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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

Housing investor loan cap ‘reaching end of useful life’: APRA

The banking regulator has signalled it could ditch its 10 per cent cap on lending to property investors as the measure is “probably reaching the end of its useful life”.

Smaller lenders have criticised the 10 per cent cap for holding back competition.

The marketplace would welcome APRA addressing the cap’s current settings in order to improve competition, which will ultimately benefit the consumer.

Under pressure from regulators, banks have also in recent years overhauled their systems for assessing customers’ incomes, their debts, their cost of living, and their sensitivity to higher interest rates.

Now is the perfect time to seek professional advice if you are considering property investment.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Competition heats up among lenders for first home buyers and investors

Softer conditions in home lending are prompting the country’s banks, whose loan portfolios are dominated by residential mortgages, to target growth opportunities in specific customer segments, including property investors and first home buyers.

Under the Australian Prudential Regulation Authority’s rules to dampen the housing market, no more than 30 per cent of new bank home loans can be interest-only, and banks’ housing investor loan books can grow no faster than 10 per cent.

The big four banks are now all well below these caps after various moves to increase interest rates and tighten credit.

Now is a great time to invest in property and source a great financing package in a highly competitive marketplace.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group