Newcomers Hit A Nerve With New Loan Deal
The Age
Wednesday February 5, 1997
AUSTRALIA'S newest home-finance lender has been swamped with inquiries since announcing a 6.99 per cent interest rate.
The Professionals real estate group and Finance Express announced on the weekend that they were teaming up to offer the new mortgage rate from Monday and that they will go even lower if official interest rates drop again, as predicted.
The slashed rate undercuts the banks by 1.25 per cent, which is the equivalent of $80 a month on a $100,000, 25-year mortgage. Not even the super-aggressive discount lender Aussie Home Loans, with an interest rate of 7.49 per cent, matches the new product.
The Professionals general manager, Mr Tony Hargreaves, said: "We have been swamped with inquiries and there were well over 600 calls on the first day. The response is extraordinary and it is clear that people are keen to pursue lower rates, better service and a total service."
The new loan is available through the 500 offices of the Professionals and is available to anyone who meets normal loan qualifications. Mr Hargreaves said: "Anyone can apply for the loan, regardless of where they are buying their property from."
There is no application fee for the new loan, but standard valuation and legal fees apply.
The loan also features redraw and early repayment facilities. For inquiries, call 1800 818 616.
Meanwhile, and unconnected to the new loan, FAI Home Loans has issued a warning to home buyers about making false comparisons between home-loan products.
FAI Home Loans managing director Mr John McGee said: "A classic mistake is for people to compare the 'no frills' loans offered by some banks with the standard variable loans offered by mortgage managers.
"The interest rates may be similar, but there is a vast difference between the two types of loans. The standard variable loans offered by most mortgage managers tend to include a host of special features. For example, FAI's flagship RMT loans include such benefits as redraw facilities, flexible payment terms, portablility and the option to swap to fixed rates.
"By contrast, the banks' no-frills loans tend to offer only the bare basics, with special features being reserved for their standard variable loans."
Mr McGee said that if home buyers want to make more accurate comparisons it would be better for them to compare the standard variable loans offered by mortgage manangers with the standard variable loans offered by banks.
Mr McGee said that home loans were at their most affordable level in years.
"It is difficult to recall when there has been a better time for home buyers," he said in a press release. "Our experience has been that more people are thinking of entering the home buyers' market to take advantage of such low interest rates. A number of people are also taking the opportunity to refinance their home loans in order to get the most benefit from the new rates. This can make a lot of sense when potential savings are so large."
© 1997 The Age