Seasonal change to spark lending ‘uplift’ in ‘buyer’s market’

According to ME’s head of home loans, Andrew Bartolo, based on previous seasonal trends, lending activity is set to rise, despite a reversal in demand from sellers to buyers “dampening” volumes in some parts of the country.

“Spring is typically the time the market blooms with listings, so we expect to see an uplift in lending activity,” Mr Bartolo said.

“However, this year the market has changed from a seller’s to a buyer’s market, dampening volumes and prices in some regions.

“Our customers will be waiting to see what the market does or will be driving a harder bargain. Sellers will therefore need to keep reserves realistic and prepare for their property to pass in at auction.”

Mr Bartolo noted that current market conditions would present first home buyers (FHBs) with an opportunity to break into the property market.

“The break in rapid house price growth will allow first home buyers previously priced out of the market to find affordable entry points, although strong activity will continue in affordable areas.

“First home buyers will benefit from competitive interest rates, concessions and ample apartment stock, although checks should always be made to ensure quality buys.”

However, Mr Bartolo expects overall lending growth to remain “subdued”, particularly for investors, as home prices fall and the Australian Prudential Regulation Authority’s curbs take full effect.

“With prices coming off their apex, the market cooling and APRA’s investor-focused lending restrictions taking effect, we expect many investors will be sitting tight and considering their options,” the head of home loans continued.

“Despite the 10 per cent investor growth cap starting to come off some lenders, lending to investors and owner-occupiers will continue to remain subdued.”

Mr Bartolo added: “The 30 per cent cap remains in place for interest-only loans, a product typically used by investors.

“Banks have also been tightening serviceability requirements, which has constrained overall volumes of lending by borrowers.”

[Related: Sub $400k home sales falling despite price drop]