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In the past month there have been 5 major influences in the Housing Finance market.

#1    In June, the government announced a stimulus package called “homebuilder”, which offers grants of up to $25,000 towards renovations and purchases of new homes.

Unfortunately more than a month later, only one state – Tasmania – has begun accepting applications and processing them. The federal government did not consult the states before devising the scheme, which has been criticised for being too complex.  Let’s hope this can get moving as it should be a boost for first home buyers.Whats Happening with Bank Lending at the Moment

#2.  Mortgage rates fall to below 2%.   A customer-owned bank, “Bank of us” has just made history, becoming the first-ever lender on Canstar’s database to offer home loan interest rates below 2%. Here’s where you can find the new record-low rates.

Bank of us just introduced special offer interest rates on its one-year, two-year and tHicks Real Estatee-year fixed home loans for owner-occupiers, available for a limited time to new customers.

  • One-year fixed special offer reduced to 1.99%
  • Two-year fixed special offer reduced to 1.99%
  • New tHicks Real Estatee-year fixed special offer at 1.99%
  • Variable rate reduced to 2.83%

Switching from the average variable rate of 3.47% to a 1.99% fixed rate on an average $400,000 loan could put $313 per month or over $3,700 a year back in borrowers’ wallets.

None of Australia’s four major banks – Commonwealth Bank, ANZ, National Australia Bank or Westpac – currently offer home loan interest rates at this record-low price.


#3  The value of new loan commitments for owner-occupier housing fell 10.2%, while investor housing fell 15.6%.

“For housing, the number and value of loan commitments for existing dwellings fell strongly, reflecting restrictions in late March and April on open houses, auctions and people’s mobility in general,” the ABS said.

But economists warn the slowdown in lending is usually the harbinger of something more fundamental.


#4   Australians refinanced a record $15 billion worth of mortgages in May

The latest ABS figures show 33,712 owners refinanced in the month of May, around a quarter higher than April and around 50% above normal levels.

Nearly two in tHicks Real Estatee of those were switched from one lender to another, as customers voted with their feet for the best deal.

“As budgets are stretched, a record number of people are deciding to get a better deal on their largest investment,” Finder insights manager Graham Cook said. “Historically low interest rates and a lack of investor spending are a double whammy to banks, but a boon for mortgage holders.”

“While the value of houses may well drop in the next year, the mortgages on them will not.”

Talk to the Hicks Real Estate team about recommending a Mortgage Broker that we trust is you are considering making a change.


#5. Loan to Valuation Ratios (LVR) tighten

While competition remains fierce in the Australian home loan market with plenty of good deals around, lenders are pulling the reins in on which loans, borrowers can access their lowest rates.

For a number of lenders, those restrictions come in the form of loan-to-value ratios (LVR), with AMP Bank being the latest to make a move here.

For context, LVR refers to the percentage of property value you’re borrowing from the bank. The higher your LVR, the lower your home deposit.

Banks are moving to charge a higher Interest Rate if your LVR is greater than 80%.

They’re worried about being stuck with people with negative equity. For example, if they give someone a 95% LVR loan but property prices subsequently drop by, say, 10%, then the risk is that if the customer defaults and doesn’t pay their loan, the bank would have to wear the difference.

There’s also a higher risk of customers defaulting, given all the job losses and the fact that we’re in recession right now. So it’s all about protecting themselves and lowering their lending risk.

So what does all that mean.  There are great loan rates out there, and even some Government grant (if you qualify), but there is a level of uncertainty that is causing people to sit tight at the moment.

On the local Real Estate market side of things, we are still finding good prices being achieved for desirable homes.  There is also a lot of buyers currently in the market, but the missing link is that there are few people looking to sell.  This lack of sellers is helping to push prices our actual sellers are achieving to high levels.

So if you are thinking about selling, now may be a great opportunity for you to sell with little competition and get that great price you are after.

If you would like an appraisal of your Homes worth click on this link and we can assist you.

House prices are on the rise. Find out the value of your property now.

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Hicks Real Estate is a Brisbane based, full-service real estate agency supporting buyers and sell as well as renters and property investors. With almost 20 years experience in the local market, we are the real estate experts you can rely upon.