We have found that most banks will work with us to provide home loans. Sometimes, buyers need some help, but the banks will make loans to those who can reasonably guarantee to the banks that they won’t default on the loans.
Rockingham, Western Australia (PRWEB) August 16, 2012
The global financial crisis has caused banks to be much more careful when they lend money, and many who could have easily obtained loans seven years ago are finding it increasingly difficult to do so now. Banks which used to award loans to customers with 100% loan to value ratio (LVR) are no longer doing so, because, even in a booming economy like that of Western Australia, the investments are seen as “too risky.”
What many see as the halcyon days of the lending industry were fuelled by unprecedented growth in the housing market. In August 2006, according to numbers from research firm RP Data, the growth of housing values peaked at 42.7 percent. Banks saw even risky loans as a good investment, because they felt that they could later refinance the properties at a higher value or repossess the properties and sell them for more than what was owed on them.
In 2012, even though the housing market is inching its way back up, the growth isn’t fast enough for most lenders to grant loans with 100% LVR ratios. According to Justin Smith, Principal of The Mortgage Gallery Rockingham, “Even though the local economy is growing, lenders still consider many loans to have unacceptable risks. The good news is that most of them will grant loans with larger down payments. For many first time home buyers, the best source of a down payment is their parents.”
To help facilitate home loans, many banks are offering limited guarantees to parents, limiting their responsibility to the cost of the deposit. Other bank products include sharing of properties, in which both parties mutually guarantee the others’ loans, or allowing the parents to refinance their homes as security for the son’s or daughter’s house.
While many have become discouraged by the tightening up of credit by the banks, Smith has remained optimistic:
“Banks, like consumers, just want to protect their investments. They are in business to make money, but they also know that they don’t make any money if they don’t do any business. Banks still want to make home loans, but they just want to make sure that they won’t lose their investments.”
Smith continued, “We have found that most banks will work with us to provide home loans. Sometimes, buyers need some help, but the banks will make loans to those who can reasonably guarantee to the banks that they won’t default on the loans. Usually, it’s just a matter of a larger down payment. This allows the bank to secure their investment and protect their interests. At the end of the day, we find financing for a lot more people than we turn away.”
The Mortgage Gallery Rockingham is a mortgage broking firm that specialises in finding home loans for those in the Rockingham, Cockburn, and Kwinana areas. Their friendly and professional mortgage brokers can help all buyers, whether they are buying their first homes or their retirement homes.
Further information is available at their website http://www.themortgagegalleryrockingham.com.au/ or you may also call them at (08) 9527 1800.