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There’s been no shortage of headlines about the finance industry in the past couple weeks. To provide some clarity around the most important issues for consumers, I’ve written about the following;

1. Changes to property investment lending rules

2. The growing government support for brokers

3. The latest property price and vacancy data.

If you need help with anything finance related, your existing loan, or purchasing and investing in property, let’s chat!

Call me now on: 0402 408944

What Investors Need to Know In 2019

In late 2018, APRA lifted two significant restrictions against banks; a cap on the number of interest only loans they could provide and a limit on how much a bank could grow its lending to investors. As the above chart shows, these restrictions impacted investor lending.

Despite these developments, it will remains a challenge for investors to access and refinance loans in 2019 because of strict serviceability criteria. One specific issue investors need to consider is the cash-flow implications of moving to a loan with principal and interest repayments.

Why Does Cash Flow Matter?

In the past, many investors were able to lower their repayments and increase their cash flow by only paying the interest portion of their loan. Now, many investors will have higher repayments which could affect a number of areas within their investment(s) structure.

What Investors Need to Know:

• Lenders all have widely varying policies for investment lending, so it’s critical to shop around and find the right lender

• Banks will be assessing your investment off your current situation instead of how things were when you first got your investment. It is imperative that you have everything in order

• Understand all the implications of switching between a positively and negatively geared investment.

If you’re looking at either investing in property or refinancing an existing loan, give me a call to speak about your situation. I am here to help ensure that you’re maximising your investment returns.

Support for Mortgage Brokers is Gaining Momentum

The recommendations against mortgage brokers in the Royal Commission came as a shock to many Australians. Soon after its release, attention turned to both sides of the government for their response and to understand what recommendations could become policy after the next federal election.

After significant lobbying and a hearty awareness campaign, it appears that all sides of government agree that the Royal Commission recommendations went too far and that brokers play a critical role in helping consumers save money by keeping competition alive.

Here’s a link to the main story in the AFR last week that broke the important news:

Australian Financial Review - Labor Abandons RC Proposals https://www.afr.com/news/politics/labor-abandons-hayne-on-mortgage-brokers-proposes-fee-limits-20190220-h1bh7i?utm_campaign=february-newsletter-2019&utm_content=australian-financial-review-labor-abandons-rc-proposals&utm_medium=email&utm_source=activepipe

There is, however, a long way to go and the industry still needs support to ensure that consumers, not the banks, come out on top. Without mortgage brokers, big banks in Australia will destroy competition, making access to home loans a more difficult and costly task.

Could I ask you to spare two minutes and sign the petition to stop this from happening?

Petition to save the mortgage brokers https://www.brokerbehindyou.com.au/?utm_campaign=february-newsletter-2019&utm_content=petition-to-save-the-mortgage-brokers&utm_medium=email&utm_source=activepipe

What’s happening in the property market?

From a national point-of-view we’re in a housing downturn but conditions are highly variable between capital cities and regional areas.

Besides median house prices, an important set of data to consider is the extremely low vacancy rates across the country. These low rates demonstrate the very real demand for housing in Australia.

It does mean that if you’re looking to get into the market soon, having a large deposit is more important than ever. Doing so means that:

• You can save money on Lenders Mortgage Insurance (LMI)

• You can potentially access lower rates

• You’ll have an equity buffer against any temporary drops in property value.

In many respects it can be a great time to buy property.

So if you’re looking, give me a call and I’ll help you find the most competitive deal (even if you don’t have a huge deposit saved!)

Key Australian Data in Feb 2019