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Understand What You Can Borrow

When you’re applying for a loan, it may be tempting just to speak to the financial institution you already bank with. The mortgage market remains highly competitive and it pays to seek alternatives.

Better still, consider using the services of a mortgage broker. A good mortgage broker has access to a panel of lenders and knows their lending application processes.

This will save you time and money and give you the best chance of getting the best possible loan when you need it. They will also be able to advise you on which loan is right for you, given your own personal circumstances.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Big Banks Royal Commission Jitters

Australia’s big four banks continue to manage multiple challenges including falling house prices, a regulatory backlash sparked by the royal commission, and higher funding costs.

A further challenge is that international funding costs have been creeping up in recent months – a trend likely to cost banks hundreds of millions if they are not passed on to customers.

Issues raised by the royal commission will make it much harder for major banks to raise their interest rates independently of the Reserve Bank. At some stage, however, an economic decision will need to be made.

How are you placed should interest rates rise sooner rather than later?

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

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?

A combination of factors are behind the movement in the Sydney property market, including:

  • Investors and those looking for interest-only loans finding it more difficult to get finance, as banks have tightened their lending criteria due to pressure from regulators,
  • Tougher restrictions being imposed on foreign buyers by the government,
  • Rising levels of housing supply, and
  • Buyers with more realistic price expectations.

If you’re looking to take advantage of current market conditions to get into the property market speak to Strategic Investor Group today.

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group

Wages Growth

Australian workers are still stuck with the lowest level of wages growth in at least two decades, as pay packets increased an average of just 1.9 per cent last financial year.

That is the same annual increase that was recorded for the three months to March, and only just matches the current level of cost of living increases, as measured by the consumer price index.

Private sector wages rose a paltry 1.8 per cent over the past year, while public servants saw an average 2.4 per cent pay rise.

When was the last time you reviewed your budget and in particular the effect interest rate increases may be having, or could potentially have, in the future?

Now is a good time to be prudent and review your financial circumstances, in particular how your budget would be affected by increased interest rates.

Attractive fixed interest rates options are available should your individual financial circumstances dictate.

 

Carl Thompson – Commercial Lending Specialist, Strategic Investor Group