(home Buyers Keen To Get Best Rate)
The Age
Sunday March 28, 1993
Home buyers keen to get best rate TIME was when home buyers took out mortgages and stayed with the same bank for the duration of a 20-year or 25-year loan. These days, according to the Australian Bureau of Statistics, it is not necessarily so.
Recently released ABS figures showed that $1811 million was borrowed from all lenders in the second half of 1992 to refinance existing home loans. This represented a 32 per cent rise over the first half of 1992 and was more than double the $791 million in refinanced home loans in the second half of 1991.
By the end of 1992, one in every 10 new home loans was for refinancing.
National Australia Bank's group manager of corporate relations, Mr Haydn Park, said the sharp lift in activity challenged the idea that a home loan customer was effectively tied to a lender for the life of the loan.
Mr Park said: ``It's a healthy trend which is likely to force lenders to place more emphasis on home loan products that keep customers satisfied in the long term, rather than simply offering upfront incentives such as a short-term interest rate discount to win new business." Mr Park said most of the refinancing activity was being generated by two groups of customer.
``Home owners who are stuck in fixed rate loans at well above prevailing rates are generating a lot of business, but there is also a lot of switching between institutions by home owners with variable rate loans." Final integration THE final stages of the Commonwealth Bank's integration with State Bank Victoria begin this week.
The state general manager for Victoria of the Commonwealth Bank, Mr Alf Long, said that the task of converting almost five million individual SBV accounts to the CBA computer systems would begin today.
``In essence, this will involve replacing SBV passbooks and cheque books with CBA stationery," he said.
``The conversion phase will be undertaken on a branch by branch basis and is planned to be completed by July 1994. It will also include the bulk conversion of all loan accounts. We will be progressively writing to all customers letting them know when their accounts are due for conversion," Mr Long said.
Rollovers excluded MORE Australians became eligible for social security payments last Thursday when the Federal Government excluded rollover funds from the income and assets tests.
Aimed at simplifying the treatment and administration of rollover funds, this legislative change was announced in the federal Budget last August.
At present, only money in superannuation funds and deferred annuities that is voluntarily preserved (i.e. where an individual voluntarily undertakes not to dip into this money until the age of 55 or when permanently retired) is excluded from social security tests. However, many people have dipped into funds, adversely affecting their entitlements.
The general manager of Winchcombe Carson Financial Planning, Mr Pat Ryan, said: ``The aim of the new policy is to further encourage people not to touch their rollover funds by offering incentives to leave their funds intact.
``The changes also corrected anomalies in attitude to investment products which are essentially the same (ie. deferred annuities and approved deposit funds), and make the system fairer for all rollover investors.
``Overall, the Government is anxious for people to maintain their lump sum payouts to finance their own retirement." In demonstrating the effect of the pending changes, Mr Ryan referred to a man (63) and his wife (60) who retired with between $200,000 and $300,000 to be placed in a rollover fund.
``Under the current system, it is highly probable that this couple would not be entitled to social security benefits. However, with rollover funds excluded from income and assets tests, the wife may be eligible for the age pension."
© 1993 The Age