| Lenders' pitches aiming higher
Despite the mortgage meltdown, the blizzard of advertising for home loans continues.
With the subprime market in tatters in the wake of record defaults and foreclosures, fewer pitches scream "Bad credit? No problem!" Instead, lenders struggling to remain profitable are targeting people who have good credit and plenty of home equity.
With fewer homes being sold -- and, therefore, fewer loans taken out to finance purchases -- mortgage firms that have survived the subprime shakeout are focusing their marketing on persuading homeowners to refinance.
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Troubled RAMS gets a $3.5bn lifeline
RAMS, which is in the throes of selling its brand and distribution business to Westpac, has announced it has been able to line up enough funding to "roll over" or refinance $3.5 billion of its debt. RAMS, which listed in July, nearly went under shortly afterwards because of the fallout from the US sub-prime loans crisis, which had the secondary effect of drying up global credit markets. As a non-bank lender with no access to retail depositors in Australia, RAMS was exposed to the full impact of the credit crunch and found itself in August being unable to refinance $6.17 billion of what had been the cheapest debt in the US, borrowed on the short-term commercial paper market. The company now has until February 11 to roll over two XCP (extendable commercial paper) borrowing programs worth $5.5 billion.
Lending window is wide open to some mortgage borrowers
Remember trying to refinance during the real estate boom? You were lucky if your broker or lender returned your calls within two weeks.
How that has changed since the bust of the subprime market last year.
Traditional borrowers -- meaning those with good credit, not too much debt and enough equity in the home -- are in the driver's seat right now.
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Treasurer plan to axe loan exit fees
THE Rudd Government is considering outlawing exit fees onmortgages so that banks canno longer punish home owners who choose to switch to a better deal. Wayne Swan, who last week attacked banks for lifting interest rates by up to 0.2 of a percentage point, has asked Treasury for a report on how to increase competition between the financial institutions. Suncorp yesterday became the fifth bank to ignore the Treasurer's warning that rates should not be raised by more than 0.12 of a point because of the global sub-prime crisis. The Queensland-based bank from today will add 15 basis points to its variable rate, taking it to 8.72 per cent and effectively adding $20 a month to repayments on an average loan. Exit fees have become a standard clause in home loan contracts, with penalties applying when borrowers switch from variable to fixed-rate loans, refinance with other lenders or pay their loans out early.
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