Auswide Bank has lifted its maximum loan-to-value ratio on its RBA Rate Tracker Home Loan, bringing it to 90 per cent, including LMI.
As of this week (13 January), Auswide Bank has lifted its maximum loan-to-value ratio (LVR) for its Rate Tracker Home Loan.
The move, which is said to form part of the lender’s “ongoing improvement program” as identified by its Broker Journey Review Forum, will see the maximum LVR rise from 80 per cent of the purchase price/valuation for owner-occupied purchases to 90 per cent (including lender’s mortgage insurance).
The mortgage is only available for owner-occupiers and is not available for vacant land purchases or construction purposes.
Auswide Bank’s RBA Rate Tracker Home Loan is one of the few rate tracker mortgages currently available in the Australian mortgage market.
First launched in 2016, the product is a basic variable rate owner-occupied home loan that tracks the movements of the Reserve Bank of Australia (RBA) cash rate.
If the RBA shifts interest rates up or down, the customer interest rate on this product also moves by the same percentage (plus the bank’s fixed margin – thought to be approximately 2.49 per cent).
For example, if the RBA cash rate (currently 0.75 per cent) falls by 0.25 per cent, the home loan interest rate will also fall by the same amount.
Similarly, if the RBA cash rate increased, so would the home loan interest rate.
The only exception is if the RBA cash rate falls to 0 per cent or below in the future. Under those circumstances, the customer would continue to only pay the fixed margin.
The RBA is next expected to announce its official cash rate decision on Tuesday, 4 February.
Economists have largely tipped the RBA to cut the cash rate at its next meeting, given the economic impact of the ongoing bushfire crisis.
This would bring the cash rate to a new record low of 0.50 per cent.