Australian Mortgage and Loan Information

Our Australian real estate economy as I call it, continues to teeter on the brink of disaster.

I call it the real estate economy, because if you are like me, my house is my most important asset and my life revolves around making it comfortable, maintaining, improving and keeping it. My jobs and money making enterprises are generally a means to this end.

Why are we on the brink of disaster? Banks are ripping off small business and the public alike by not passing on the rate cuts. They are being wasted on bank profits and extremely obscene salaries for bank executives.

Thousands of jobs are disappearing daily as small business is forced to cut back on expenditure. People will be forced to sell their homes because the banks have not passed on the RBA interest rate cuts. Major Bank’s continue to overcharge mortgage holders for their finance, official interest rates are at an all time low of 3%, yet small business pay in excess of 6%. The majority of small business use residential real estate as their surety for their business loans. So as small business’s start to go under as predicted, the Australian banks will have plenty of residential property to sell as they foreclose on mortgages and we know they will flood the market like they did in the late eighties as it seems all the Bank CEO’s have memories similar to fish, they can be caught time and time again on the same hook and maggot. All this on the back of a Government deposit guarantee, that effectively bailed out the banks. The guarantee is indirectly from the very taxpayers they are ripping off.

The remedy?

The Government needs to put a cap on first mortgage loans. A figure of 2% should be plenty. That is, if official cash interest rate cashs are 3%, then the standard variable first mortgage rate would be 5%. If the RBA lower rates by .25% then the maximum rate for this mortgage would come down by a similar rate. The bank’s however, would be given a period of 15 to 20 days to adjust the rate.

Cheaper money for small business will stimulate the Australian economy in general, but the important boost will be to the real estate economy as the cost of keeping and obtaining a home will be more sustainable.

Write to your local MP if you agree with my sentiments. We can as a group achieve change.

Unfortunately my much wished for defection from home loan copy-cat ism of one of the big four Australian Banks has failed to materialise, at least in this short term. I trust my source, I think it will only be a matter of time before you will be offered a distinct choice among the big four.

In the mean time if you are hunting for a new loan, ask your mortgage broker about the various banking/home loan package deals available. Many packages offer savings of up to .7% on standard variable loans and lines of credit. The catch is the annual fee, which sometimes is in excess of $350. However when you consider the savings in transaction account fees and loan interest if you are borrowing more than $250,000 you should be well ahead.

Before you dump your current lender, It would be judicious to inquire about transferring your existing home loan to a package with them. You could save thousands in fees and charges generated by a transfer of lender. I would also consider using some mortgage checking software to check the accuracy of your loan and credit card statements before you cast your current lender adrift. Please also read your current loan documents and try and get an understanding of what you currently have.

Be careful what you wish for? The chances are you will get it!