35years loan from Ubank/NAB

I just saw this https://cms.ubank.com.au/wp-content/uploads/own-home-loan-tmd.pdf

Is this the first loan product (Ubank/NAB) for a duration longer than 30 years (up to 35y) in Australia? Will we see more of this soon from other lenders? Will this have much impact on borrowing power (it should)? Is this a macro change in Australia mortgage market?

@Redom , @Peter_Tersteeg , @Rolf Latham

 

Not the first, I recal that La Trobe had a 40 year term many years ago. Not sure what happened to that.

I think a 35 year loan is intended to look like an IO loan without actually being an IO loan. If lenders accept a 35 year term it will have a small positive impact on borrowing power, otherwise no real implications. I wouldn't expect this to be a difference maker.

Incidentally, since 86400 was purchased by NAB and merged into Ubank, brokers that previously have 86400 on their pannel can now write Ubank loans.

 

Can run the scenario's yourself through mortgage calculator's too see what difference changing mortgage duration has, has a pretty small diminishing affect.
It would give more breathing room to a current boom to extend prices higher. Otherwise probably won't provide much support.

Very marginal compared to how much rapid rate rises are crushing borrowing capacity.

 

Interesting. It would make an $800pm difference for me in terms of minimum repayment. As someone in their mid 30s, the 30/35 years really makes little difference to me while the additional $800 per month is relatively substantial

 

Hmm 35 years is about a 5% improvement. It’s not nothing.

2.5% cash rate inside 12 months is about a 25% deterioration.

 

Pepper will allow up to 40 years on some of their products currently. I think TMB had a 40 year product for FHBs only a while ago.

I would imagine extended loan terms would be one of a host of things that are being considered. Seeing quite a few changes to lender policy that is favourable e.g. some lenders start to accept COVID payments for self employed, 1 year financials policies, 10% rental income shading instead of 20%, etc.

 

I am not suggesting this change can offset the impact of rate rises. Just curious to see if this change will be a trend in the future when we will see 40y loans offerred by many lenders.

 

35/40y terms are big and controversial in Europe.

Assuming the FHB is under 25 and the house a new build - sure. For IPs - sure.

Any other scenario - I guess most people would hope to onsell or use super?