Mortgage costs could increase due to home loan risks… Interest-only mortgages make marketplace return…
Mortgage costs on the rise?
The Australian Prudential Regulation Authority (APRA) announced that it would require an average mortgage risk weight of 25 per cent on residential mortgages, up from the current average of around 16 per cent, according to a story from ABC.
The change applies only to the four major banks (ANZ, CBA, NAB and Westpac) and Macquarie Bank, which are the five institutions currently allowed to set their own mortgage risk weights.
All other lenders regulated by APRA use a standard 35 per cent risk weight on residential mortgages, meaning that the major banks will still retain a cost advantage over smaller rivals.
"The mortgage industry was a little bit biased towards the major players because they could hold less capital and, therefore, it brings the centre of gravity back a little further towards some of the smaller players," the principal of Digital Finance Analytics, Martin North told The World Today.
Interest-only mortgages make marketplace return
Interest-only mortgages are making a comeback, but these are not the loans of yesteryear or yester-housing booms, according to an article from CNBC.
"I think it is opening the door back to responsible lending, giving people choices," said Mat Ishbia, president and CEO of Michigan-based United Wholesale Mortgage, the second-largest lender through brokers in the nation, said to CNBC.
The company announced Monday it is now offering interest-only loans through brokers, with significant safeguards. Borrowers must put 20 percent down, ensuring that they have the "skin in the game" that so many did not during the heady days of the housing boom.
They must have at least a 720 FICO credit score, which is well above average, and they must qualify on what the payments will be once they're adjusted higher, not at the starter rate.
"These people can afford these mortgages. They're savvy homeowners," said Ishbia. "We're giving them the choice. It is no more risk to us. We actually think it is less risk. "United Wholesale Mortgage does not hold the loans but sells them to investors. Fannie Mae and Freddie Mac, the government-backed mortgage giants, do not buy these types of loans.
The Australian Prudential Regulation Authority (APRA) announced that it would require an average mortgage risk weight of 25 per cent on residential mortgages, up from the current average of around 16 per cent, according to a story from ABC.
The change applies only to the four major banks (ANZ, CBA, NAB and Westpac) and Macquarie Bank, which are the five institutions currently allowed to set their own mortgage risk weights.
All other lenders regulated by APRA use a standard 35 per cent risk weight on residential mortgages, meaning that the major banks will still retain a cost advantage over smaller rivals.
"The mortgage industry was a little bit biased towards the major players because they could hold less capital and, therefore, it brings the centre of gravity back a little further towards some of the smaller players," the principal of Digital Finance Analytics, Martin North told The World Today.
Interest-only mortgages make marketplace return
Interest-only mortgages are making a comeback, but these are not the loans of yesteryear or yester-housing booms, according to an article from CNBC.
"I think it is opening the door back to responsible lending, giving people choices," said Mat Ishbia, president and CEO of Michigan-based United Wholesale Mortgage, the second-largest lender through brokers in the nation, said to CNBC.
The company announced Monday it is now offering interest-only loans through brokers, with significant safeguards. Borrowers must put 20 percent down, ensuring that they have the "skin in the game" that so many did not during the heady days of the housing boom.
They must have at least a 720 FICO credit score, which is well above average, and they must qualify on what the payments will be once they're adjusted higher, not at the starter rate.
"These people can afford these mortgages. They're savvy homeowners," said Ishbia. "We're giving them the choice. It is no more risk to us. We actually think it is less risk. "United Wholesale Mortgage does not hold the loans but sells them to investors. Fannie Mae and Freddie Mac, the government-backed mortgage giants, do not buy these types of loans.
