Trending Financial News 30 September 2019

RBA expected to cut rates on Tuesday

The Reserve Bank of Australia is expected to cut official interest rates this week, bringing the leading home loan rates in the market to around 2.5 per cent. Right now, the lowest advertised home loan rates on InfoChoice’s database of 145 institutions are now around 2.74 per cent. (Well Home Loans, comparison rate 2.96%, 2 year fixed, OO P&I).

Variable home rates now start at 2.89 per cent pa (comparison rate 2.91% pa).

“There are now well over a hundred home loans with advertised rates under 3 per cent but still just two lenders with comparison rates under 3 per cent,” said Vadim Taube, CEO of leading Australian financial comparison site, InfoChoice.com.au.

“The lowest home loan comparison rate is now 2.90 per cent pa from Reduce Home Loans.”

Three popular savings accounts cut rates

The Reserve Bank of Australia is expected to cut official interest rates this week by 0.25 per cent. Some popular savings accounts have already cut rates last week.

“Last week three really popular, market leading savings accounts cut their maximum rates,” said Vadim Taube, CEO of leading Australian financial comparison site, InfoChoice.com.au.

“The RAMS Saver, the ING Savings Maximiser and the ANZ Progress Saver are three very popular accounts with savers.

“All three have cut their maximum rates this week and more savings account cuts are coming in the next fortnight.”

St George, Bank of Melbourne and BankSA also cut savings account rates. The highest savings account rate now generally available with an ongoing maximum bonus rate is 2.5 per cent from Bank of Queensland, Greater Bank, MyState Bank and UpSaver.

Young people say they can’t afford to move out

Young adults are staying at home because they think they can’t afford to buy a home of their own, according to CoreLogic’s Perceptions of Housing Affordability 2019 research.

34 per cent of adult Australians who are still living with their parents think they will be at least 30 before they move out. That is up from 20 per cent two years ago.

One in ten adults still in the family home say they have no intention of leaving. The main reason for continuing to live in the parents home is: “I can’t afford to move out”.

“The survey shows that 64 per cent of those earning more than A$150,000 think they cannot afford to move out,” said CoreLogic’s research director, Tim Lawless.

Is owning a home still important?

Because of high prices, fewer Australians (81 per cent ) believe home ownership is important to them according to the CoreLogic perceptions of Housing Affordability 2019 report. That is down from 89 per cent two years ago.

The biggest challenges for home buyers are not being able to save a deposit, not being able to get approved for a loan and the cost of stamp duty.

23 per cent of aspiring homebuyers said they could only afford a deposit of between 10 and 19 per cent. 34 per cent said they could only afford a deposit of between 1 and 9 per cent.

CoreLogic found that it takes a typical Australian household almost nine years to save a 20 per cent deposit, and more than ten years in Sydney and Melbourne.

Heritage Bank vows to ‘right thing’ by members

Queensland based Heritage Bank will “do the right thing” by savers and depositors and absorb some of the impact of rate cuts said Heritage CEO Peter Lock.

Over the last year, the mutual bank has reduced its interest rate margin (the difference between average loan rates and deposit rates) by 0.5 per cent to 1.89 per cent and suffered a 4 per cent slide in net profits to $43.3 million.

“It’s a bit of compression,” Peter Lock told BankingDay.com.

“Two thirds of our customer base are depositors, versus one third borrowers.

“Even if profit suffers, we’ll continue to do the right thing as long as we can for members.”

Heritage Bank reported retail deposits grew by 6 per cent to $6.9 billion in the last financial year.

Heritage Bank prepares to take on big banks

Some smaller banks may have to merge to survive in the next few years said the CEO of Heritage Bank, Peter Lock. Heritage has lifted its capital reserves to 14.4 per cent, up from 14.1 per cent in 2018.

“Some smaller customer-owned banks will have a very tough time,” said Mr Lock, “I would see this leading to more consolidation in the industry.”

Heritage reported that loan approvals lifted by 8 per cent to $1.8 billion last financial year.

Heritage Bank is building two new branches in Sydney – at Castle Towers and Westfield Parramatta. Heritage Bank aims to have 10 branches in Sydney in the medium term, and 10 branches in Melbourne.