Borrowers' Rates Bonanza

HOME interest rates are at their lowest levels since deregulation in 1986

At that time, the pressure was for higher mortgage rates after the decades of rate regulation that was a hallmark of the post-war years.

In fact, Advance Bank assistant general manager Arthur Delbridge said rates are now under 10pc for the first time in 20 years.

Today's competitive, deregulated market and historically low rates offer a relative bonanza to home borrowers.

The intense competition, for example, has seen the National Australia Bank's Tailored Home Loan grab a big share of the market, while the State Bank of NSW has almost doubled lending in the space of year.

Here's what the banks are offering:

NATIONAL AUSTRALIA BANK

THE Tailored Home Loan is a variable repayment loan which allows customers to start repaying at an amount agreed between themselves and their bank manager.

To qualify you should have about a 20pc deposit.

But the National will lend up to 95pc of valuation with mortgage insurance

"The mechanics of a Tailored Home Loan revolve around one important factor- customers agree to increase their repayments each year by an amount they can afford," public affairs manager Haydn Park said.

Once this percentage increase is determined, a reference rate is struck and that forms the basis of the annual review of the loan. Repayments are geared to be affordable throughout the term of the loan as opposed to standard home loans which are revised whenever interest rates change.

A Tailored Home Loan is also designed to help customers repay the loan as fast as possible.

Consider this example: An $80,000 standard home loan written at the National's current interest rate of 10pc over 25 years requires customers to repay $726 a month. Using this same repayment for a Tailored Home Loan, but with the agreed increase, the term of the loan is reduced to 17 years and customers save $44,000 in interest.

ST GEORGE BANK

WITH lower rates, specialist home loan provider, St George, has planned for improved affordability by providing a range of home loans suited to people in each market sector.

Last week St George reduced its standard variable owner occupier loan rate to 9.7pc.

But St George's Homestarter loan is now at just 8.5pc for new properties constructed by participating builders.

St George has also just announced a further reduction to 8.5pc for its"capped" home loan, the most popular choice among St George's borrowers.

First home buyers who have the bulk of their savings with St George for six months before applying for a loan, are eligible for the bank's Reward loan, now at 8.6pc. The Reward loan is offered at a 1.1pc discount off the standard variable rate, with the discount applying for the first three years of the loan.

Fixed rate loans are also available, with rates ranging from 9.5pc for one year to 11.5pc for a five-year fixed term.

Investors are well catered for in St George's loan portfolio too. Fixed rate investment loans are available from 9.5pc, while the Homestarter loan for investors buying or building a new property is at 9.25pc, capped until August 1993.

St George also provides a variable rate loan for investors at 11.45pc.

The bank offers a tax effective Loan Magic offset benefit, which can significantly reduce the interest charged and duration of the loan.

STATE BANK

THE State Bank offers three "basic" home loans - capped, fixed and variable.

Current home loan rates are:

* Special capped (owner-occupied) 8.5pc.

* Standard variable rate 9.9pc.

* Fixed rate (residential investment and owner-occupied) one year (9.5pc), three years (10.5pc), five years (11.25pc).

Other home loan products include no deposit loans, high start loans, vacant land loans, construction loans, home improvement loans, home equity loans, refinancing and bridging finance.

Interest on all home loans is calculated daily and repayments can be made weekly, fortnightly, monthly or by lump sum.

The State Mortage Saver facility (part of the State All-In-One account) is available on all home loans. This is a mortgage offset facility where interest on "savings" can be offset against interest due on a home loan, instead of being credited to a savings account.

The bank also offers Residential Mortgage Guarantee Insurance (RMGI) where you can borrow up to 95pc of the property's value. Therefore, only a 5pc deposit would be required.

THE IMB BUILDING SOCIETY

AMONG its lending products, IMB Building Society offers finance for homes to live in, home improvements, residential investment, personal purpose and revolving credit.

IMB is the largest provider of housing finance in south-eastern NSW, having 47 branches in Sydney, the Illawarra and the South Coast.

For all new loans for homes to live in the rate is 9.5pc. For existing borrowers wanting loans of a similar nature, the rate will reduce by 0.5pc to 10pc on August 1 and a further 0.5pc from September 1 (to 9.5pc).

These are IMB's lowest rates for 20 years.

IMB's Mortgage Miser facility allows members to have their savings account interest offset automatically against their mortgage each month.

IMB is offering a "discount" rate for a limited period for new residential investment loans. For all such loans approved until September 1, the rate will be 9.5pc.

The discounted rate will revert to that charged for standard residential investment loans on July 1 next year.

WESTPAC BANKING CORP

THE standard variable rate for Westpac home loans will fall to 10pc from August 11. This means repayments on a 25-year, $100,000 Westpac home loan will reduce to $909 monthly.

For new home loan borrowers, Westpac is offering a special rate of 8.75pc for the first four months of the loan.

Anyone considering taking out a home loan should clearly understand what fees the lending institution charges to set up and administer the loan. This fee is a flat $500 and the only bank fee payable.

Also, Westpac variable rate loans may be repaid in part or in full at any time without any penalty costs applying.

"Customers who may be concerned about repayments in the event of job redundancy can take out Westpac Loansure, which provides insurance cover for six months repayments," said housing marketing manager Paul Thogersen.

Fixed rate loans are also available for terms usually up to five years. When these loans expire the borrower usually "rolls" the loan into a new fixed interest or variable rate loan.

Westpac is offering a two-year fixed rate loan (interest only repayments)at 10.5pc, a three-year loan (interest only repayments) at 11.25pc and a five-year (interest only or principal and interest repayments) at 11.5pc.

ADVANCE BANK

THE Advance Bank's variable rate for existing borrowers will drop to 9.75pc from September 1 - the lowest for 20 years.

Assistant general manager Arthur Delbridge said this will mean more than$40 a month saving to the average borrower.

"But the big saving is the bank's capped rate loan which stands at 8.5pc for new borrowers until May 1, 1993," he said.

The capped rate loan will not increase for 10 months, but it can go down if the variable rate home loan falls below 8.5pc. In addition to the range of owner occupied loans, the bank offers variable and fixed rate loans for investors.

To assist customers' home improvements or other expenditures, such as income producing investments, Advance Bank has a specialised product called Home Power.

This is a home equity loan which provides customers with a revolving line of credit up to $500,000 against the equity they hold in their own home.

MLC BUILDING SOCIETY

THIS month, the MLC Building Society unveiled the MLC Home Loan which allows the borrower to withdraw excess repayments.

Like most others, the MLC Home Loan allows the borrower to save on interest by making larger or more frequent repayments of principal.

"Its unique benefit is that it enables the borrower to withdraw any additional repayments at any time," said general manager David Lynch.

"The loan does have the complexity of an associated offset deposit account yet provides 100pc offset of interest."

Interest is calculated daily and charged monthly.

All transactions can be made by telephone.

The variable home loan rate is now 10pc and the establishment fee is $650 including valuation and legals.

COMMONWEALTH BANK

EACH working day the Commonwealth Bank averages about 400 individual home loans worth about $25 million. The bank is now offering a standard variable home loan at 9.9pc, a six-month capped rate option at 8.95pc and a five-year fixed rate loan at 12pc.

Chief manager, personal lending Ron Campbell said the bank was soon to introduce a three-year fixed rate loan.

"Our up-front 'only one fee' concept has been very popular," he said.

The bank also offers Land Loans for the purchase of vacant land, Home Improvement Loans to assist with additions/renovations and Home Loans for holiday homes. These are all offered at the same rates as standard home loans

The bank's Home Seeker Loan plan approves a loan before you go house hunting.

The Mortgage Interest Saver Account (MISA) offsets credit funds against the home loan debt.

CITIBANK

THE two most popular home loan products in the Citibank range are the six monthly variable rate mortgage and the Mortgage Power loan.

The six monthly variable rate mortgage, offered at 8.45pc, is secured by a first mortgage on an owner-occupied residential or investment property and may be used for a new purchase, or to refiance an existing loan.

Repayments can be either interest only (converting to principal and interest after three years) or principal and interest.

Mortgage Power, with rates starting from 8.95pc, is a revolving line of credit that allows access to the equity tied up in the property. Interest is calculated on the daily balance outstanding, the applicable rate is variable monthly and a rate cap option is also offered.

ANZ

THE ANZ Banking Group's variable interest rate is 10.5pc. The bank is also offering one year fixed rate loans at 8.9pc, two year at 10pc, three and four year at 11pc and for five years is charging 11.5pc. Applications can be processed in 48 hours and the bank offers a variety of repayment options.