The 5’s Have Left The Building
The Big Four have run out of variable home loan rates beginning with a five. Unfortunately, for borrowers the bills haven’t disappeared along with them
Following the RBA’s decision to lift the cash rate by 0.25 percentage points to 4.60%, all four majors have passed on the increase. Compare the Market estimates that borrowers with an average $731,000 mortgage will pay roughly $5,568 more a year than they would have at the start of 2026.
The RBA wants the economy to slow. A lot of Australians have already taken their foot off the accelerator.
Property Market In The Fridge
Australia’s housing market is still heading south. While we’ve witnessed six consecutive months of declines, it’s not as bad as it looks according to property boffin, Hal Pawson, writing in The Conversation.
He argues that property prices have climbed 78% since 2020, so a 15% peak-to-trough decline would take values back only to around early 2024. Pawson says that rising interest rates have been a key driver of the downturn, which was underway before the federal government’s changes to negative gearing and the capital gains tax.
Cheaper houses sound promising for buyers until the bank reduces the amount they can borrow. Those with substantial help from Mum and Dad have a better chance of picking up a bargain provided The Bank of Mum and Dad is still open for business.
Forty Years Should Do It
When a 30-year mortgage no longer fits the household budget, just add another decade. Simple.
The latest lender to offer a 40-year term is Granite Home Loans. The product is available to owner-occupiers and investors, with a maximum loan-to-value ratio of 95%, including risk fees.
Extending the loan term can reduce monthly repayments, but you’ll end up paying a lot more interest over its 40-year life than you would with a shorter term. It’s a pity that no one has yet invented a 40-year income guarantee.
Banking Hubs: A Box of Tricks
After years of closing branches, Australia’s major banks have proposed putting face-to-face banking back into regional communities. Sound great? No. Turns out it’s the face-to-face banking you have when you don’t really have it.
The Australian Banking Association has proposed a trial of up to 10 shared banking hubs in towns without a branch. They could be in council offices, libraries or Australia Post outlets, staff would help customers but would not be permitted to give financial advice or carry out transactions.
An alliance of regional banks and customer-owned institutions argues that the “hubs” would provide a fraction of the services communities need. Customers still need cash, help with scams and somewhere to discuss financial problems privately. A shared counter may be better than no counter at all, but a concierge is not a substitute for a banker when something goes wrong.
No Surcharge. No Free Lunch
The extra fee you paid to use a credit card has gone, but the cost of processing the payment hasn’t. Merchants must now cover that cost themselves. They’ll either eat it or increase their prices.
The major banks have sensed an opportunity and are poaching merchants from each other by cutting their processing fees. Commonwealth Bank reduced its rate from 1.10% to 0.99%, while Westpac cut its rate to 0.79%.
Those cuts may help, but card payments still cost merchants money, it’s more than likely that customers will find it hiding in the price of their lunch. The same bill as before, but with better camouflage.
IN CASE YOU MISSED IT……..
Your New Investment Adviser Is a Bot
A Chartered Accountants ANZ survey found that 61% of Australian retail investors now use AI to inform investment decisions, up from 48% a year ago, although half of non-users say they do not trust the information it produces. Read more at News Hub.
The Broker Shuffle
Top two aggregator, Connective, is gaining on the frontrunner, The Loan Market Group, in the race to recruit brokers increasing its numbers by 63 in recent months. Finsure has reportedly lost nine and Lendi 10, although it disputes that number. Read more at The Adviser.
A Little Help With the Deposit
Queensland Country Bank has joined the federal Help to Buy panel, giving eligible buyers access through its retail and broker channels with deposits as low as 2% and government equity contributions of up to 30% for existing homes or 40% for new builds; Teachers Mutual is also opening access to trained brokers, while CBA remains the only participating lender that does not offer the scheme through brokers. Read more at Queensland Country Bank and Mortgage Professional Australia.
Fake Fifties on the Rise
More than 40,000 counterfeit Australian banknotes were detected in the year to March, the highest detection rate since June 2018, with $50 and $100 notes accounting for 95% of the fakes. Read more at The Conversation.
Points for Borrowing More
Westpac is offering eligible new credit-card customers up to 150,000 Qantas Points and 50 Status Credits, while some eligible business borrowers could earn up to 500,000 points through a new lending offer. Read more at Qantas Newsroom.
The Fine Print
This week’s lesson is that financial flexibility can mean a great many things: higher repayments, longer mortgages, new banking arrangements and another incentive to borrow. The challenge is working out which solutions improve a customer’s position and which just make the paperwork look better.
The financial services industry has plenty of products, but sometimes struggles to produce a simple answer.
Stay Sceptical. Question Everything. Ignore the marketing department.
