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TAFFY’S TALKBACK ISSUE JULY 2017 – SEPTEMBER 2017 WELCOME TO ISSUE TWENTY NINE OF TAFFY’S TALKBACK… Well the end of financial year 2016/17 is just about upon us. We hope it has been a successful one for you, and as your mind turns to tax time, please let us know if you are looking for a good accountant – we have a couple we are very happy to refer. In our previous newsletter we outlined things our self employed clients may need to bear in mind, when completing their financial reports. Especially if considering borrowing funds next year. In this newsletter, we would like to talk about the lenders and what the current finance landscape looks like, bearing in mind this is changing almost weekly. We are in a situation where banks are under all sorts of pressure from the regulators, being ASIC and APRA, who are worried about the extent of investment lending throughout the country and the high percentage of interest only loans in the market place. APRA, in particular, are also concerned about the financial strength of the Banks and the underlying capital holdings they retain. So what does this mean for bank customers and our current and future borrowing needs? Essentially banks are taking the opportunity to review their overall lending book and tighten up their approval and review processes. In some cases this has seen some lenders withdraw from interest only lending. Some have withdrawn from investment lending in certain sectors (Self-Managed Super Funds for example). Most have reduced the amount they will lend as a percentage of the security value. This makes it harder for borrowers, who have to raise a larger deposit, to buy their home. In some cases it has meant clients cannot refinance, as there are lenders who will not refinance investment lending any more. Some lenders are also refusing to re-write existing clients home loans due to policy changes, meaning clients cannot change to a fixed interest rate, as they may not have enough equity in their property. We are also seeing continuing interest rate rises. This has nothing to do with Reserve Bank interest rate announcements each month. This is the way lenders can manage their lending exposure, by pricing for risk – the larger the deposit, the lower the interest rate. They also will offer better rates for owner occupied home loans, than for investment home loans. Page 1 of 2

Finally and most importantly, there are very few lenders operating in the “grey” now. It is a very black and white credit environment, where things are much more stringent than they were, even 9 months ago. As such, it is imperative that our clients keep a close eye on their loans and monitor what is happening with interest rates and fees. As home loan statements only issue once every six months as a rule, this can be easily overlooked. So please take the time to check on things. If you do not have access to your home loan on the internet, please take steps to change this. It can be a very effective way to monitor changes as they occur. Much of our work currently is taken up with re-negotiating existing loans onto cheaper rates or reviewing financial situations and saving clients’ money via refinancing. In many cases, we are seeing significant savings through this process. Throughout this credit tightening, what we are experiencing is significant time delays in lenders’ approval processes. As they have tightened up their credit screening, they have reduced the ability to meet finance deadlines and as such 14 days for a finance clause is an absolute minimum. I have even had banks tell me that if I need finance approved within that time frame, to take the loan elsewhere, as they will not be able to meet the deadline. So in summary, for the time being, if you are reviewing your finances, seeking additional funding, or a new property purchase, please come to us as soon as you can. The earlier we set the wheels in motion the better. It takes a lot of time now, just for us to review lending policies with all banks, to ensure the qualifying criteria is met, even before we get to lodge an application. Most importantly, please remember the adage – Banks love lazy customers…… Don’t be a lazy customer, get us to do the work for you to ensure you are getting the best deal you can.

Don’t forget we provide expertise in sourcing the most suitable finance, whatever the need. Home Loans Investment Property Loans Car Loans

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Quotable Quote “Money is a guarantee that we may have what we want in the future. Though we need nothing at the moment it insures the possibility of satisfying a new desire when it arises.” —Aristotle Finally: Do we have your correct contact details on file? We regularly send out information to our clients via email – give the office a call on 3822 5588 or email us your details to [email protected] to make sure we have yours on file!

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