Bankwest pioneers rate reducing loan
By
Ben Abbott
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30/08/2010 6:00:00 AM
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9
comments
Bankwest has released a new home loan where applied interest rates "get better with age".
Starting with a 0.4% discount off the Bankwest standard variable rate, the rate will decrease the longer the customer remains with the product - by 0.1% per annum for the next four years to a maximum discount of 0.8%
The maximum discount will then apply for the remaining life of the loan, according to the bank.
Bankwest head of mortgages, Dean Gillespie, said the new product - the Bankwest Rate Cutter Home Loan - would appeal to a wide range of buyers. “If you are looking for a lower interest rate, buying your first or second home, or even investing in property, this home loan will be the perfect choice”, he said.
The bank has calculated that if a customer takes out an average $285,000 loan, at the end of their first four years they will already have saved $5,510 as a result of the increasing discounts.
The loan is particularly targeted at buyers who are struggling with decreasing affordability.
Related stories:
Adelaide launches 95% LVR loan
Latest Comments
Total:
9
comment(s)
Gazza on
30 Aug 2010 11:59 AM
What''s new about this HSBC did it about 6 years ago
Broker Tony on
30 Aug 2010 12:26 PM
It might be cheaper than a standard variable rate loan but who uses them? Could be good for smaller loans if minimal fees.
Patrick on
30 Aug 2010 12:30 PM
Do these bankers think we are stupid. Why do they calculate savings based on SVR. This product will be competing with loans starting at 0.7% off SVR and only delivers a 0.1% savings over this after 4 years. To recover the loading above 0.7% off in years 1 to 3 will take another 10 years assuming the loan remains fully drawn, so on an amortising balance probably 12 years or more. Even if the base SVR rate is competive, this product is a "lame duck". Amazingly enough, many of us know how to do a "discounted cash flow analysis".
Bemused on
30 Aug 2010 12:32 PM
I like how they say they are targetting buyers who are "struggling with decreasing affordability" - how on earth does that help a client with affording a loan NOW? How about you bring back the Rate Tracker Ultra (a real option for strugglers) and avoid the channel conflict that has made us brokers refuse to deal with you!
Wayne Slager, Your Loan Adviser on
30 Aug 2010 12:41 PM
Great idea. I think borrowers will warm to it as it represents a benefit for loyalty which is something I''m sure they''d like to be recognised for. Another ''value'' option for brokers to advise on, too.
KT on
30 Aug 2010 02:00 PM
HSBC product range don''t offer an offset facility which is useless for most of the clients that apply my loan structuring strategy.
Patrick is right though about the Bankwest gimmick. All major lenders offer 0.7% discount on their SVR already anyway....why start off with only a 0.4% discount?!
Broker on
30 Aug 2010 02:48 PM
Are we supposed to get excited about this gimmick?!!
On another note, I also note that CBA are waiving app fee on their basic variable loan, and now Westpac are going back to 92% LVR for new customers, perhaps both their market share is going backwards, if so I''d like to think Brokers are contributing to this well deserved outcome!
TN on
30 Aug 2010 02:49 PM
St Goerge had this on the go 10 years ago, hardly new or innovative!
Spinner on
31 Aug 2010 08:44 PM
Needs to start around 0.7% and increase 0.1% p.a. Consumers what it now.