Trending Financial News 12 July

First home buyers are BACK!

New home loan sales are falling and first home buyers are jumping in to take advantage of cheap loan deals as lenders compete hard in the shrinking market.

New home loan sales fell 2.4 per cent in May 2019 and sales are down 20.9 per cent over the past 12 months, according to the Australian Bureau of Statistics figures.

Excluding refinancing, new lending to owner occupiers fell 2.7 per cent in May and new lending to investors fell 1.7 per cent.

However first home buyers bounced back with their share of lending rising to 28.5 per cent, the highest level since 2012.

Westpac admits to big mistakes and a clean-up

Australia’s oldest and second biggest bank, Westpac, has investigated itself following a request from regulators, and has committed to cleaning up its corporate culture and governance systems.

Westpac Group CEO Brian Hartzer said he acknowledges the need to “improve non-financial risk management and oversight.”

Westpac and other banks were asked by the regulator to investigate themselves after an inquiry into the Commonwealth Bank found serious shortcomings in the way the bank treated staff and customers.

“Our board and senior executives are committed to addressing the shortfalls identified in the report,” said Mr Hartzer, “and will continue to provide regular updates on our progress.”

Westpac is currently heavily promoting its investor loan rates and Altitude credit cards which are currently offering 120,000 Velocity points (terms and conditions apply).

A Nimble move as watchdog clamps down on bad personal loans

Small online lender Nimble wants to become registered as a real bank and has applied for a limited license from the prudential regulator.

The move by Nimble came one day before the announcement of a new clampdown on irresponsible lending in the payday and online small loans market. Nimble has previously been criticised by debt counsellors and regulators for its high interest, small loan model but is not the subject of the new intervention powers and has emphasised its responsible lending practices.

Nimble CEO Gavin Slater said thousands of hard-working Australians are suffering from financial exclusion from the mainstream banking.

“Short-term lending has come under a lot of criticism for high interest rates,” said Mr Slater, “The reality is that the need is real and we would like to offer more affordable rates.”

Mr Slater said Nimble was more popular with its own customers than some of the big banks.

ANZ announces new easier home loan serviceability requirements

ANZ will replace the buffer interest rate of 7.25 per cent with a new serviceability rate of 2.50 per cent pa above the actual home loan rate being paid by the borrower. For most home loan borrowers that means they will able to borrow more and some people who may have been rejected for a loan altogether will now be eligible for credit.

ANZ is the first big bank to lower the floor assessment rate but the other three big banks are believed to be reviewing their rates, according to Mortgage Business.

According to the InfoChoice refinancing calculator, on a $300,000, 25 year variable rate home loan, a 7.25 per cent rate will require monthly repayments of $2,168.42 while a lower serviceability rate of 6.03 per cent (2.5 over ANZ Simplicity PLUS P&I’sv current rate of 4.53 (comparison rate 4.57 per cent) will require $1,938.41 in monthly repayments, a difference of $230.

Personal loan rates plummet as lenders chase borrowers

The personal finance market has continued to contract with fewer loans being sold. New personal loan sales were down 0.7 per cent in May 2019 and down 16.2 per cent over the last 12 months.

Lenders are responding to the lean conditions for them by slashing rates to record lows. First Option Bank’s BeGreen personal loan is currently charging 6.99 per cent pa (comparison rate 7.69 per cent). Peer to peer lender SocietyOne has personal loans for borrowers with excellent credit priced at 7.50 per cent (comparison rate 9.51 per cent).

Wisr has personal loan from 8.50 per cent (comparison rate 12.48 per cent). Compare personal loans from Australia’s banks, credit unions and other lenders at InfoChoice.

Crypto crashes after Trump twitter storm

US President Donald Trump has sent cryptocurrency markets into a tailspin with a viral Twitter tirade branding Libra and Bitcoin “not money” and insisting there is only “one real currency.”

Bitcoin (down $792) and Ethereum (down $389) lost 5 per cent of their value in 24 hours while XRP fell 8 per cent and Bitcoin Cash lost 9 per cent.

“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air,” tweeted the President.

“Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….”

The President also took aim at Facebook’s proposed global online currency Libra.

“Facebook Libra’s ‘virtual currency’ will have little standing or dependability,” the President tweeted last night Australian time.

“If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations.”

Like many other government and industry experts, the president has questioned why private companies like Facebook want to issue their own currency.

“We have only one real currency in the USA, and it is stronger than ever.

“It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!”

Find out more by checking out InfoChoice’s Guide to Facebook Libra