There are lots of interesting tidbits in Australian mortgage news this week, so without further ado:
- It seems our constantly rising interest rates are having a negative impact on some mortgage holders, especially those people who are on 100% loans or no-docs mortgages – the kind that are on the decrease in Australia at the moment, perhaps for good reason. Statistics which show how many mortgage holders had missed repayment deadlines last quarter say that from all home loans borrowers, 1.44 per cent failed to make payments correctly, but in the “sub prime” sector, including high risk borrowers and low doc loans, the percentage had risen to a scarily high 12.24 per cent. First home buyers have been particularly affected and the outlook, assuming interest rates continue to rise or even just remain stable, is not so great. The good news is that compared to countries like the United States, Britain and Spain, our proportion of people falling behind on mortgage repayments is still low.
- At the other end of the market, there is bad news for home loan holders who are able to pay out their loan early. A Melbourne University study has found that borrowers who have used finance companies have unfairly high fees to pay if they pay off their mortgage ahead of schedule – up to $5,000 in some cases for just a $250,000 loan. In contrast, credit unions have an average exit fee of $420, so weigh up the pros and cons if you think you might get into a position to pay out a loan early.
- And finally, if you have seen advertising stating that you can save up to $35,000 by switching your bank home loan to a credit union home loan, do your homework carefully before you change. Complaints have been made (by banks, mostly) that this advertising used an unfair comparison date – when banks had already increased interest rates but credit unions hadn’t – to inflate the amount it was possible to save.