Invest
Uh-oh: it’s about to get tougher to refinance
Aussie homeowners looking for a better deal could soon be in a tight spot, with S&P predicting tightened lending restrictions will lead to “tougher refinancing prospects”.
Uh-oh: it’s about to get tougher to refinance
Aussie homeowners looking for a better deal could soon be in a tight spot, with S&P predicting tightened lending restrictions will lead to “tougher refinancing prospects”.
That’s because of tightened lending standards in the face of the royal commission, the ratings agency said.
“We expect lending standards for residential mortgages to continue to tighten, in the wake of the royal commission,” it explained in its latest arrears report.
“While this will help to contain the growth in household indebtedness, it could affect credit growth and home prices.
“A slowdown in credit growth is also likely to affect refinancing prospects, which is a common way for borrowers to self-manage their way out of financial stress.”
S&P predicted that borrowers with higher loan-to-value ratios and those with interest-only loans will face “tougher refinancing prospects” thanks to the current lending environment.
Nevertheless, this is unlikely to result in more households going into arrears as most loans are reasonably seasoned and as such have equity built-up.
Home loan arrears rose in March to 1.18 per cent from 1.16 per cent but this figure is still lower than the decade-long average for March (1.31 per cent).
While S&P predicted the level of arrears will remain stable for the rest of the year, it also noted the severity of arrears is increasing. In March this year, arrears more than 90 days late made up about 60 per cent of all arrears, reflecting a 34 per cent increase on the March 2008 figures.
Speaking in April, Reserve Bank of Australia assistant governor (financial markets) Christopher Kent flagged the same issue.
He said borrowers with loans nearing the end of their interest-only periods will face a “significant step-up” in required payments as they shift to principal and interest payments.
These borrowers are particularly at risk should shocks to the Australian economy occur.
“If the borrower has made no provisions and is unable to make the necessary adjustment, they may need to sell the property to repay the loan. Therein lies an additional risk inherent in interest-only lending,” Mr Kent said.
“Moreover, the borrower’s ability to service the loan is not fully tested until the end of the interest-only period.
“The most vulnerable are likely to be owner-occupiers, with high LVRs, who might find it more difficult to refinance or resolve their situation by selling the property.”
RELATED ARTICLES
-
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
-
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
-
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
Deposit redirection scams are quietly eroding buyer savings and agency reputations in Australia’s property market. This case study unpacks how a mid-tier real estate group redesigned its settlement ...Read more
Property
The $12m threshold: Why portfolio value, not property count, now defines Australia’s investor elite
The old yardstick of six properties as shorthand for investment success has been overtaken by a harsher reality: in today’s market, elite status is defined by balance-sheet strength, not asset countRead more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
Property
Trust, technology and triage: what NSW’s ‘name and shame’ signals for real estate governance
NSW’s latest enforcement action on real estate trust accounts isn’t a one-off embarrassment; it’s a stress test of sector governance. With licences suspended and penalties applied, the message is ...Read more
Property
Vacancy is rising, demand is resilient: A case study in defending yield as Australia’s rental cycle rebalances
After a blistering run, Australia’s rental market is loosening at the edges. Vacancy is edging up off historic lows, rent inflation is set to moderate into 2026, yet underlying demand remains ...Read more
Property
Don’t lose the deposit: A case study in stopping real estate payment fraud — and the ROI for doing it
Deposit redirection scams are quietly eroding buyer savings and agency reputations in Australia’s property market. This case study unpacks how a mid-tier real estate group redesigned its settlement ...Read more
Property
The $12m threshold: Why portfolio value, not property count, now defines Australia’s investor elite
The old yardstick of six properties as shorthand for investment success has been overtaken by a harsher reality: in today’s market, elite status is defined by balance-sheet strength, not asset countRead more
Property
From intuition to instrumentation: How a "two-stakeholder" sales playbook lifted close rates and cut cycle times
High-stakes consumer purchases are increasingly joint decisions. When one partner is under-served, deals stall. This case study follows an Australian real estate group that rebuilt its sales motion ...Read more
Property
Selling in 2025: How to spot bad agents fast—and build an ROI-first vendor playbook
In Australia’s property market, choosing the wrong listing agent isn’t just inconvenient—it’s a textbook principal–agent failure that can wipe tens of thousands off your sale outcomeRead more
Property
Selling in 2026: How to de‑risk your agent choice and protect tens of thousands at settlement
Choosing the wrong selling agent isn’t just an inconvenience — it’s a balance‑sheet risk. In a market where digital discovery is concentrated and AI is recasting how listings are priced and promoted, ...Read more
Property
Rate resilience in Australian housing: why scarce supply is overpowering monetary tightening
Australia’s housing market is defying higher borrowing costs because the binding constraint isn’t demand—it’s supply. Brokers report persistent buyer competition and investor repositioning, while ...Read more
