- March 22, 2010
- Posted by: admin
- Category: Finance News
AMP Bank dropped the interest rate on its basic variable home loan by 22 basis points to 6.27 per cent, and cut the rate on its introductory variable mortgage by 45 basis points to 5.94 per cent.
The introductory variable home loan rate applies for only one year and will revert to AMP’s professional pack or classic club variable home loan rate thereafter, the bank said in a statement on Sunday.
The new rates apply to new customers and become effective from Monday.
However no change was made to AMP’s standard variable rate (SVR) of 6.94 per cent, spokeswoman Amanda Wallace said.
AMP hiked its interest rates on most products by 25 basis points on March 2, moving in lock-step with the big four banks following the Reserve Bank’s move to increase the official cash rate by 25 basis points to 4.00 per cent.
NAB’s SVR stands at 6.74 per cent, CBA’s is at 6.86 per cent, ANZ’s is at 6.91 per cent and Westpac’s is at 7.01 per cent.
AMP Ltd’s chief executive Craig Dunn said a revived market for residential mortgage backed securities (RMBS) had helped AMP fund lending growth as well as providing “much needed” competition to the big four.
“For those customers looking for an alternative to the major banks there is competition of which AMP Banking is an example but there needs to be more,” he said.
But Bendigo and Adelaide Bank’s chief executive Mike Hirst on Thursday told AAP while the RMBS market was showing signs of recovering, it was still far off the level required to support a fully competitive banking sector.
“There is a long way to go before you could say it will be a source of funding that would provide the non-majors (banks) with the amount of funding they need to be really competitive,” he said in an interview.
Mortgage securitisation is the process whereby lenders bundle up a number of mortgages as an interest-bearing financial product and sell it to investors.
It can be an effective way of funding home loans because it matches investors who want long-term fixed income with borrowers who repay their loan over many years.
AMP in January raised $1 billion from an upsized RMBS notes issue, and will look to make more RMBS issues going forward, Ms Wallace said.
Bendigo raised $1.1 billion from an upsized RMBS transaction last Wednesday.
SOURCE: Alison Bell – Business Day