Free to take a plunge

Steady in­ter­est rates, a flat mar­ket and com­pet­i­tive len­ders could un­lock home own­er­ship, re­ports Ben Hyde.

The Advertiser - Real Estate - - House Hunter -

MORE favourable buy­ing and lend­ing con­di­tions are set to ben­e­fit prospec­tive home­buy­ers and in­vestors for the rest of the year, in­dus­try ex­perts say. The com­bi­na­tion of steady in­ter­est rates, min­i­mal growth in prop­erty prices and in­creas­ing competition be­tween len­ders could also help un­lock home own­er­ship.

Many econ­o­mists and len­ders are pre­dict­ing the Re­serve Bank will sit on its hands in the short term and lift rates only once or twice for the rest of the year.

BankSA gen­eral man­ager Chris Ward says the Re­serve Bank is likely to keep of­fi­cial in­ter­est rates where they are for the next few months, al­though it will be care­fully watch­ing in­fla­tion and wages growth.

‘‘Later in 2011, the RBA is likely to in­crease rates, with Au­gust the most likely time for a rise of 0.25 per­cent­age points,’’ he says.

As­sured Home Loans chief ex­ec­u­tive of­fi­cer Gary Wil­liams says the in­creas­ing competition be­tween len­ders is fil­ter­ing through to cre­ate bet­ter re­sults for con­sumers. ‘‘The main change is the abil­ity to change len­ders now that it is a hot sub­ject in re­gard to the exit penal­ties,’’ Mr Wil­liams says.

‘‘The big­ger len­ders are now giv­ing larger dis­counts, es­pe­cially in the first year, as well as a larger on­go­ing dis­count from there on.

‘‘We have also seen many of the len­ders dip­ping into their own pock­ets to pay for some of the fees to switch over. This is def­i­nitely a win-win for the con­sumers.’’

Mr Wil­liams says lend­ing cri­te­ria re­mains tight af­ter the global fi­nan­cial cri­sis but some in­sti­tu­tions show ten­ta­tive signs of loos­en­ing up.

‘‘The len­ders will now lend to a higher ra­tio and in some cases they will go up to 97 per cent of the prop­erty value,’’ he says.

‘‘But with more risk comes more scrutiny. So if you want to bor­row up to 97 per cent, you will need to be at your place of em­ploy­ment for a good length of time and have also saved reg­u­larly into a bank ac­count with proof of fi­nances.’’

Po­lice Credit Union ex­ec­u­tive man­ager of prod­uct and mar­ket­ing Paul Mo­dra says len­ders are be­ing in­no­va­tive to cap­ture mar­ket share.

‘‘In­no­va­tive prod­uct of­fer­ings could in­clude of­fer­ing in­ter­est-only re­pay­ments for owner-oc­cu­pied loans to lessen bor­row­ers’ monthly re­pay­ments,’’ he says.

‘‘With house prices tipped to re­main rel­a­tively sta­ble, it is still a great time for peo­ple to en­ter the hous­ing mar­ket as the out­look for em­ploy­ment re­mains strong and in­ter­est rates are only pre­dicted to in­crease grad­u­ally.’’

Mr Ward says the home loan mar­ket is very com­pet­i­tive and there are some great home loan of­fers avail­able to those look­ing at buy­ing prop­erty.

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