There have been many significant changes to lending in the past few years and a number in the past few months!
Here’s a snapshot of 3 big changes and what they mean for you.
1. You can borrower up to 18% more than you could a month ago!
APRA’s and then the bank’s reduction of the “assessment rate” which is the rate the banks’ assess your ability to repay a mortgage. Prior to the change you were assessed at 7.25% after the change on average you are being assessed at a rate of 5.75% a reduction of 1.50%. While this might seem technical it’s a large reduction in the assessment rate and a large increase in the maximum loan amount possible. As always its important the loan makes sense for you and your circumstances.
Outcome and impact for you: You can borrower up to 18% more than you could a month ago. This should filter through to some increase in property prices.
2. If you haven’t reviewed your loan in the last 6 months, you should!
The Reserve Bank of Australia (RBA) reduced the cash rate twice by 0.25% to a historic low of 1.00%. The consumer bank’s followed by reducing their home loan and investment loan rates – fixed rates also followed to reduce with some special rates available at 2.99%.
Outcome and impact for you: There has been a lot of movement in rates and a lot of competition for new business, so if you haven’t reviewed your loan in the last six months, you should. Please call me on 0412 369 606 to find out what we can do for you.
NOTE: Banks are notorious for not looking after existing customers as they rely on consumer apathy knowing you’re too busy with work and family to challenge your interest rate. If you fall into this bracket we make the process easy and straightforward and nothing would delight me more than to have you save money on an ongoing basis.
3. Many details of your credit history can be accessed by the banks. Keep your credit clean and avoid being in arrears.
A lot of banks have now implemented comprehensive credit reporting, which is where the bank’s share some information about your credit facilities with each other.
This is designed as part of a government-initiated industry change to provide a more complete picture of consumers’ credit history. Customers will see new additional information on their credit report.
Previously the report only contained credit enquiries, defaults and serious credit infringements. However with the increase of information shared you can now expect to see these additional inclusions on your credit report – account open and closed dates, types of credit, credit limits and up to 24 months of repayment history information.
Outcome and impact for you: – Ensure your that all credit facilities at all banks are paid timeously and do not fall into arrears. This could create problems when seeking loans and credit facilities in the future.
NOTE: Please remember to disclose all credit facilities correctly in your loan application documents, the information will be assessed by the bank and discrepancies may result in a delayed application process.
Please give me a call to discuss your specific situation and how these changes may benefit you.