We welcome our regular Guest Editors to our blog, Simon Orbell and Loren Adams from Smartmove Mortgage Advisors who give us an update on how the banks have continued to respond to Covid-19.
“Many of the banks have made changes in response to Covid-19. These changes relate to current & future applications, turnaround times, interest rate/cash back offers & hardship. If any of the changes raise questions for you please don’t hesitate to contact us on (02) 9968 5000.
Banks continue to be extremely thorough with their assessment of loan applications. Many are asking questions about how Covid-19 has affected an applicant’s income and whether it is likely to impact the applicant in the near future. Some banks are still accepting an applicant’s income even if it is coming from Job Keeper (with additional questions and confirmation that the applicant will return to work on a certain date).
The self-employed space is proving to be difficult, with some banks asking for the last quarter’s BAS statement (and sometimes other information like copies of recent business bank account statements) to prove that the applicant’s business hasn’t been adversely affected by COVID-19 and the lockdown/restrictions.
When it comes to property valuations, a lot of banks are either relying on the Contract of Sale or completing online valuations (in certain situations) to reduce the need for valuers to visit people’s homes to reduce the spread of the virus. Also, some postcodes with some banks are becoming restricted in terms of how much will be lent from a loan to valuation ratio perspective so it is worth checking with your broker that any property of interest isn’t affected by this.
The majority of the big banks are taking multiple weeks to assess new loan applications. The main driver of these delays is a huge influx of refinancing applications off the back of the “cash back” offers some banks are advertising (some banks are offering customers $4,000 to move banks!). However, there is still one major bank and many non-major lenders with extremely fast turnaround times (some as fast as 4 hours from the point of them receiving the application).
If you need to move quickly to secure your dream property, it is important to understand how long your bank’s turnaround time will be to ensure you don’t get “gazumped”.
There are some incredibly low interest rates on offer at the moment. Whilst the RBA is reluctant to drop the cash rate any further, we have still seen some interest rate reductions in certain parts of the market (on both fixed and variable rates).
If you would like to discuss your home loan options please don’t hesitate to get in touch with Smartmove who can tailor an approach to your personal circumstances & find the best solution for you.
In general, the Banks are being as supportive as we have ever seen when it comes to clients going through financial hardship. There are options with most banks to either pause repayments or revert to interest only payments on your home loan. The banks have advised us and our customers that a repayment pause will not affect the “creditworthiness” of an applicant from a credit file perspective. However, what isn’t clear is how a bank will view a customer looking to borrow further funds either whilst still on a repayment pause or shortly after the completion of a repayment pause. One issue that may pop up is that the applicant may not be able to show a “repayment history” and the banks haven’t been clear on whether they will look past this or if they will make them jump through more hoops to gain approval because of the repayment pause.
In summary, the general “mood” of the mortgage market is tighter, with more questions and more effort to gain a loan approval. However, to date, despite the rapidly changing environment, we have been able to create solutions for our clients that meet their needs. Using a mortgage broker like Smartmove can open your options up to a range of lenders with differing risk profiles & credit policy niches that can help you achieve your property & finance goals.
Please get in touch if we can help you in anyway.”
Simon Orbell 0403 403 899 | [email protected]
Loren Adams 0421 913 941 | [email protected]
As always, please consult a professional financial advisor before making financial decisions for your personal circumstance.