How the big four banks are responding to the coronavirus crisis

How the big four banks are responding to the coronavirus crisis

Here is a summary of how the big four banks have responded to the emergency RBA cash rate cut amidst the coronavirus crisis.

CBA

Home loans:

  • 70-basis point cut to 1-, 2-, and 3-year fixed rates – all to 2.29%.
  • No cuts for variable home loan customers.
  • Reduction of repayments to minimum required under their loan contract & easier access to overdraft facilities.
  • Hardship support – deferral of business term loan repayments and overdrafts up to six months.

Term deposits:

  • 12-month term deposit rate hiked 60 basis points to 1.70%.

Small businesses:

  • 1.00% reduction to cash-linked small business loans.
  • Hardship support – deferral of business term loan repayments and overdrafts.
  • Deferring repayments on vehicle and equipment finance loans and providing tailored restructuring options that meet individual customer needs.
  • Waiving of:
    • Merchant terminal fees
    • Redraw fees
    • Early redraw fees
    • Establishment fees and excess interest on Temporary Excess products.

Westpac

Home loans:

  • 90-basis points cuts to 1-, 2-, and 3-year fixed rates – all to 2.19%.
  • No cuts for variable home loan customers.
  • Hardship support – deferral of home loan repayments for six months.

Term deposits:

  • Special 12-month term deposit of 1.70%. 

Small businesses:

  • 1.00% reduction to variable interest rates on small business cash-based loans.
  • Overdrafts reduced by 2.00%.
  • Hardship support – deferral of business term loan repayments for six months.
  • Merchant terminal rental fee waivers for up to three months.

NAB

Home loans:

  • 60-basis points cut to fixed rates – lowest to 2.19%.
  • No changes to home loan variable rates.
  • Hardship support – deferral of home loan repayments up to six months.

Term deposits:

  • Introduced a 10-month term deposit rate of 1.75% on deposits of $5,000 to $2 million from 24 March.

Small businesses:

  • Hardship support: Deferral of principal and interest for up to six months on a range of business loans, including floating and variable rates, and equipment finance loans. Also deferral of business credit card repayments.
  • 200-basis point rate cut on new loans and all overdrafts on QuickBiz from 30 March.
  • Additional 100-basis point cut on variable rates for small business loans, effective 30 March, on top of a 25-bps reduction earlier in March.
  • Access to up to $65 billion in additional secured limits to pre-assessed customers, with $7 billion currently available for fast assessment process.
  • Access to up to $9 billion in additional limits for unsecured lending for existing customers via QuickBiz.

ANZ

Home Loans:

  • 49-basis points cut to fixed rates – lowest to 2.19%.
  • Cut variable rates for both new and existing home loan customers by 0.15 per cent from 27 March.
  • Hardship support – deferral of home loan repayments up to six months.

Small businesses:

  • Cut variable interest small business loan rates in Australia by 0.25%, effective from 27 March 2020, resulting in a 0.50% pa reduction since last week.
  • 80-basis points cut to fixed rates – cut to 2.59% for secured small business loans up to $1 million, effective 3 April 2020.
  • Hardship support - all impacted customers can request a six-month payment deferral on loan repayments for term loans, with interest capitalised.
  • Made temporary increases in overdraft facilities for 12 months available.

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Learn more about home loans

What is a building in course of erection loan?

Also known as a construction home loan, a building in course of erection (BICOE) loan loan allows you to draw down funds as a building project advances in order to pay the builders. This option is available on selected variable rate loans.

What happens to your mortgage when you die?

There is no hard and fast answer to what will happen to your mortgage when you die as it is largely dependent on what you have set out in your mortgage agreement, your will (if you have one), other assets you may have and if you have insurance. If you have co-signed the mortgage with another person that person will become responsible for the remaining debt when you die.

If the mortgage is in your name only the house will be sold by the bank to cover the remaining debt and your nominated air will receive the remaining sum if there is a difference. If there is a turn in the market and the sale of your house won’t cover the remaining debt the case may go to court and the difference may have to be covered by the sale of other assets.  

If you have a life insurance policy your family may be able to use some of the lump sum payment from this to pay down the remaining mortgage debt. Alternatively, your lender may provide some form of mortgage protection that could assist your family in making repayments following your passing.

Mortgage Calculator, Loan Term

How long you wish to take to pay off your loan. 

What is appreciation or depreciation of property?

The increase or decrease in the value of a property due to factors including inflation, demand and political stability.

What is breach of contract?

A failure to follow all or part of a contract or breaking the conditions of a contract without any legal excuse. A breach of contract can be material, minor, actual or anticipatory, depending on the severity of the breaches and their material impact.

How much deposit do I need for a home loan from NAB?

The right deposit size to get a home loan with an Australian lender will depend on the lender’s eligibility criteria and the value of your property.

Generally, lenders look favourably on applicants who save up a 20 per cent deposit for their property This also means applicants do not have to pay Lenders Mortgage Insurance (LMI). However, you may still be able to obtain a mortgage with a 10 - 15 per cent deposit.  

Keep in mind that NAB is one of the participating lenders for the First Home Loan Deposit Scheme, which allows eligible borrowers to buy a property with as low as a 5 per cent deposit without paying the LMI. The Federal Government guarantees up to 15 per cent of the deposit to help first-timers to become homeowners.

Do other comparison sites offer the same service?

Real Time RatingsTM is the only online system that ranks the home loan market based on your personal borrowing preferences. Until now, home loans have been rated based on outdated data. Our system is unique because it reacts to changes as soon as we update our database.

What is a specialist lender?

Specialist lenders, also known as non-conforming lenders, are lenders that offer mortgages to ‘non-vanilla’ borrowers who struggle to get finance at mainstream banks.

That includes people with bad credit, as well as borrowers who are self-employed, in casual employment or are new to Australia.

Specialist lenders take a much more flexible approach to assessing mortgage applications than mainstream banks.

What do mortgage brokers do?

Mortgage brokers are finance professionals who help borrowers organise home loans with lenders. As such, they act as middlemen between borrowers and lenders.

While bank staff recommend home loan products only from their own employer, brokers are independent, so they can recommend products from a range of institutions.

Brokers need to be accredited with a particular lender to be able to work with that lender. A typical broker will be accredited with anywhere from 10 to 30 lenders – the big four banks, as well as a range of smaller banks, credit unions and non-bank lenders.

As a general rule, brokers don’t charge consumers for their services; instead, they receive commissions from lenders whenever they place a borrower with that institution.

Mortgage Calculator, Property Value

An estimate of how much your desired property is worth. 

Monthly Repayment

Your current monthly home loan repayment. To accurately calculate how much you could save, an accurate payment figure is required. If you are not certain, check your bank statement.

How personalised is my rating?

Real Time Ratings produces instant scores for loan products and updates them based what you tell us about what you’re looking for in a loan. In that sense, we believe the ratings are as close as you get to personalised; the more you tell us, the more we customise to ratings to your needs. Some borrowers value flexibility, while others want the lowest cost loan. Your preferences will be reflected in the rating. 

We also take a shorter term, more realistic view of how long borrowers hold onto their loan, which gives you a better idea about the true borrowing costs. We take your loan details and calculate how much each of the relevent loans would cost you on average each month over the next five years. We assess the overall flexibility of each loan and give you an easy indication of which ones are likely to adjust to your needs over time. 

How common are low-deposit home loans?

Low-deposit home loans aren’t as common as they once were, because they’re regarded as relatively risky and the banking regulator (APRA) is trying to reduce risk from the mortgage market.

However, if you do your research, you’ll find there is still a fairly wide selection of banks, credit unions and non-bank lenders that offers low-deposit home loans.

What is the flexibility score?

Today’s home loans often try to lure borrowers with a range of flexible features, including offset accounts, redraw facilities, repayment frequency options, repayment holidays, split loan options and portability. Real Time Ratings™ weights each of these features based on popularity and gives loans a ‘flexibility score’ based on how much they cater to borrowers’ needs over time. The aim is to give a higher score to loans which give borrowers more features and options.