Lending trends we’ll see in 2018

Home loan repayments to increase

“The financial markets expect the RBA to start putting up rates in 2018,” ME Bank head of home loans Patrick Nolan said.

“This means repayments could also increase, typically by $50 for every 25 basis point rise on a $400,000 loan.”

Property prices to cool

Banking regulators want to see a slowdown in house price growth, and that’s what ME expects in 2018.

“Limits on investor and interest-only loan growth will remain for the foreseeable future, which will continue to dampen investor activity and cool property prices,” Mr Nolan said. “We’re already seeing this intervention starting to take effect.”

First home buyers to make a comeback

With investors taking a step back, first home buyers will find more opportunities in 2018.

“They will continue to benefit from competitive interest rates, new concessions (if eligible) and ample apartment stock, although checks should always be made to ensure quality buys,” Mr Nolan said.

Upgraders will continue to renovate

“We’ve seen a substantial increase in renovation loan applications in 2017, a trend that we’re likely to see well into 2018, as households choose to renovate over moving,” the executive said, adding that upgraders are avoiding exorbitant moving costs such as stamp duty.

“We’re seeing some more top-ups as people take advantage of lower interest rates and leverage the extra equity in their property in order to finance renovations.”

Owner-occupiers to win from competitive lending rates

With limits on investor and interest-only growth, banks are competing over a smaller piece of the lending pie and are offering some great deals for owner-occupiers.

“If you’re an owner-occupier and haven’t checked your rate lately, 2018 could be the year to save some serious money,” Mr Nolan said.