INQUIRIES for 100 per cent home loans have surged 250 per cent since the Federal Government’s more generous first home owners grant ceased at the end of last year.

But mortgage broker Loan Market says these potential borrowers are likely be unsuccessful and will need to show they can save for a deposit.

Loan Market chief operating officer Dean Rushton says there is still a huge amount of demand from people wanting to enter the housing market despite the end of the government’s expanded grant.

But those looking for a 100 per cent loan will find it difficult.

“Tighter lending restrictions which require genuine savings contributions of around five per cent towards the property purchase means most are unlikely to get past first base,” Mr Ruston said.

“The major lenders have no appetite for this type of lending and there is little room to move for applicants who do not fit the box.”

He said early last year banks reduced their maximum loan to valuation ratios (LVRs) to as low as 85 per cent in response to the global financial crisis, making it much more difficult for first-time buyers.

Buyers had been able to use the boosted First Home Owners Grant as a contribution to their deposit but this had become more difficult since the concession returned to its original level of $7000 in January.

Mr Rushton said family equity options, where parents or another immediate family member can help with loan servicing and security support, were still available to help first home buyers entering the market.

“Unfortunately, a lot of people have lost the knack of saving money, which makes it difficult if you want to find the finance to get into the residential property market at the moment,” he said.

“The situation is unlikely to change in the near future.”

AAP

David and Libby Koch - News Limited newspapers

BANK fees quietly and insidiously plunder your savings, often without your knowledge.

Australians on average lose $1000 a year to bank fees and it grows about 8 per cent a year. Often we pay those fees because of our own laziness.

We don’t know about you, but we’d rather keep that $1000 for ourselves than help the bank make another record profit. Change your banking habits, cut those bank fees and enjoy the rewards.

The sooner you get cracking on this issue the better.

Assess your banking arrangements

The first step is probably the hardest and that’s understanding your banking and credit card habits. With a day-to-day account, how many transactions do you make, are they electronic, do you need a cheque book or are you happy with internet banking?

The key is to choose the accounts which suit your habits at the lowest cost. Often you can find appropriate products within your current bank so the first step should be your branch’s information section.

Explain your situation to the customer service person and see what they can offer. If it’s not much, start shopping around other banks.

The same with a credit card. If you never seem to pay off the balance on the due date, choose a card with a low interest rate and no interest-free days. If you regularly pay the balance off on time, interest-free days are an advantage.

Make sure you check out the deals offered by your financial institution. Many of them offer discounted fees for pensioners, students, a range of professions and even members of sports associations.

If you have a couple of products with your bank, such as a credit card, home loan or managed investment, you are an important customer.

Ask where they can cut your fees to keep you happy.

Some banks also offer their shareholders lower fees on home loans.

Only use your bank’s ATMs to avoid costs

Plan ahead and visit one of your bank’s ATMs for free before you run out of cash.

New rules mean we have a much better idea of how much we are charged to use another bank’s ATM.

From now on when you use an ATM that’s not your bank’s, a message will come up on the screen telling you how much you will be charged by the ATM’s owner.

This should be around $2 at an independent ATM or a rival lender’s.

On top of that $2, your bank may also charge you a so-called “foreign” fee for using a different ATM. This fee varies from bank to bank.

It’s important to note this fee is per transaction. Just say you want to withdraw cash and check your balance at an ATM that doesn’t belong to your bank, you could be charged up to $2.50 for each action $5 in total.

If there are only “foreign” ATMs around, withdraw a larger amount and make it last longer. A $2 fee on a $100 withdrawal is a 2 per cent slug, but on a $500 withdrawal it’s just 0.4 per cent.

An alternative to this is to withdraw small amounts fee-free via Eftpos when you’re out shopping.

Don’t overdraw

Some lenders charge up to $50 every time you don’t have enough cash in your account to cover a cheque or direct debit payment.

Overdrawing your account may seem a better option than not paying your rent or electricity bill, but the penalties are high.

Get organised and don’t ever put yourself in that position.

If you are hit with a $50 overdrawn fee, complain to the bank and mutter about it being illegal under contract law to make a profit on these types of penalties. British consumers had a big win over the banks on this issue.

Our banks don’t want it tested here, and our experience is that they’ll cut the penalty if you complain.

Consolidate accounts

With some accounts charging regular fees of up to $10 a month, it makes sense to consolidate your accounts.

There’s also the extra withdrawal fees, Eftpos fees and other transaction charges.

If you have several transaction accounts, find out who gives the best deal, transfer your money and close the rest. The same goes for credit cards.

Read the fine print on loans

Research all fees before taking out a new loan. Is there an application fee? What’s the penalty if you make late repayments? Do they charge a monthly administration fee?

Keep track of the fees because some lenders have been sneakily increasing annual mortgage fees.

Avoid your branch

Suburban branches cost a lot to run, so banks charge for the privilege of using them.

Some banks make you pay up to $5 for withdrawing money over the counter and up to $2.50 for depositing money at a branch. Internet banking is the cheapest way to make transactions.

ANZ chief executive Mike Smith on the roof of company’s headquarters in Victoria. Picture: Jon Hargest Source: Herald Sun

ANZ has increased its underlying profit after tax for the four months to January by 16 per cent to $1.6 billion on higher earnings, wider margins and lower bad debts.

Income growth was about 8 per cent and cost growth was 7 per cent on further investment in the business, especially the institutional and Asian divisions, the bank said.

The company’s margins increased 14 basis points, excluding the markets division, compared with the second half of fiscal 2009.

ANZ chief executive Mike Smith said the outlook for Australia, New Zealand and Asia was now more positive than a year ago.

“The improved conditions are reflected in a more positive outlook for provisions,” Mr Smith said.

“There are, however, good reasons for caution about the outlook at this early stage of the year.

“We are already seeing a sovereign debt crisis in Europe and there is likely to be further volatility as the global financial crisis continues to work its way through the system.”

The provision charge for the full year was expected to be modestly higher than that implied by the four month total of $670 million. Fiscal year to date provisions were down 35 per cent on the prior year average.

ANZ, the Australian bank with the biggest presence in the Asia Pacific, said lending growth grew slightly, with increases in mortgages and credit cards offset by lower demand from corporate and institutional clients.

Deposits grew 2.5 per cent, driven by the increase in Australian retail and Asia Pacific institional deposits, offset by a decline in New Zealand.

“The Australian Retail and Commercial businesses are delivering good results. Asia Pacific Europe and Americas (APEA) is continuing to grow while a key focus in 2010 is integrating the business we acquired in Asia from RBS,” Mr Smith said.

“The New Zealand economy is stabilising, holding out the prospect of improved business performance over the next year or two.”

The bank said consumer asset quality was holding up well with the total provision coverage ratio remaining steady at 2.04 per cent.

ANZ said it had raised just over 60 per cent, or $15.2 billion, of its expected term funding requirements with an average maturity of five years.

The bank said funding costs remained high on a historical basis with the most significant increase coming from deposits.

The banks have been pushing up interest rates on deposit products to attract savings to fund lending.

ANZ said its pro forma Tier One ratio was 10.4 per cent with a core ratio of about 8.3 per cent, making the bank’s capital ratio the highest amongst the big four.

The integration of recent takeovers ING, RBS and Landmark were on track.

Mr Smith said global economic growth was likely to be slower now than in the decade leading up to the financial crisis.

“Despite recent steps to temper growth in China, Asia is expected to remain the world’s best performing region with growth of 7.7 per cent (excluding Japan) which confirms our confidence in the super regional strategy,” Mr Smith said.

ANZ is aiming to have 20 per cent of its earnings coming from Asia by 2012.

AAP

PETER MARTIN

The Reserve Bank has produced the first public estimate of the number of times it expects to raise interest rates in the coming months.

Its governor, Glenn Stevens, told the Parliament’s economics committee yesterday he expects to do it between two and four more times.

Declaring the financial crisis over, and telling the committee it had only ever been a global crisis for six to eight weeks, Mr Stevens said the cash rate had to move away from its ”emergency settings” and increase by 0.5 to 1 percentage points so that consumer and business rates would return to their long-term average, ”which I think is the appropriate place to be”.

Another two to four rises of 0.25 points would add a further $95 to $190 to the monthly cost of servicing a $300,000 mortgage, but would, importantly, leave repayments several hundred dollars below where they were before the crisis began.

The future of rates beyond that would depend on the bank’s assessment of wage and inflationary pressures and the institutions with which borrowers had their accounts.

”We have really had 3½ rate moves so far, or if you are a customer of Westpac, four,” the governor told the committee.

Mr Stevens was relaxed about government debt, saying it was so low that on one reading of proposed new international banking standards Australia did not have enough government debt to sell the banks the safe securities they would need.

Asked to respond to a claim by the Coalition frontbencher Barnaby Joyce that Australia was at risk of defaulting on government debt, he said there were ”few things less likely than Australia defaulting”.

Reminded that Senator Joyce was the shadow finance minister, he said he had ”yet to meet a finance minister who has ever mused any possibility about debt default of his own country”.