Honestly, this has been the busiest May I can recall and while some Australians were holding back due to political uncertainty, our clients have taken FULL advantage of others not moving and have been buying wisely.
From Bendigo to Berwick, Hobart to West Meadows, Canberra to Carlisle in W.A., we have seen action across the nation. As well, many are taking advantage of lower rates for refinances.
Will rates go lower? While the Reserve Bank had talked themselves into at least one rate reduction, I believe they will be loath to go much further.
Why? Well, APRA (The Australian Prudential Regulation Authority (APRA) is an independent statutory authority that supervises institutions across banking, insurance and superannuation and promotes financial system stability in Australia) is reducing the assessment rate in mid-June from a 7% minimum (most major lenders use 7.25%) to as much as 1% lower.
How much difference will this make? It will make a PROFOUND difference in the amount most people can borrow and in the past few years where we have struggled to get loans, particularly for investors due to servicing difficulties, I suspect we are going to be able to move people out of higher investment loans and the banks are going to become a whole lot busier.
Why will this help? It will provide a support for house prices and create a lot of activity in this sector, which is great for the economy as housing has such a large impact on our economic prosperity in Australia. With negative gearing here to stay for the present as well, a confidence will return to people buying and trying to get ahead by investing in property.
Another factor at play is a change in banks capital requirements. Smaller banks were expected to hold more capital for loans than larger banks – “the big four’s capital requirements are calculated by applying a risk weighting of 25 per cent to mortgages, while the smaller banks are required to apply a weighting of 35 per cent.” [Frost: AFR 2019]
However, that is also about to change with the regulator changing so it will make it much easier for smaller lenders, particularly with less risky loans. All in all, very positive for borrowing.
A client, about to settle a new home loan was sent a very clever scammer email purporting to be from their new lender and stating they should click this link to check their Credit Details. This is very concerning as:
- The scammers knew about their new loan and
- Knew who was their lender and that they would have had a credit check.
One way to avoid such issues is to always keep an eye on your own credit file so if there is ever a hit on it, you are alerted. Go to www.mycreditfile.com.au and you can set up for a fee (expensive though it is) of $4.95 a month to always know if anyone is using your credit. I also heard of a young person who had their details stolen from their mailbox and the first they knew about a new personal loan set-up in their name was a letter from nab stating welcome to your new $10,000 loan! She called to let them know it was a scam, but it just goes to show how easy it was for someone stealing your details from your unsecured mailbox. Make sure you get a locked one!
As always, if I can be of any assistance to you, please call me on 0412 709 200.