Higher LVRs make a comeback
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|Tuesday, 01 February 2011|
High LVR lending is back en vogue, with three lenders announcing changes in their policy.
Last week, ING DIRECT and National Finance Club both announced plans to increase their maximum loan to value ratio to 95 per cent.
And LJ Hooker is getting ready to join the ranks.
Speaking to The Adviser, LJ Hooker financial services general manager Peter Bromley said the lender would increase the maximum loan-to-value ratio on its standard variable home loan to 95 per cent.
“We are looking to make this change within the week,” Mr Bromley said.
“We have had an excellent response to our home loan product from both our broker and real estate network. We want to position ourselves as a viable alternative to the banks, but to do that, we understand that we must provide a highly competitive product suite.”
In addition to extending the LVRs on its home loan products, Mr Bromley said the lender would also look to expand its product suite to include low doc and line of credit mortgages within the next few weeks.
ANZ has made a decision to raise its variable mortgage rate by 0.39% to 7.8%, though it will also abolish mortgage exit fees and offer a suite of discounts and subsidies to attract customers who are looking to switch lenders.
In a widely expected and foreshadowed move, the bank went 0.14% above the RBA’s official cash rate movement of 0.25%, slightly less than CBA’s 0.45% rate rise, citing high wholesale funding costs and intense competition for deposits.
ANZ CEO Australia Philip Chronican said: “Raising lending rates is never an easy decision and while we have taken a commercial decision to increase variable interest rates, we’ve also recognised that we need to take the lead in doing more to give customers’ choice and to help them manage their finances in this uncertain interest rate environment.
To sweeten the move, the bank has officially abolished all deferred establishment fees (or exit fees).
It will also provide up to $1600 in fee discounts and subsidies for customers until the end of 2010 to reduce ‘switching costs’ for new and existing customers who may be attracted to refinance by a new disount offer on its 3-year fixed rate.
The fee discounts will include a waver on ANZ’s Loan Approval Fee (up to $600) for all mortgage customers applying for the 3-year fixed rate offer, as well as a subsidy of up to $1000 to offset switching costs charged by other lenders.
On it’s 3-year fixed rate, the bank is now offering a 0.44% discount until the end of 2010, which effectively reduces the interest rate to 7.1% – 0.7% per annum less than the standard variable rate.
“This package gives Australians greater choice by reducing switching costs and introducing a very competitive fixed rate offer for customers wanting to fix their mortgage interest rate at a lower rate compared to the standard variable rate,” Chronican said.
Commenting on exit fees, Chronican said: “Our mortgage exit fee was already among the lowest in the market and by abolishing it we are telling our customers we are prepared to win and retain their business through competitive pricing, convenient products and great customer service.”