Lending update – April 2021

Earlier this month the RBA again reinforced its view that the cash rate will not be increase until at least the year 2024.

This continued view appears to have translated into further falls in interest rates at most lenders across the board. Lenders are rewarding safer, or lower loan-to-value ratio (LVR), borrowers with lower variable rates. Additionally, fixed rates still continue to slide with many lenders now offering fixed rates from 2-5 years under 2%.

This flood of low rates shows that banks continue to compete more and more with each other for business, however the time from submission to actual processing of an application is still at all-time highs. Clients can be left waiting for weeks before a response, however cash-back offers continue to be extended with many lenders now offering $3-5k for clients to make the swap.

With lending volumes at all-time highs, the RBA has hinted that it will be ‘monitoring trends in housing borrowing carefully’. Anecdotal reports from buyers in capital cities like Sydney are that open houses have queues out the door and the average number of days on market is shrinking as buyers rush to snap up any stock on the market. Valuations of existing properties have also started returning higher than expected which all points to early indicators that the market is heating up towards the predicted 10% gain in prices this year and again next year.

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