Despite over two years of a stagnant cash rate, some borrowers have seen their mortgage interest rate rise whilst lenders have adopted stricter policies and criteria creating one of the most complex lending environments in recent memory.
This tightened lending environment, means a larger number of Australians are experiencing difficulty securing a home loan due to new, stricter assessment criteria in which their savings and living expenses are being forensically examined.
That being said, those who present less risk are able to negotiate a more competitive home loan deal with lenders, who are competing vigorously for financially fit borrowers.
Looking ahead, it is important if you are looking to secure a home loan in 2019 to get your finances in order and seek expert advice from a qualified mortgage professional, who can guide you through the process and offer a choice of lenders.
Why the RBA decided to hold the cash rate again
Firstly, the latest National Australia Bank Business Survey revealed that business conditions remained well above average in October.
Further, the Westpac Melbourne Institute of Consumer Sentiment revealed that consumer confidence had undergone a clear improvement over 2018. Respondents were much more positive about their own finances, due in part to a sustained period of low interest rates.
The most recent Hedonic Home Value Index from CoreLogic revealed that national dwelling values fell by 0.7% over November, and were down 4.2% since peaking in October last year. This follows several years of strong growth in dwelling values and can be attributed to measures implemented by Australia’s financial regulators in recent years. The decline in dwelling values, particularly in the nation’s capitals could open the door to those looking to get their foot in the property market.
Encouragingly, the most recent Labour Force survey from the Australian Bureau of Statistics revealed an unemployment rate of 5.0% in October and the nation’s participation rate is close to record highs, which could be a positive indicator for wage growth coming into the New Year.
The RBA board does not meet to make a cash rate decision in January however lenders’ interest rates could move in the interim
Coming into the New Year, if you are looking to buy your first home or investment property to take stock of your financial situation and set clear, strategic goals. Falling property prices and attractive interest rates on new loans present a good opportunity for those looking to buy their first home.
First time buyers should make an appointment to speak to their local mortgage broker to find out if they’re in a good financial position to secure a home loan. An experienced broker will review a prospective borrower’s financial position and help coach them through the steps to get home buying ready.
If you are already in a home loan, the end of the year is a good time to take stock and ensure their existing home loan is still suited to their needs. Borrowers should get a home loan health check to determine whether they could secure a more competitive interest rate or access flexible loan features.
At Mortgage Choice, our brokers know what lenders are looking for when they assess your home loan application. They also know which lenders are suited to your individual needs and financial goals and can help you get a competitive home loan deal.
Get in touch with your local broker today.