FIN111 Introductory Principles of Finance Spring 2023 Assessment Task 2

Report > FIN111 Introductory Principles of Finance Spring 2023 Assessment Task 2 - Report

University of Wollongong FIN 111 According to Commonwealth Bank CEO Matt Comyn, the Australian home mortgage market is a rapidly changing and fiercely competitive landscape, with many financial institutions competing to offer potential homeowners a variety of lending options during a time of radical change and intense competition. (Thomson, 2023) ...[Show More]

University of Wollongong
FIN 111
According to Commonwealth Bank CEO Matt Comyn, the Australian home mortgage market

is a rapidly changing and fiercely competitive landscape, with many financial institutions

competing to offer potential homeowners a variety of lending options during a time of radical

change and intense competition. (Thomson, 2023)

When looking for a mortgage, it is important to evaluate the product thoroughly, considering

things like interest rates, the type of interest rates (fixed versus variable), and the presence of

an offset account. The inclusion of the interest rate while figuring up the monthly repayment

amount is crucial. A lower mortgage interest rate is a wise financial move that will result in

significant savings over the course of the loan. When looking for the option to make extra

payments or withdraw money, choosing a house loan with a variable interest rate is useful. It

is critical to understand that a variable loan's interest rate may change in reaction to market

circumstances. The market for mortgages is dominated by the big banks. The majority of the

domestic house loan industry is dominated by Commonwealth, Westpac, NAB, and ANZ. To

gain market share, they might make use of economies of scale and well-known brands. (IBIS

WORLD, 2023) I have evaluated three different mortgage choices provided by different

financial institutions, including Westpac, ANZ, and CBA. (Appendix 1)

In this analysis of three well-known Australian financial institutions—Commonwealth Bank

of Australia (CBA), Westpac, and Australia and New Zealand Banking Group Limited (ANZ)

— I have compared their interest rates. With a comparable rate of 6.62% p.a., CBA's

Standard Variable Rate provides a competitive interest rate of 6.24% p.a. Access to offset

accounts and a number of other advantages are offered by the loan. Contrarily, Westpac's

Flexi First Option Home Loan, which is subject to particular discount offers, has the lowest

interest rate in our review at 6.19% p.a. With no recurring fees and an unlimited number of

additional repayment options, this loan emphasises flexibility. Although detailed repayment

information was not provided, ANZ's Simplicity PLUS - Variable Rate stands out because to

its special offer reduction for customers with lower loan-to-value ratios. The Standard

Variable Rate from CBA has useful features despite having a slightly higher interest rate.

Simplicity PLUS from ANZ continues to be competitive because to its discount for specific

borrowers.