“We have seen many instances where brokers are unable to provide service and clients have chosen to sell one of the properties so they can refinance at a lower rate.”
He said it would only get worse.
“The impact of restrictions on interest-only loans has been widely seen, but the effect of restrictions on high-debt customers and closer scrutiny of income, expenses and valuations are yet to come. .”
“With APRA now expecting lenders to develop internal portfolio limits on debt-to-income levels, time to build a real estate portfolio worth millions on $100,000 income is over.
But it’s not all bad news.
Loan Dolphin noticed that the big banks, after the Royal Commission, actually increased price discounts for high quality borrowers.
In some cases, the LoanDolphin market has seen discounts of up to 150 basis points from the standard floating rate.
“There is greater competition between banks to win over borrowers with good, healthy loan-to-value ratios and those who repay principal and interest.”
In addition to attractive rates, banks also offer cash and loyalty points. They include $2,000 cash back from Commbank, $1,250 cash back from NAB, $1,200 cash back from ANZ and first-time home buyers get up to $1,000 back on transfer fees. Westpac offered 200,000 to 500,000 velocity points.
And the competition is fierce.
Of the settled home loans that go through the LoanDolphin mortgage market, only 17% are settled with the big four banks.
Tier 2 banks such as Bank of Queensland and Suncorp and Bendigo and Adelaide Bank account for 34% of settled loans, while non-bank lenders account for 28%.
“Banks are slowly becoming more active, but brokers still dominate the market writing nearly 80% of business.”