Virgin Money, part of Sir Richard Branson’s Virgin group, aims to shake up the Australian financial services scene, launching a car insurance product, which will be followed by deposits and loans in coming months.

Sir Richard launched Virgin Car Insurance in Sydney on Wednesday, saying he could offer Australians 35 to 40 per cent cheaper car insurance than current insurers.

“We have a team in Australia who look for businesses where consumers are being taken for a ride,” Sir Richard said.

“The challenge is to get people to compare, but we have a strong brand and we’ve done this before.”
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An analysis has revealed that the major banks are making $450 a year more from each average home mortgage today than before the global financial crisis as they exploit weaker competition from non-bank lenders.

The cash grab by big banks, revealed in the analysis conducted for The Australian newspaper, threatens to further increase tensions between the banks and the Rudd government.

The banks have cried poor, declaring they cannot afford to pass on the full benefit of the Reserve Bank’s latest 0.25 percentage point interest rate cut because they are suffering from increased costs.
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Australians are using lower interest rates to repay debt instead of saddling up for more borrowings, a mortgage lender says.

Resi Mortgage head of consumer advocacy Lisa Montgomery said there had been an eight per cent increase in those wanting to consolidate debt, among the 700 customers surveyed about the future for their finances.

Since September, the Reserve Bank of Australia (RBA) has cut official interest rates by four percentage points to a 45-year low of 3.25 per cent, while banks have lowered their standard variable mortgage rate by an average 3.75 percentage points.
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A boom in lending for housing, led by low interest rates, is not expected to cause a sharp rise in bad debts when rates eventually pick up again, the Reserve Bank of Australia (RBA) says.

A sharp rise in arrears is not expected as household budgets are under less stress than those in other countries and the rise in Australian incomes since 2003 has outpaced the growth in consumption spending.

The RBA also says the ability of households to service their loans has improved, with the four per cent annual appreciation in house prices over the past five years dwarfed by the eight per cent annual growth in household disposable income over the same period.
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Simple steps in handling a housing loan can ensure Australian home-owners keep their mortgage sound, a mortgage manager says.

Australian Mortgage Options managing director Robert Projeski said borrowers could take elementary measures to ensure they did not become financially burdened.

“Celebrate getting your loan by all means, but simple steps can remove the need to commiserate later on,” Mr Projeski said.
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Loans to first home buyers surged in January as lower interest rates, cheaper houses and boosts to the federal government’s grant made owning property more attractive, a leading mortgage broker says.

Mortgage sales to first home buyers rose 25.8 per cent in the month, from 21.2 per cent in December.

It marked the sixth consecutive monthly rise in since first home buyers accounted for 10.6 per cent of sales in June 2008.
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More people with home loans are finding it harder to meet the repayments compared to last year, a report has found.

“Just over half of the respondents acknowledged that their monthly mortgage repayments were more than 30 per cent of their gross household income,” the annual Australian mortgage report from financial advisory firm Deloitte said.

“Of that group, more than 50 per cent were stretched or at their maximum repayment limit,” the report said.
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With lenders dropping their interest rates in recent weeks, the temptation to loosen the belt and lower repayments is high. But according to the Mortgage and Finance Association of Australia (MFAA) every dollar households can contribute goes a long way.

“People have been stretched to maintain their mortgage repayments in recent months and often the first reaction at a rate drop will be to spend that saving elsewhere,” says Phil Naylor, CEO of the MFAA.
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Most Australians would not shy away from allowing lenders to access their entire credit history if it meant getting a better home loan deal, a new survey has found.

A poll by leading mortgage broker Loan Market Group, which includes X Inc Finance, found 72 per cent of respondents supported positive credit reporting, which allows lenders to scrutinise an applicants full credit history.
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Mortgage brokers are there to help you find the most appropriate home loan - you just need to ask the right questions, according to the Mortgage and Finance Association of Australia (MFAA).
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Another big drop in home lending in May is the fourth consecutive monthly decline as consumers take fright in the wake of higher interest rates and petrol prices, according to peak building and construction industry organisation Master Builders Australia.

Mr Peter Jones, Master Builders’ Chief Economist, said “Tighter financial conditions coupled with the high cost of fuel is affecting consumer sentiment and having a significant impact on home buyers.
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The biggest monthly fall in the number of home loans approvals in eight years suggests the Reserve Bank of Australia (RBA) may be succeeding in its bid to slow the economy and push inflation down.

Finance approvals for owner-occupied housing declined for the fourth straight month in May, down 7.9 per cent, seasonally adjusted.
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Home loan repayments and rent are hurting struggling borrowers much more than high petrol prices, data from Australia’s largest privately owned debt collection agency shows.

Unleaded fuel prices were approaching $1.70 in Adelaide, Melbourne, Sydney and Canberra yesterday even before crude oil prices reached a record $US145 a barrel.

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Australians are finding it more difficult to obtain housing finance as home lenders battle to deal with the global economic slowdown, a new survey has found.

An online poll in June conducted by Loan Market Group’s X Inc Finance, Australia’s fastest growing mortgage broker, found 60 per cent of respondents felt they were finding it harder to get a home loan in the wake of the credit crunch.

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Australian banks say they haven’t tightened their lending criteria, as a mortgage broker claimed that more people were finding it harder to get a home loan.

The global credit crunch has had a more severe impact on non-bank lenders, which rely heavily on borrowings to fund their loan books.

To get funding, many have had to increase credit quality by cutting riskier products or turning people away - if they haven’t disappeared altogether.

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