| Banks engaging in anti-competitive behaviour: Choice
Australian banks and financial institutions are engaging in anti-competitive behaviour in the home loan industry, according to the consumer group Choice. Research from Choice shows extremely high mortgage exit and entry fees are often preventing borrowers from switching to a better deal on their home loan. Choice's director of policy and campaigns Gordon Renouf says these high fees are undermining the competitive interest rates being offered by independent lenders. "The problem is that if you see someone else with a quarter or a half a per cent better mortgage rate, you're going to be reluctant to change if you're going to be paying $1,000 or $2,000 to get out of your mortgage contract," he said. "It's going to take a while before you reap that money back from a lower rate." But the Australian Bankers Association chief executive David Bell says Australian mortgage fees exist to ensure proper background checks on borrowers take place.
Seattle Investor Group Calm as Markets Swing
It certainly could be. Thirty-year fixed-rate mortgages have been dropping since Christmas. The average is now 5.5 percent, quite low by historical standards. So if you have an adjustable rate mortgage that's going to reset, now could be an excellent to time to swap into a fixed-rate loan. Lending standards have changed since the "anything goes" days of the housing bubble that burst last fall. "Here's why," says Greg McBride, senior financial analyst with bankrate.com, a personal finance Web site. "There are actually standards now. Instead of the loan requirement being the ability to fog a mirror, the people now in the best position to get mortgages have good credit, proof of income and either money for a down payment or equity in an existing house." Lower interest rates will take some of the sting out of adjustable rate loans that are resetting higher.
Fed's rate cuts ignite a rush to refinance
A positive note in the chorus of bad economic news sounds loudly, like a call to arms. Or, as happened after the Federal Reserve dropped short-term interest rates three-quarters of a percentage point Tuesday, a race to refinance. The refinancing frenzy began right after the Fed's announcement, local brokers and bankers reported. The 10-year Treasury bond rates on which fixed mortgages are based also fell, and interest rates for 30-year loans plunged as far as 5.125 percent, the lowest level since spring 2004. On Jan. 1, the 30-year fixed rate averaged 6.07 percent; it has ranged between 6 percent and 6.5 percent for two years. Though the number of refinancing applications will not be available until Wednesday from the Mortgage Bankers Association, newspaper and television accounts from Bangor, Maine, to Los Angeles described a boom in activity.
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