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How is 2021 shaping up from a lending perspective? What does that mean for you as a borrower?

There’s no doubt that 2020 created challenges for many of us. Entire industries struggled, financial markets were significantly impacted and there’s still a great deal of uncertainty on the horizon.

But lenders are still lending, right?

Yes.

And Canberrans are still buying property, right?

Yes! (Double yes!)

We helped record numbers of Canberrans buy homes and/or prepare to buy in 2020 and 2021 is shaping up to be no different.

With a large portion of Canberra’s population in secure, long term government employment, many families were able to ramp up cash savings significantly in 2020. This has created a MASSIVE surge in the number of motivated buyers – especially those looking to buy their first home.

So, let’s look at how the lending environment and what it means for you as a borrower.

 

1. Your loan application will take longer to be assessed

In 2020, we saw wide-spread delays with the processing of loan applications, largely because many lenders use offshore teams located in regions severely impacted.

Despite the fact we’re now into 2021, we’re *still* seeing delays with processing of loan applications. We’re finding that delays significantly vary between lenders and are now likely caused by:

  • Increased volume of applications due to special lending offers (ie. reduced Lenders Mortgage Insurance, refinance rebates, attractive fixed rates)
  • Increased numbers of motivated buyers wanting to act now (There’s nothing like #isolife with parents/ house mates you don’t like, to help you realise it’s finally time to buy your first home)
  • New-to-the-job loan assessors, doing their best to learn quickly
  • Inevitable complications related to having a lender’s entire workforce, deployed to home ‘offices’
  • ‘Teething issues’ resulting from lenders outsourcing specific functions to third party providers (preparation of Loan Contracts for example) to help manage the increased workflow

Given the uncertainty in the broader economic climate, in addition to taking longer to review an application, once it’s picked up, the assessment process is taking longer too. Lenders have stepped up their assessment protocols and scrutinising loan applications like never before.

 

2. Your loan application will be heavily scrutinised

It’s painful. It’s a bit over-the-top. You might even feel like you’re being interrogated. There’s no question that many lenders are asking for a whole host of supporting documents they’ve never required previously. Understand that a lender will scrutinise your finances with a fine tooth comb.

Whilst we pre-emptively ask for all the information a lender will require upfront (because we pride ourselves on making things as easy as possible for you!), the goal posts are shifting daily.

This means that even if you provide everything.but.the.kitchen.sink when you sign your loan application, by the time your application is actually assessed by the lender (which could be up to 4 weeks later depending on the lender and the type of application), there’s a chance the lender may exercise their discretionary powers and request additional/updated information from you.

Don’t get us wrong…

Lenders still want to approve loans. They still want to lend money – and it’s critical from a broader economy perspective that they do.

You just need to be aware that as a borrower, you may need to jump through a few additional hoops before you receive the call from us to say, “Congratulations! Your loan is Formally Approved.”

 

3. You need to get your finances ready sooner rather than later

If you’re planning on purchasing property soon, you need to think about getting your finances in order sooner rather than later. And in a hot market, being pre-approved and ready to go is more important than ever.

We all know it’s human nature to put things off that don’t absolutely need to be done right now. We can’t tell you how many calls we receive on a Monday from brand new clients who have fallen in love with a property that’s being sold at auction next weekend.

It’s our job to do everything we can to make the process of buying property as easy and stress free for you as possible. And in this current lending climate , our best advice is to get ready earlier than you think you need to be.

If you:

  • are aware of the state-of-play from the outset;
  • willing to be a little patient (because we’re fielding record numbers of enquiries too); and you
  • understand we’re working around the clock to help as many buyers as we can, we’d love to help!

You can get started here.

 

 

 

 

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