Changes To The Mortgage Market And How They Might Impact You


I know I have had discussions with many of you about how home loans are becoming more difficult to get and there are more hoops that you have to go through in order to get your loan approved. Banks have become far stricter in terms of their lending criteria and are now wanting greater evidence of your actual spending patterns to support your loan application. Rough estimates of your spending are no longer accepted.

Many believe that tighter lending standards have been the reason that house prices have been falling in Sydney. CoreLogic, a leading property data company, has reported that Sydney house prices were down 5.6% in year on year in August. To read more the decline in house prices please click here. With the full report of the Royal Commission into banking due in February 2019, it could well result in lending standards tightening further. Time will tell, but if this occurs it is bound to have further impact on the property market.

In the last month there have been some new developments that impact those with mortgages. Firstly, all the big banks except National Australia Bank (NAB) have raised rates despite there being no interest rate move from the Reserve Bank of Australia (RBA). Most have moved between 14 to 16 basis points, citing an increase in the cost of their overseas funding. Although these are not large hikes it will be interesting to see if there are more rate hikes by the banks in the months ahead. I suspect there will be.

The other interesting development is CBA announced they were changing the way their redraw works, and they way they calculate their minimum repayments. Click here to read a good article from Choice explaining the changes. The main impact is that it can potentially change the degree of benefit in placing your savings into redraw versus an offset account where you keep control of the money.

If you would like to discuss the changes with me further or have any questions, please send me an email via the contact me page here.

This information is of a general nature only and has been provided without taking account of your objectives, financial situation or needs. It does not represent and is not intended to be personal advice. Because of this, you should consider whether the information is appropriate in light of your particular objectives, financial situation and needs. We strongly suggest that you seek professional financial advice before acting.