Wednesday 2nd May 2018Unchartered Waters Ahead Despite RBA Stability
The home finance sector is still facing unchartered waters despite the Reserve Bank of Australia’s (RBA) extended stay on the sidelines, says mortgage broker network 1300HomeLoan.
1300HomeLoan Managing Director John Kolenda said official interest rates remaining at 1.5 per cent since August, 2016, has been comforting for mortgage holders in the current financial environment.
But Mr Kolenda said there are still concerns about future rate movements and the broader impact on the economy as major lenders have dramatically tightened lending criteria.
“It is unchartered territory and with the vast amount of pressure being applied to the banks as a consequence of the Hayne Royal Commission, we are more than likely to see rates on hold for a considerable time,” he said.
“Over the coming months the impact of the tighter lending conditions will become evident and flow through to the property market. There are a number of dynamics at play, all of which present headwinds for lenders, borrowers, the property market, employment, economy and future rate direction.”
Mr Kolenda said by maintaining its holding pattern, the RBA has allowed mortgage holders to be relaxed and comfortable in a confusing lending landscape.
“Surprisingly, we have seen some heavy discounting on owner-occupied and principal and interest loans from the majors as they attempt to secure lending volumes through a consequence of a tougher lending environment,” he said.
“Borrowers should look to take advantage of this as it translates into thousands of dollars in savings. Clearly there has been a move away from investor and interest only loans which has the banks focused on the other product segments. All of these changes in some way will flow through the property market.”