Trending News 20 June

It’s a borrowers market as home loan sales crash

Sales of new home loans has slumped. The latest data from the Australian Prudential Regulatory Authority shows that new home loan volumes crashed 16.4 per cent in the first three months of 2019, compared with the same period in 2018.

The value of new owner-occupied loan sales fell 15.2 per cent, the value of new investment home loans fell 8.7 per cent while the value of new interest-only loans was down 21.3 per cent.

Low-doc loan sales crashed with the value of new low-doc loans down 60.8 per cent.

How big is the average home loan in Australia?

The value of the average residential home loan in Australia has grown 2.9 per cent to $276,900 in March 2019 from $269,000 in March 2018, according to official data from the Australian Prudential Regulatory Authority released yesterday.

The number of active home loans in Australia grew slightly (up 1.2 per cent) over the last 12 months to 5,956,700. The total value of these loans is almost $1.7 billion.

APRA reports that bank profits are down in the March quarter of 2019 by 4.7 per cent as loan sales slow.

New debt agreement laws will protect consumers

Aussies with large consumer and unsecured debts will get greater protection under reforms to insolvency laws.

From next week, Part IX Debt Agreements can only run for a maximum of three years and can only be administered “fit and proper” persons with insurance.

The number of active Part IX debt agreements has increased markedly, while the total number of bankruptcies has fallen. Debt agreements are an alternative to bankruptcy for people with unsecured, consumer related and smaller levels of debt.

The Consumer Action Law Centre says many debtors are choosing to enter a debt agreement that may not be the most appropriate method of managing their obligations.

Big banks cut savings account rates

Commonwealth Bank and National Australia Bank have cut their savings account base interest rates to 0.3 per cent p.a.

The base rate is the ongoing rate that savers get after the introductory rate expires or if they don’t meet the terms of the bonus interest rate.

CBA’s NetBank Saver now has a maximum introductory rate of 2.2 per cent. NAB’s Reward Saver interest rate has come down 0.25 percentage points to 2.05 per cent.

InfoChoice chief Vadim Taube told the Herald Sun: “We have never seen at-call savings account rates this low.

“These rates are now only fractionally above the inflation rate of 1.3 per cent and the base rates are all well under the inflation rate.

“That means your money is not growing significantly in real terms and could be losing value if you leave it sitting in one of these low rate savings accounts.”

Are Aussies rejecting Facebook money?

Most Aussies think Facebook’s new Libra money project is a mistake, according to a small indicative poll on InfoChoice’s Facebook page. In response to the question: “Facebook is launching its own money, but is this a good idea?” about 80 per cent of respondents voted NO.

Facebook, Visa, Mastercard, PayPal, Uber, eBay and 23 other online commerce brands have announced a plan to establish a new online currency for Facebook called Libra.

Users will be able use Libra to make purchases on Facebook, eBay, Uber and other online merchants. Facebook says Libra will be “a simple global currency and financial infrastructure that empowers billions of people.”

Read more about Facebook’s Libra plan at InfoChoice.