I believe every single one of us has been affected by COVID-19 one way or the other. For most people it was a financial hit to their back pocket. For others it was the FEAR. The fear of losing their job, losing their home and just the overall worry has had a huge impact on us all nationally and worldwide.
We have seen hours reduced, overtime cut and casual staff being laid off. People have been forced to take time off without pay. How is this impacting lenders regarding risk and funding to their customers?
Our lenders have certainly tightened the reigns where finance is concerned.
The first question asked of our lenders question over the past 8 months has been “ Has your client been impacted by COVID ?“ It’s understandable that they are raising these questions however it has made it harder for customers to obtain finance in these uncertain times.
Traditionally lenders will allow a % of overtime, bonus and commission in addition to base/ordinary pay. Our lenders have now gone a step further and increased their shading further, some lenders an additional 10 -15%. This obviously has a negative impact for the customer and their borrowing capacity will reduce substantially.
Similarly for the self employed, more documents are required such as recent BAS statements to confirm income is in line with last year and to confirm income has not been affected.
Some employees have been put on Jobkeeper and this can also have a negative impact to the customer as not all lenders will take this into consideration for servicing a home loan.
I believe lenders have taken the very conservative approach since COVID 19 hit us in March this year.
On a positive note, rates are on a downward slope. This is certainly good news for the owner occupier/investor and certainly a very good time to buy for the First Time Buyer.
The good old “ LIVING EXPENSES “ have reduced dramatically with our customers as they have been restricted from taking that holiday or weekend away or eating out multiple times per week – due to COVID.
We can see an increase in our customers’ savings patterns over the past few months, it’s definitely an eye opener as it is possible to save and restrict your spending habits and COVID has certainly proven this to us all.
One of the key components to your mortgage application is capacity and ability to repay. If we are demonstrating this already through our savings and our living costs, it’s an easier ride when it comes to your mortgage application. So I guess COVID has brought a bit of positivity, we know we can save, we know we can reduce our living expenses and we know we don’t have to SPEND IT because we have It !
Government Grants – the release of another 10,000 spots under the FHBDS where the govt will guarantee the 15% LMI waiver for NEW HOMES, along with the Home Owners grant of $25k for a new build or renovation and the FHOG grant with $10k available to first time home buyers and RBA reducing rates further is a massive incentive for our buyers to purchase a new home or renovate to stimulate the construction industry and keep jobs and workflow.
Some information on the grant – https://www.firsthome.gov.au/homebuilder/nsw/
With rates being at an all time record low, we have more net disposable income, allowing us to go out and spend a little more if we want WITHOUT taking out further lines of credit. It also allows us to build up our savings too.
At MACARTHUR HOMELOANS we always work with our customers to give them the best possible outcome and we make sure that they are in the strongest possible position moving forward to purchase their first home, refinance to a more competitive product or to buy that holiday or investment home.
If you require any further information regarding the grants or general information on your home loan please get in contact with us and we’ll find the best options for you.