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Mortgage war erupts as CBA, NAB, Westpac slash interest rates; CBA cuts 70bp from its five-year fixed mortgage rate to 4.99%
Topic Started: 23 Jul 2014, 01:45 PM (10,154 Views)
Mike
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http://www.theaustralian.com.au/business/financial-services/cba-cuts-70bp-from-its-fiveyear-fixed-mortgage

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THE nation’s largest lender, the Commonwealth Bank, has for the first time in its history dropped its five-year fixed mortgage rate below the 5 per cent mark.

The bank has slashed 70 points from its five-year fixed rate to 4.99 per cent in what is the latest salvo in a banking sector battle to attract new homebuyers.

The new rate will be effective for new and existing customers from July 23 and will apply to Wealth Package and Mortgage Advantage Package products.

“This is a great opportunity for customers to lock in an extremely competitive rate for five years,” said Lyn Cobley, the bank’s executive general manager of retail products and third party.

Buoyed by low cash rates — which the Reserve Bank of Australia has left on hold at a record low of 2.5 per cent for almost a year — the banking sector has been dropping fixed mortgage rates as they try to lure new customers.

According to home loan rate tracker Rate City, the most competitive 5-year fixed home loan rate was UBank’s 5.43 per cent.

RBAdata shows the average 3-year fixed home loan rate has fallen from a peak of 9.4 per cent in July 2008, before the global financial crisis, to 5.20 per cent in June this year.

The shift in CBA’s loan-rate follows embarrassing findings from a recent Senate inquiry into incidences of fraud which occurred in the bank’s financial planning arm between 2006 and 2010.


5 years at a rate below 5%, wow that is tempting. Wonder if other banks will top this, I think we might see 4.79% to 4.89% from other lenders over 5 years soon. That is a great rate for such a long time.
http://mike-globaleconomy.blogspot.com.au/
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b_b
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Mike
23 Jul 2014, 01:45 PM
http://www.theaustralian.com.au/business/financial-services/cba-cuts-70bp-from-its-fiveyear-fixed-mortgage




5 years at a rate below 5%, wow that is tempting. Wonder if other banks will top this, I think we might see 4.79% to 4.89% from other lenders over 5 years soon. That is a great rate for such a long time.
Hang in there Mike.

The SVR will be 3% in 3-5 years.
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Dr Watson
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b_b
23 Jul 2014, 01:55 PM
Hang in there Mike.

The SVR will be 3% in 3-5 years.
What would that mean for Australian house prices?
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt — Bertrand Russell
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b_b
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Dr Watson
23 Jul 2014, 02:06 PM
What would that mean for Australian house prices?
I should be clear - this does not mean interest rates will not rise between now and then. They may. It's just the following cuts will push the OCR lower each cycle.l

However, property prices will probably stay above replacement cost for the next few years.

Depending on the extent of the supply response, we will have
- Prices eventually sliding back to replacement cost (normal cycle), remembering replacement cost probably ticks up 2-3% per year, or
- Prices moving very quickly below replacement cost (crash / correction, etc)
Edited by b_b, 23 Jul 2014, 02:15 PM.
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Gossamer
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http://www.smh.com.au/business/banking-and-finance/mortgage-war-erupts-as-commonwealth-bank-nab-westpac-cut-fixed-rates-20140723-zw1qd.html

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The Commonwealth Bank, National Australia Bank and Westpac on Wednesday became the latest banks to cut fixed rates, each giving customers the chance to secure historically low borrowing costs over the longer term.
Edited by Gossamer, 23 Jul 2014, 08:01 PM.
Common sense is a curse - those who have it need to suffer dealing with those who don't have it.

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Nelson
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Shadow
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Looks like the banks are doing the RBA's job for them.

Sub 5% fixed for five years is bound to encourage even more buyers into the already booming housing market.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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o2sd
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Shadow
23 Jul 2014, 08:05 PM
Looks like the banks are doing the RBA's job for them.

Sub 5% fixed for five years is bound to encourage even more buyers into the already booming housing market.
How about yourself? Going to pick up some more property before the next leg up?
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MMM
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Shadow
23 Jul 2014, 08:05 PM
Looks like the banks are doing the RBA's job for them.

Sub 5% fixed for five years is bound to encourage even more buyers into the already booming housing market.
I explained everything with Interest rates but you don't seem to get it. Jobs losses are falling faster than interest rates can to justify it, which is clearly shown with Sydney being the only capital to be above inflation since since house prices. And Sydney itself is only just above inflation in that time with many other capitals negative even in nominal terms. And what have we done to achieve so little since 2010. We dropped rates to record lows , relaxed foreign ownership rules and allowed people to use their superfund to leverage into property. We have increased fhb grants and removed stamp duty and created building grants on top of these.

So this is all we have achieved over this time by using all these measures, measures that are not real economic growth measures for now or for the future.So with all these things and at a time that our economy was absolutely thriving by comparison to today, we could only manage such little.

With all these measures being used up and running out of steam one by one. How will it go now that our economy is on the extreme decline as oppossed to thriving like it was not so long ago.

Soon you will realize that people who do not have jobs , cannot get a place to rent or obtain a mortgage to buy a home, now with our youth unemployment around 25%, higher than US , UK or euro. And those that rent now or have a mortgage to pay will not be able to pay it anymore once their jon is gone.

So what have we got now.

Record low interest rates.

Record lvrs

Record number claiming negative gearing and losses.

Record number of investors leveraging their super into property.

Record number of foreign buyers.

Record number paying interest only loans.

Record number of vacancy rates or headed there.

Record number of building in all capitals.

Record job losses

Record buisiness closures.

And last but not least, record number of bulls turning bears ;)

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Shadow
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Evil Mouzealot Specufestor

Yet despite all that doom and gloom Ted, house prices are still rising. Perhaps the doom and gloom is just in your head? You had better hope so, because if things are really that gloomy, and house prices are booming regardless, just imagine how much stronger the house price growth will be when conditions improve.
Edited by Shadow, 23 Jul 2014, 09:04 PM.
1. Epic Fail! Steve Keen's Bad Calls and Predictions.
2. Residential property loans regulated by NCCP Act. Banks can't margin call unless borrower defaults.
3. Housing is second highest taxed sector of Australian Economy. Renters subsidised by highly taxed homeowners.
4. Ongoing improvement in housing affordability. Australian household formation faster than population growth since 1960s.
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o2sd
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b_b
23 Jul 2014, 02:10 PM
I should be clear - this does not mean interest rates will not rise between now and then. They may. It's just the following cuts will push the OCR lower each cycle.l

However, property prices will probably stay above replacement cost for the next few years.

Depending on the extent of the supply response, we will have
- Prices eventually sliding back to replacement cost (normal cycle), remembering replacement cost probably ticks up 2-3% per year, or
- Prices moving very quickly below replacement cost (crash / correction, etc)
A couple of questions.

1. Do you calculate replacement cost ex. land purchase or inc. land purchase?

2. Is the uptick of 2-3% in replacement cost simply an inflation effect, or something else?
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