Trending Financial News 10 September 2019

A new Aussie bank opens its (mobile) doors

Sydney-based Xinja Bank has begun marketing transaction accounts to customers after securing a full banking licence from the Australian Prudential Regulatory Authority. Xinja Bank is the fourth new Aussie bank to win regulatory approval this year behind Volt Bank, Judo Bank and 86 400.

Xinja chief executive Eric Wilson expects to roll out savings products in the next few months and loans early in 2020 but will not be issuing credit cards.

Xinja will only offer products and services through its mobile banking app.

“We don’t have bricks and mortar branches or old technology,” Eric Wilson told BankingDay.com.

Westpac group cuts investor home loan rates

Westpac and its subsidiary banking brands, St George Bank and Bank of Melbourne and BankSA have slashed investor home loan rates by up to 1.30 percentage points.

Westpac’s four-year investment fixed option (interest only) was cut 1.30 percentage points to 3.79 per cent. Westpac’s principal and interest variable rate for investors was cut 0.34 percentage points to 3.74 per cent and its interest only variable rate for investors was cut 0.44 percentage points to 3.99 per cent.

The chief executive of comparison site InfoChoice.com.au, Vadim Taub, said: “The rates from the online lenders are too low to ignore. The big banks are reacting.”

Mortgage market warming up for Spring

The mortgage market bounced back in July with new mortgage sales growing 3.9 per cent, the Australian Bureau of Statistics reported. The July result was the strongest monthly outcome since October 2014 and up from 1.9 per cent growth in June.

The value of new mortgage lending to owner occupiers grew at 5.3 per cent in July, seasonally adjusted, with increases in all states and territories except Tasmania. New mortgage lending for investment dwellings rose 4.7 per cent.

The value of mortgage sales in July was still down 9.6 per cent on July 2018.

First home buyers are returning

The number of new home loans sold to first home buyers was up 1.3 per cent in July 2019 to the highest proportion of the market since 2012.

CoreLogic analyst Cameron Kusher told BankingDay.com that falling dwelling values and low interest rates have helped first home buyers.

“Dwelling values have fallen, housing market values have now bottomed, interest rates were reduced in both June and July and borrowing capacities have increased with the removal of previous lending restrictions.”

Refinancing is the new black

Lending to households for refinancing a home loan jumped up 5.4 per cent in July according to data released yesterday by the Australian Bureau of Statistics. The increase in refinancing activity follows two months of RBA rate cuts and rate cutting activity by lenders competing for business.

Variable rate home loans are now charging rates as low as 2.89 per cent p.a. (comparison rate 2.91 per cent p.a.) from Reduce Home Loan’s Low Rider Variable loan. Fixed rate home loans are now available with rates starting from 2.74 per cent p.a. (comparison rate 2.94 per cent p.a.) for three years from Well Home Loans Well Balanced Fixed Rate Home Loan.

“Borrowers who are prepared to switch and are armed with information about the best rates in the market can get big rate cuts right now because lenders are scrambling for business,” said Vadim Taube CEO of leading Australian financial comparison site InfoChoice.com.au.

Personal loan rates go under 5%

New personal loan sales fell 2.6 per cent in July, according to data released yesterday by the Australian Bureau of Statistics. The personal loan market has been slow or in decline in recent years as consumers find alternative ways to finance goods and services. But banks and other lenders are fighting back and actively looking for new business.

Some personal loan providers are reacting with new loan rates and easy online applications. The lowest rate now available on InfoChoice from a reputable mainstream lender is 4.29 per cent pa (comparison rate 4.83 per cent pa) from loans.com.au’s Green Car Loan.