Suncorp now loading rate for >90% loans

[Bradsdad]

From 1 July 2009, a new Loan to Value Margin of 0.20% p.a. will apply to each new Home Loan where
the Loan to Value Ratio (LVR) is equal to or greater than 90%.
Recently, many lenders have made changes to the maximum acceptable LVR for Home Loans. Whilst
Suncorp Bank continues to offer home loans to customer’s with a maximum LVR of 95% (plus Lenders
Mortgage Insurance), due to the current fi nancial environment and the additional cost to fund this loan
type, an interest rate margin will now be added to the standard rate for new loans where the LVR is
greater than 90%.

 

[Qlds007]

Steve

I think they could cut the rate by 1 per cent and I still wouldnt deal with them.

Honestly customer service is a joke.

Phoned BDM with a post code to be told "yep checked with credit that is fine for 95%". Submitted the deal, 3 full weeks later deal hadnt moved so pushed and pushed for week to be told we are onto that and will have an answer on Wednesday.

Come Wednesday they say post code not exceptable for 95%, could do 90% (which of course could have done anywhere) although whilst the client has been with his current employer for 8 years we can only take his base salary and not the compulsory night shift and weekend work he is required to do as a nurse. Therefore we can drop it back to 85% and approve it now.

I ask you thank god it is just a matter of time before they get taken over my another institution.

 

[Dragon]

That's an interesting approach by Suncorp.

Most institutions are capping the maximum LVR at 90% for new customers, and allowing existing customers to borrow more. For us - that is 95%.

We will however, allow the mortgage insurance to be capitalised on top of the loan by 2%. ( i.e - new customers 92% , existing customers 97% )

The move by Suncorp to charge more for the high LVR loans would appear to disadvantge the first home buyers. This goes against the policies of the gov in stimulating this sector.

While it may represent ( in their opinion ) a reflection of the risk attached to high LVR borrowings, I can't see it remaining a popular move if Suncorp want to actually write this business.

 

[Rolf Latham]

Im With RT

Stick to Insurance please Suncorp..............

Rate for risk is a reasonable concept, but where that risk is 100 % (usually) underwitten by an LMI insurance policy paid for by the borrower its gouging.

Bankwests similar attempt at forcing a borrower over 90 % to only use their more exxy variable products, and locking them into that with no option to fix for 2 years could be construed as unconscionable conduct when variables once again rise

ta
rolf

 

[Qlds007]

Dragon

The same could be said for your Bank who where the first major to card a premium on lodoc business.

Maybe this signifies how St George want treat to lodoc applications.

 

[Dragon]

Absolutely.

Or it could represent a correct pricing of the risk.

Considering incorrect priced risk was the main cause of the US mortgage crisis, then it may have been a brilliant move in hindsight.

I speculate though, I'm not involved with policy or pricing decisions. My job is to assist clients with lending needs.

 

[Token Funder]

Dragon

The same could be said for your Bank who where the first major to card a premium on lodoc business.

Maybe this signifies how St George want treat to lodoc applications.

Richard...you're not serioiusly suggesting there shouldn't be a premium on Lo Doc are you?

 

[Qlds007]

No not at all I believe they should be a premium for lodoc and most of the major lenders factor that into their rate by excluding their Professional package discounts but SGB are the only lender that actually loads the rate over and above this.

 

[Token Funder]

No not at all I believe they should be a premium for lodoc and most of the major lenders factor that into their rate by excluding their Professional package discounts but SGB are the only lender that actually loads the rate over and above this.

I don't blame them

 

[asdf]

No not at all I believe they should be a premium for lodoc and most of the major lenders factor that into their rate by excluding their Professional package discounts but SGB are the only lender that actually loads the rate over and above this.

After billions of dollars in profit and they still want more? Thats generous! I'll decide whether I want to pay the premium thank you very much. I think I will know better about my own financial circumstances than a computer model spitting out garbage. If I default, it goes on my file, therein ends the IP journey.

Try your hardest to get the cheapest and best loan. Risk pricing is BS and its all relative... to the exec who needs to add more zeros to their rem package. Remember, bank rules are there for guidance only. They are definitely not in place for your best interest. The people putting the rules together are not brain surgeons or NASA scientists. Get to know the system and always be one step ahead of them.

 

[Peter_Tersteeg]

I'm getting very fed up with trying to get loans over 90% atm. They can get approved by the lender only to be knocked back by the insurer for the most arbitary reasons. Very frustraiting.

The insurers just don't want to underwrite them.

 

[Qlds007]

PT I agree

Got one approved today at 95% of $595K although has taken nearly a month of anquish let alone the tree of paper we had to supply covering everything from the make of the kitchen sink to the grandmothers credit card statement.

Thought the clients had gone but i guess one of the beauties if you are honest with them from day 1 as to how long these things take it is not that they can up stumps and go next door.

 

[grossreal]

hi all
this post interests me for one reason
first its on about suncorp nd I am very interested how the snowman is going to do with the bank will he melt the bank and keep the insurance for me I think he will
I am very interested in that I was told they have no bad debt and i have been reading tey have 1/3 of there comm accounts are or have gone west
and for me they are a very good example of why we are int he sh-t we are in now
I told there head of comm a long while ago and not only that I got so angry and I hope he still has his card that I crossed out his title and wrote apprentice to credit
and thats the problem
first it was credit knocking them back and now it the insurers in both cses the manager (or lack of it) is just not doing their jobs for me
now lets look at the second reason
the dragon
first I have no problem with people going as a un named person and I use grossrealisation and thats a generic funding name
but there is some thing that I have been involved in for a very long time and thats business
and business take a long time to build
and as one of my group keeps telling me and told me yesterday they are your treasures.
well having a name st george who ever you are for me is a bit over the top you can have saint george for me thats fine
If I was to have the golden archers up here I would be in very big trouble.
and thats just for you to understand people like me have to negotiate with these business and I know how nasty they can get
I do not ask that you be banned I do ask you to change it for your own sake
unless you have bought out all the share holders and westpac well i stand corrected but the name and the logo are trade marked and if you work for them you will know that
yes they allow you to use in cards etc
but that would not alow you to say I am them
its that simple
and just for your future I would not use their logo in the way you currently have
why
If I did the would sue me and I can fight that
if you are an employee they can cause alot bigger problems so I would change it and simm could tell you how to do that and a board is for training and this is training on what not to do
now the other thing I am very interest in st g is the changes in the operations
bankwest has changed in a big way and waiting to see what st g is going to do
I think having someone within any bank is a valuable asset so I don't wish you to think this is a flame to a post
and you can pm me as I always want to talk to people in banks
but your name to be twikked and also take off the logo as it will come up on google and we all will be in trouble
you sim and the board

 

[Dragon]

Grossreal,

I appreciate your comments, and no , I don't take them as a flame to me personally.

I agree with part of what you wrote, I shouldn't be representing myself as the whole organisation as some people may take this as our policies in every situation. Or if I am taken out of context, then this may make things difficult for our bank.

I have amended some things, avatar being one of them to allow people to make a pretty easy connection to which lender I do represent, and an appropriate disclaimer.

I will continue to add my opinions, as I think the property market will be recovered via investors returning , so want to place myself to take advatnage of this and help any potential investors that want to deal directly with a lender representative.

Thankyou.

 

[grossreal]

hi dragon
yep is fine with me and look alot better but thats my personal opinion and welcolm as they say not as they type.
?i think I will be bouncing stuff off you if thats ok as I like to see the banks point of view
I must say so you know I am on the other side of the desk
I am assisting people that have issue with banks or lenders and assisting them to get out of those issues and in most cases it involves me buying the asset
helps me helps my clients and usually does not assist the bank or lender
except reduces there bad debt ledger
so we are at the same table but I am on the other side.
but thats fine
I do have clients that want loans but I am not a broker in the normal sense of the word
a loan facilitator would be a better term and most bankers stick there ears up when this is mentioned
I also have very little competion and always have new clients I have no website nor for that matter a business card because I like it that way.
this is one reason that I thought I would let you know my concerns
I hope you get alot from the site and
I thing I will say there is no silly question except the one you don't ask.
so I might ask a few silly question to most on a board but they do have a reason.
I hope you well
and look forward to your input.
oh and you will need to read my posts a few times as I am great at grammer and spelling its one of the things I excel in

 

[chilliaa]

I'm getting very fed up with trying to get loans over 90% atm. They can get approved by the lender only to be knocked back by the insurer for the most arbitary reasons. Very frustraiting.

The insurers just don't want to underwrite them.

actually im very happy to hear this, just another clog that is finally becoming sensible again.
From a macro perspective, no point having a mortgage insurance system, if there is no money to pay out if there is a systematic run on property prices.
This was another factor that contributed to the GFC. I'm glad this risk perameter is being reduced.

 

[Dragon]

There are bigger issues with the banks not even utilising external mortgage insurers.

I am not sure of what changed, but guess it was the Basel II accounting standards, that allow banks not to use a 3rd party for insurance.

Insurers started seeing banks self-insure the "good" risks and use 3rd party insurers for the "bad" risks.

This upsets the risk profile as if all risks are high, the premiums received for the good ones do not offset losses. meaning insuers wont cover anything but good risks and declining bad ones.

This is part of the reasons the lenders pulled back LVR's so if they decide to fully self insure, they are partly protected due to LVR.

I will add another disclaimer here, that this is my opinion internally and after talking to both mortgage insurers on a regular basis.

 

[grossreal]

hi dragon
why could you not do a 100% loan and have a external insurance policy wth say loyds for the amount of the loan
so say I have a 6 mil borrower and at the mment they can only get 60 or 65% of the value
why does the bank not look to do small syndicated loans
where the bank take the loan for 100% so to full 6 mil and the client has with a bank say 3 mil and 3 mil insured the same as current
except the client gets the insurance so its not mortgage insured
the gap is insured. the bank has its normal loan
and teh client has another insurance and that insure the bank
for any loss if they have to sell it up
this is possible in commercial lending
why is this not something a bank can do
if you wish I have one to give it a try
and its 8 mil val at the moment and I have the insurance contacts as this is not uncommon just not on resi property
if you had external insurance why can't they do that
why does it have to be just two groups who are not that good at assessing risk from my view
what you view on this
this way you could do say 6o% no doc
and the client get 100% low doc with a insurance policy
yes the bank has to check if the policy is fine and if it is why not
you could have no doc bank and full doc insurer as they are lots of reasons for a no doc loan
now the insurance would also cover the furniture and the normal house insurance
for me it seems funny you have two insurers when doing a loan the one on the house and the one on the loan and the one on the loan is money for old rope for me
why not just one
so fire thieft loss of building and lost of property
they will need to put the value of first but I can't see any problem
and most banks are now insurers also
as fro premium etc isn't that upto the client if they wish that.
just something to think about and if your bank does want to run with it can I get 2 days ahead of anyone else to put the insurance policy together and it will be generic for most banks

 

[Rolf Latham]

Hi Dragon

The whole LMI industry is not disimilar to a Ponzi Scheme.

The challenge is that you can not refuse and micro assess the risk too much, since that will severely affect premiums. Since these businesses have no other "non-investment" cashflow, their reserves could be quickly chewed up.

ta
rolf

 

[Token Funder]

There are bigger issues with the banks not even utilising external mortgage insurers.

I am not sure of what changed, but guess it was the Basel II accounting standards, that allow banks not to use a 3rd party for insurance.

Insurers started seeing banks self-insure the "good" risks and use 3rd party insurers for the "bad" risks.

This upsets the risk profile as if all risks are high, the premiums received for the good ones do not offset losses. meaning insuers wont cover anything but good risks and declining bad ones.

This is part of the reasons the lenders pulled back LVR's so if they decide to fully self insure, they are partly protected due to LVR.

I will add another disclaimer here, that this is my opinion internally and after talking to both mortgage insurers on a regular basis.

Banks have been using captive insurers for years. As long as the good people in APRA are happy with the strength (rating) of the captive, which is basically a function of the rating of its reinsurer, they're as "good" as an external insurer.

Personally, I've always had the view that APRA were nuts in this respect.

Self-insurance (i.e. no insurance) is a different beast altogether and means, in essence, that for a fully verified loan with an LVR of more than 80% the bank needs to hold twice as much capital as an insured loan and, therefore, make twice as much profit to deliver the same ROE.

Basell II is another topic altogether but will ultimately deliver significant capital advantages to the big banks.