The finance space has served up a few surprises and challenges so far in 2023.
Rising interest rates have led to falling prices, reduced borrowing power for a lot of Aussies and plenty of uncertainty about what might happen next.
However, these conditions have also created some opportunities in the mortgage market.
Banks are competitive
So often we think of banks as simply taking our money in the form of interest- if they even decide to give us a loan- and then laughing all the way to their next record profit report.
But the reality is that competition between lenders has exploded in recent years as many more players have entered the market and disrupted the way the top tier banks have operated.
As borrowing power diminishes for average Aussies, it means there are fewer people eligible for loans and therefore fewer people to pay interest.
So banks must compete for the business of those who are still eligible.
As a result, more banks are discounting their rates for new customers and more are willing to come to the party for existing customers who pick up the phone and ask for a better deal.
B Invested founder Nathan Birch has had several clients contact him recently to let him know they have had significant rate reductions by calling their lender. So if you haven’t done it in a while, it’s worth giving it a shot.
Your lender would rather hang onto your business than try and find another customer to replace you.
Equity is still strong
Despite the constant doomsday chatter by the media, where prices are falling off a cliff and the market is crashing every other day, it’s important to put the last few years into perspective.
Many home values went up by 30% or more between 2020 and 2022 and so far they have only corrected by less than 10%. And a return to growth has already been underway for consecutive months this year, according to major data providers CoreLogic and PropTrack.
That means that unless you bought just before rates began to be hiked, you likely still have decent equity in your portfolio.
With prices on the way up and rental income growing year after year, now is the time to look at pulling that equity out and using it to expand that portfolio.
Products that can help
Lenders are becoming more flexible with some of their mortgage products, which is helping people get loans who might not have satisfied certain criteria in the past.
One example is the one day ABN, where an employee who has become a contractor can become a business and get access to a loan; while other loan products mean people in specific work fields may be able to access 10% deposits with lenders mortgage insurance waived, or various other deals and benefits.
So when you chat to your Zinger Finance mortgage broker or Investor Relations team member at B.Invested, be sure to ask for more information as you may be able to access a product or discount you never knew existed.