CBA raises variable rates by 0.45%

[Rolf Latham]

Besides...at some point I suspect deffered establishment fees will be removed.

Unlikley on an existing facility where the contract pre dates that change.

With lenders like the one you are looking at ??, which are broker only, the lender will simply recover the cost from the broker ( as many do now) , so dont be surprised if more brokers have enforceable clawback provisions going fwd.

Incrasingly, the regulators and pollies are introducing things that will cost the end user more.

ta
rolf

 

[peaches]

Having said that there is already some cannibalization of CBAs book going on by one of its owned entities. BWA are doing some pretty aggressive stuff on intros with nil app fees with a nice 95 % IO with offset.

Not a bad strategy for CBA get the DEF's on the old loan and restart the DEF counter using Bankwest - smoke and mirrors.

 

[peaches]

The Rock at 7.09% 3 years fixed with a 100% offset has got to be looked at - yes they are finicky but so are most building societies.

 

[sash]

What are those chinks in you opinion??

They do want people with lower LVRs....

smells like Advantedge.

Choicelend probably

good product ..............but has its chinks too

If you are going mainly fixed Heritage is a good option too, but once again has issues.

ta
rolf

 

[Intrinsic_Value]

As for share prices....just remember Westpac was sitting at $28 about 8 months ago now it hovers between 22-24...I should know as I own over 3000 shares. One of the reasons I suspect is the position they took on Home Loans. Remember people wil try to keep their banking and loans together. I suspect there was a move away from Westpac when they moved away from the pack in terms of rates.

Time will tell....but if past is a predictor....CBA is likely to be seen as more risky...particularly if people move all their business. Remember it is 20% of the profitable customers who will make the move because other banks and credit unions will court them.

This ends our lesson on banking theory Intrigued!

actually the reason for Westpac's shares falling is the reduced market expectations of future profit growth. PE ratio's are hence contracting.
When the shares where $28 analysts were forecasting significant profit growth into 2011 and 2012, these expectations are now being wound back.

They were also bought late last year/early this year year by the international hedge funds as part of a long strategy with the AU$. This was unwound mid this year.

Profit growth does not come from maintaining constant loans at lower margins.

If westpac had not increased its rates i think the share price would be lower than it currently is.

Notice also the decline in the share price post ex dividend date (greater than the dividend), i think the stock may be in the process of being shorted now that the shorts dont have to worry about the dividend.

For the record my portfolio is only 10% big 4 banks (mainly NAB), so i'm not overly fussed.

 

[Rolf Latham]

Hiya

Some negs

No offset

A variable rate is exactly that..................attractive today. Fixed rates are good, often pretty much in the bottom quartile.

U can get better variables at higher lvrs through Homeside as an eg

A relatively high def establishment cost for loans > 250 k, which GROWS if rates rise if u are on variable

Limited security, only nice stuff, no funny properties

Used to be quite flexible about borrowing structues, less so in the last few weeks with having dumped HDTs


Plusses at the mo

nil app fees

nil ongoings

up to 40 % more comm than many lenders, hence the rebate style brokers try and flog it a lot, since they can actually go close to making a dollar on it.

No clawback, the borrower carries it in the deferred establishment fee ( again another reason some brokers do like it)

Used to use both mortgage insurers, now only use QBE

Flexible about what constitues income

ta
rolf

 

[Spectre]

Interesting article with the SMH earlier

http://www.smh.com.au/business/waiting-game-for-banks-to-move-into-line-of-fire-20101109-17m21.html

Noting the part where they say Westpac hasnt increased rates and is probably costing them $8M a week.

So my thinking is if the other lenders (ie non cba) delay, then pass along a rate increase they can tow the line that they held off as long as possible, saved people some money in the gap because we waited 14 days to do it. Great spin.

Guess Aussies just got too used to rates going up too quickly after the announcement? I wouldnt say theres any collusion between all but CBA, even though Ralph was in China...

 

[sash]

Yep...spot on Rolf.....they pretty conservative.

Given that NAB backs them....not surprised.

Hiya

Some negs

No offset

A variable rate is exactly that..................attractive today. Fixed rates are good, often pretty much in the bottom quartile.

U can get better variables at higher lvrs through Homeside as an eg

A relatively high def establishment cost for loans > 250 k, which GROWS if rates rise if u are on variable

Limited security, only nice stuff, no funny properties

Used to be quite flexible about borrowing structues, less so in the last few weeks with having dumped HDTs


Plusses at the mo

nil app fees

nil ongoings

up to 40 % more comm than many lenders, hence the rebate style brokers try and flog it a lot, since they can actually go close to making a dollar on it.

No clawback, the borrower carries it in the deferred establishment fee ( again another reason some brokers do like it)

Used to use both mortgage insurers, now only use QBE

Flexible about what constitues income

ta
rolf

 

[Peter 14.7]

I am with CBA and only on the 0.7% discount.

Can anyone advise what they are getting off CBA with over $1M loans and less than 60% lvr?

I dont have a relationship banker to badget as ebing Country CBA assumes we are all poor I guess Local loan officer gets confused with our portfolio and trying Melb only got me a business banker wanting to see me products.

However the big blockage in moving is Wife. We do all banking with CBA and she will stronlgy oppose move to another bank due to stress and changeover so is anyone getting 0.9% off? Like ANZ.

Thanks

Peter

 

[Spectre]

Hi peter

Stuff I'm seeing is a bit higher on the rate and lower on the fees, and if enough fat in the deal they're negotiating on rate outside of carded rate.