The RBA on Tuesday again resolved to leave the official cash rate on hold at 1.5%, noting that the current settings continue to offer appropriate support for the Australian economy.
Despite the stable cash rate, Geordan Murray, HIA Senior Economist, says borrowers are still wary of any potential hike in their borrowing costs.
“In the post GFC era lenders have frequently adjusted home loan rates independently of movements in the official cash rate in order to ensure that their lending rates more accurately reflect their true cost of capital,” explains Murray.
Murray adds that as the housing markets in Melbourne and Sydney continue to cool it will be increasingly important that households have clear guidance on any potential changes they may face in home lending.
While industry guidance is great, having a trusted professional (that’s us!) watching out for market changes on your behalf is even better.
That’s because over the last couple of years there has been an additional degree of complexity in the home loan market – and we can help decipher what that all means for you.
“Lenders have been squeezed by regulators which led to a degree of credit rationing and higher borrowing costs for investors and those wishing to borrow in interest only terms,” explains Murray.
A while back APRA – the regulator – introduced a range of measures that tightened lending standards to curb growth in risky lending.
“APRA’s interventions were appropriate at the time that they were implemented. (However) the housing downturn now has its own momentum and does not need additional assistance from the regulator,” says Murray.
In fact, recent figures published by the RBA show that growth in housing credit to investors has dropped to a historic low and owner-occupier lending growth is also now slowing.
“The housing market is now in a very different position to the time when APRA imposed the restrictions. We have already seen the speed limit on investor lending dropped but other restrictions remain,” says Murray.
“It will be important for the RBA, APRA and the federal government to monitor developments in the housing market and ensure that we have appropriate policy settings to ride out the cyclical downturn smoothly.”
As Murray explains, now more than ever borrowers are needing someone to help guide them through uncertain lending times.
That’s where we can help.
We have our ear to the ground when it comes to all industry movements, which means you don’t have to stress about doing so.
So if you’d like to find out more about how we can help you navigate the tricky lending times ahead, get in touch today.
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