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Bank limitations create opportunities for non-bank lenders

Since the GFC, bank capital levels and the number of bank regulations have skyrocketed. The unquestionable thrust of Basel III has been for banks to massively increase capital, reduce leverage, limit risk-taking behaviour, and adhere to a far more stringent set of banking regulations.

The fallout from the Royal Commission will undoubtedly see a further reduction in risk-taking appetite and yet more regulatory burden placed on the banks.

In Australia, the non-bank lending market is growing rapidly but is still relatively small, with many players fighting for scale. We expect this trend to continue.

It is important to research the market and understand your options when considering how to fund your next property purchase.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

The Financial Landscape Has Changed Forever

It is important to understand how much you’re able to borrow prior to committing to any financial transaction. With the recent evolution of the lending landscape don’t make the mistake of assuming you will automatically obtain finance.

Seek professional advice regarding loan structure and strategy at the outset.

Changes by the Banks in relation to loan term, repayment type, satisfactory security and affordability has redefined the loan approval process.

Whether you are seeking to enter the Residential or Commercial Property Market it is critical that you seek professional advice today.

Strategic Investor Group will crunch the numbers and provide you with the best options, based on your overall financial position, and individual personal circumstances.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

What will be the economic effect of the Banking Royal Commission?

We are already seeing the impact with individuals and company’s ability to access Bank loans becoming extremely difficult.

With the loan approval process requiring applicants to evidence the ability to service their borrowings at twice the actual interest rate, have the recent regulatory changes created a barrier for genuine borrowers.

Prudent lending principles are required, however, have the regulators gone too far, and will these actions have a flow-on effect for future economic growth?

Understand your individual position by speaking to a professional today.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Australia’s credit reporting system is changing. Are you prepared?

A key component lenders use when determining whether you are approved for a loan and how much you can borrow is your credit report, which sets out your previous credit applications and any defaults on your payments

Australia is currently moving to a new system of credit reporting that will help reward people who pay off their debts on time.

Following industry-wide changes, your credit report will soon show a much more comprehensive picture of your credit health and your ability to pay your debts.

Consumers who have been diligent in making their repayments on time may be able to borrow more money and at a lower interest rate than before.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Will you be affected by The Hayne Royal Commission?

Lenders have been tightening their lending controls and interest-only rates in response to regulatory pressure to lower record levels of household debt and boost prudential standards.

Ratings’ agency Standard and Poor’s is warning owner-occupiers are more likely than investors to struggle with the transition to principal and interest repayments, particularly for loans underwritten before 2015 when lending standards for interest-only were less strict.

If you have an Interest Only loan due for review it’s time to seek professional advice regarding your options.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Interest Rates – What will 2018 & 2019 bring?

Most economists are forecasting that the Reserve Bank of Australia (RBA) will probably only make one rate rise (+25bp) to the cash rate by late 2018 while a smaller group of analysts expect interest rates to remain on hold well into 2019. Westpac’s chief economist Bill Evans has even gone as far as saying that he expects rates to remain at current levels well into 2020.

Stability from the RBA doesn’t always translate into stability for borrowers as many have already faced rising mortgage costs during the last 12 months, especially those with investment and interest-only loans.

Now’s the time to take stock and review your individual financial position.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

How prepared are you for your property purchase?

Eighteen per cent of Australian bidders have failed to get pre-approved finance prior to attending an auction, a new study has revealed.

According to a recent YouGov Galaxy poll, nearly one in five adults in Australia failed to secure finance before buying at auction.

Given it takes time to seek and be granted pre-approval it is important to seek professional advice as early as possible.

Buyers need to determine how much they can borrow and gain certainty that they are being realistic with their expectations.

Pre-approval is an indication from a lender that they feel comfortable lending a set amount of money to a potential buyer. It puts the buyer ahead of the game and strengthens their position when negotiating a purchase.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Is your loan structured correctly?

The Reserve Bank has left the official cash interest rate on hold at 1.5 per cent for the 20th month in a row.

It is “universally anticipated” that the RBA won’t move on rates in the immediate future.

Most economists only expect one rate rise this year and 10 out of 24 analysts expect rates to remain on hold into 2019, and potentially beyond.

It is important to remain fully informed, and understand your options, by reviewing your individual circumstances today.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Location, Location, Location

Sydney has the nation’s most evenly distributed new apartment market – putting it at less risk of inner-city oversupply – according to the 2018 UDIA State of the Land Report.

Just over a fifth of new Sydney unit completions (apartments, townhouses and terraces) were within five kilometres of the city centre in 2017 compared with almost half of all Melbourne unit completions – the country’s fastest-growing apartment market – the report found.

A third of new Sydney units were within 5 to 10 kilometres of the CBD, 28 per cent of completions were 10 to 20 kilometres out and 18 per cent of completions were as far as 50 kilometres from the centre of town.

Obtaining industry best advice is essential prior to making any potential property investment decision.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Sydney’s next wave of change: $87bn of Infrastructure Projects

Sydney will be a 30-minute city by 2056. The NSW government recently announced a 3-city plan.

The next 10 years will see a significant shift in the City. Sydney’s new Greater Sydney Commission is preparing Sydney for the next wave of change – the creation of three separate cities; the Eastern City – with Sydney CBD as its focus, the Central City with Parramatta as its focus, and the Western City with the Western Sydney Airport as its focus.

These cities will be fully functioning cities connected by major infrastructure projects by 2056.

Understanding of each of these infrastructure projects in Sydney and the key drivers for business and commerce in each of the three cities is key to understanding the future property investment options across the region.

Ensure you speak to a professional today regarding any potential property investment decision.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group