Bankwests new loan

BankWest is poised to launch a new mortgage product that will turn the home lending market on its head.

According to The Australian the bank is releasing details today of a discounted standard variable interest rate product, capped at 7.5% until 2012. It is believed that the discounted variable rate will be priced at 5.4%, 30 basis points below BankWest's current rate of 5.7%.

The Reserve Bank of Australia has held the interest rate at 3% for several months, but economists are predicting the central bank will raise rates in light of recent optimism.

The new product will be made available to brokers from Thursday.

Capped Loans were around from a couple of lenders back about 7 years ago, but werent too popular.


Yeah, despite offering such a facility on a regular basis, I can't remember ever writing a capped loan.

The lender has to cover it's bases one way or another. I recall there being a 'capping fee' and a somewhat chunky deferred establishment fee, which is what probably deterred people from using that option

However, it will be interesting to see the details of the BankWest offering. It's important to have options and at least this is one more item on the menu

The Capped Rate Home Loan is a variable rate product with a cap set on the interest rate. This means that the interest rate is guaranteed not to increase past a certain limit for a pre-determined period.

Eligibility Minimum loan amount $100,000.

Interest Rate
The interest rate is a variable rate with a cap set on the interest rate. Each tranche release will have a common cap expiry date and common cap interest rate. Please refer to the current interest rate fees and charges schedule for rate details or see below.

Rate Type Rate Comparison Rate
Variable Rate 5.40% p.a. 5.56% p.a.
Capped Rate* 7.50% p.a. 7.65% p.a.
*The capped rate only applies until 10/11/2012. A loan may not be avaliable on the above terms.

Loan Value Ratio (LVR) = Maximum 90% (plus capitalised LMI)
Owner Occupier loans* ; Investment loans*; construction of an investment dwelling*. (*May differ for country and regional areas).

Applicable Fees
Application fee - $700
A Capped Rate Home Loan Cap Purchase Fee is payable in order to cap the interest rate. The fee is 0.15% of the loan amount and is payable upfront at the time of application.
Monthly loan maintenance fee of $12 applies to this home loan product.
A Capped Rate Home Loan Prepayment Fee - Payable each time you repay 50% or more of your amount of credit (including any variation to it) before the capped term expiry date. The Capped Rate Home Loan Prepayment Fee is calculated as follows: 1% of the amount of the loan being repaid.
Transfers available, standard transfer procedures and fees apply.

Online Redraw
Free, no minimum, $5K per day Pay Anybody maximum. Home Loan Access (over the counter) fees applicable.
Considering what happened in 08 is still fresh in a lot of peoples minds then the Bankwest product may not sound too bad.