Obtaining a mortgage in Australia has become difficult over the years…some may even say very difficult. There are several reasons for the stricter lending regulations, ranging from the differential pricing in mortgages to the decline in interest rates since the end of 2014. However, recent happenings and proposals are making many think that things are looking up for the prospectus mortgage owner. Here are three things that every mortgage seeker should know going into the new financial year:
APRA proposing loosening lending limits
In a very brief summary, the APRA has sent a letter proposing some of the stricter lending criteria surrounding obtaining a mortgage in Australia be somewhat altered.
What does the mean for the average Australian mortgage seeker? Core Logic highlights a specific example in one of their recent articles:
“If someone is offered a mortgage at 3.9%, they are currently being assessed on their ability to repay a mortgage at an interest rate of 7.25%…Under these proposed changes, if we look at the same scenario as previous…now they would be assessed on their ability to repay at a lower 6.4%.”
While these are currently just proposals, it should result in more people being able to get mortgages moving forward. That of course, is something we can all be excited for.
Property Market should improve for property investors moving forward
Favorable market conditions and prices are making property investment look once again like a strong bet, even among a downward trend. A major reason for optimism is the fact that the Federal election being behind us.
Potential investors now can rest easy on topics like negative gearing and tax reforms knowing they are no longer in jeopardy (for the time being). As property values are quite low at the moment, investors should see this as an opportunity to strike, taking advantage of said low valuations and reaping the benefits later down the track.
RBA has cut interest rates to 1 per cent
On July 2nd, the Reserve Bank cut interest rates to a new historic low, 1 per cent. Factors for this revolve around the slowing economy and the rise of unemployment. But what does this mean for prospective home or investment home buyers?
Good news, interest rates pertaining to home loans are virtually a certainty to go down.
Overall, it seems as if the new financial year brings with it promising news and a positive outlook. The forecast calls for lower interest rates and less stringent lending criteria on mortgage seekers. That coupled with the estimation that the property market is ripe for investing should give first-home buyers and experienced property investors alike the chance for a sigh of relief. Remember, if you are looking for your first home, an investment property or to refinance, Option Home Loans is here to help!