{"id":13492,"date":"2017-08-24T09:13:42","date_gmt":"2017-08-23T23:13:42","guid":{"rendered":"http:\/\/realestatetalk.com.au\/?p=13492"},"modified":"2017-08-24T09:13:42","modified_gmt":"2017-08-23T23:13:42","slug":"how-to-navigate-todays-complex-lending-landscape","status":"publish","type":"post","link":"https:\/\/channels.realty.com.au\/realtytalk\/how-to-navigate-todays-complex-lending-landscape\/","title":{"rendered":"How to navigate today\u2019s complex lending landscape"},"content":{"rendered":"

The lending landscape is changing rapidly.
\nIn fact, it\u2019s the most complex that I\u2019ve seen in my many decades in the sector.
\nBanks seem to be shifting the goalposts constantly, which can mean increased rates for certain types of new and existing borrowers as well as lowering loan-to-value ratios (LVR) for new loan applications for both interest only lending and new investment lending.
\nThere are some lenders who have now reduced their LVR\u2019s for any new interest-only lending to 70%.
\nBut that\u2019s not as bad as another lender who is asking for a 50% LVR for any new interest-only loan applications.
\nNow that\u2019s effectively saying that it is closed for business for interest-only lending, but it\u2019s just using the ridiculous LVR as a way of saying the same thing more diplomatically. These are the levers that lenders pull when they are in default of the regulators\u2019 wishes, they just effectively close the doors to those applications.
\nThere is also now a very pronounced differentiation between interest only lending and the regulators wish to balance this with more principal & interest borrowings. The key is the rates that are being applied and varying between 0.45% and 0.75% for the same loan but with the different repayment style.<\/p>\n

A complex landscape<\/h3>\n

\"Frustrated
\nThe complexity of the lending landscape means mortgage broking professionals need to be across rapidly changing policies.
\nI really don\u2019t know how consumers could possibly navigate their way through the current\u00a0lending marketplace<\/a>.
\nThere are interest rate differentials between home and investment loans, between principal interest and interest-only, and between under and over 80\/20 LVRs. It\u2019s almost enough to make your head spin!
\nOn top of that, you have got all of the policies that you have to navigate your way through to try to work out what is the best outcome for borrowers.
\nIt\u2019s driving us crazy and we do this every day!
\nWe\u2019ve got spreadsheets all over our walls, trying to keep it up with it all.
\nBut we\u2019re busier than ever because people are looking for advice and help because it\u2019s so complex out there.<\/p>\n

A moving market<\/h3>\n

The changing lending goal-posts is happening amidst a moving market and an interesting economy.
\nWe\u2019ve got a growing population, an economy spluttering along, a housing market in two cities that\u2019s been booming, investors making up more than 50 per cent of all properties purchased in Sydney, people acting purely because of Fear of Missing Out (FOMO) and just buying whatever, as well as the amount of new property coming to the market generally.
\nWhat does it all mean?
\nWell, that is the $64 million dollar question, isn\u2019t it?
\nIt means that it\u2019s a market of many moving parts that each can have an impact.
\nWhat I do know is that there are some people in Docklands and South Bank in Melbourne that bought new units 10 or 15 years ago, which have still not increased in value.
\nSo if we think about all the new units being built in some capital city areas, then there may be some valid reasons for some of the lending concerns.
\n\"She'sBut I believe that the APRA restrictions have gone too far too quickly. It is hurting some people and others are losing money because of the changing market such as these expats who bought a property\u00a02 years ago and now are having trouble completing their purchase<\/a>.
\nIn years gone by, the blunt tool that was used was interest rates, which were levered up or levered down depending on the state of the economy and inflation figures.
\nNow they just have more tools in their shed \u2013 but they\u2019re still blunt.
\nEconomic data is starting to show reducing numbers of investors, which is what APRA wanted.
\nWhat they may be unprepared for is the impact of their retreat, given the property market was one of the only parts of the economy doing well.
\nI guess we\u2019ll just have to wait and see what happens \u2013 while continuing to professionally navigate a lending landscape that is starting to look a little like spaghetti.
\nHere are my top tips to assist you in this complex environment:<\/p>\n