It has almost been six months since we in Australia first began to feel the economic impacts of the COVID pandemic and associated lockdowns.
At that point in time, many lenders offered their impacted customers a pause on their home loan repayments. September is the month when many of these repayment pauses will finish and banks will begin asking customers to repay their loans. Some lenders have announced a possible extension to the repayment pause, whilst others will ask for a minimum of interest only repayments to keep the loan out of arrears.
Whilst the media is quoting economic doom and gloom in the finance industry, many brokers seem to be experiencing their busiest period for a long time. Those clients that have maintained regular work are taking advantage of the many bargains to be had with never before seen interest rates proving a great opportunity to either put additional funds into home loan accounts, or start/grow an investment portfolio.
The extended lockdown news in Melbourne appears to be segmenting the property market with all other major cities maintaining a 60%+ auction clearance rate, whilst Melbourne at a new low of 33% with very minimal stock available. Lenders have begun to announce changes to their policies to put further reductions on new borrowing that should only affect Melbournians, and this willl further restrict that portion of the market.
It would appear the lending market is beginning to recover. New lending rose 8.9% in July, supported mostly by lending to owner occupier purchases which saw a July increase of 10.7%. The next few months will be an interesting and possibly testing time for lenders and consumers as economic stimulus packages begin to wane, and we determine the full impact of the lockdowns across Australia.