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New lending rises in February: another ‘blip’ or has the tide turned?

New lending rises in February: another ‘blip’ or has the tide turned?

In a surprise move, the ABS lending to households and businesses figures rose in February, with new owner-occupier loans leading the way with a 3.4 per cent increase from the previous month, in seasonally-adjusted terms.

Investor lending also rose, although by just 0.9 per cent, resulting in a rise of 2.7 per cent in all dwellings.

Sally Tindall, research director at RateCity.com.au said today’s increase may be another anomaly, but could be evidence that the downturn in home loans is slowing.

“Back in October last year, there was a noticeable ‘blip’ in the downward trend for the housing finance market, and there is a chance this is just another anomaly,” she said.

“However, after a year of frugal lending practices, some banks have realised they need to hit a more sustainable medium when it comes to home lending.

“After a year and a half of subdued growth in home loans, the banks are hungry to bolster their books through competitive pricing.

“Just today, CBA dropped some of its fixed rates by up to 0.30 per cent. Australia’s biggest home loan lender is one of dozens of lenders looking to get new business in the door by dropping fixed rates.”

Value of new loans

% change month on month

% change year on year

Owner occupiers

3.4%

-13.9%

Investors

0.9%

-29.1%

All loans

2.7%

-18.6%

Source: ABS Lending to Households and Businesses, new lending seasonally adjusted and excludes refinancing.

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Fact Checked -

This article was reviewed by Research Director Sally Tindall before it was published as part of RateCity's Fact Check process.

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Learn more about home loans

Cash or mortgage – which is more suitable to buy an investment property?

Deciding whether to buy an investment property with cash or a mortgage is a matter or personal choice and will often depend on your financial situation. Using cash may seem logical if you have the money in reserve and it can allow you to later use the equity in your home. However, there may be other factors to think about, such as whether there are other debts to pay down and whether it will tie up all of your spare cash. Again, it’s a personal choice and may be worth seeking personal advice.

A mortgage is a popular option for people who don’t have enough cash in the bank to pay for an investment property. Sometimes when you take out a mortgage you can offset your loan interest against the rental income you may earn. The rental income can also help to pay down the loan.

When do mortgage payments start after settlement?

Generally speaking, your first mortgage payment falls due one month after the settlement date. However, this may vary based on your mortgage terms. You can check the exact date by contacting your lender.

Usually your settlement agent will meet the seller’s representatives to exchange documents at an agreed place and time. The balance purchase price is paid to the seller. The lender will register a mortgage against your title and give you the funds to purchase the new home.

Once the settlement process is complete, the lender allows you to draw down the loan. The loan amount is debited from your loan account. As soon as the settlement paperwork is sorted, you can collect the keys to your new home and work your way through the moving-in checklist.

When does Commonwealth Bank charge an early exit fee?

When you take out a fixed interest home loan with the Commonwealth Bank, you’re able to lock the interest for a particular period. If the rates change during this period, your repayments remain unchanged. If you break the loan during the fixed interest period, you’ll have to pay the Commonwealth Bank home loan early exit fee and an administrative fee.

The Early Repayment Adjustment (ERA) and Administrative fees are applicable in the following instances:

  • If you switch your loan from fixed interest to variable rate
  • When you apply for a top-up home loan
  • If you repay over and above the annual threshold limit, which is $10,000 per year during the fixed interest period
  • When you prepay the entire outstanding loan balance before the end of the fixed interest duration.

The fee calculation depends on the interest rates, the amount you’ve repaid and the loan size. You can contact the lender to understand more about what you may have to pay. 

What are the features of home loans for expats from Westpac?

If you’re an Australian citizen living and working abroad, you can borrow to buy a property in Australia. With a Westpac non-resident home loan, you can borrow up to 80 per cent of the property value to purchase a property whilst living overseas. The minimum loan amount for these loans is $25,000, with a maximum loan term of 30 years.

The interest rates and other fees for Westpac non-resident home loans are the same as regular home loans offered to borrowers living in Australia. You’ll have to submit proof of income, six-month bank statements, an employment letter, and your last two payslips. You may also be required to submit a copy of your passport and visa that shows you’re allowed to live and work abroad.