What does the current lending landscape look like?

Lending & Mortgage Broking


What does the current lending landscape look like?

After the RBA increased the cash rate by 50 basis points in July, their third increase in as many months consumers are cautious in their approach to the market. Many of our clients are wanting to ensure they adequately service their loan with concerns of further rate hikes and increased cost of living expenses. With forecasters predicting the cash rate to reach as high as 2.5%, the passed-on variable rates are expected to hike to as much as 6%. The current fixed rate being offered by Macquarie on a 1-year basis is 5.29% at an 80% loan to value ratio. Other lenders share the same opinion of Macquarie as fixed rates are all seen within the 5% range. This evidently reduces the borrowing power a client has due to their increased repayments. It is important to contact your broker to discuss borrowing and lending capacity in today’s market.

Increased mortgage repayments and cost of living expenses continue to cause discomfort among households, it’s important to think about potential solutions during these times. Clients with an offset account need to investigate using these accounts to their maximum potential. All savings accounts generating small interest returns do not scale in comparison to the interest savings made on your home loan. Another option for mortgage holders is to reduce to a no-frills loan if they are unable to make use of lender packages. A no-frills loan is a basic cheap home loan without any additional features. Lenders charge an annual fee of approximately $400 and a switch to a no-frills loan removes this expense and can reduce your interest rate significantly. Another option is to negotiate a rate review with your current lender. Lenders offer mortgage holders the ability for their rates to be reviewed yearly. If your current bank is unable to provide a competitive rate, refinancing to a new lender can provide a competitive rate. Contact your broker to get the most out of your current financial situation.

To combat the rising cost of living and difficult nature of entering the property market the government has released their new Australian Home Guarantee Scheme.

  • The number of places available through the First Home Guarantee has increased from 10,000 to 35,000.
  • The Family Home Guarantee will have an annual allocation of 5,000 places from 1 July 2022 until 30 June 2025.
  • The new Victoria cap for capital cities is $800,000 and $650,000 in other regional areas.
  • The First Home Guarantee (FHBG) supports eligible first home buyers to buy their first home sooner, with a deposit as little as 5%, the government guarantees the remaining 15% of the value of the property.

 Whilst the Family Home Guarantee on the other hand support eligible single parents with at least one dependent child to buy a home, with a deposit as little as 2%, again the government guarantees the remaining 18% of the value of the property. Currently, just the Commonwealth Bank of Australia (CBA) and National Australia Bank (NAB) are on the major bank panel for the government’s First Home Guarantee (FHBG) and the Family Home Guarantee (FHG) schemes administered by the NHFIC. Thirty non-major lenders are also part of the Home Guarantee Scheme. Please reach out to the lending team directly to determine whether an applicant meets the eligibility requirements and the parameters of these schemes.

This information is general in nature and is provided by Partners Wealth Group. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.