Vow Voice 30th July 2020

As our financial year 2019/20 closes we acknowledge our top 4 lenders for the year, ANZ /NAB/La Trobe and Liberty Financial. Even through COVID-19, our settlement numbers remain strong through both Commercial Lending & Equipment Finance products with us settling over $1.5billion in settlements.

The take-up by many new loan writers referring to either our National loan specialists in Equipment Finance or the Platform Group, saw a strong increase in volumes year on year with over 3000 loans settled.

I also acknowledge our top National Commercial loan writer this year in Travis Fulton from Lantern Capital based in Victoria, along with fast-growing new Commercial loan writers in Duncan Chen & Kelvin Shang of Peoples Mortgages who were number 1 in NSW. Special recognition also goes to Kelly and Ian Fraser who were the recipients of our Ambassador of the year award for 2020.

We continue to look at funding options with new lenders entering the Commercial markets, that we deem will help your customers business needs. Planning for our 7^th Commercial Conference in 2021 is already well underway planned for May in Bryon Bay, this conference rewards and acknowledges the brokers that excel in these markets.

If seeking training to diversify into these product markets in this new financial year, do not hesitate to contact your BDM or Glenn Mitchell to discuss options and opportunities!

On top of great policy, we're pleased to announce a reduction in rates!

• Essential Options INV P&I - reduced to 2.99% (up to 80% LVR)
• Essential Options INV IO - reduced to 3.14% (up to 80% LVR)
• Essential Options (up to 65% LVR) - 2.69% (P&I, $250K-$750K, Owner Occupied, PAYG Only)

Please don't hesitate to contact the sales team for any scenarios and enquiries. Just drop an email to salesteam@resi.com.au

*WARNING: This comparison rate is true only for the examples given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate.

The Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme is supporting up to $40 billion of lending to SMEs (including sole traders and not-for-profits). Under the Scheme, the Government is guaranteeing 50 per cent of new loans issued by eligible lenders to SMEs. The Scheme has enhanced lenders' willingness and ability to provide credit, supporting many otherwise viable SMEs to access vital additional funding to get through the impact of Coronavirus.

Although a budget of $40 billion was set aside for this Scheme, only 15,600 businesses have gotten their hands on this combining to a total worth of $1.5 billion.

To help more SMEs so that they can adapt to the COVID-safe economy, the treasurer has announced post-September tailoring of the Scheme. According to a statement issued by Josh Frydenberg's office, some of the changes include the following:

• The purpose of the loans will be modified to extend beyond working capital
• Allow funding of a broader range of investments
• Secured lending will also be permitted, excluding commercial or residential property, and the maximum loan size will lift to $1 million from the initial $250,000
• Maximum loan term has been extended up to five years (from three years) and
• The introduction of lender discretion to offer repayment holiday periods.

The initial phase of the Scheme remains available for new loans issued by eligible lenders until 30 September 2020, with the second phase of the Scheme to kick off on 1 October 2020 and run until 30 June 2021.

Data collated by realestate.com.au shows an upwards trend in the number of 'under offer' listings being readvertised. This has prompted speculation that deals are falling through because of tighter lending restrictions by the banks and home buyer cold feet.

Figures between January and July 2020 shows an increasing number of "boomerang homes" nationally. These are properties returning to the market after having an offer accepted.

Banks tighten up as buyers back away

At the start of the first COVID-19 lockdowns, there was a large spike in the number of 'under offer' properties across the country that went back on the market with a jump from 13.08% to 17.97% in the week commencing 23 March 2020. The following week the number dropped to 13.76% before decreasing even further but has gradually risen since mid-April.

"The end of March was a very bad time for the economy and for property and confidence," said Nerida Conisbee, chief economist at realestate.com.au.

"It was between when we went into lockdown and the next stage, which was the stimulus packages. There was a lot of uncertainty around that period and as a result home buyers got cold feet and banks were being cautious about who they were lending to."

According to Ms Conisbee, the silence had continued with Australia's growing unemployment. "We are finding that banks are well-capitalised and they're not under pressure, but they are nervous about the situation, particularly the unemployment situation." Ms Conisbee said.

"The banks are having to look very carefully at a person's ability to pay back their loan and in the situation where unemployment is rising, they would be looking very clearly at an individual's employment situation." And this will not be changing anytime soon according to her.

Ms Conisbee also said it was likely the situation was not quite as dire now and welcomed this week's announcement that the Federal Government's JobKeeper and JobSeeker stimulus would be extended until March 2021, though reduced.

Jesse Jones, sales agent at McGrath Estate Agents St Kilda, said buyers were seeking to capitalise on the low cash rate with enthusiastic first-home buyers flooding the market. But their excitement was often cut back with banks less eager to lend than the pre-pandemic era.

Banks expected to continue with tighter lending rules

Sam Boer, chief executive at mortgage broking group Smartline said he expects the trend of tighter lending rules to continue until the impact of COVID-19 decreases and the economy begins to recover.

"Lenders have introduced steps and process checks to make sure new borrowers can still afford to make their loan payments right up until loan settlement date. Some are even asking for updated payslips from customers as a settlement condition," he said.

This ensures that the lenders protect themselves under their responsible lending obligations.

Click here to read more and to see the increase in boomerang homes during COVID-19.

The NSW state government has formally put an end to stamp duty for first home buyers purchasing new homes under $800,000. This stamp duty applied to first home buyers that purchased homes worth more than $650,000 previously.

Premier Gladys Berejiklian announced on Monday (27 July) that the state government will temporarily remove stamp duty for first home buyers purchasing newly built homes (valued at under $800,000) from 1 August.

There will also be concessions available for new homes under $1 million in value (up from the previous limit of $800,000).

This removal expects to support approximately 6,000 first home buyers while boosting construction and creating jobs amid the COVID-19 crisis.

As well as increasing the stamp duty threshold for newly built homes, the government will also raise the limit for stamp duty on vacant land.

This will rise from $350,000 to $400,000 and will phase out at $500,000.

The temporary changes will only last for 12 months and will only apply to first home buyers purchasing newly built homes and vacant land, not to existing homes.

The NSW government will also continue to offer a $10,000 First Homeowner Grant, which is available to people buying a new first home worth no more than $600,000, or buying land and building a new first home worth no more than $750,000 in total.

This means the maximum amount of benefit a homeowner could be entitled to is $32,335 if purchasing a new home and accessing the grant.

The move complements the intentions of the federal HomeBuilder scheme that provides a $25,000 grant to owner-occupiers "substantially renovating" or building a new home between 4 June to 31 December 2020.

The federal government estimates that approximately 27,000 grants would be handed out as part of the package across $10 billion in building projects, supporting 140,000 direct jobs and another 1,000,000 related jobs in the residential construction sector.