Home Loan Rates Fall Again ...

Home interest rates tumbled across the board yesterday to 13.5 per cent in the wake of a $173 million improvement in the December balance of payments.

Rates were poised to fall with strong deposit growth, market interest rates at their lowest level in three years and improved US trade figures last week.

The current account deficit figure of $658 million yesterday provided the spark for the move by Westpac, the Commonwealth, ANZ, Advance Bank and the State Building Society to cut their lending rates by 0.5 per cent.

The fall means a saving of $19 a month on the average home loan.

It brings the mortgage rates of the big home lenders down to the regulated ceiling of 13.5 per cent for the first time in more than two years and brings new home loans, deregulated in April 1987, in line with regulated loans.

The National Australia Bank is the only major lender which did not announce a rate cut.

NAB chief general manager, Mr Lloyd Smith, was surprised the other banks had cut their rates by such a large margin, but said his bank's executives would meet on Friday to consider a reduction.

The current account figure was at the lower end of financial market expectations but prompted only a slight strengthening of the dollar. Sharp falls in market interest rates over the past week also meant only a small drop in the wake of yesterday's good figures.

The trade figures showed a $474 million revision to the current account deficit for 1986-87, to $12.8 billion. This took the current account deficit to about 4.8 per cent of gross domestic product from the 5 per cent based on the earlier figures.

The big revisions, due largely to more up-to-date figures on income returns on overseas investment by Australian companies, show that the nation was emerging from the trade crisis more quickly than previously thought.

The improvements carried through into the new financial year, with the current account deficit for the September quarter revised down by $266 million.

The current account deficit in 1987 fell by $2525 million or nearly 18 per cent, from $14271 million in 1986 to $11746 million last year.

The December figures showed exports rising by more than 19 per cent after seasonal adjustment.

13.5% LOANS

WHAT YOU WILL SAVE

HOME MONTHLY MONTHLY MONTHLY

LOANS REPAYMENTS REPAYMENTS SAVINGS

$'000's AT 14% AT 13.5%

40 $481 $466 $15

50 $602 $583 $19

60 $722 $699 $23

70 $842 $816 $26

80 $962 $932 $30

In most cases, customers must apply for reduced monthly repayments, as most banks prefer to reduce the term of the loan. All figures are based on a 25-year loan. PAGE 5: More loan cuts forecast.

PAGE 31: Big lenders slash rates.