The Australian government, banks and APRA are working together to ensure credit is cheap and is fast flowing. If you experience financial difficulties as a result of COVID-19, please contact Mint Equity and we can discuss financial hardship options.

FAQ

Is it still a good time to buy property?

If you have the borrowing capacity, now is still a good time to buy. Research from the Reserve Bank points to an inverse relationship with changes to the cash rate and property prices; when interest rates fall, housing prices typically rise. Interest rates are now incredibly low, ANZ just announced 2 year fixed rate for owner occupiers paying principal and interest to 2.19% p.a*. Consumers are nervous about job losses, and some buyers will hesitate, however the government and industry bodies are doing their best to minimise job losses, and lost business revenue. The banks and the government are not slowing down credit, they want to make sure you have quick and easy access to it, so buyers can keep buying.

Call us to discuss financial hardship options

Will property values fall?

Property values will only fall if demand declines. If people continue buying and selling the impact to the property market will be reduced. COVID-19 is not like the GFC. In the GFC, people couldn’t get credit and banks weren’t lending. Also, the RBA cash rate prior to the GFC was 7.25% - a very different situation to the one we are in now.

Will it become more difficult to get a loan?

No. In fact, it’s likely to get easier to get a home or business loan. All of the First Home Buyer incentives remain in place and APRA is looking to remove red tape to enable small businesses to secure loans. Interest rates for home loans are incredibly low. The banks want to keep lending. They are also implementing new methods for identification checks and valuations to ensure loan applications aren’t hindered by the lack of face-to-face contact. Property, legal and financial services are not effected by the governments stage 1 shut down.

Is now a good time to refinance?

Now is a great time to review your mortgage interest rates, and lenders are offering the best interest rates we’ve ever seen. It’s a great way to reduce your monthly costs and some lenders are offering promotions with cash back incentives. As we said before, lenders want to lend, so take advantage of the low interest rates. We will manage the process for you, so it’s stress free – just let me know if you want me to send you a product comparison so you can see how much you could save.

What if I can’t make my mortgage repayment?

APRA and the banks are already provisioning solutions for those who face financial hardship from to job loss or reduced income due to COVID-19. As you’ll see below, some lenders (and we think all will soon come on board) will provide loan holidays to those experiencing difficulties in making mortgage repayments.

Will taking a home loan repayment holiday effect my credit score?

Credit reporting business illion told Mortgage Business that it would not be counting these variations as credit events. Several lenders also outlined that they would not be treating deferred repayments under the hardship arrangements as credit events.

Will my property valuation be lower than my purchase price?

Valuers utilise recent market sales to base their valuations, combined with economic sentiment and market conditions. The recent sales activity and high auction clearance rates are providing valuations that are matching our lending valuations and purchase prices. Things are good at the moment, so now is a good time to get your property valued while there is a good amount of comparable sales data.

Should I switch to a fixed interest rate?

We haven’t seen fixed rates like this before. 2.19% for 2 years for owner occupiers P&I repayments is very tempting. As always, fixed interest rates are great if you are comfortable holding onto the property for the fixed period. Fixed rates can also provide comfort around mortgage repayments and the security of them not changing for that duration – and we all want some certainty at the moment. However, if your normal income varies and you like to make additional payments into a mortgage offset account, then it’s best to stay with a variable home loan. If you do want to switch from variable to a fixed interest rate, let us know and we’ll do the calculations to make sure your current lender is offering you the best fixed rates. It might be an easy switch form or a refinance to another lender – you might even get a cash back promo!

Here is the good news:

RBA, Australian Government and APRA support

Small businesses will be given up to $100,000 to keep their staff employed during the coronavirus crisis, and have their loans guaranteed by the Commonwealth, as part of the Morrison Government's second economic stimulus package.
A second $750 payment will be automatically paid to an estimated 5 million welfare recipients on July 13. The first $750 payment, announced in the first stimulus package, will be paid on March 31.
The Government will temporarily double the Jobseeker Payment, previously called Newstart, providing people with an additional $550 a fortnight.
The Government will allow people to access up to $10,000 from their superannuation this financial year and in 2020-21. People will not pay tax on the money they access, and withdrawals will not affect Centrelink or veterans' payments.
The RBA and government have injected $100B into Australia’s financial system to support jobs and business and are working with APRA to lower the cost of credit and increase the flow of credit.
That includes a $90B Term Funding facility for the banking system which will focus on lending to small to medium sized business. Essentially, they are incentivising the banks to lend to small businesses.
The government has also acted by allocating up to $15B to invest in residential backed facilities, this ensures that some of the non-bank lenders are getting the support to lend to SME sector.

Banks to support mortgage holders and small businesses

NAB, Westpac, ANZ and other lenders are offering six-month loan holidays to mortgage customers for those experiencing financial hardship as a result of COVID-19. Lenders are setting up ‘Covid Care Teams’ to assist customers with questions relating to financial hardship.
The government will guarantee unsecured small business loans up to $250,000
Banks will defer small business loan repayments for six months, freeing up $8 billion to support borrowers through the coronavirus crisis. At the end of the deferral period, businesses will not be required to pay the deferred interest in a lump sum: either the term of the loan will be extended, or the level of loan repayments will be increased, the ACCC said.
The government and APRA will be cutting red tape around lending to small business. This is a positive move given the recent increase in regulations and compliance implemented after the Banking Royal Commission.

New loan applications and property valuations

New borrowers can complete their face to face identification checks via Australia Post or ZipID where face-to-face meetings with bank staff or mortgage brokers are not possible.
The majority of property valuations are desktop types, whereby the valuer doesn’t need to visit the property. However, some properties will require an on-site valuation. Valuation companies are contacting home owners directly to ensure the owner is not sick and to set up access protocols.

Property market

From CoreLogic – Tim Lawless “For buyers who have the confidence and financial well-being to remain active in the housing market through this period of weakness, there could potentially be some good buying opportunities to secure properties at a competitive price and at ultra-low interest rates.”

Give us a call should you need more information

COVID-19 Property and Finance Update

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