Actu To Offer Cut-price Home Loans
The Age
Monday April 18, 1994
The ACTU and insurance giant National Mutual yesterday unveiled a new initiative to tap Australia's huge superannuation pool to give union members access to cut-price home-loan finance.
The ACTU and National Mutual have established a special trust, setting aside about $150million in home loan finance to be made available from June at an interest rate at least one per cent below the variable rate.
But the cheap funds will only be available to members of industry- affiliated superannuation funds which direct part of their investment capital into the Superannuation Members Home Loans trust.
To this end, both parties yesterday invited industry funds to register their interest in the scheme, advising that investors would be issued with bonds in the trust and paid a market rate of return.
The deal will help transform the face of Australian unionism, furthering the long-term objective of the ACTU secretary, Mr Bill Kelty, to head off the threat of declining union membership by substantially boosting the level of services available to affiliated members.
It follows the signing of an exclusive credit card arrangement with the National Australia Bank in late 1992, aimed at providing loan discounts and special offers to the ACTU's 2.8 million affiliated union members.
The ACTU offshoot, ACTU Financial Services, has also signed up with the stockbrokers Bain&Company to offer members access to specialist financial advice and a range of investment products.
Mr Kelty said the new trust brought to fruition the ACTU's long-voiced view that superannuation funds should be available to help members buy homes.
The ACTU had toyed with a plan for its members to gain direct access to their own superannuation savings for housing and being able to draw on 75 per cent of their balance.
However, with the average balance of members' accounts totalling less than $5000, the ACTU considered it would not be worthwhile for members to take that route. It was also felt that such a plan would place undue pressure on industry funds.
``We believe that investing in this fund is an appropriate investment for superannuation funds as part of a diversified portfolio," Mr Kelty said.
The interest rate will be linked to the 90-day bank bill rate and will be reviewed quarterly.
Mr Kelty said the new trust would have much lower operating costs than most other mortgage lenders, which meant lower rates could be made available to borrowers without jeopardising returns to the funds' investors.
National Mutual's managing director, Mr Geoff Tomlinson, said loans of up to $250,000 would be available for members purchasing owner- occupied completed residential homes, including borrowers seeking to refinance existing mortgages.
© 1994 The Age