-time-7770372_137="2900">A key finding of the David Murray-led financial system inquiry in 2014 was that leverage should be banned in superannuation funds to mitigate the risk of financial instability.</p>
<p data-gtm-vis-first-on-screen-7770372_137="16517" data-gtm-vis-total-visible-time-7770372_137="2900">The government rejected his advice.</p>
<p>Nearly $700 billion is held in SMSF funds by more than one million investors.</p>
<p>During the past four years the number of members investing in property has increased from about 3.6% to 6.9% of SMSF fund assets.</p>
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Leveraged SMSF sector in doubt as CBA scraps SMSF lending

<html><body>
<p>EXPERT OBSERVER</p>
<p>The Commonwealth Bank of Australia reported its full year results last week.</p>
<div>Cash profit for FY2018 of $9.41 billion was down 4.7 per cent. </div>
<div> </div>
<div>But overall this remained a solid underlying result with a fully franked dividend of $4.31 per share heading the way of investors (up 2 cents or +0.5 per cent...thanks!). </div>
<div> </div>
<div>Increased funding costs impacted net interest margins adversely as expected.</div>
<div> </div>
<div>However, the group more than made these costs back in the financial year through changes in the funding mix and the repricing of investor and interest-only loans.</div>
<div> </div>
<div>In fact, the net interest margin was up 5bps over FY2018 to 2.15 per cent.</div>
<div> </div>
<div>Group loan impairment expense was also very low, at just 15bps.</div>
<div> </div>
<div>Note that the Group will adopt AASB 9 from 1 July 2018, and therefore total provisions will increase to reflect forward-looking factors as required by the standard (this adjustment will will pushed through opening retained earnings and therefore will have no impact on the current year income statement). </div>
<div> </div>
<div>'As if' earnings</div>
<div> </div>
<div>A number of one-off items including the $700 million AUSTRAC penalty reduced the statutory NPAT and cash NPAT.</div>
<div> </div>
<div>Excluding one-off items, cash profit was up by 3.7 per cent to above $10 billion.</div>
<div> </div>
<div>From the slide deck</div>
<div> </div>
<div>There were so may great slides in the full year preso that's it's impossible to know where to start, but here are just a select few. </div>
<div> </div>
<div>90+ day home loan arrears were notably up a bit year-on-year from 0.6 per cent to 0.7 per cent. </div>
<div> </div>
<div>Click to enlarge</div>
<div> </div>
<p> </p>
<div><img src="https://2.bp.blogspot.com/-NikJ1XTC2aM/W2obenRu8FI/AAAAAAAAra0/Bu_BuRukzkwr3D1deQO6h0gvC7zNKaT1ACLcBGAs/s640/CBA1.jpg" width="640" height="510" data-original-height="646" data-original-width="810"></div>
<p> </p>
<div>(Source: ASX: CBA)</div>
<p> </p>
<div>The year-on-year increase in arrears was mainly due to Western Australia and the Northern Territory, with changes elsewhere relatively benign. </div>
<p> </p>
<div><img src="https://3.bp.blogspot.com/-BPTlAOXy52Q/W2obesMjuDI/AAAAAAAAraw/-PYHhx5N81AQ0yr6tGOyTwhmdVcTyqm9gCLcBGAs/s640/CBA3.jpg" width="640" height="374" data-original-height="738" data-original-width="1257"></div>
<p> </p>
<div>The switching of interest-only (IO) loans peaked in September 2017. </div>
<div> </div>
<div>There is still plenty of scheduled IO expiry over the next two financial years, however, with the blue bars arguably representing the loans most at risk of arrears (being IO loans to investors). </div>
<p> </p>
<div><img src="https://1.bp.blogspot.com/-oV4exYg2jIY/W2obf3MIo_I/AAAAAAAAra8/NGaVAzwTFF8L3X27_sdVCv1GdNukH2T6wCLcBGAs/s640/CBA4.jpg" width="640" height="276" data-original-height="643" data-original-width="1490"></div>
<p><br>Home loan repayments in advance remain popular, though not for all borrowers.<br><br></p>
<div><img src="https://3.bp.blogspot.com/-zmTCKRUK6YA/W2ocvV3VTBI/AAAAAAAArbY/bIkgLBE06_Ak3f32pJmK2CLHaDUB__-mgCLcBGAs/s640/CBA7.jpg" width="640" height="330" data-original-height="750" data-original-width="1454"></div>
<p> </p>
<div>Finally, CBA optimistically notes that outside recessions or global financial crises modern housing downturns generally only last about 8 months on average (so on that basis, this one should be about done).</div>
<p> </p>
<div><img src="https://3.bp.blogspot.com/-baZfqx1F2yk/W2obgIOcIrI/AAAAAAAArbE/cfkEW3UjyasvCcohNfaoPV3nTBFD9zsgwCLcBGAs/s640/CBA6.jpg" width="640" height="330" data-original-height="796" data-original-width="1536"></div>
<p><br><em>PETE WARGENT is the co-founder of AllenWargent property buyers (London, Sydney) and a best-selling author and <a href="https://petewargent.blogspot.com/" target="_blank">blogger</a>.</em></p>
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pwargent-M4siyDbqQY

WA home loan arrears still problematic for CBA: Pete Wargent

<html><body>
<p>Australia’s property market isn't going to crash, according to the Commonwealth Bank economist Gareth Aird.</p>
<p>Nor even a hard landing, but something not too dissimilar to the corrections of 2010 and 1989, he said.</p>
<p>But he has forecast that house prices in Sydney and Melbourne will continue declining until the end of next year.</p>
<p>“We (CBA) see the peak to trough being around 10% in Sydney and a little less in Melbourne (8.8%)," he told Business Insider.</p>
<p>Click <a href="https://edge.alluremedia.com.au/uploads/businessinsider/2018/09/CBA1.jpg" target="_blank">here</a> to enlarge</p>
<div>
<img src="https://edge.alluremedia.com.au/uploads/businessinsider/2018/09/CBA1.jpg" alt="">Source: <small>Commonwealth Bank</small>
</div>
<p>Aird’s model is calculated as a function of the four variables listed below.</p>
<p>1. Annual changes in mortgage rates (1 year advanced);</p>
<p>2. The annual change in the flow of credit (six months advanced);</p>
<p>3. Auction clearance rates (four months advanced);</p>
<p>and 4. The house price expectations index from the Westpac/Melbourne Insitute consumer sentiment survey (2 months advanced).</p>
<p>He concedes that “predicting property prices can look foolish retrospectively”.</p>
<p>However, the chart below shows that the four leading indicators outlined above track actual movements in house prices “very well”.</p>
<div>
<img src="https://edge.alluremedia.com.au/uploads/businessinsider/2018/09/CBA2.jpg" alt="">Source: <small>Commonwealth Bank</small>
</div>
<p>“Clearly, we can’t forecast auction clearance rates or the household perception around the future path of dwelling prices.”</p>
<p>CBA’s base case is that Sydney home prices will decline by 5% annually in 2018 — a relatively mild assessment given the latest weekly data from CoreLogic Sydney house prices are currently 5.9% lower than this time last year.</p>
<p>That would take overall declines from Sydney’s July 2017 peak to around 7.5%.</p>
<p>“For Melbourne, prices would be down by around 5% from their November 2017 peak,” Aird said.</p>
<p>“Nationally, we think prices will end the year down by around 3% with a roughly similar outcome likely in 2019."</p>
<p>Aird noted the broader economy outside of housing is still performing well, along with the continued strength in Australia’s labour market.</p>
<p>He expects the unemployment rate will decline further which lowers the risk of mortgage defaults.</p>
<p>There’s Australian rate of population growth, he added.</p>
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