Housing Market: Mortgage Brokers are asking what happened to the housing shortage?

Falling home prices and home sales tell me that the housing shortage has evaporated. Mortgage loan demand has tanked with it. So what happened?

Four years ago the HIA claimed we had a housing shortage of 80,000 units. Rents were growing and people were on waiting lists. Home Builders had and field day and so did mortgage brokers financing both homes and investment properties. Things were good.
By late last year the housing shortage had ballooned to "120,000", then 180,000 this year and was tipped to reach 200,000 homes needed to satisfy our need more homes and units by years end.

Who stopped the mortgage merry-go-round?

Most of these claims have come from the Housing Industry Association. They are echoed by real estate agents everywhere as the reason you should buy now, the best reason to sell now.
When you go and see real estate agents they tell a different story. My local area in Ormeau, has had a slow and steady rise in real estate prices for the past ten years, until late last year. Then the the last mortgage interest rate rise cut in and people stopped buying and the music stopped for the real estate merry-go-round.
I asked one of the local real estate agents what was happening to real estate prices and we had had a 10% drop in the Ormeau [North Gold Coast] area. The first drop in home values I had heard on since moving here and building anew home in 2002. Homes were selling, but not at Ormeau's solid and brisk pace.
Nice homes on large level and elevated blocks, with wide tree lined streets. this is a lovely area.

Where are the home shortages, and the mortgage business potential that goes with them?

The issue is not so much the Gold Coast but the general theme of housing shortages which dominate the property industry talk and the HIA spin nationwide. It's a grave concern to mortgage brokers

Vacant Land Sales down to the lowest levels since 1994

Mortgage brokers that haven't been seeing too much vacant land mortgage loan deals come their way lately may be interested to know that Land Sales are at the lowest level they have been since 1994.

The January floods would not have helped sales any, but the Queensland floods never affected the Gold Coast at all! So we have to conclude something deeper is happening.
According to a recent report on the Gold Coast we have 13 months of land supply at the current sales rates. So land shortages are out the window when we look for a reason for low new home sales and construction loans that go with these building contracts.
The same is true for "House and Land" sales. They are just not happening.
Lan developers on the Gold Coast say that land production over the next 12 months will reach 2455 lots. This is twice the current level of annual demand. Something will have to give.
Remember that next time you hear the Housing Industry Association or the Master Builders Association complaining about the lack of land sales or new house sales.

Boomtime with lower Home Value = oversupply

We are in a boom time, make no mistake. So the only reason that we would see home value declines is a homes for sale glut. Home buyers can pick and choose all month long and wait for prices to fall further.
The number of dwellings for sale is at its highest levels since early 2009.

Why have land sales plummeted?

There is a current lack of demand for land. I believe I have the answer to this one. Block sizes. Land developers have been cutting the size of land lots now for ten years and the prices climbs ever higher.
People are just nor seeing value in buying land that is smaller than to cam buy already built on.
As the established home prices fall, why would anyone buy a smaller block and build a smaller home and wait 12 months to move in when they could buy a finished home now that is bigger and better for less money? Your are right they wouldn't.

The biggest boomtown in Australia is Perth, but land prices are falling there too.

Land sales dropped 27 per cent in Perth in the December quarter, while average prices fell 3 per cent.
Such things do not occur amid a "chronic housing shortage crisis".
There's certainly no shortage in Adelaide, where vast areas are being opened up for new development in the north of the city.
The over-supply of building land is a fact in Western Australia Australia's boom State and in Melbourne. Victoria, Australia's biggest home market.

Mortgage Brokers need to think Refi

Mortgage brokers will have to become proactive in writing mortgage loans and should look to the mortgage refinance and home equity loans to grow their business. Home buyers and new home builders will be thin on the ground for sometime to come.

Mortgage Shopping: Should you DIY or use a Mortgage Broker?

When shopping the home loan market you can take one of two approaches:

1. Research and apply directly to your chosen mortgage lender, or 
2. Engage a Mortgage Broker to do the legwork and the paperwork for you.

A lot of people ask me which is better, sourcing a home loan yourself or using a broker,
Some say that if you are happy with your bank as a mortgage lender there is no reason why a direct loan application with your bank won't get you a loan.

But sometimes having a mortgage broker can actually make the difference between a loan approval for that home loan, or a decline letter.

Reasons for using a Mortgage Broker

1. Specialised mortgages and lender knowledge. They know who has the best offers, and which only look good on paper.
2. A broker can save you time and ensure that you don't miss great offers.
3. Get your application to lenders who are more likely to approve your loan.
4. Advise when an advertised rate is not what it seems
5. Allow you to consider home loans from mortgage lenders you may never have heard of before.
6. Prevent you from trashing your credit rating. Aimlessly applying for loans all over can get you declined. Make sure you find the best loan and lender first, then apply.
7. Mortgage brokers know the home loan lenders that factor in incomes that others don't.
8. Did I mention the services of a mortgage broker are mostly free to you? Some services are not free, but setting a home loan usually is as the broker is paid a mortgage broker fee. 

Mortgage Broker verses applying direct to the lender summary
Using a mortgage broker is a fee to you service that can save you time and money tracking down the best loan for your needs.
Mortgage brokers know the market better than you do, and it makes sense to use this experience, if it were not free!
But some people just have a need to do everything themselves. I you are one of them, don't sweat it, just do it yourself.

Property sales : Has the dead cat bounced in Australia's property mearket?

Property sales : Has the dead cat bounced in Australia's property market?

Property sales across the country have slumped to their lowest level in 10 years. despite rising sales in Melbourne, and some upturn in Sydney's housing market
Figures from RP Data show sales of houses and units dipped 20 per cent in 2010 on the back of a number of interest rate rises, and falling demand for other reasons too I suspect.
Darwin Brisbane and Hobart all recorded lower home sales activity, with Sydney leading the way.
The "dead cat bounce" analogy
Home sales fell last year to below those recorded at the height of the global financial crisis in 2008. That was when the rest of the World had a major correction in house prices and Australia missed that bath. Hence the dead cat bounce comparison.
Whilst we have seen several raises in mortgage interest rates, they are hardly a concern at average mortgage rates we have and full employment, so my guess is that house prices have got ahead of themselves and until they soften further we are unlikely to see an upswing in home buyers any time soon.
New Responsible lending laws
One thing that people are not talking about is that from January 1st, 2011, banks had to be more diligent in the lending due to new responsible lending laws taking affect.
The fact is that new land on the Sunshine coast is so over priced that lenders may be reluctant to fund the silly prices being asked for blocks of land, on the basis that the market may well soften further and they would be caught holding the baby.
This is besides the fact that the borrowers may have a hard time meeting the repayments. It may becoming easier for bank managers to say no to loans, as the big banks are loaded with mortgage borrowers who have equity in their homes and the ability to repay the loan. Why pick up new business that does not meet that criteria?
You may have noticed that the ads from the big home builders and the developers have suddenly stopped. They are not into throwing good money after bad, and the developers may have to start thinking about discounting their land if they want to offload the land that they have going unsold.
First Home Buyers an extinct species
Over priced land has killed off the first home buyers in the new home sector. Decades ago cheap land was the spur that meant that first home buyers usually bought house and land in the sticks. Well that does not happen anymore.
And the problem is that second home buyers wanting to move up want a decent lot size. That won't happen under $300,000 on the Sunshine Coast. So since when was residential land worth over $2 million dollars an acre? Since Stockland and Delfin monopolised the residential land development market it seems to me.
All was fine whilst the Labor Government propped up sales with trebling the first home owners grant to stimulate first home buyers into building a new home. Well that has stopped and as usual, the price of everything rose to the level that people could afford with the grants. Take them away and the party is over. Isn't this what has in fact happened?

If the Government wants to get people into new homes, and get home prices down, it needs to take control of land sales and development.
Without new players in the home loan markets, expect to see mortgage business drop and the return of refinancing and debt consolidation in the mortgage broker sector.

Bank Mortgage Wars: Australia's Big Four Banks slug it out in the home loan space

Bank Mortgage Wars: Big four slug it out
NAB fired the first shot with the "break up" letter.
The National Australia Bank [NAB] has the least to lose and the most to gain in the home loan sector, so this made a lot of sense for them.
NAB has the smallest home loan portfolio, and the CBA and Westpac home loan customers looked ripe for the plunder. Have a go yer mug!


Westpac and CBA want to retaliate. 
NAB's business portfolio is their crown jewels. Hit em where it hurts most they must have thought.
This is competition. Wayne Swan and the ACCC would be pleased.
Westpac in the meantime are retelling the "banana smoothy story" to anyone who will listen [mostly the morons that are paying over the top mortgage interest rates, because they are a sucker for Nanna Gail's tales.]

What about the money? The fly in the ointment
The investment community are not happy. Better deals for customers mean lower profits, and that means falling share prices and lower dividends. But no customers means lower profits ,and being left standing in the NAB's drag race challenge means that the NAB would start to gain some badly needed traction in the home loan business at their expense. So doing nothing is not an option.


That brings up a question, So just who are the banks working for then.
The Government, the customers, or the investors [who actually own the business] That includes the fund managers who buy their stocks as part of their investment products, and low profits for banks mean a lower performing investment.
Well all three if the truth be told. That's if we don't include the managers and board.
Who has the biggest clout in the major banks?
Well today it looks like the shareholders and fund managers. The NAB challenge will put pressure on profit margins and that means earnings slides. it might even give them some good press in the eyes of borrowers. OK. So the NAB wins then? Not if Westpac and the Commonwealth Bank [CBA] have anything to do with it.
And the money side of town are worried that real competition between the big four banks is going to fierce, and lower earnings, profits and dividends would be the bitter harvest. Market share is the name of the game for the Big Banks. CBA and Westpac have it, and NAB wants to take it off them.

The drag race challenge. NAB v Westpac and CBA
National Australia Bank dropped a bombshell last month with the offer to pay the mortgage exit fees incurred by Westpac and CBA customers. Switching was in the news, and that is always a good place to begin a marketing campaign. [In the classic drag race manoeuvre, the under dog picks a fight with the top dog.]

Retaliation from Westpac was swift.
Westpac [and the CBA] have discount loans to new customers on offer. That's what NAB are already doing and it got them nowhere. And what about Westpac and CBA's existing home loan customers, locked into high interest rates? Too bad, if they are too dumb to give a crap and move thinks Westpac.

The CBA retaliation move: Relax the Lending Criteria. Easy money? 
I thought that is what caused the GFC?
CBA revealed it had relaxed some of its lending criteria, in an effort to suck all the new mortgage business to its doors. [Bad move I say]. Swap good mortgage customers at premium rates for "iffy" clients at discounted rates? [CBA is getting mad, or is that going mad?]
The other problem is that there are few new customers, New home sales are down, home prices are lower and buyers are thin on the ground, and maybe waiting for further price erosion?


Governments and Customers rejoice in real competition.
These small bit exchanges have been welcomed by consumers and the government as a sign of real competition for a change.
But will the campaign run out of steam, or this all a show for the audience ; look we have real competition and we don't need all this new regulation stuff that Wayne Swan is planning.


Investors are not impressed
With the big four banks, our "money for jam" banks are one of the most profitable sectors of the Australian market right now. The big four banks alone are aiming for a combined earnings over $20 billion in 2011.


Money ain't cheap these days.
Funding costs are tipped to rise and lending over the next three years is forecast to slow, so profits falls were likely anyway.


Will the Fifth Pillar "do doughnuts" around the big four banks?
If the so called fifth pillar, the regional banks and building societies and credit unions get better funding arrangements, then its going to be really tight for the big banks to maintain their profitability, unless they do as the ANZ and start to look for opportunities in new markets overseas.

Mr Mortgage forecasts lower home loan demand over the next three years, better deals from non bank mortgage lenders and credit unions and raised status of mortgage managers in the coming months as the real competition in the mortgage space. The NAB verses CBA and Westpac drag race is just the show opener for things to come. If you are looking to switch loans away from CBA or Westpac, wait till the new rules are in place in July.
For new mortgage loans look at credit unions, and building societies and non bank home loans for lo doc lending.

Credit Cards: Green Bandt to ban Hole in the Wall cash bandits.

You'll "get more green out of your ATM cash machine" soon if Andrew Bandt gets his private members bill over the line.

Bandt's bill has the attraction factor

Green Andrew is proposing a ban on those $2.00 ATM transaction fees for withdrawing cash.
Politicians from the entire spectrum are liking his tune and are backing Green MP Adam Bandt's private member's bill.
Bob Katter also stuck his boot into the Government and Opposition for skinny policy offerings, though Labor Treasurer Wayne Swan has been holding its cards close to it chest. He is expected to release his plan for banking reform later this month.
Though Independent MPs Andrew Wilkie, Tony Windsor, Rob Oakeshott and Bob Katter and unaligned Nationals MP Tony Crook said Mr Bandt's bill, now before Parliament, was the most promising proposal on banking, they have yet to see the Labor Plan, but I suspect that it will be more wide ranging in terms of offering real competition to the major banks than Andrew bandt's bill. Let's wait and see on that one.

Call to action to stir Wayne Swan

The calls to action increases the pressure on Treasurer Wayne Swan, who will next month announce banking reforms that could need the support of the crossbenchers.
The banks' all claim that politicians did not understand that funding costs were going up. Wilke says that this core claim is nonsense.
Mr Katter said the surge in banking chiefs' salaries also warranted attention and could be curbed through the tax system.
Mortgage Foreclosures unfair.
He called on the government to do ''something serious'' about the system of mortgage foreclosure, which was weighted in lenders' favour.

Summary of Bandt's Bill

As it stands, Andrew Bandt's proposed bill has three main areas of saings for Australian Credit users.

1. A crackdown on Bank Fees.
2. Mortgage Rates to move in line with RBA increases
3. A ban of bank transaction fees of $2.00 per transaction.

Whatever the outcome, it looks like Australia's Parliament is in for a lively time on the floor next year, and home buyers can look forward to more and better loan offers from nonbank players, lower mortgage interest rates and lower fees, no to low exit fees on their mortgages rates, and credit card losing unfair fees. Sounds good to me.

Bad Credit: Can you refinance your home when you have bad credit rating?

A lot of people are suffering from mortgage stress right now, and they need answers right now.
They can't afford to wait for the Government to create competition in the mortgage industry, they need to refinance now, or risk losing their home to the greedy banks.
And that poses a couple of questions about credit impairment

1. If you have bad credit now, and you can't meet your mortgage repayments, how can you refinance away from that lender and get a new home loan?
2. How do I find a lender who will set this sort of home loan for credit impaired homeowners?

Mr Mortgage has a section for Bad Credit mortgage loans

When you have bad credit it does not mean that you can no longer finance, or refinance your home, it simply means that you do not conform with regular bank loan guidelines.
There are plenty of other mortgage lenders out there that have mortgage products tailored for the the credit impaired who are looking at mortgage refinancing options.

How to reduce your monthly credit repayments using a bad credit home loan


One thing you must understand about non conforming loans is that they usually have a higher interest rate. This is to compensate for the riskier loan conditions that they non conforming lenders may have to face.
So how can you reduce your monthly repayments if bad credit lenders have higher interest loans?

Basically there are three methods to reduce your monthly credit repayments.

1. First you can increase the term of the loan. This allows to spread out the repayments over a longer period of time to make the repayments easier to make.
2. Secondly you can consolidate all of you high interest short term loans into the bad credit mortgage loan. If you have credit cards loans, car loans, personal loans, second mortgages, or so called interest free loans that can cost you up to 30% pain interest rates, then combining these loans with your mortgage refinance may be the best way to reduce your monthly repayments to a size that you are comfortable with. In fact many people get into the situation of being unable to meet their mortgage repayments because of all the other debts that they have. so this may be your way to ease your mortgage stress.
3. Obviously, combining points one and two above may give you your optimum solution.

Remember a Bad Credit Rating is not a life sentence


I think its important for you to realise that bad credit is usually temporary and soon you might be back on your feet again.
I mention this for two reasons.

1. Don't think ill of yourself just because your currently have a bad credit rating. It can pass.
2. Also the bad credit home loan solution that I have outlined above should be seen as a temporary fix, say for two to three years.

Once your credit has improved again, then there is no reason why we could not assist you in getting mortgage loans with lower interest rates. So refinancing to bad credit lenders is only step one of the process.
Once you are back on your feet again, refinance to a Low Interest Loan
For more info go to the bad credit section at Mr Mortgage
Author: Rick Adlam Mr Mortgage

Mortgage repayments: Why NSW has nearly half of Australia's home loan battlers

According to a Moody's latest investment report, New South Wales has 44 per cent of Australia's entire home loan delinquencies, and mortgagors in Sydney's fringe suburbs are most likely to lose their homes through mortgage stress.

Most of those are in Sydney's outer regions where more about 2.5 per cent of mortgages are more than 30 days behind in repayments, a Moody's Investors Service report said.

Australia's mortgage market is generally performing well, but not as well as four years ago

Australia's mortgage market has always performed well, with just a National figure of about 1.3 percent of mortgages in default due to slow mortgage repayments.
This figure is about ten times better than the US experience over the past two years, but is not as good as it was four years ago.

So why is Sydney having suburbs with double the National average?

1.  Overvalued house prices. Show me struggling homeowners and I'll show you overvalued homes. Many home buyers have paid too much for their homes and will suffer the most.
2. Commuting expenses. When you are in the outer suburbs you will be travelling longer to get to work, and that means high transport, car and petrol expenses, so you have less to spend on your mortgage. Rising petrol prices have not helped.
3. Starting families too early. Having kids is expensive and it means that many partners choose to stay home to care for their children. Starting a family may have been unplanned or seemed affordable two years a go with record low interest rates and the baby bonus. But the baby bonus doesn't go far and the the mortgage keeps rising. You cannot make mortgage repayment and feed a family on one income these days, so both partners need to be income earners.

The RBA tipped to raise interest rates

The troubles may be in front of those now struggling to meet mortgage commitments as the RBA is widely tipped to raise mortgage interest rates by up to 1.25% over the next twelve months and the Major banks looking to raise rates over this figure.
Softening house prices in these suburbs will not assist mortgage stressed homeowners to sell their way out of debt, so people behind in mortgage repayments will have to learn to tighten their belts over the next few years.

Mr Mortgage Advice. If you are struggling with mortgage repayments now, I suggest that you switch to a non bank mortgage lender with lower mortgage interest rates, and maybe a discounted one year mortgage rate to help you through the next twelve months. The major banks want to raise rates in addition to any Reserve Bank rate increases, so your need to out of that scenario now.

Will house prices really go up 20% over the next 3 years?

House prices are predicted to grow between 9% and 20% over the next 3 years. Mr Mortgage disagrees. Here's why.

Experts are rarely good at predicting the future because their minds are full of facts from the past. I have a problem with future house price forecasts and it is this almost never materialises.

When you have someone who has a vested interest in the result [QBE is a house insurance player] then take house price forecasts with a grain of salt.

A QBE "survey" compiled by BIS Shrapnel says house prices will growth between 9 and 20 per cent in Australia's capital cities over the next three years. Really? So I guess that means that you should be paying 9% to 20% more for your insurance then? I see!

The biggest problems I see with House prices forecasting using median house prices

1. The median price is not an actual price. Any house price survey relies on the notion of the median price of a home. These are the homes that are sold.
2. There are two problems with this.
   1. Many homes sold are new, and therefore are usually better than an established home and worth more to buyers.
   2. Most established homes are dolled up prior to sale [paint jobs, renovations, staging and the like]. They are "pushed" and "promoted" and "marketed" to fetch a higher price. Even then many are not currently selling.

We need a segmentation of median house prices

At least if we got a segmentation of house sales [new apartments, new homes, established homes etc, I would be more comfortable believing these figures. That won't happen because the output is designed to deceive buyers and sellers to believinghouse prices are higher than they are.

Here's an example of how median house prices distort true values.

A new apartment block is released for sale with the penthouses at 2.2 million a piece, and apartments from $400,000.

One of the penthouses is sold, and two older units down the road sell for $220,000.

How median house prices are calculated

The median house price is $2.64 million divided by three. That gives a median unit price of $880,000! Whilst this may seem a silly example it is how median house prices are calculated.

Home buyers might begin to believe that the older units down the road are worth more than $220,000, and the $400,000 are worth more too.

Can you see why median house prices is not a good guide?

What about interest rates affecting housing prices?

Australia's housing market [some say housing bubble] has so far fared better than most parts of the US and the UK markets.

In the US for instance they have 30 year fixed interest rates retailing at under 5% pa., and they could go lower to help keep people in their homes, let alone prop up the housing market. No such luck here in Australia.

Australia's mortgage interest rates will rise over the next twelve months

We face a home mortgage interest rate in Australia of over 8% over the next 12 months.

Whilst the "experts say fix your mortgage interest rates now, that's fine if you are buying now or if you have a variable mortgage already. If you are buying in 12 months time that is not going to help you because I believe that rates will be as much as 1.25% higher than they are now.

Result? I see "median" house prices moderating, and home prices for Joe average softening over the next 12 months.

What Mr Mortgage believes.

Anytime is a good time to buy a house that is well priced and what you need to live in, and is affordable, if you intend to live there for more than 5 years. If not its better to rent and invest the savings and housing costs. If you are an investor, there are better places to park your money.

Australia's "Housing bubble" will not pop but lose some of its froth and just shrink to a less inflated size.

Lower returns for property investors, and more certain yields and easier picking elsewhere will keep investors out of the housing market, and moderate home values.

Future house prices will not be a mirror of our past. The RBA has it eye on house prices and the board will do what ever it takes to keep a lid on the housing market to ensure affordability for future home buyers.

The baby boomer influence has run its course in the general housing market, and as they move out of established housing this will take more heat out of house prices.

Author: Rick Adlam Mr Mortgage

US Mortgage foreclosures in Sub-prime mess deemed fraudulent due to "robo-signers"

As many as 40 US state attorneys general are expected to join forces to announce an investigation into the mortgage-servicing industry on fraudulent foreclosures to pressure financial institutions to rewrite large numbers of troubled loans.

Mortgage document fraud by "robo-signing"

The move comes amid recent allegations that mortgage-servicers, which include units of major banks such as Bank of America submitted fraudulent documents in thousands of foreclosure proceedings nationwide.

The banks have countered saying that the document issues are technical and mostly the result of papers approved by so-called robo-signers with little review—and don't reflect substantive problems with foreclosures. 

Foreclosures on hold, as banks heed the consequences.

Members of the US Congress have called for a suspension of all foreclosures until the documentation issue is resolved.

Some are saying that mortgage servicers that have lied to courts by filing incorrect paperwork and should suffer the consequences of their fraudulent actions.

The attorneys' general immediate aim is to determine the scale of the document problems and correct them. But several of them have said that the investigation could force the lenders and servicers to agree to mass loan modifications or principal forgiveness schemes. 

Other possibilities include financial penalties or changes in mortgage servicing practices.

Mortgage lenders and servicers have largely resisted reducing principal on mortgages, instead focusing on interest-rate reductions or term extensions. Banks say they are worried about lawsuits from investors, some of whom could lose money in a principal write down.

A recent action by Massachusetts attorney general successfully pressured Bank of America to reduce mortgage-loan balances by as much as 30% for thousands of borrowers, using the threat of a lawsuit to get a settlement, though documentation problems were not at issue then.

The States could use their respective laws against unfair and deceptive acts and practices, and well as actions under states' various foreclosure laws or tighten those laws.

In 2008, Bank of America settled charges brought by 15 attorneys on accusations of predatory lending in its Countrywide Financial unit, granting loan modifications worth $8.4 billion to thousands of homeowners. That may be the tip of the iceberg if these new actions have bite.

Ohio became the first State to sue a mortgage servicer, when he filed suit against GMAC Mortgage LLC. The suit named GMAC employee Jeffrey Stephan, an alleged "robo-signer," who said that he signed off on thousands of court documents related to foreclosures without even reading them.

Mortgage Lenders and Mortgage Servicers suspend foreclosures

GMAC announced that it was suspending foreclosures in the 23 U.S. states where judges are required to sign off on them. 

J.P. Morgan Chase and Co.'s home mortgage unit and Bank of America have both suspended house foreclosures, with the Bank of America now suspending foreclosures in all 50 states of the US.

Some State attorney generals would like to look beyond the narrow issues raised by the robo-signing, with claims that servicers are initiating foreclosures while the lenders are in the process of modifying the loans.
Author: Mr Mortgage

Greedy banks to raise your mortgage interest rates above the RBA moves

CBA, Westpac, NAB and ANZ are tipped to raise mortgage rates over any RBA rate rises to fatten record profits.

Homeowners and home buyers are being warned to brace for their favourite bank to lift their mortgage interest rates by more than any rate rise from the RBA.
So if the Reserve Bank of Australia sees a rate rise as important, then expect a double whammy from the bank you have your mortgage loan with.
The RBA is widely tipped to lift rates by 0.25 of a percentage point next week, but your bank may ask you to pay more on your home loan, with some saying they will up rates by a total of 0.4%. [Mr Mortgage disagrees with this view by the way.]
Ant increase in mortgage rates will hurt mortgage stressed homeowners and put off a lot of home buyers, but the banks don't see this as their problem.
They have been writing heaps of quality loans, and now see this as a time to lock in the good times and not worry about writing new business.
So the big banks can afford to lose a lot of mortgage customers and still make a killing with the their extra margins in place on the remaining mortgage loans.

We have all heard the Banks excuses for increasing mortgage rates.

The banks have complained that the higher costs of funding their loans is squeezing their profit margins.
The banana smoothie story. Remember the Westpac Bank analogy of the banana smoothie vendor?
But Treasurer Wayne Swan has attacked any banks thinking of double dipping, saying they have reported solid profits. Mr Mortgage says they have all made record profits, but are addicted to ever increasing profits, so good luck with your plan Wayne.

Although the four big banks' total first-half profit climbed by $1.3 billion this year, they have complained that their profit margins are being squeezed because it costs them more to borrow from overseas than before the financial crisis. This beggars the question, so where did the record profits come from?

The RBA dismisses banks excuse to rise mortgage interest rates

The Reserve Bank of Australia yesterday dismissed the banks' concerns about their operating margins, saying they have shown little sign that they are under pressure and the interest rates they charge already have been enough to make up for the higher costs they pay for overseas funds.

Why your bank will raise its mortgage rates higher than the official cash rate increase

Your bank will raise its mortgage loan interest rates higher than the RBA increase simply because the big four banks simply have no effective competition.

The non bank mortgage lenders were all but wiped out in the wake of the Global financial crisis. This is the reason we are now paying higher mortgage rates than we should be.

Until the Government gets serious about a Government sponsored mortgage industry, initially for first home owners building new homes, then we will continue to have the banks ripping us off  with higher mortgage rates and be perpetually seeing house prices rise due to housing shortages.

Author: Mr Mortgage