6.9% Home Loans Dive
Sun Herald
Sunday February 2, 1997
AUSTRALIA'S mortgage loans war has intensified, with a new lender offering a 6.99 per cent interest rate from tomorrow.
And the rate will drop even lower if the Reserve Bank cuts official interest rates soon, as it is widely tipped to do.
The new offer is the lowest true variable rate since the late 1960s, undercutting the banks by 1.25pc - $90 a month on a $100,000, 25-year loan.
The lender - a joint venture between real estate group The Professionals and Melbourne lender Finance Express - poses the most damaging blow to the banks since the meteoric rise of discount lender Aussie Home Loans, which charges 7.49pc.
The full-service loan is equivalent to the major banks' 8.25pc rates - including redraw, early repayment and split facilities - according to The Professionals general manager Tony Hargreaves.
Over the life of a loan the savings add up to $25,000, he said. It even undercuts the banks' no frills basic loans of about 7.3pc and, in some cases, matches the supposedly heavily discounted "honeymoon" rates offered by the banks for the first year to attract new borrowers.
Adding to the banks' embarrassment, the slashed rate comes as some lenders have only just passed on to their borrowers the 0.5pc official interest rate cut from early December.
Mr Hargreaves said The Professionals' loan would be profitable although the margin would be "thin". The group is relying on attracting a large number of borrowers quickly.
"It is based on volume, " he said.
The indications are the rate will be snapped up by home seekers and also those who want to refinance their loans from dearer lenders.
It is believed the national co-operative of real estate agents conducted a three-month trial of the rate in Kogarah and southern Sydney and attracted overwhelming interest.
The loan is only available through the 500 offices of The Professionals, but Mr Hargreaves said this did not mean purchasers had to buy through the group.
WHAT YOU PAY: Page 68.
HOME RATES Rate Monthly repayments You % on a $100,000 loan save The Professionals 6.99 $699 $88 Westpac* 7.29 $718 - $19 Aussie Home 7.49 $732 - $33 National 8.25 $787 - $88 * No frills loan only
© 1997 Sun Herald