At the end of a rather dire 2011 for the mortgage market, important financial analysis institutions such as Deloitte rushed to put up the dramatically decreasing growth rate of the marketplace on the natural disasters that hit the world early on in the year.
As the financial effects of those cataclysms spread across the globe, lenders and clients alike struggled to make ends meet and deliver on their contractual terms. Predictions and forecasts aside, not many would have been able to predict the current situation, in which an increasing number of mortgage debtors are employing offset accounts to drive down their costs.
Such accounts are available from a variety of banks and other lending institutions on Bankwest.com.au. If you’ve taken out a mortgage on your home and would like to learn more on how to lower your loan expenses, read on, for background, current standings and responses from bank representatives.
The Deloitte 2012 report on Australia’s mortgage debt bore the potentially overly optimistic title of A ‘new normal’, yet the contents were much more moderate in outlook than many may have expected.
According to Deloitte experts, 2011 represented a sort of ‘light at the end of the tunnel,’ since the mortgage market managed to work itself up to $1.2 trillion, even though growth slowed down even more, to a 6% rate per annum, the lowest recorded in the past twenty years.
Based on these factors, the global financial analysis institution predicted that 2012 would bring positive growth, even though levels would still remain moderate. Mortgage funding sources, they said, would diversify, against the backdrop of continued power wars and price wars fueled by the consumer.
Meanwhile, the standards for lending and regulation would continue to grow, as the market tightened, spelling out a situation in which the consumer would occupy the seat of honor. Lenders, Deloitte argued, would have to deepen their relationships of trust and delivering on their cross-selling promises, if they wanted their customers to continue to ‘make good’ on the loans.
Meanwhile, the average mortgage holder has discovered that they can deposit the money they use for day-to-day banking operations into offset accounts. This move literally saves them thousands in interest rates, since transaction accounts can be linked with home loans.
The balance of the former reduces the interest rates charged on the latter, interest rates that your bank adjusts and calculates on a daily basis.
According to George Svigos, the spokesperson at NAB, as cited by News Limited, the number of offset accounts with the bank has doubled and then some, while their balances have nearly tripled over the course of the previous year-and-a-half.
Suncorp Personal Lending Manager Tony Meredith was quoted by the same source saying that the bank’s offset accounts have been witnessing a yearly increase of 20% during the past few years, while ING Direct rates of offset home loan arrangements have also grown by 6% on the year ending in June 2012.
The math on offset accounts is rather easy to follow: a $10,000 loan in such an account would have the bank charging you interest on your mortgage loan minus those $10,000. Since there is no minimum deposit limit on such accounts, any money you park in there will help drive your mortgage interest downward.
The entire amount in that account will go into offsetting your loan and the interest rate will equal the one you’re being charged for the mortgage. Experts recommend wise investments, which mean that you start depositing money into the offset account from day one of your loan, with strategic sums in there, to actually help you feel the difference.
Knowing About Reverse Mortgages in Australia
In a country like Australia, it is most probably you have been told that a reverse mortgage can be a way for you to borrow against your home equity while not require you to sell your house first and also don’t have to make repayments every month.
Even though these are true, but prior for you to rush out and sign up for a reverse mortgage, it is advisable for you to fully grasp the procedure and be sure you actually meet all the requirements.
Reverse Mortgages Only For Senior Australians
One important thing that many people didn’t pay attention to is the fact that reverse mortgages are merely eligible to apply for senior citizens who happen to be 60 years or elder.
Despite the fact that you don’t need to repay the principal loan amount or interest incurred on the particular principal for the life period of the loan, these two amounts, however, are going to be due by the end.
This happens if the homeowner passes away, sells the home, or moves out from the home for over 364 days. As of today, we can see there are more and more senior Australians are looking towards reverse mortgages to help them create funding for their retirement. Thus we can see that the demand is actually huge.
In contrast to an ordinary loan, the reverse mortgage doesn’t require you to come up with any monthly payments unless you want to sell, moving out or die. The amount of money you borrowed from must then be reimbursed to the bank, typically through the sale of the property.
You will expect the debt is going to be higher compared to the initial amount of money you borrowed since the fees, as well as the interest of the money on the home, are added to the loan each year.
For people who are having a joint owner of the property, the mortgage can be found in both names and will go on provided that one of the owners is staying in the property.
Caveats on Reverse Mortgages
Although reverse mortgages seem very ideal for most of the Australians, however, there are some caveats that you should be aware of.
You will need to take into consideration the additional charges that you need to pay. One of the charges is the non-recourse insurance which is needed if extra money is taken out and there are insufficient funds in the selling price to repay the moment that been taken out. Besides, you will need to pay for the traditional closing fees as well.
Given that the additional charges can be costly, it is essential for you to know the exact amount that you need to pay. If you want to make all of the extra charges on the mortgage worth for the money you pay for, then you should live in the house for a number of years.
It is best for you to do enough research and required groundwork through examining with a number of loan providers in Australia that offer reverse mortgages before you make your final decision.
After all, base on the recent mortgage trend, we can see that there has been escalating media speculation in which the Australia Federal Government is going to encourage seniors to use reverse mortgages for elderly care funding in the near future. Thus, we are able to foresee that the demand for these reverse mortgages in Australia is going to receive higher demand.
About Westpac Mortgage Centre in Australia
Some Background of Westpac Banking Corporation
Westpac Banking Corporation (Westpac) was the first bank founded in Australia in 1817. Westpac Group features a lot of subsidiaries and managed businesses across Australia and New Zealand. The bank also expands its business to the Pacific region and become one of the key financial centers in New York, London, Singapore, and Hong Kong.
Services Provided By Westpac Mortgage Centre
As of today, Westpac Group carries 3 major divisions that serve close to 12 million clients. These 3 divisions comprise of Australian Financial Services (AFS), Westpac Institutional Bank and Westpac New Zealand.
Products and services provided by Westpac including credit cards, insurance, investment loans, personal loans, and mortgages.
Apart from this, the bank also provides 24 hours of internet banking as well as home loan services everywhere in the world. Customers can make use of a variety of tools online from Westpac mortgage centers such as forex calculator and quick-decision tools.
The bank is among the key loan providers in the mortgage market of Australia as many people are being attracted by the competitive rates, flexible loan products and fair policies provided by Westpac mortgage center.
Due to current economic development seem not so sustainable for the housing prices in Australia, Moody’s has put Westpac mortgage insurance industry on negative watch. Most of the experts predicted that the mortgage delinquency rates are very likely to increase over the next 10 years.
While for Westpac’s mortgage delinquencies, which is also known as repayments on home loans may get affected by such negative situation if the condition does not become any better.
Below are some of the feedbacks collected from customers who ever make a deal with Westpac. It contains good and bad and you may check them out and determine yourself.
- Offering mortgage and home loan packages with a lower interest rate in comparison with other major lenders.
- Friendliness and efficiency.
- Many ATMs and their online banking are really easy to use.
- A power unto themselves.
- High interest rates.
- Extremely slow at processing loan.
- The bank can be very greedy with their rates. Sometimes they do not pass on full RBA Rate Decreases or Increases.
You can find out more about Westpac Mortgage Centre at their website.