ME bank names five developments brokers and borrowers should watch out for this year
.jpg)
ME bank names five developments brokers and borrowers should watch out for this year
Rising home loan repayments and upgraders choosing to renovate will be key trends in 2018, according to ME bank.
The non-major named five developments it believes will affect borrowers over the coming year, These include rising repayments, cooling property prices, first home buyers to make a comeback, upgraders choosing to renovate, and owner occupiers to benefit from competition.
“The financial markets expect the RBA to start putting up rates in 2018,” said ME’s head of home loans Patrick Nolan. “This means repayments could also increase, typically by $50 for every 25 basis point rise on a $400,000 loan,” he said.
On the subject of upgraders, Nolan said that ME had seen an increase in renovation loan applications in 2017. Upgraders would increasingly choose to renovate, Nolan predicted, in part to avoid stamp duty. “We’re seeing some more top-ups as people take advantage of lower increase rates and leverage the extra equity in their property in order to finance renovations.”
Rate rises far from confirmed
A rise in repayments could be bad news for stretched borrowers.
A third of Aussie borrowers are already experiencing mortgage stress, a recent report by research firm Digital Finance Analytics suggested.
However, although the financial markets expect rates to rise in 2018, several experts disagree. HSBC’s economists predict a rate rise in February 2019; just six of the thirty experts in Finder’s economists panel anticipated a rate rise in the next six months.
Sydney households now spend 48.4% of their gross annual household income on repayments, for a discounted variable rate mortgage, according to CoreLogic. The figure nationally is 37.2%
Upgraders and renovators
Brokers would certainly notice a change in upgrader habits, as this market is two to three times the size of the first home buyer market.
QBE’s 2017-2020 Housing Outlook noted that this market barely increased in size during 2017 in most states, with the notable exception of Tasmania.
The Housing Outlook did expect the upgrader market to grow, however, due to low interest rates and flat-to-rising prices in most states.
Rising home loan repayments and upgraders choosing to renovate will be key trends in 2018, according to ME bank.
The non-major named five developments it believes will affect borrowers over the coming year, These include rising repayments, cooling property prices, first home buyers to make a comeback, upgraders choosing to renovate, and owner occupiers to benefit from competition.
“The financial markets expect the RBA to start putting up rates in 2018,” said ME’s head of home loans Patrick Nolan. “This means repayments could also increase, typically by $50 for every 25 basis point rise on a $400,000 loan,” he said.
On the subject of upgraders, Nolan said that ME had seen an increase in renovation loan applications in 2017. Upgraders would increasingly choose to renovate, Nolan predicted, in part to avoid stamp duty. “We’re seeing some more top-ups as people take advantage of lower increase rates and leverage the extra equity in their property in order to finance renovations.”
Rate rises far from confirmed
A rise in repayments could be bad news for stretched borrowers.
A third of Aussie borrowers are already experiencing mortgage stress, a recent report by research firm Digital Finance Analytics suggested.
However, although the financial markets expect rates to rise in 2018, several experts disagree. HSBC’s economists predict a rate rise in February 2019; just six of the thirty experts in Finder’s economists panel anticipated a rate rise in the next six months.
Sydney households now spend 48.4% of their gross annual household income on repayments, for a discounted variable rate mortgage, according to CoreLogic. The figure nationally is 37.2%
Upgraders and renovators
Brokers would certainly notice a change in upgrader habits, as this market is two to three times the size of the first home buyer market.
QBE’s 2017-2020 Housing Outlook noted that this market barely increased in size during 2017 in most states, with the notable exception of Tasmania.
The Housing Outlook did expect the upgrader market to grow, however, due to low interest rates and flat-to-rising prices in most states.
