APRA Updates:
You have probably seen or read in the news recently that the Australian Prudential Regulation Authority (APRA) has issued guidelines resulting in changes to mortgage lending policy.
You may be wondering exactly what the changes mean — and particularly what they mean for you.
Background
Briefly, the Government Regulators including the Reserve Bank have expressed concerns about a potentially overheated property market, especially in Sydney and Melbourne. APRA is looking to take the heat out of the market by slowing the growth of mortgage investment lending.
In its role as regulator of banks and other financial institutions, APRA has issued guidelines designed to do that, as well as ensuring the ongoing strength of Australian banks.
Key changes
APRA has asked banks to cap investment loan growth at 10% p.a. A number of lenders are already at, or even over, this limit, so they are under pressure to significantly reduce their investment lending.
The four major banks and Macquarie Bank are also required to increase the capital they hold against mortgages, which tends to increase the cost of lending. Banks have already passed on some of these costs to customers via higher interest rates.
What does this mean for you?
If you have a home loan that includes principal repayments or you live in your home, you may not be affected. In fact some lenders may even decrease interest rates on that loan.
If you have an investment, or an ‘interest only’ home loan, you may find that your lender increases the interest rate on that loan.
If you are looking at buying an investment property, you are likely to find the lending market more restricted than in the past. This doesn’t mean you won’t be able to find a loan that suits you, just that it may take a little more time. That’s where I can help.
Talk to me
Of course, everyone’s situation is different, and the information above is simply an overview. I am always happy to discuss your situation, particularly if you have any queries or concerns. You can reach me via phone 0434503800 or email hao.lim@afhouse.com.au.
Seven Tips to Win at Auctions
Going to auction can be as gamble. But there are a few simple things you can do to help win your dream home.
| 1. | Kick the tyres first: Inspect the property multiple times with the right specialists. Consider any required inspections – including building and pest – before you go to auction. Engage a solicitor or conveyancer to review the sale contract. Once you exchange contracts, there’s no turning back! |
| 2. | Check the rules: The rules for participating in auctions may differ across the States and Territories. You should check with your solicitor, conveyancer or real estate agent, if you are unsure of the rules that apply. In some States or Territories, you may need to register to bid at auction. Find out whether you need to take formal ID to bid. |
| 3. | Make sure your finances are in place: Make sure that your loan pre-approval is good to go. Don’t forget that pre-approvals only last for a certain period, so if you’ve been looking around for a while, make sure it’s still current. If you are the winning bidder, you may need to pay a deposit straight away. Find out whether this is the case and make sure that you have the funds available. |
| 4. | Do your homework: Do in-depth research on the property’s market value and valuation expectations. Analyse the pros and cons of the property’s characteristics such as size, location, physical condition and proximity to amenities and compare to other similar properties that have recently sold. This important information can help you determine the price you’re willing to bid. |
| 5. | Set your limits: Doing so ensures that you bid in a strategic manner and with more confidence. This may help to reduce doubt as you submit your bids and prevent you getting emotionally competitive or over-extending.Be prepared to go to a figure like A$793,000 rather than A$790,000. This is a relatively small difference in the context of the overall price, but it can be enough to dissuade other bidders and help you win at the auction. |
| 6. | Get familiar with the auction process: Attend auctions where you are not planning to bid on the property, so that you can watch and learn how they work. Observe the processes and any strategies the winning bidder employs that seem effective. If you find the whole thing overwhelming, you may want to consider taking on a buyer’s agent or asking a family member to bid on your behalf. |
| 7. | Auction day tips: Try to ensure you have direct line of sight to other bidders and the auctioneer. Get ready to pounce back with your bids quickly after a competing bid. Look the auctioneer in the eye, then announce your bid clearly and confidently. Try to stand by yourself and do not turn to your support crew for guidance. These actions may give other bidders the impression that you have a lot of cash in your pocket, and may discourage them from bidding against you. Consider making your first bid close to around the reserve price. This indicates that you are serious about buying the property and moves the auction into a more realistic phase. |
Willoughby Spring Festival
The Willoughby Spring Festival is coming soon and we will have a stall there to provide you with information regarding to your lending needs on 5th September. Why not drop by to say hello, we are located outside CBA and we’d love to see you all there!
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