Lending update – 2021
If you’re interested in buying your first home, investing, renovating, downsizing or upgrading in 2021 – you’re not alone.
We’re seeing a huge surge in lending activity across the country, with loan volumes at record highs. According to the Australian Bureau of Statistics, the total value of new home loans was more than $24 billion in November 2020, which is an all-time high, following six months of back-to-back increases.
With demand for finance likely to continue to increase in 2021 due to record low interest rates, here is our lending update for 2021.
Interest rates will likely remain low
With the cash rate expected to remain at historic lows for some time, lenders will be offering some of the most competitive rates ever. Having a home loan will remain very affordable and many buyers and investors will look to take advantage in 2021. To put this in perspective, some lenders have 4 year fixed rates on offer for as little as 1.89%.
With such a drastic increase in loan applications and a bottleneck leading into the Christmas break, many lenders are now struggling to keep up with current levels of activity. In some cases processing times can be as high as 42 working days. The key is to not be alarmed. While delays can be extremely stressful, if you’re working with an experienced mortgage broker they can assist you to locate a solution that will allow you to gain approval as quickly as possible.
Banks are taking a closer look at financials
Tighter lending practices throughout the pandemic have resulted in banks undertaking a closer inspection of applicants’ financials, which includes bank and credit card statements. Additionally, many lenders are also applying a COVID-19 assessment criteria to various types of income, such as bonuses and commissions. This potentially could lead to further delays, but also result in a reduced borrowing capacity or decline if the borrower was relying on this type of income for approval.
Next steps – start the process early!
The best way to ensure the process of securing finance is as painless and seamless as possible, amid the unusual lending conditions, is to start the process as early as possible. Work with an experienced and reputable mortgage broker who is able to effectively navigate potential lender delays, as they develop a plan of attack with you early in the process. Even if you’re not looking to borrow for another 6-12 months, start to consider how you manage your budget and if potential spending cutbacks can be made to assist with your future application.
It’s never been more important to engage with the right finance partner. Feel free to reach out to the team at Orium Finance should you wish to discuss your situation with experts.
Whether you’re buying a home, an investment property, looking to renovate or simply want to check you’re getting the best deal on your mortgage, Orium Finance are experts that make it easy.
Contact us for a complimentary, no obligation meeting.
Call 02 8330 3700 or email [email protected]