If you caught Wednesday’s edition of Land Cycle Investor, you’d be aware of the changing trends shaping the mortgage market to enable banks to keep lending.
The moves mirror patterns observed in the second half of previous cycles.
Notably, in the UK, banks are gearing up to offer no-deposit 100% mortgage loans.
A growing number of homebuyers are embracing ‘ultra-long’ mortgages, with terms extending beyond 35 years.
This shift has propelled the average asking price of UK properties popular with first-time buyers to a record high of more than £224,963 (as reported by Rightmove, a UK property portal).
Similar reforms to facilitate entry into the property market are also underway here. Several lenders have implemented policy modifications to support borrowers.
Non-bank lender Resimac, for instance, reduced its serviceability assessment buffer to 2% across all its products.
Westpac and its subsidiaries — St George Bank, Bank of Melbourne, and BankSA — have introduced a provision allowing certain borrowers seeking refinancing to undergo a modified Serviceability Assessment Rate if they fail to meet standard criteria.
Moreover, other banks have expanded their acceptance of overtime pay and allowances on loan applications, broadening the range of assessable income.
In Australia, Queensland-based banking and insurance provider RACQ introduced 40-year terms on select home loans last year, while ubank announced an extension of its loan term for refinances from 30 to 35 years.
It underlines the banks’ imperative to attract borrowers, and we should expect to see further developments as rising rates continue to pressure budgets.
To gain further insights into these trends and the broader economic and market outlook, I reached out to my good friend, Pete Wargent — a well-established finance and property guru in Australia.
A fellow British national, Pete qualified as a chartered accountant in London and was previously a director at the Big Four accounting firm Deloitte.
He’s also a six-time published finance author.
I’ve been friends with Pete for many years, and it was an absolute pleasure to have him on the podcast to grill him about the macroeconomic outlook for Australia.
In our recent conversation, we discuss the following:
- Trends in the UK property market that show the cycle is well on track
- The unfolding dynamics in the New Zealand property market, which has experienced significant value fluctuations mirroring those of a crash…can the market recover?
- We explore investment opportunities in the commercial sector, as well as give an overview of the Real Estate Investment Trusts (REITs) to question if it’s a good time to step in
- I chat with Pete about some of his recent purchases — including a beach hut! Is this a good investment that can hold its value?
- And we generally have a good yarn about Pete’s travels and our recent experiences in the markets
It was an absolute pleasure to have Pete Wargent join me for the chat.
Tune in below to hear all this and more!
Editor, Land Cycle Investor