The increasing concerns over borrowing capacity, consumer sentiment is at an all time high with the fear of loan rejection and meeting lending expectations put in place by lenders.
Borrowers are worried, not only due to the fall in home values but because they are receiving lower valuation for their properties and the hesitation in securing an appropriate home loan rate. A research by Pepper Money has surveyed 1126 borrowers in January 2019 which has come to the conclusion that borrowers are fearing the banks will decline their loan application or limit the loan amounts they’ll be approved for in order to buy their property. This would result in many borrowers being prevented in entering the housing markets as they won’t have the ability to afford the type of property they want due to property prices.
Growing concerns about borrowers not being able to repay their mortgage repayments or defaulting on their mortgage as has been predicted to slightly increase in the coming months, due to the interest only loans will convert to principal and interest loans. This alongside the election and Labor’s proposed change to negative gearing is a contributing factor of a volatile property market we currently face today. The timing of the royal commission and the tightened controls on the banks has also doubled down the pressure for borrowers.
Hear is the good news
There’s a wide array of lending solutions available because of alternative, non-bank lenders and credit unions. As the credit market has tightened the value of a potential customer has increased as they are now more valuable than ever. This with the added benefit of vendors feeling the heat in selling their properties for a lower price has potential buyers in the driver’s seat when it comes to negotiating the purchase price.
With quality alternatives beyond the big banks competition for home loans is high. We expect the banks to start lending again soon as APRA has recently removed benchmarks placed on the banks. As a result of the credit crunch, if your financials stack up you can secure a competitive home loan rate that suits your financial goals and buy your property sooner.
Speak to the BlueCherry Loans team for a competitive deal so we can help you navigate the complex lending process and ensure you secure the best rate possible or receive a decent valuation on your existing property. Call our team on (02) 9897 1039 and chat to one of our home loan experts.