Market begins recovery, but borrowers are being caught unawares.
“We’re very confident the housing market has bottomed,” proclaimed Australia’s largest property developer last week. But loans are unwittingly becoming a barrier to entry. Make sure your spring buyer clients are prepared sooner rather than later.
Across the country, the consensus is that the market appears to be regaining momentum. The national “time to buy a dwelling” index surveys consumer sentiment which is reportedly up three per cent this month to its highest level since early 2014. But let’s be fair, buyers haven’t been the problem in this market. Loan approvals and vendor inertia have been the stagnating factors.
The national auction clearance rate reached a relieving 77 per cent, (even Sydney and Melbourne recorded two-year highs with a preliminary clearance rate of 82 per cent in Sydney and 78 per cent in Melbourne).
But that’s only one factor. Today’s market conditions remain mixed. Sure, we have steady employment growth, and record low interest rates as well as broadly welcomed,-recent tax cuts but there is also reduced credit availability, weak consumer sentiment and low wage growth.
The reality of this market is that it’s very difficult for customers to get their loans approved and default rates have hit seven per cent after being around 3 per cent. Buyers are struggling to get finance with the length of the process and complexity proving problematic, which is where a mortgage broker comes in handy.
Under-supply of property puts additional pressure on keen buyers to complete the pre-approval process in order to be competitive.
If spring buying is on your client’s agenda, make sure they’re speaking with me. It could be the difference between a great loan and no loan.