HLI 0.38% $3.92 helia group limited

I continue to think about that. I'm not sure what the advantage...

  1. 963 Posts.
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    I continue to think about that. I'm not sure what the advantage to CBA would be to change a 50 year + relationship that is working well. The main reasons I can see for change, or why CBA went to market, would be to get a better deal on premiums and/or for HLI to take a larger percentage of higher LVR loans, both of which would make CBA loans more competitive.

    I think the most likely outcome is that CBA would ask HLI to reduce the premiums they charge to reflect the reduced risk that has come from KYC requirements, HLI lending criteria and aggregate consumer behaviour of forgoing discretionary spending and other more essential spending so they can pay their mortgage. The reduced premiums would make CBA home loans more competitive without them having to offer reduced rates. For example, playing around with HLI and CBA calculators this morning, it didn't take long to work out what any given % discount of the LMI fee was if translated into the equivalent % reduction in CBA interest rate, e.g., CBA (and HLI) marketing and sales could say something like... 'the CBA/HLI relationship means you get an x% discount on LMI, which is the equivalent of a 0.25% reduction on your mortgage rate for the life or your loan'.

    If the contract wasn't renewed, I'm guessing the release of capital would be under the same rules as with the CBA/HLI contract in place.

    It's a great question to keep thinking through.

    What are others thoughts?


 
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