Just a couple of thoughts from the Mortgage side of the fence … and to be fair, anyone that knows me will know that I am not one to ever look at the glass as being half empty – so, SPOILER ALERT – the tone of this message is upbeat and determined !!

Something I am being asked pretty much daily right now, is “Should we be waiting for a while for prices to drop , before looking to buy? ”

My answer to this, given that bank lending criteria is changing literally almost daily, is that if you are ready now to get an application together, let’s do it now. We can go through various scenarios to ensure affordability  , and the benefit of acting now is that there is likely to be less competition right now, and if you’re ready to act, then why wait for everyone else?

There’s a lot of focus being placed on interest rates right now, especially after the Reserve Bank’s latest 0.75% OCR  “gift” yesterday –  but to give some sort of context it’s interesting to note that over the last 20 odd years, the average mortgage interest rate has been around 7.3% – so despite all the publicity, in the big picture we are not that far away from historical averages.

Real Estate was still transacted quite happily back then, as it will continue to be now – and there’s a level of comfort in that.

Banks are still trying really, really hard to give every application its best chance of being approved – they are businesses too, and are wanting to keep their lending figures as healthy as possible. , bless their $Billion annual profit socks .

They are currently getting loans approved in 4 or 5 days, and are even relaxing some aspects  of their lending criteria (eg a softening of their view relating to Boarder income), to further help improve applicant borrowing capacity.

Another trend I am noticing is that there are a number of clients looking to see if they can upgrade to a better home, and this seems to be leading to more and more offers being made, conditional upon the sale of a property.

However, often the client is initially reluctant to submit an offer conditional upon the sale of a property because they feel the offer may not be strong enough.

But once we have met with them, gone through the numbers, and given them some level of comfort that their offer may be more viable than they think, they often overcome their initial reluctance.

One strategy I have been employing recently is via an instrument called a security transfer – whereby a client transfers their existing home loan across from their existing property to their new property, thus keeping the low-interest rate that they are on – thereby only needing the increased portion of the home loan to be at current rates.  This can significantly improve affordability.

So we still have a few tricks up our sleeve !!

There’s no doubt that it’s a bit tougher out there for some, but this presents opportunities for others.   If knowledge is power, let’s impart as much knowledge as we can to make people more aware of the power they may actually have.

Warm regards, Stu