The current economic outlook is somewhat uncertain, so it is only natural for buyers to question the outcome of their future loan applications. However, banks are still incredibly willing and able to loan to the right customers.
The RBA has slashed interest rates to a historic low. This is trickling down to the banks, meaning that borrowers can benefit from low home loan interest rates.
For reference, the lowest mortgage rates advertised as of April 4, 2020, belong to UBank (2.59% p.a.) and HSBC (2.65% p.a.). You can enquire about a loan at these banks, or you can use them to negotiate with your current bank, in hopes that they will match it.
Home loan rates are low, but the banks still won’t lend to just anyone; they want the best candidates. Thanks to the recent introduction of Comprehensive Credit Reporting (CCR), mortgage providers can assess potential borrowers better. They will favour and even look for the ones showing financial maturity.
CCR takes into account not only salary but also the past reliability of an individual in paying back their loans. Additionally, it factors in how many times a loan has been requested or received. The method tries to focus more on the positive aspects of credit history, allowing people to recover from financial mishaps more easily. More than having the most money, it is about being the most financially responsible.
In other words, CCR rebalances negotiating power in lending, giving more leverage to reliable borrowers with good credit history. If you fall into this category, you should consult with multiple lenders to discover your best option. Remember that the banks are desperate for lenders like you, so keep negotiating.
With all this in mind, it is still important to be cautious when borrowing. It is a huge commitment and may follow you around for the next few decades, especially when considering fixed rates.
Eric Greening of LJ Hooker Home Loans states that “a fixed-rate may look attractive, but people also need to look at the overall comparison rate and fees. And as conditions improve the ability you have to pay off your loan quicker will be restricted. Australians have historically preferred variable rates due to their great flexibility. Fixed rates historically only account for around 15% of the market.”
Take caution and know your borrowing power in the current financial market. This is still a great time to borrow, especially if you are a candidate with a good credit history. If you are curious about the lending options available to you, reach out to your local Avnu agent and we can put you in touch with a broker to suit your needs.
For more information head to LJ Hooker Home Loans.
DISCLAIMER – The information provided is for guidance and informational purposes only and does not replace independent business, legal and financial advice which we strongly recommend. Whilst the information is considered true and correct at the date of publication, changes in circumstances after the time of publication may impact the accuracy of the information provided. LJ Hooker Avnu will not accept responsibility or liability for any reliance on the blog information, including but not limited to, the accuracy, currency or completeness of any information or links.