If you’re looking to get a home loan, it’s likely that you’ve been following the property market for a little while. Australia has experienced a huge change in the property market in the last decade with changes in sales dramatically affecting mortgage applications and approvals from lenders.
Rewind to five years ago and it was pretty easy to get a mortgage application. Home loan approvals were common and this led to almost six years of rapid growth – especially in key cities such as Sydney and Melbourne.
Now however, times have changed, and in September 2018 property prices were falling for the eleventh month in a row. Banking royal commission rules are getting tighter especially around those looking to refinance loans. There’s a real slump in property prices and you’ll want to consider how this affects your mortgage application.
First time buyers
Lower property prices can be helpful to first time buyers who are taking the decision to wait and see what bargains they can find.
As the number of buyers looking for investment properties drops, there is now more space for mortgage applications from first time buyers. Property prices are dropping overall – not just in the major cities but also the country so it’s a good time if you’re looking to get on the property ladder.
Whether it’s cause or effect, property prices have also dropped in line with increased background checks and the decrease in interest-only loans.
Naturally the increase in background checks has means that more mortgage applications are being rejected as they simply can’t get approval as easily any more.
Your mortgage application
Whilst property prices in Australia have no doubt fallen, it’s hard to generalise the effect this can have on home applications overall.
Your mortgage application, and whether it is approved or not, will depend heavily on your individual circumstances and financial situation. Consider some of these factors when it comes to making a mortgage application for your dream home:
- Your monthly income
- Your existing debts
- Your Loan to Value Ratio
- Your current credit score
- Any past black marks in your credit history
- The type of property you’re buying
Ask for help
It’s clear that mortgage applications will always be affected by property prices as the two are inextricably linked to the housing market overall. If you’re unsure on this or want to understand it further, ask for expert help.
It’s especially important for those considering a home loan application to really understand the property market in Australia today to make the best financial decision moving forwards.