After the increasingly tight lending conditions of the past few years, it’s now become a little easier for owner-occupiers and investors to get mortgages.
I’m not talking about the three recent rate cuts from the Reserve Bank, because while lower interest rates make it easier to pay off a mortgage, they don’t have much impact on a borrower’s ability to qualify for a mortgage in the first place.
Rather, I’m talking about the recent decision by Australia’s banking regulator, APRA to relax the mortgage lending guidelines that it issues to the nation’s banks, credit unions and building societies.
Previously, lenders were assessing whether borrowers could repay a mortgage priced at 7.25%, even though Australians were applying for loans with interest rates that started with a ‘3’ or ‘4’.
Now, though, lenders can assess borrowers at the interest rate plus 250 basis points. So if Mr & Mrs Average apply for a home loan priced at 3.50%, the Averages will be assessed at 6.00% rather than 7.25%.
This will lead to more market activity, because there had been lots of Australians who wanted to borrow, and who would have made responsible borrowers, but who had been locked out of the market based on the old, strict rules.
More market activity will stimulate the economy, which is why an increase in borrowing will be good news not just for the property and finance industries, but also for Australia as a whole.
It’s now easier to enter the market with a 0% deposit
There’s another piece of good news: the friendlier mortgage assessment rules mean it has become easier to qualify for Acuity Funding’s unique 100% Funding product.
This is a really clever loan product that we offer in conjunction with our developer partners.
The 100% Funding product allows first home buyers, investors and migrants to buy select properties without a deposit.
Here’s one more final piece of good news: 100% Funding is now available on more apartments and house and land packages than ever before.
Want to know more about 100% Funding? Email me at email@example.com and we can organise a quick chat.