I spoke with Steve Long a personal mortgage adviser from SmartLine Mortgage Advisers about what is happening in the current lending climate.
Lending conditions have been very favourable for borrowers and this environment is expected to continue throughout the year. Last year’s interest rate cuts played a significant part in encouraging people to borrow while finance was cheap. The additional rate cut announced on 3 March brings the cash rate to a record low of 0.5 per cent and should reinforce the sentiment that now is a great time to borrow.
But there is more to the story. Low interest rates have contributed to lower margins for banks and this has intensified competition between lenders. Borrowers – including first home buyers, upgraders and investors – have been coming out in force as lenders adjust their loan offerings to compete for new customers. Owner-occupier loans have been steadily increasing since May last year, with a 4.4 per cent jump in new home loans seen in December.*
Lower rates, easier lending terms and special offers (such as discounts and cash incentives) are some of the carrots being offered, particularly by smaller lenders. Some mid-tier lenders (such as ING, ME Bank and Macquarie), many of whom have invested heavily in technology and systems, are boasting faster turnaround times for loan approvals, better customer service and consistent lending policies.
While up until recently property forecasts have been very promising, intensifying concern about the economic impact of the coronavirus may result in some slowdown in growth over the short term.
RBA Governor Phillip Lowe believes the economic impact of the coronavirus will be short-lived. “Absent the virus, the outlook in Australia was improving … [and] I don’t think the virus fundamentally changes that outlook,” he said. It will, however, “delay progress towards full employment and the inflation target.”
Regardless, the increased lender competition means there is a lot of choice available to borrowers right now. I can find you a competitive loan solution, with features and a service offering that will suit you.
To take advantage of the current lending environment get in touch with us today.