The property market is rapidly approaching crunch time – where there will be multiple winners and losers.
The end of this month is D-Day for the 450,000 borrowers who deferred home loan payments. Some will be able to recommence making payments, but for others this could mark the start of a series of tough conversations with the bank – conversations which could even lead to borrowers being forced to sell their property.
For a vendor, a distressed sale is clearly bad news. But for a buyer, such properties could create many opportunities.
Increasingly Australia is looking like a two-speed economy; work in hospitality or travel and you may struggle to make repayments. Work for the government, or an essential service, and you are looking financially robust.
For those in strong employment, the forthcoming vendor pain presents a golden opportunity to purchase property.
And with rates likely to stay very, very low for two or three years.
Some economists now argue that in all states and territories except Sydney and Melbourne, repayments are now lower than rents (assuming clients have a 20 per cent deposit).
While Covid-19 has undoubtedly shook the global economy, most economist believe the Australian experience to be far better than feared such that many economists predict a 2+ per cent growth in 2021. Indeed, such is the overall confidence in the economy, many banks have modified their predictions to single digits on how far prices will fall due to those who cannot make loan repayments.
Mortgage brokers have seen an increase in demand for their services since Covid-19 and that only looks to increase.
New loans for residential investments rebounded 15.2 per cent in the three months to June over the previous quarter as investors refinanced to new lenders, taking advantage of record low interest rates.
And forthcoming legal changes, where the broker must work in the best interest of a borrower, only looks to increase mortgage brokers’ market share. When consumers know that the broker is working for them rather than just trying to sell them a bank product, the broker is likely to generate strong customer engagement.