Other lenders have signalled increases variable home loan rates by 0.25 per cent in coming months, independent of moves by the Reserve Bank.
Bluestone, with about $3billion worth of loans on its books, blamed higher funding costs as a result of the global credit squeeze for its decision to lift its lending rates by between 17 and 55 basis points.
Bluestone is a provider of so-called low-doc loans. About one-quarter of its customers have prior credit problems, placing them in the same category as the "sub-prime" sector in the US, where poor lending practices have caused a meltdown in capital markets around the world.
So we can forget official rate rises now. The only issue regulating rates is competitiveness, and there seems to be enough general upward movement to negate that. So we go from loans at any cost to loans at crippling cost.
3 comments:
Best performing Australian hedge fund in 2005 and 2006 has lost 80%. And two other Australian hedge funds have halted redemption requests by investors.
So we can forget official rate rises now.
My understanding (at least from Praguetwin, upon whom I rely for a clear-eyed view on this stuff) is that mortgage benchmarks don't typically track central bank rate policies anyway--a pattern that has held in the US for at least as long as I've been interested in mortgages.
froggy, yes, there always is a variation from benchmarks, moderated only by competition. Generally, here at least, rates move with the reserve bank, but not particularly with the actual rate set. I think that is what you are suggesting.
I guess it depends on the product and lender type.
RBE, that isn't being reported here.
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