- January 19, 2010
- Posted by: admin
- Category: Finance News
Westpac released information late yesterday saying “We are reducing our maximum Loan to value ratio (LVR) for new to bank customers to 87%.”
This is a very clear indication that the bank is only seeking the best quality customers. However if you are an existing customer the maximum LVR for existing will remain at 97% The interesting thing is that all loans above 80% LVR are insured by the mortgage insurer so the banks risk is very little. It will be interesting to see which lender is next to make a similar announcement?
The government needs to remove the bank guarantee policy to allow competition back into the market place. The bank guarantee was never required in the first place. All of Australia’s major banks have strong balance sheets and even stronger profits.
The major banks keep blaming the rising cost of funds to get away with raising the interest rates above the reserve bank increases. If this guarantee is not removed the banks continue playing the rising cost of funds card.
I am sure that when the announcements come about banks net profits they won’t be down as much as every other business in Australia.
Source Formula 1 Finance