6 October 2016
Sydney, 6 October 2016: Home buyers have more than 3,600 home loan products to choose from, at the lowest interest rates in half a century, the Australian Bankers’ Association said today.
“This very competitive market allows home buyers to choose the loan product that best suits their financial needs,” ABA Chief Executive Steven Münchenberg said.
“Although there is a wide range of both variable and fixed rate products available, more than 85 per cent of home buyers choose a variable rate product.”
Mr Münchenberg noted the potential of offering tracker rate mortgages in Australia was one of the topics discussed during Parliamentary hearings into major banks this week.
“A tracker rate mortgage is a variable rate loan offered in some countries as an alternative to fixed interest rate products. It means that the interest rate moves up or down in line with an indicator rate, such as the cash rate,” he said.
“This differs to standard variable rate mortgages which are linked more to the total cost to banks of providing the loan.
“At the moment tracker rate mortgages are not a product offered by the 100 or so financial institutions which provide home loans. This suggests there is not a viable market opportunity for this type of product,” he said.
“Banks are, however, always looking at ways to improve their products and services. This involves reviewing product design and drawing on international experiences to see if customers would get any value from a new product.
“It’s important that when customers are searching for a home loan, they know what features are most important to them. For example, no application fee, flexible repayment options or a low interest rate,” Mr Münchenberg said.
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More than 57,000 customers have received hardship assistance during recent lockdowns across Australia.
“Many people don’t realise how prevalent financial abuse is and that it may be a red flag for future violence.”