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Australian Property Market with COVID-19

The coronavirus pandemic has the potential to massively disrupt our economy. What does that mean for you and surviving your mortgage?

Find out what you can do to protect yourself

We promise to get back to you within 4 business hours

COVID-19 is like nothing we have ever seen before

We are in uncharted territory. The global coronavirus pandemic is causing economic disruption on a massive scale. It is affecting every inch of our daily lives. The only thing that comes close is the 1918 influenza pandemic, but that was a very different time.

Australian consumer confidence is at an all-time low, the share market is down, and economists are predicting that unemploment in Australia could reach up to 10 per cent.

The world looks set to enter a recession, and things are going to be very different when it comes out the other side.


And if you feel like things are going to get worse before they get better, you’re not alone. 85% of Australians recently surveyed by Roy Morgan say “the worst is yet to come” in regards to the COVID-19 coronavirus pandemic.

In times like these, it’s normal to feel uncertain about your financial future. A lot has happened in the past few weeks, and it can be a lot to process.

Read on to learn about the potential effects of COVID-19 on your mortgage, and what you can do about it.

House prices could plummet by up to 20 per cent in capital cities

Uncertainty is very high at the moment, and very few people are committing to a purchase. Real estate agents are reporting that buyer enquiry has fallen sharply.

Social distancing rules have banned property open houses, and auctions have had to move online. Since this happened at least 400 of the nearly 1260 auctions originally scheduled for the last week of March shifted to non-auction listings. Auction clearance rates are falling to near record lows, and look set to continue to fall.

Mortgage stress has increased, with over 200,000 households added to the stresed list. This figure is likely to rise as more businesses close and social distancing measures continue to ramp up.

AMP Capital chief economist Shane Oliver has predicted that unemployment will likely shoot up to about 10 per cent and this could result in a 20 per cent drop in Melbourne and Sydney house prices.

In the best-case scenario, capital cities are likely to see house price declines of about 5 per cent.

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The impact of coronavirus on our economy could last a decade or more

The success or failure of Australia’s coronavirus fight relies to a large degree on just one thing: whether individual Australians follow official advise and just stay home.

Coronavirus will continue to spread virtually unchecked unless at least 8 in 10 Australians stay home as much as possible. And the longer it takes to get the disease under control, the worse it will be for our economy.

As far as the toll on our economy goes, we could see an impact lasting a decade or more. Recessions caused by financial crises, such as the 2008-2009 global financial crisis, can depress interest rates and economic activity for up to 10 years.

And it could last even longer than that. Economists from the University of California researching the impact of historical pandemics found “significant macroeconomic after-effect” from pandemic that lasted for 40 years.

On the other hand, if we get the disease under control quickly and the government continues to support our economy, growth could rebound quickly.

The Australian government is doing what it can to minimise the long term impact of the pandemic,

On 30 March, the government announced the $130 billion JobKeeper Payment to help keep Australians in jobs, bringing the Government’s total support for the economy to $320 billion, representing 16.4 per cent of annual GDP.

Whether that will be enough is anyone’s guess.

Our advice is to follow this mantra by Maya Angelou: “Hoping for the best, prepared for the worst, and unsurprised by anything in between.”

What you can do to minimise the impact on your financial health

Here’s what you should do to protect yourself

If you’re not affected yet, look at refinancing your home loan

  • The coronavirus pandemic is going to have an economic impact that could last for years. In these uncertain times, you need to do what you can to protect your financial health now and in the future.
  • Refinancing your home loan can be a great way to reduce your monthly expenses and keep more money in your bank account.
  • To learn about your options and whether refinancing your home loan is right for you, book a free assessment with one of our brokers here at Hunter Galloway. We will review your situation and give you advice on your best options moving forward.

If you’re under financial distress, seek help from your lender

  • If you’re struggling to afford your home loan repayments, you’re not alone. Many Australians have been affected by coronavirus and the banks have responded by offering specific coronavirus mortgage relief and hardship support policies to help borrowers.
  • At the moment, most Australian lenders will allow you to pause or defer your mortgage repayments for between three and six months.
  • Every lender has its own criteria to determine who is eligible or not, and you may have to prove that you’ve lost a job or income to qualify. Contact your lender to see what options are available to you.

Would you like to learn about your options?

How refinancing your home loan can help at this time

  • Reduce your home loan repayments

    You may be able to refinance your loan to get a lower interest rate or switch to an interest-only loan which will reduce your repayments even further.

  • Consolidate your debt

    Pay out your credit card and personal loans under your mortgage. Pay off all of your debt with one home loan repayment and a single, lower interest rate.

  • Increase your loan and take cash out

    If you have built up some equity in your property, refinancing will allow you to release that equity so you will have some cash on standby. You may also qualify for a cashback of up to $4,000.

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Why you need to act now

The damage to your economy is already affecting the banks’ lending criteria. As this continues to progress, it will become more and more difficult to refinance your loan.

  • Bank valuers will likely be more conservative as the situation continues to develop. This will reduce the amount you can borrow.
  • There may be delays due to lenders having their staff work from home.
  • Bank valuers may refuse to visit properties, making it impossible to refinance with lenders who require a property valuation.
  • There is a risk that some lenders may stop lending altogether if Australia goes into total lockdown.
  • If your income drops during this period, you may not get approved.
  • Some lenders require face to face meetings to finalise your application which may not be possible.

We’re here to help whenever you need us

Our team is working around the clock to constantly monitor the lending situation and make sure that we avoid lenders who will be unable to approve loans during this time.
  • Available by phone or video conference

    We can sort out everything for you over the phone or via video conferencing, including all of your paperwork.

    This means you can stay home and stay safe while we take care of your financial health.

  • Reducing risk of rejection

    We can do this through our own internal credit assessment process which we complete before applying with any lender. Our team has its own internal Credit Manager who reviews each application before being submitted to the lenders, meaning we won’t apply with a lender who won’t approve your loan.

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Our reputation and achievements

Market average rejection rate is 40%, our rejection rate is 3%
Approximately 40% of home loan applications were rejected in December 2018 based on a survey of 52,000 households completed by 'DigitalFinance Analytics DFA'. In 2017 to 2018 Hunter Galloway submitted 342 home loan applications and had 8 applications rejected, giving a 2.33% rejection rate.
2019 Mortgage Broker of the Year
Why Choose Hunter Galloway As
Your Mortgage Broker?
One of the lowest rejection rates
across Mortgage Brokers
 in Australia
The highest rated and most reviewed
Mortgage Broker in Brisbane
 on Google
We have direct access to 30+ banks and lenders
across Australia

Google reviews of our customers

Hunter Galloway Mortgage Brokers have helped hundreds of home owners.

We have built a brilliant reputation for being extremely well organised, helpful and making the home loan process as smooth as possible

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star star star star star

My mortgage was not your typical simple loan; it required a lot of attention and out of the box thinking. ... All of this was provided by the team. Both Nathan and Josh worked tirelessly to get the result and outcome that I needed. They are incredibly personable, professional and a joy to work with.

Reynold

3 weeks ago

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star star star star star

These gentlemen came recommended and I was genuinely impressed; the personalized service and ... very rapid reply to queries and constant updates was impressive as well as the ease with which they performed all the necessary work. They are very thorough and whilst collating paperwork is never much fun, they make it easy and explain why having all in place first is the best method. Very impressed!

Charles Phillis

3 weeks ago

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star star star star star

Thank you so much to Nathan, Josh, Jared and the team for everything that they did for us in the process of buying our ... first house. They truly made it a seamless process. The team were always so on top of everything and kept us in the loop every step of the way. We will recommend Hunter Galloway to everyone we know! Thanks again boys!

Melissa Allison

3 weeks ago

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star star star star star

We had a really great experience with Nathan from Hunter Galloway. Would definitely recommend him ... to anyone who is looking for a finance broker. He certainly knows his stuff, and his constant communication during the loan approval process was incredible.

Bianca Smith

3 weeks ago

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star star star star star

I would recommend Nathan team to everyone. They are very professional and efficient.I previously had unpleasant ... experience when dealt with bank directly. Lucky, found Nathan, Josh and Jared just on time. Through them, bank even offered the loan more than I need. I could not settle this investment without Nathan's help!

Jessie Zhang

3 weeks ago

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star star star star star

After being stuffed around for over two weeks by another broker - got in touch with Nathan and ... had a first-home loan approval within 48 hours of speaking with him. First-class customer service and demonstrated wealth of experience. Can't recommend Hunter Galloway enough.

Irene Diocares

3 weeks ago

Lenders on our panel

Westpac Bank
ANZ Bank
NAB
AMP
Adelaide Bank
FirstMac
Commonwealth Bank (CBA)
St George Mortgage Brokers
ING Direct
Home Loans
Macquarie Bank
Suncorp Bank
Pepper Money
ME Bank
Bankwest

Questions and Answers

What is refinancing?

Refinancing refers to the process of changing your existing home loan for a new one. You can refinance your loan with your current lender, or more commonly, you transfer your loan to a new bank.

How does refinancing work?

When you take you a new home loan, you will use some or all of the funds from the new loan to pay out your current loan. Once you have paid off your existing loan, your mortgage with your current bank will be closed and you will start making repayments to your new lender.

In order to refinance your loan you will need to complete the following steps:

  • Shop around for a new loan (or save yourself the trouble and have one of our friendly mortgage brokers shop around for you). Once you find the right lender and the right home loan, you will start the application process.
  • When you begin the application process, the lender will complete an initial assessment to make sure that you can afford the new loan. They will want to take a look at supporting documentation such as payslips and your current home loan statements. Once completed, assuming that you qualify, they will issue a conditional approval for your loan.
  • Next, the bank may order a property valuation. This valuation will determine how much you can borrow and whether your property is an acceptable security for the loan.
  • Once the valuation and any other conditions have been reviewed, the bank will unconditionally approve your loan and send contracts for you to sign and return.
  • The bank will contact your previous lender to arrange a changeover of the loan once they receive your signed contracts. This changeover process is called settlement and occurs on a date mutually agreed upon by the banks.
  • On settlement day, your old loan will be paid out and the title of the property will be handed over to your new lender.
  • Once settlement is complete, you will start making repayments to your new bank.
What are the benefits of refinancing?

Refinancing your home loan can open up a lot of different opportunities for you to better manage your finances, including:

  • Consolidate your debt into one repayment (for example, personal loans or credit card debt)
  • Get a better home loan product with more flexible features
  • Reduce your loan repayments by securing a lower interest rate
  • Invest in shares or property using the equity of your home
  • Unlock some extra cash to renovate your home
  • Repay your mortgage faster
How long does it take to refinance?

The timeline for refinancing is generally 3-6 weeks, depending on a few variables.

When can I refinance my mortgage?

It’s generally a good idea to review your mortgage every two years, depending on your circumstances.

Can I borrow more money when I refinance?

Absolutely. Many borrowers refinance their loans at a higher loan amount. You can use this to fund other expenses, such as renovations, holidays, a new car, or debt consolidation.

You can typically borrow up to 80% of the value of your property. For example, if your property is worth $650,000 and your loan amount is $450,000, you could borrow up to an additional $70,000 (bringing your new loan amount up to $520,000 which is 80% of your property’s value).

Can I refinance my mortgage if I have bad credit?

It is possible to refinance your mortgage if you have bad credit, but it is a bit more difficult. It comes down to finding the right lender and demonstrating a promising outlook that you’re making a conscious effort to improve your credit rating.

We will need to get a copy of your credit file, work on trimming your debt, and work closely with a specialist lender to refinance your loan. You will also need to borrow less than 80% of the value of your home.

How much will it cost me to refinance?

Refinancing does come at a cost, so it’s important to be aware of the expenses involved. Often these costs are minor compared to the money you will save over the life of your loan. To give you an idea of what costs might be applied to your refinance:

  • Loan Application Fee: Applicable by the lender when applying for a new loan.
  • Exit Fees/Break Costs: Although earlier termination fees were abolished in 2011, lenders will charge an exit fee/break cost for fixed rate loans that are still in their fixed term. The fee is calculated by the lender on a daily basis – based on the fixed rate, the variable rate, loan balance and remaining term.
  • Valuation Fee: Your lender may charge a fee to have your property valued.
  • Settlement Fee: Your lender may charge a fee to pay out your current mortgage.
  • Discharge Fee: Most lenders will charge $150 – $400 to discharge your loan
  • Mortgage Registration (Government Fee): The land titles office will charge a mortgage deregistration and registration fee. This is to register the mortgage on the title.
  • Lenders Mortgage Insurance (LMI): One-off fee only applicable if you have more than 80% of the purchase price owing on your home loan refinance.
Do I need to change banks to refinance my home loan?

You can refinance your home loan from any bank or lender you choose, including your existing bank. These days we find that banks do not typically reward loyalty. In most cases we find lenders offer better deals to new customers rather than rewarding existing ones.

That being said, we are often able to negotiate a better rate for you even if you choose to stay with your existing bank.

What will my property be valued at?

The banks will have a professional valuer complete a valuation report on your property as part of the refinance process. They give the property a value that the lender uses in their calculations as well as providing information about the property and the market conditions in the area. You won’t know all of this until the report is completed.

You can get an idea about what your property is worth by doing your own research:

  • Look at sales of similar properties in your suburb in the past 6 months
  • Look at websites such as realestate.com.au or domain.com.au for recent sales history
  • Speak to local real estate agents about activity in your area
  • Compare your property with other similar properties. They should have similar construction, land size, number of bedrooms and improvements.
Will I need to pay Lenders Mortgage Insurance (LMI)?

If the outstanding balance of your loan is higher than 80% of your property’s value you may need to pay LMI with your new lender. LMI is not transferable between lenders, so if you refinance to another lender, if your loan is not below 80%, it will be payable again.

If your loan amount is below 80% you will not need to pay LMI again.

FBAA & Credit and Investments Ombudsman Membership

Award winning Mortgage Broker in Brisbane

As members of the Financial Brokers Association of Australia (FBAA) and the Credit and Investments Ombudsman (CIO) we must uphold the highest level of excellence when helping clients with their finances. The members of each organisation must meet a minimum standard in experience, education and ongoing training to maintain membership each year and as active members, we commit to upholding these standards, ensuring we maintain their high levels of compliance, integrity, and professionalism with all of our mortgage clients.

Valuation issues & credit scores

One of the most common issues we see is with valuations and shortfalls which can ultimately stop your property journey before it even begins. We can order free upfront valuations with many of our lenders, meaning we can find out what your bank thinks your property is worth way before applying with them.

From experience, we know that ordering a valuation prior to applying for a home loan makes sure your credit file doesn’t get damaged from having multiple enquiries.

We can provide free valuations and also a copy of your credit file so you know where you stand way before applying for a loan with the banks!

Complex Credit Policy Pitfalls

Each lender and bank in Australia has a unique credit policy, meaning while some will accept your full income, others may not allow it due to their policy.

Quite often bank policy can be set in stone, and due to the complexity bank staff quite honestly don’t know it nor do many mortgage broker Brisbane. They are not familiar with complex situations and how to correctly assess them. This can sometimes cause it to take quite a long time to process your application and even in some instances mean your loan will get declined for no good reason.

With banks making their policies more and more complex it becomes more important to correctly package, and assess your application before it is even lodged with the bank – showing the banks all of the strengths of your home loan application and making sure it fits all of their policies.

At Hunter Galloway we have our own in-house credit team and we make sure your application is going to fit with the bank each time.