Powered by MOMENTUM MEDIA
subscribe to our newsletter

No ‘viable market opportunity’ for tracker mortgages

A chief banking representative has suggested that there is currently “not a viable market opportunity” for rate tracker mortgages in Australia, despite “more than 85 per cent” of home buyers choosing variable rate home loans.

According to Steven Münchenberg from the Australian Bankers’ Association (ABA), the “very competitive market” of over 3,600 products and the “lowest interest rates in half a century” mean that customers can currently “choose the home loan product that best suits their financial needs”.

He added, however, that rate tracker mortgages — which are tied to the cash rate — were not a product currently offered by financial institutes in the country, suggesting that at this time, “there is not a viable market opportunity for this type of product”.

Mr Münchenberg continued: “Banks are, however, always looking at ways to improve their products and services. This involves reviewing product design and drawing on international experiences to see if customers would get any value from a new product."

The subject of rate tracker mortgages has been of note recently, after they were discussed during parliamentary hearings during the recent inquiry into the major banks.

Advertisement
Advertisement

PROMOTED CONTENT


The concept of linking mortgage rates to the cash rate was earlier suggested by the parliamentary standing committee in an effort to “protect customers from interest rate fluctuations that are not genuinely caused by changes to the bank’s cost of funds”.

Mr Münchenberg concluded that it was important for Australian home buyers searching for a home loan product to be aware of what features were most important to them by factoring application fees, repayment options as well as interest rates into their decisions.

[Related: Banking review pushes for tracker mortgages]

No ‘viable market opportunity’ for tracker mortgages
mortgagebusiness

Latest News

The RBA has studied the role of collateral in credit markets under stress, and has found that collateralised borrowing rose for some segment...

Auction volumes surged significantly over the December quarter across Australia, largely attributed to a “resurgence” in Melbourne, acco...

Loan conditions and collateral guarantees continue to be major stumbling blocks for small businesses looking to access financing, according ...

FROM THE WEB

Join a group of highly informed brokers.

Broker Pulse, a community-driven knowledge base of lender performance Reveal exactly which lenders are making life easiest for brokers and their clients by taking this monthly survey and joining a group of highly informed brokers who leverage these insights every month.

JOIN NOW
podcast

LATEST PODCAST: A new record in mortgage approvals

Do you expect to see strong uptake of the HomeBuilder scheme?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.