Home buyers urged to prepare for new lending landscape
14 June 2019
Stricter lending conditions in the wake of the Banking Royal Commission findings will ultimately protect home buyers, a Port Macquarie finance education event has heard.
Attendees of the Sovereign Hills Display Village’s finance Q&A heard from local finance representatives who were asked about sweeping changes to home lending practices and the application process.
Westpac’s Kathryn McGuire said the industry reforms were necessary.
“The new lending landscape will ensure people are lending to their ability,” she explained.
“Benchmarking is the biggest change in the lending market, and this has made it harder for some people to obtain finance,” added Holiday Coast Credit Union’s Matt Lester.
“We are trying to get a true picture of your living costs. This scrutiny of your bank statements has meant we are now encouraging potential buyers to book two meetings; the first is a strategy meeting to discuss a savings plan, identify your hurdles and overcome them, and the second is for the loan application.”
‘Plan your finance’ was the biggest message for attendees.
“One important reason to prepare for your home loan application is that all applications and denials will be recorded on your credit file. These can negatively impact your next application,” added Mortgage Choice’s Gary Owen.
Port Macquarie has experienced seven consecutive years of suburb growth to 2018 and during this period the median house price climbed by almost $200,000 to $580,000.
According to property research company PriceFinder, Port Macquarie’s median four-bedroom house price today is $575,000, while in nearby Thrumster the median is $565,000 based on the previous 12-month sales period.
In June the Reserve Bank of Australia reduced the cash rate to a record low of 1.25% in the face of subdued consumer spending and low inflation.
It’s hoped this measure, combined with the flagged first home buyers loan deposit scheme and the federal election result, will inject greater positivity into the housing market.
“I would have thought an interest rate cut would lower monthly repayments as well as help make the transference from interest only loans to normal principal and interest loans more achievable,” added Gary Owen.
“A rate cut should make those with mortgage stress less stressed, spending should be easier and small businesses should be happier with lower cost loans. However, slower economic growth, hot on the heels of falling Sydney house prices and talk of trade wars internationally, has undoubtedly spooked some consumers.”
Locally, there has been a rise in the popularity of two and three-bedroom dwellings, which the finance panel applauded.
“Be realistic and start small,” they concluded.