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Andrew Bell’s Market Wrap: Is It Getting Harder To Get A Home Loan?

By Chelsea Gates

MARKET WRAP
Issue 12  |   May 24th, 2018  |  Opportunities Like This Do Not Arise Often

This edition we are at 2108 The Circle Sanctuary Cove, which, I would argue that this is one of the finest positions within the resort with views that cannot be compared. It is on a very sizeable 1,006m2 with a northeasterly position with a wide 25.4m frontage to the riverfront. Have a good look through this property as I provide this week’s report.

I just want to pass on my thanks to so many of you who have been feeding back the appreciation for the newsletter and the information that I provide and the fact that so much of it is very grassroots level information that normally is not available. I am always searching for information that will be beneficial to everyone.*

Why Is Getting A Home Loan So Much Harder?

Today I share with you something that is just emerging and coming at us at a fast pace. The focus on banks and financial institutions over the past 12 months and in particular through the current Royal Commission is starting to really have some impact. The easy access to credit, or in our case home finance, is no longer a simple matter. Even for those with history with their banks that would make them feel that any financial requirements would easily be accommodated are finding significant changes. High wealth people are particularly feeling the pinch as the Royal Commission has brought focus on the lack of credit checking that has occurred in the past for high wealth borrowers who the Banks perhaps assumed were A-Okay with any funding.

Over the course of the last few months, loan application forms have blown out from 3-4 pages to 13+ pages with significantly more information required and evidence to prove statements made on application forms. This has become a shock to the system and of course, requires significantly longer time to obtain finance approvals. What used to be a 7-10 day approval term is now stretching out with some banks to now over 3 weeks. This has an impact on both buyers and sellers. For buyers, it is essential to get your finance approved before making offers and so the minute you are thinking about buying put your loan application in straight away and get it approved so that you become a far more attractive buyer to sellers because you can then go in and make offers as a fully financed approved purchaser. There will be fewer buyers in that position so finance approved buyer will have an advantage over those who are still waiting to get approvals. For sellers, it is quite probable that more contracts will be subject to finance approval and that will be a much longer process than experienced before resulting in longer days on market.

All of the above comes under the banner of Duty of Care to borrowers. The upside is that in the future there will be fewer people in the market coming under financial stress because proper care is taken to ensure that borrowers genuinely can afford loans. Already most banks as a safety measure are applying an interest rate of 7.5% to any borrowing request to see whether borrowers could actually afford to pay those sorts of interest rates should they ever rise to that level. Most home loans are under 4% at present so it is a pretty healthy safety margin.

It is a real warning to everyone. No longer assume you are going to get finance as you maybe bitterly disappointed. You may not be able to borrow as much money as you thought you could which may change the type of property you end up buying. You will undoubtedly be frustrated by the extent of scrutiny that you will go through with a loan application. It certainly says that the finance brokers will become more important than ever as they will be able to do much of the legwork for you and manage the loan application for you all the way through to approval. If there are any hiccups they can wrestle with the banks to plead your case to secure finance that may be you wouldn’t have got otherwise. Our Loan Market Broker Phil Rogers is all over the process and is always available for advice and information.

Contact Phil Rogers
0401 022 182
Phil.rogers@loanmarket.com.au
www.loanmarket.com.au/townsville-city/brokers/phil-rogers

One very pleasing piece of news on the finance side is that APRA the Banking Regulation body is scraping its Housing Investor Loan cap as of the 1st July. This cap was put in place to cool the Sydney & Melbourne real estate markets and as it has had its effect the cap is no longer required meaning that property investors will now find it much easier to get finance. We are now seeing financial institutions increasing their lending to 90% of valuation and in fact lowering their interest rates. There is plenty of competition in this investor space which is making borrowing for investors the most attractive it has been in several years.

Golden Opportunity For Sellers

There is great activity in the real estate market at present here on the Gold Coast although we are still faced with a shortage of properties for sale in the market place so there is a golden opportunity for sellers. If you would like a little more information on any specific aspect of the real estate market on screen now (1800 198 009) is our hotline number and email contact so don’t hesitate to fire through any questions and we will do all that we can to assist.

I would be surprised if you don’t agree that 2108 The Circle Sanctuary Cove is very very special. The details are below for Matt Gates from our Ray White Sanctuary Cove office who is marketing the property and you can always arrange an inspection through Matt. 70 squares of superlative indoor and outdoor family lifestyle with so many extras to make this home a very central part of your life.

Contact Matt Gates
0404 444 439
m.gates@rwsp.net

Now we are into winter we are starting to get some of the cold weather which reminds me that I have volunteered for the Vinnies CEO Sleepout on the 21st June. Thank you to so many who have donated anywhere from $10 to $500 to sponsor my night in the cold and currently I am up over $10,000 thanks for all of your support to help so many homeless and in particular women with their children escaping domestic violence. Details are on screen if anyone else is looking for a way to support homeless this winter.

That’s it for this fortnight. I look forward to being with you again in two weeks. Until then, stay safe.

DONATE HERE

That is it for now and I look forward to being with you in a fortnights time.

Andrew Bell, OAM
Chief Executive Officer
The Ray White Surfers Paradise Group

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