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YOUR GUIDE TO PRODUCT EXCELLENCE

Report No. 4 January 2009

LOW-DOC HOME LOAN STAR RATINGS

IN THIS REPORT WE EXPLORE … Low-doc borrowers feel the brunt Lenders cut back on LVRs Refinancing a risky strategy Between a rock and a hard place? Mortgage insurers backing away LVR methodology tracks product changes

LOW-DOC BORROWERS FEEL THE BRUNT The last six months has seen a continuation of the tightening lending environment which we highlighted in the previous report in July 2008. With the economic slow-down now hitting home, Australia’s cash rates have shifted into reverse, tumbling from 7.25% to 4.25% with the likelihood of further cuts soon to follow. Rather than giving the lending industry a shot in the arm, this loosening of monetary policy has merely underlined a certain wariness by some lenders to approve loans. The difficulty of shoring up funds from the wholesale money markets combined with expected increases in defaults has resulted in lenders being more cautious about how much they lend and to whom. The generous cash rate cuts make lending rates more favourable for borrowers but they do not change the fact that lenders are generally less willing to lend than previously. In this restrained lending climate borrowers perceived to be higher-risk suffer most when looking to obtain credit. Low-doc borrowers, therefore, can expect to find it much more difficult to obtain a loan than previously. . LENDERS CUT BACK ON LVRs Not only have we seen many lenders withdraw from the low-doc market, but several of those who remain are now unwilling to lend more than 60% of loan-to-valuation ratio (LVR) on a property purchase – so that in many cases you need a 40% deposit before you can even think of applying for a low-doc mortgage. Stalling property prices, faltering job security and a general flatlining of the economy are behind the moves by many lenders to lower the amount they are willing to lend. This is tough on low-doc borrowers who can now also be asked to provide a greater level of documentation than before when applying for a loan. Several lenders have reduced their maximum available LVRs by as much as 20%. Six months ago lenders such as ANZ, ING Direct, and Police & Nurses Credit Society were willing to lend 80% of a property’s value to a low-doc borrower. Now they will lend a maximum of just 60% and it’s likely that more lenders will soon follow suit.

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This report is no longer current. Please refer to the CANSTAR CANNEX website for the most recent star ratings report on this topic.

YOUR GUIDE TO PRODUCT EXCELLENCE 2

REFINANCING A RISKY STRATEGY Regardless of whether now may or may not be an ideal time to buy, refinancing an existing low-doc loan is now fraught with problems. With a growing number of lenders willing only to lend up to 60% of a property’s value, it’s vital to ensure that you have enough equity in the property to qualify for a low-doc loan.

LVR requirement after 5-year ownership

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

10% decrease No change 10% increase 25% increase

Change in property value over 5 years

LVR

Can refinance @ 60%

Can't refinance @ 60%

Source: CANSTAR CANNEX January 2009 The above chart assumes you borrowed an 80% LVR loan to purchase a property five years ago, in possession of a 20% deposit. The four scenarios are based on what has happened to the property’s price during these five years, ranging from a decrease of 10% to an increase of 25%. The chart highlights that only if you have had 25% growth would you now be able to refinance your original 80% LVR home loan with a 60% LRV loan even though you have been paying down your loan during the five-year period. The implication is that many low-doc loan customers are stuck with their current loan provider until they have 40% equity in their property. Another consideration is your credit rating. Is it strong enough to qualify for another mortgage? If you have honoured all your mortgage payments in a timely manner since first obtaining a low-doc loan, your credit rating will be ideal. If however, you have experienced occasional trouble in making your regular mortgage payments, you could well find yourself struggling to refinance. Therefore, it’s worth checking with your lender, or even with a credit rating agency such as www.mycreditfile.com.au to see whether your credit rating has been affected, and if so to what extent. BETWEEN A ROCK AND A HARD PLACE? Several institutions have disappeared from the list of low-doc lenders since our July report. The majority – although not all – of these lenders have simply stopped advertising their low-doc products rather than withdrawing them altogether. Another development noted during the past six months has seen several lenders have withdrawn low-doc loans from their packaged products.


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A by-product of the credit crunch which has caused headaches for a few unfortunate borrowers is certain lenders’ business models which necessitate an active reduction in their loan books in order to increase their capital ratio. Those lenders with low capital ratios are generally finding that their loan book is undergoing a higher default risk than other lenders with a lower loan-to-value ratio. One approach which helps them to achieve a capital ratio improvement has been to maintain fairly consistent interest rates despite the new lower cash rate environment. The double whammy for borrowers comes with the fact that early termination fees still apply as normal. For those who arranged finance at a fairly recent stage, the choice is either accept the high interest rate being charged, or pay the early termination fees to move the loan and take advantage of lower interest rates elsewhere. MORTGAGE INSURERS BACKING AWAY Despite what many people think, the lenders mortgage insurance they usually have to take out when they apply for a home loan does NOT protect the borrower in the event that they can’t pay. It is designed instead to protect lenders against defaults by borrowers. The mortgage insurer will pay the lender if there is a shortfall in recovery costs once the repossessed property has been sold. Banks typically require lenders mortgage insurance (LMI) to be taken out on loans with an LVR over 80%, and also for mortgages perceived to be high risk, such as low-doc home loans. After a reshuffle of companies offering lenders mortgage insurance, the two main ones left servicing the Australian financial industry are Genworth Financial and QBE LMI (formerly PMI). Last September QBE began to increase premiums on high LVR loans and withdrew insurance on all loans above a 95% LVR. In December Genworth increased documentation criteria for low-doc loans. These applicants are now required to provide bank statements and a year’s worth of Business Activity Statements. Furthermore, low-doc loans involving any form of equity release will no longer qualify for insurance under Genworth’s umbrella. What this means to the low-doc consumer is that new or refinanced low-doc loans will be harder to obtain, as lenders show more and more reluctance to operate without LMI underpinning their loan-writing business. For low-doc borrowers, it seems that saving for an even bigger deposit is the only way. For low-doc borrowers keen to refinance, paying a big chunk off your mortgage could be the only way to meet the 40% equity requirement. LVR METHODOLOGY TRACKS PRODUCT CHANGES This time around, we analysed 132 loans from 33 lenders. That’s a reduction of 21 loans and five lenders since our last star ratings report. To better capture the current market trend of capping the minimum borrowing at 60%, CANSTAR CANNEX is now basing its comparisons on 60% rather than 80% LVR, as was previously the case. This also removed the “knock-out” factor, which would have seen a large number of lenders not qualify for star ratings analysis, thereby diluting our market comparison. Our updated methodology rewards those loans which are available at over 60%, with the higher LVRs receiving higher scores in this particular feature category. The full methodology used to calculate the star ratings can be found after the results at the end of this document. In all three low-doc categories rated, variable, 3-year fixed and revolving line of credit, banks once again dominate the ratings, with only Acura Finance breaking the five major banks’ stranglehold on the 5-star ratings awards. As can be seen by the results, there are still plenty of excellent products available for this market. Studying the full list of results in the star ratings report makes it easy to compare products and short list those of interest.


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COPYRIGHT © CANSTAR CANNEX Pty Ltd ABN 21 053 646 165, 2008. The recipient must not reproduce or transmit to third parties the whole or any part of this work, whether attributed to CANSTAR CANNEX or not, unless with prior written permission from CANSTAR CANNEX, which if provided, may be provided on conditions. DISCLAIMER To the extent that any CANSTAR CANNEX data, ratings or commentary constitutes general advice, this advice has been prepared by CANSTAR CANNEX Pty Ltd ABN 21 053 646 165 AFSL 312804 and does not take into account your individual investment objectives, financial circumstances or needs. Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such. CANSTAR CANNEX recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser. A Product Disclosure Statement relating to the product should also be obtained and considered before making any decision about whether to acquire the product. CANSTAR CANNEX acknowledges that past performance is not a reliable indicator of future performance. Please refer to CANSTAR CANNEX’s FSG for more information at www.canstarcannex.com.au.


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Text218: PROFILE SUMMARY

Rate (%) $250k Loan

Product Name

VARIABLE RATECompany

Minim

um

Period for

Self

Em

ployed

Minim

um

Loan Am

ount

Ongoing fee

Total U

pfront F

ees

Allow

bad credit history

Fees

low-doc home loan star ratings January 2009

Eligibility

Split Loans

Redraw

100% O

ffset A

ccount

Features

Construction

Loan

Max LV

R

�� "superior value"

Acura Finance Lo Doc 80 6.6 800 Nil 50000 ✔No min 80% ✘ ✔ ✔ ✔

Colonial Standard Variable Lo Doc ( 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

Commonwealth Bank Standard Variable Lo Doc ( 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

Westpac Premium Opt Loan-Low Doc 6.91 750 8/m 25000 ✔24 mths 82% ✘ ✔ ✔ ✔

Westpac Rocket Repay LowDoc 6.91 750 199/a 25000 ✘24 mths 82% ✔ ✔ ✔ ✔

�� "excellent value"

Acura Finance Lo Doc 80 No Mort Insur 6.9 800 Nil 50000 ✔No min 80% ✘ ✔ ✔ ✔

Colonial Low Doc Loan 60-80% LVR 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

Colonial Standard Variable Lo Doc 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

Commonwealth Bank Economiser Low Doc 6.23 700 8/m 10000 ✘12 mths 80% ✘ ✔ ✘ ✔

Commonwealth Bank Low Doc Loan 60-80% LVR 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

Commonwealth Bank Standard Variable Lo Doc 6.74 700 8/m 10000 ✘12 mths 80% ✔ ✔ ✔ ✔

St George Bank Low Doc Home Loan <$500 6.44 850 12/m 250000 ✘24 mths 80% ✔ ✔ ✔ ✔

State Custodians Lo-Doc Standard Variable 6.83 300 Nil 50000 ✘24 mths 83% ✘ ✔ ✔ ✔

Westpac Premium Opt Loan-Low Doc 6.91 750 8/m 25000 ✔24 mths 82% ✘ ✔ ✔ ✔

�� "strong value"

ANZ Low Doc 60 Standard Var 6.91 600 5/m 20000 ✘24 mths 60% ✔ ✔ ✔ ✔

ANZ Low Doc 60 Standard Var (B 6.91 600 5/m 20000 ✘24 mths 60% ✔ ✔ ✔ ✔

ANZ Low Doc Simplicity Plus 6.21 600 Nil 50000 ✘24 mths 60% ✘ ✔ ✔ ✔

Colonial Economiser Low Doc 6.23 700 8/m 10000 ✘12 mths 80% ✘ ✔ ✘ ✔

IMB Limited Lo Doc Loan 6.7 908.50 10/m 100000 ✔24 mths 80% ✔ ✔ ✘ ✔

Mortgage Ezy Lo Doc Fee Free Variable 6.89 987 150/s 50000 ✔24 mths 83% ✘ ✔ ✔ ✔

nab Tailored HL Var Low Doc 6.74 600 8/m 10000 ✘24 mths 80% ✔ ✔ ✔ ✘

one direct lo doc 60 Var 6.14 60 Nil 100000 ✔No min 60% ✘ ✘ ✔ ✘

Savings & Loans Cred Un Low Doc Home Loan 6.91 600 8/m 20000 ✘24 mths 80% ✔ ✔ ✔ ✔

Suncorp Back to Basics Low Doc 6.47 600 Nil 10000 ✘24 mths 80% ✘ ✔ ✔ ✔

�� "average value"

Adelaide Bank Lo Doc Bonus Term Loan 7.4 695 10/m 10000 ✔24 mths 80% ✔ ✔ ✔ ✔

AMP Banking Std Low Doc Variable 7.43 845 299/a 40000 ✘24 mths 80% ✔ ✘ ✔ ✘

AMP Banking Std Low Doc Variable (Affinit 7.43 845 299/a 40000 ✘24 mths 80% ✔ ✘ ✔ ✘

AMP Banking Std Low Doc Variable (Low 7.43 845 299/a 40000 ✘24 mths 80% ✔ ✘ ✔ ✘

29th January 2009

your guide to product excellence

Page 1 of 2LOW-DOC HOME LOAN - VARIABLE:


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Rate (%) $250k Loan

Product Name

VARIABLE RATECompany

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um

Period for

Self

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ployed

Minim

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Loan Am

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Total U

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Split Loans

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Features

Construction

Loan

Max LV

R


BankWest Easy Doc Home Loan 7.22 700 Nil 20000 ✘24 mths 80% ✔ ✔ ✘ ✔

Colonial Low Doc Loan < 60% LVR 6.74 700 8/m 20000 ✘12 mths 60% ✔ ✔ ✔ ✔

Commonwealth Bank Low Doc Loan < 60% LVR 6.74 700 8/m 20000 ✘12 mths 60% ✔ ✔ ✔ ✔

HomeSide Lending HomePlus Var >250k 6.47 1062.50 10/m 250000 ✘24 mths 80% ✔ ✘ ✔ ✔

HomeSide Lending Offset Variable LoDoc 6.33 1062.50 8/m 50000 ✘24 mths 80% ✔ ✘ ✔ ✘

HomeSide Lending Plain & Simple Var P+I 6.53 762.50 Nil 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

Mortgage HOUSE Freedom Home Loan Lo Do 7.46 869 Nil 50000 ✘2 yrs 80% ✘ ✔ ✔ ✘

Mortgage HOUSE Pure Basic Lo Doc 7.16 599.95 Nil 200000 ✘No min 76% ✘ ✔ ✔ ✘

MyRate Lo-Doc <600K 7 0 Nil 100000 ✔24 mths 80% ✘ ✔ ✔ ✘

RAMS Home Loans SE Pro Pack 1 6.99 895 300/a 250000 ✘24 mths 80% ✘ ✔ ✔ ✔

RAMS Home Loans Smartway Low Doc 7.79 895 120/a 25000 ✘24 mths 80% ✘ ✔ ✔ ✔

RESI Mortgage Corp LoDoc LMI 7.28 616 Nil 30000 ✘24 mths 80% ✘ ✔ ✔ ✔

RESI Mortgage Corp LoDoc Pro LMI 7.18 616 330/a 30000 ✘24 mths 80% ✘ ✔ ✔ ✔

Suncorp Standard Variable LowDoc 7.05 600 10/m 10000 ✘24 mths 80% ✔ ✔ ✔ ✔

� "satisfactory value"

A M O Group Lo Doc Home Loan 7.09 1165 Nil 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

Adelaide Bank Lo Doc Bonus Homebuyer 7.5 695 150/a 20000 ✔24 mths 80% ✘ ✔ ✔ ✘

AIMS Home Loans Gold Lo Doc Variable 8.64 990 Nil 200000 ✘No min 80% ✘ ✔ ✔ ✔

BMC Mortgage Low Doc - No Cred Impair 7.34 750 Nil 50000 ✘24 mths 80% ✔ ✔ ✔ ✔

BMC Mortgage Low Doc -Low Cred Impair 7.34 825 Nil 50000 ✔24 mths 60% ✔ ✔ ✔ ✔

Citibank Self Cert 80 Std Var (Mortga 8.15 649 8/m 50000 ✘12 mths 80% ✘ ✘ ✔ ✘

Collins Home Loans Low Doc Rate Reverter 7.25 670 Nil 50000 ✘24 mths 60% ✘ ✔ ✔ ✘

Collins Home Loans Low Doc Variable 7.25 870 445/a 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

Homeloans Hassle Free Home Loan 7.89 894 Nil 10000 ✘24 mths 80% ✘ ✔ ✔ ✔

Homeloans Premium Lo Doc Variable 7.09 864 Nil 30000 ✘2 yrs 80% ✘ ✔ ✔ ✔

Homeloans Premium LoDoc ProPk Var 6.99 864 330/a 30000 ✘No min 80% ✘ ✔ ✔ ✔

HomeSide Lending Plain & Simple Var IO 6.64 762.50 Nil 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

HomeSide Lending Reducible Variable LoDoc 6.97 762.50 6/m 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

ING Direct Lo Doc Standard Variable 7.04 719 Nil 50000 ✘24 mths 60% ✘ ✔ ✔ ✘

La Trobe Financial Servs Lite Doc Housing 8.05 3442.50 Nil 20000 ✔12 mths 80% ✘ ✔ ✔ ✘

Police & Nurses Cred Soc Low Doc Home Loan 6.92 650 5/m 50000 ✘24 mths 60% ✔ ✔ ✘ ✔

29th January 2009


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3-YEAR FIXED RATECompany

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Self

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Total U

pfront F

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Allow

bad credit history

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Portable Loan

Redraw

100% O

ffset A

ccount

Features

Construction

Loan

Max LV

R


St George Bank LowDocNew Portfol 3yrFxd ( 5.79 850 17/m 2000 ✘24 mths 80% ✘ ✘ ✔ ✘

Westpac 3 yr Fixed Low Doc 5.69 750 8/m 25000 ✘24 mths 82% ✘ ✔ ✔ ✔

Westpac 3 yr Fixed Low Doc (Premier 5.69 750 8/m 25000 ✘24 mths 82% ✘ ✔ ✔ ✔


St George Bank Low Doc 3yr Fixed 6.14 850 12/m 10000 ✘24 mths 80% ✘ ✘ ✔ ✘

St George Bank Low Doc 3yr Fixed (Low Doc 6.14 850 12/m 10000 ✘24 mths 80% ✘ ✘ ✔ ✘

St George Bank LowDocNew Portfol 3yrFxd 5.79 850 17/m 2000 ✘24 mths 80% ✘ ✘ ✔ ✘


BankSA LowDoc Portfolio 3yr Fxd 6.14 850 17/m 10000 ✘24 mths 80% ✘ ✘ ✔ ✘

BankSA LowDoc Portfolio 3yr Fxd (Lo 6.14 850 17/m 10000 ✘24 mths 80% ✘ ✘ ✔ ✘

Colonial 3yr Fixed Low Doc 6.14 700 8/m 10000 ✘12 mths 80% ✘ ✘ ✔ ✘

Colonial 3yr Fixed Low Doc (Wealth 6.14 700 8/m 10000 ✘12 mths 80% ✘ ✘ ✔ ✘

Commonwealth Bank 3yr Fixed Low Doc 6.14 700 8/m 10000 ✘12 mths 80% ✘ ✘ ✔ ✘

Commonwealth Bank 3yr Fixed Low Doc (Wealth 6.14 700 8/m 10000 ✘12 mths 80% ✘ ✘ ✔ ✘

nab Tailored HL 3yr Fxd LD 6.09 600 8/m 20000 ✘24 mths 80% ✘ ✔ ✔ ✘

Savings & Loans Cred Un LowDoc Home Loan 3yr Fxd 6.19 600 8/m 20000 ✘24 mths 80% ✘ ✘ ✔ ✔

St George Bank LowDoc Portfolio 3yr Fxd 6.14 850 17/m 2000 ✘24 mths 80% ✘ ✘ ✔ ✘


ANZ Low Doc Stand 3yr Fixed 6.19 600 10/m 20000 ✘24 mths 80% ✔ ✘ ✔ ✔

ANZ Low Doc Stand 3yr Fixed (Br 6.19 600 10/m 20000 ✘24 mths 80% ✔ ✘ ✔ ✔

HomeSide Lending Homeplus 3yr Fxd >250K 6.09 1062.50 10/m 250000 ✘24 mths 80% ✘ ✔ ✔ ✘

HomeSide Lending Reducible 3yrFxd LoDoc 6.09 762.50 6/m 50000 ✘24 mths 80% ✘ ✔ ✔ ✘

one direct lo doc 60 3y fxd 6.09 60 Nil 100000 ✔No min 60% ✘ ✘ ✔ ✘

RAMS Home Loans Fixed SE Pro Pack1 3yr 5.99 895 300/a 250000 ✘24 mths 80% ✘ ✔ ✔ ✔


AIMS Home Loans Gold Lo Doc 3yr 7.69 990 Nil 200000 ✘No min 80% ✘ ✘ ✔ ✔

AMP Banking Std Low Doc 3yr Fixed 7.69 845 Nil 40000 ✘24 mths 80% ✘ ✘ ✔ ✘

AMP Banking Std Low Doc 3yr Fixed (Affin 7.69 845 Nil 40000 ✘24 mths 80% ✘ ✘ ✔ ✘

Citibank Self Cert 80 3Y Fixed 6.92 649 8/m 50000 ✘12 mths 80% ✘ ✘ ✔ ✘

RAMS Home Loans Fixed Low Doc 3yr 6.74 895 120/a 25000 ✘24 mths 80% ✘ ✔ ✔ ✔

State Custodians Lo-Doc 3yr Fixed 7.12 300 Nil 50000 ✘24 mths 80% ✘ ✘ ✔ ✔

29th January 2009


Page 1 of 2LOW-DOC HOME LOAN - 3-YEAR FIXED RATE:


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3-YEAR FIXED RATECompany

Minim

um

Period for

Self

Em

ployed

Minim

um

Loan Am

ount

Ongoing fee

Total U

pfront F

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Allow

bad credit history

Fees


Eligibility

Portable Loan

Redraw

100% O

ffset A

ccount

Features

Construction

Loan

Max LV

R


Suncorp 3yr Fixed Low Doc 6.94 600 10/m 10000 ✘24 mths 80% ✘ ✘ ✔ ✘

29th January 2009


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REVOLVING LINE OF CREDITCompany

Minim

um

Period for

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Minim

um

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Ongoing fee

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pfront F

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Allow

bad credit history

Fees


Eligibility

Split Loans

Max no of

sub accounts

Interest C

apitalised

Features

Mandatory

repayments

Max LV

R


Colonial Residential Equity Loan (We 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

Commonwealth Bank Residential Equity LoDoc (W 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

Westpac Equity Access Ln Low Doc 7.06 750 10/m 25000 ✘24 mths 82% ✔ N/A ✔ ✘

Westpac Equity Access Ln Low Doc ( 7.06 750 10/m 25000 ✘24 mths 82% ✔ N/A ✔ ✘


Colonial Residential Equity Loan 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

Commonwealth Bank Residential Equity LoDoc 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

nab FlexiPlus Low Doc 6.89 600 250/a 20000 ✘24 mths 80% ✔ 2 ✔ ✘


ANZ Low Doc Equity Manager (Br 6.91 600 150/a 20000 ✘24 mths 70% ✔ No max ✔ ✘

BankSA Low Doc Portfolio Ln Var (Lo 7.14 850 17/m 10000 ✘24 mths 80% ✘ 10 ✔ ✔

Commonwealth Bank Viridian LOC Lo Doc 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

HomeSide Lending Peak Perform LoDoc >250k 6.42 1062.50 70/s 250000 ✘24 mths 80% ✘ N/A ✔ ✘

RAMS Home Loans LOC SE Pro Pack1 6.39 895 300/a 250000 ✘24 mths 80% ✔ N/A ✔ ✘

St George Bank Low Doc Port Ln Var<500K 6.54 850 17/m 250000 ✘24 mths 80% ✘ 10 ✔ ✔


AMP Banking Std Low Doc Line of Cred 7.69 845 299/a 40000 ✘24 mths 80% ✘ 10 ✔ ✔

AMP Banking Std Low Doc Line of Cred (A 7.69 845 299/a 40000 ✘24 mths 80% ✘ 10 ✔ ✔

AMP Banking Std Low Doc Line of Cred (L 7.69 845 299/a 40000 ✘24 mths 80% ✘ 10 ✔ ✔

ANZ Low Doc Equity Manager 6.91 600 150/a 20000 ✘24 mths 70% ✔ No max ✔ ✘

BankSA Low Doc Portfolio Ln Var 7.14 850 17/m 10000 ✘24 mths 80% ✘ 10 ✔ ✔

Suncorp Asset Line Low doc 7.05 600 10/m 10000 ✘24 mths 75% ✔ N/A ✔ ✘

Wizard Home Loans Fastdoc Plus LOC 7.04 895 Nil 50000 ✘24 mths 80% ✘ N/A ✔ ✘


Citibank Self Cert 80 Mort Power (Mo 8.47 649 12/m 50000 ✘12 mths 80% ✘ 4 ✔ ✔

Collins Home Loans Low Doc Line of Credit 7.25 870 445/a 50000 ✘2 yrs 80% ✔ 3 ✔ ✘

Colonial Viridian LOC Qtly Lo Doc (W 8.83 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

Commonwealth Bank Viridian LOC Lo Doc (Wealt 6.79 700 12/m 20000 ✘12 mths 80% ✘ N/A ✔ ✘

ING Direct Lo Doc Smart Home Loan 7.04 499 180/a 50000 ✘24 mths 60% ✔ N/A ✔ ✘

Mortgage HOUSE Professional Pac Lo Doc 7.39 869 250/a 50000 ✘No min 80% ✘ N/A ✔ ✘

one direct lo doc 60 equity loan 6.33 60 Nil 100000 ✔No min 60% ✘ N/A ✘ ✘

29th January 2009


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REVOLVING LINE OF CREDITCompany

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repayments

Max LV

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RAMS Home Loans LOC Low Doc 1 7.79 895 200/a 100000 ✘24 mths 80% ✔ N/A ✔ ✘

29th January 2009


Page 2 of 2REVOLVING LINE OF CREDIT:


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YOUR GUIDE TO PRODUCT EXCELLENCE

What is the CANSTAR CANNEX low-doc home loan star ratings? CANSTAR CANNEX loc-doc home loan star ratings is a consumer-friendly benchmark or value index. CANSTAR CANNEX star rated products represent a short list of financial products. This short list narrows the search for consumers to products that have been independently assessed and ranked. All star rated low-doc home loans rated from one to five achieved a “borrowing” grade suitable for consumers to consider with qualities ranging from “Superior” to “Satisfactory”. The CANSTAR CANNEX low-doc home loan star ratings are an independent and transparent analysis comparing both the Cost and all the Features across home loan products. The results are reflected in a consumer-friendly 5-star concept. The star ratings from the CANSTAR CANNEX low-doc home loan star ratings are described as follows: Superior Product Average Product Excellent Product Satisfactory Product Strong Product Rising Star

What types of products are evaluated for CANSTAR CANNEX low-doc home loan star ratings?

The following account types are assessed in the ratings:

• Variable Rate Home Loans • 3-Year Fixed Rate Home Loans • Revolving Line of Credit

For all these three product categories, CANSTAR CANNEX low-doc home loan star ratings assess the products’ competitiveness based on a scenario where the borrower requires a $250,000 loan at 80% loan to value ratio (LVR). Loans targeted at medium-to-severely-credit-impaired borrowers were excluded from our analysis, as were non-conforming loans. Loans assessed are only for residential purposes and not for business, investment or any other purpose. Package banking low doc loans are included within our analysis, as stand-alone products.

How often are all the products reviewed for rating purposes?

All ratings are fully recalculated every six months based on the latest features offered by each lender. CANSTAR CANNEX also monitors rate changes on an ongoing basis.

How does it work?

Each product reviewed for the CANSTAR CANNEX low-doc home loan star ratings is awarded points for its comparative pricing and for the array of positive features attached to the product.

To arrive at the total score CANSTAR CANNEX applies a weight (W) against the Pricing Score (P) and Features Score (F). This weight will vary for each product type and will reflect the relative importance of either costs or features in determining the best low-doc home loan. This method can be summarised in the graph below:

Methodology - low-doc home loan star ratings


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CANSTAR CANNEX star ratings methodology


CANSTAR CANNEX low-doc home loan

star ratings

Pricing Score (P) Ranges from 55% to 70%

Based on total interest costs and fees over 25 years

Feature Score (F) Ranges from 25% to 40%

Early Termination Fee (E)

5%

TOTAL SCORE ( T ) = W1PRICING SCORE( P ) + W2FEATURES SCORE ( F ) + W3EARLY TERMINATION FEE SCORE( E )

Overall Weightings W1 W2 W3 Pricing (P) Feature (F) ETF (E) Variable Rate Home Loans 65% 30% 5% 3-Year Fixed Rate Home Loans 70% 25% 5% Revolving Line of Credit 55% 40% 5%

Feature Categories Weightings

CATEGORY DESCRIPTION Variable 3-Year Fixed

Revolving Line of Credit Descriptions

LOAN APPROVAL REQUIREMENTS* 20% 20% 20% Document requirements, eg. payslip, tax return

ADDITIONAL REPAYMENTS 12% 7% 4% List flexibilities in making additional repayments

LENDING TERMS 10% 10% 10% Min loan amount, max LVR, loan terms

SPLIT LOANS 8% 6% 6% Ability to have split loans (fixed & variable rate)

TRANSACTIONAL MORTGAGES 7% 6% 10% Details on redraw facility & flexibilities to withdraw

SPECIALIST LENDING FEES 5% 5% 5% Other fees, such as arrears fee

OFFSET FACILITY 5% 4% 2% Details on 100% offset account

CONSTRUCTION LOANS 4% 2% 1% Ability to have progressive drawdown

SECURITY/EQUITY/GUARANTEE OPTIONS 4% 3% 2% Flexibility of guarantor to help borrower

SWITCH FEES 4% 6% 4% Fees related to switching loan type

TOP UP LOAN FACILITIES 4% 4% 4% Flexibility to unlock equity on the house

LENDING AREAS 3% 3% 3% Area where the loan is available

PORTABILITY 3% 3% 3% Can the loan be transferred to different security?

SECURITY REQUIREMENTS 3% 3% 4% Different type of security allowed for this loan

LOAN APPROVED BUT NOT DRAWN 2% 2% 2% Flexibility to have undrawn loan

SPECIALIST LEND LOYALTY DISCOUNT 2% 2% 2% Rate discount after specific term

LOAN PURPOSE 2% 2% 4% Can the loan be used for business/personal?

CHANNEL AVAILABILITY 1% 1% 1% Different channels to apply for this loan

SPECIALIST LENDING BORROW ENTITY 1% 1% 1% Who can use this loan

LINE OF CREDIT DETAILS 0% 0% 12% Specific features for line of credit

FIXED INTEREST DETAILS 0% 10% 0% Specific features for fixed rate loan

* Includes information on document requirements for a lender to assess the loan application


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CANSTAR CANNEX star ratings methodology


How are the stars awarded?

The total score received for each product ranks the products. The stars are then awarded based on the distribution of the scores according to the following guidelines. As you can see, only the accounts that obtain a score in the top 5% of the of the score distribution receive a 5 star rating and only the top 75% of the score range receive a star rating.

How often are CANSTAR CANNEX low doc home loan star ratings re-rated? Products are officially re-rated every six months. The results are published in a variety of mediums (newspapers, magazines, television, websites etc)

Does CANSTAR CANNEX rate other product areas?

CANSTAR CANNEX researches, compares and rates the suite of banking and insurance products listed below. These star ratings use similar methodologies to guarantee quality, consistency and transparency. Results are freely available to consumers who use the star ratings as a guide to product excellence. The use of similar star ratings logos also builds consumer recognition of quality products across all categories. Please access the CANSTAR CANNEX website at www.canstarcannex.com.au if you would like to view the latest star ratings reports of interest.

Business banking

Car insurance Credit cards Deposit accounts Health insurance

Home & Contents Life Insurance

Low-doc home loans Margin lending Mortgages Package banking Personal loans Reward programs COPYRIGHT © CANSTAR CANNEX Pty Ltd ABN 21 053 646 165, 2007. The recipient must not reproduce or transmit to third parties the whole or any part of this work, whether attributed to CANSTAR CANNEX or not, unless with prior written permission from CANSTAR CANNEX, which if provided, may be provided on conditions. DISCLAIMER To the extent that any CANSTAR CANNEX data, ratings or commentary constitutes general advice, this advice has been prepared by CANSTAR CANNEX Pty Ltd ABN 21 053 646 165 AFSL 312804 and does not take into account your individual investment objectives, financial circumstances or needs. Information provided does not constitute financial, taxation or other professional advice and should not be relied upon as such. CANSTAR CANNEX recommends that, before you make any financial decision, you seek professional advice from a suitably qualified adviser. A Product Disclosure Statement relating to the product should also be obtained and considered before making any decision about whether to acquire the product. CANSTAR CANNEX acknowledges that past performance is not a reliable indicator of future performance. Please refer to CANSTAR CANNEX’s FSG for more information at www.canstarcannex.com.au.


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