Discounted mortgage rates could cease
(29 June 2010 – Australia) Increases in wholesale funding costs could see Australia’s major banks end mortgage rate discounts offered to their customers.
Despite the current sovereign debt crisis that has triggered an increase in funding costs faced by the banks, the government is still applying pressure to Australian banks to keep their lending rates in-line with the Reserve Bank of Australia’s monetary policy changes.
Phil Chronican, ANZ’s chief executive told The Australian that banks were already making changes to mortgage packages to ease the current margin squeeze.
Mr Chronican added that it was likely the local banks would restructure the ‘value-based pricing’ of mortgages which could include reducing the discounts on the average standard variable rates offered to some new and existing customers.
If you look at it recently, what you have seen in the market is people rejigging their brokerage commission rates. That's the way the market has moved, Mr Chronican highlighted.
The market is also moving towards banks raising the valuation based pricing of mortgages, Mr Chronican added.
The bank’s chief executive also told The Australian that the banks offer discounts based on the valuation characteristics of a loan. In the future it may be used differently by banks as they fine tune their home loans.
At the moment, the discounts usually apply to people with a reasonably high income and they have equity in their existing home, there is a lot of different pricing out there.
Mr Chronican said ANZ, and its rivals, were prepared to suffer the margin squeeze to maintain market share.
Phil Chronican, ANZ’s chief executive told The Australian that banks were already making changes to mortgage packages to ease the current margin squeeze.
Mr Chronican added that it was likely the local banks would restructure the ‘value-based pricing’ of mortgages which could include reducing the discounts on the average standard variable rates offered to some new and existing customers.
If you look at it recently, what you have seen in the market is people rejigging their brokerage commission rates. That's the way the market has moved, Mr Chronican highlighted.
The market is also moving towards banks raising the valuation based pricing of mortgages, Mr Chronican added.
The bank’s chief executive also told The Australian that the banks offer discounts based on the valuation characteristics of a loan. In the future it may be used differently by banks as they fine tune their home loans.
At the moment, the discounts usually apply to people with a reasonably high income and they have equity in their existing home, there is a lot of different pricing out there.
Mr Chronican said ANZ, and its rivals, were prepared to suffer the margin squeeze to maintain market share.
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