To ME Bank’s head of home loans, Andrew Bartolo, there are five key trends for borrowers to be aware of in the coming months.
1. A cooling market
“Spring is typically the time the market blooms with listings so we expect to see an uplift in lending activity. However, this year the market has changed from a sellers’ to a buyers’ market, dampening volumes and prices in some regions,” Mr Bartolo said.
This means borrowers will be either waiting to see where the market moves or attempting to drive a higher bargain, he continued. As for sellers, they will need to be realistic about reserves and prepare to pass-in at auction.
2. Tighter access to credit
While some investor speed bumps have been removed, lending to both investors and owner occupiers is likely to stay muted.
“The 30 per cent cap remains in place for interest-only loans, a product typically used by investors. Banks have also been tightening serviceability requirements, which has constrained overall volumes of lending by borrowers,” Mr Bartolo said.
3. Softened investor interest
Investors are also backing away.
“With prices coming off their apex, the market cooling and APRA’s investor-focused lending restrictions taking effect, we expect many investors will be sitting tight and considering their options,” he said.
4. Opportunities for first home buyers
When the investors go away, the first home buyers come out to play.
Mr Bartolo explained the pause in the previous breathless price growth will allow some first home buyers to catch up and find affordable entry points.
“First home buyers will benefit from competitive interest rates, concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys,” he said.
5. Borrowers looking to refinance
“We expect customers to shop around for better home loan deals, and, at the same time, benefit from strong competition by banks for owner-occupied customers.”