'aussie' Loan Rates Won't Rise
The Sun Herald
Saturday September 17, 1994
AUSSIE Home Loans has dropped another bombshell on banks by suggesting that its 7.5 per cent mortgage rate which will be reviewed in January is unlikely to rise above 8.25pc on current interest rate trends.
This is likely to be at least 1.25pc below the rate the banks expect to be charging then. It will almost certainly trigger a shake-out among the smaller banks, despite its small size, as the home lending boom comes off the boil.
The recent lift in some banks' variable rates means there is now a full 2pc difference in the loans available to home buyers.
Aussie Home Loans Managing director John Symond said it had received a record 5,000 calls last week - three-quarters of them from borrowers wanting to refinance their bank loans.
Ausie Home Loans' 7.5pc home rate, frozen until January with a $250 establishment fee, is believed to be below its cost of funds. This has led its competitors, including the major banks, to assume that it would jack up its rate in January.
But Mr Symond said it would remain below the banks and, if wholesale interest rates did not move up any more before then, the new rate would be between 7.95 and 8.25pc. The major banks already charge 8.75 to 9.5pc.
The closest bank competitor to Aussie Home Loans is Citibank which has frozen its 7.75pc rate plus $500 on a credit card until December.
Aussie Home Loans is undercutting the banks even more for investment loans- its 7.5pc plus $775 establishment fee is 3pc below some of them.
© 1994 The Sun Herald