Banks fight competition with mortgage package

Banks are offering preferential mortgage terms for Australian and New Zealand property buyers in the face of fierce market competition.

A Commonwealth Bank spokesman said the number of Hong Kong people buying Australian and New Zealand properties and borrowing from banks is decreasing. The bank has thus introduced multi-currency loan and a special mortgage package to attract lenders.

In general, mortgage loans for Australian and New Zealand properties will secure a lending ratio up to 80 per cent of the property valuation or the transacted price, whichever is lower. Lenders buying properties in Australia or New Zealand, and lending by the currency in that country will get a higher lending ratio. The longest repayment period is usually 20 years.

Helen Lui, regional director of Lloyds TSB Bank, said Hong Kong investors wanted to take advantage of the low exchange rate of the Australian dollar.

Lloyds TSB Bank is offering a competitive mortgage rate for investors by cost of fund interest plus 1.25 per cent. For example, the mortgage rate for Australian loan is about 6.2 per cent at the moment, Ms Lui said. Lenders can choose New Zealand, United States and Hong Kong currencies.

Multi-currency loan is available from Commonwealth Bank, and choices extend to the yen with 1.37 per cent lending rate, although the risk may be higher as the yen fluctuates from time to time.

The lending rate is based mainly on the Interbank Offer Rate of different countries, plus 1.5 per cent from now until the end of September. The current Australian mortgage rate is 6.35 per cent.