Are banks lending during COVID-19?

Discussion in 'Loans & Mortgage Brokers' started by timetoact, 22nd Mar, 2020.

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  1. Melbourne_guy

    Melbourne_guy Well-Known Member

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    Having had financial interests in the UK during the GFC, I'm in agreement with this. Watching pension funds and investments crashing wasn't fun knowing providers had frozen all access to the funds.

    Also, I still believe what happens in the USA economy is more important than Australia and the USA is not doing great right now fighting the coronavirus. Completely speculative but the USA political and financial fall-out in election year could be spectacular if it drags out.
     
  2. berten

    berten Well-Known Member

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    What starts? Legit question

    Credit tightening?
     
  3. berten

    berten Well-Known Member

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    @Redom

    Could you dumb this down for me? Did you mean it's likely mainstream banks will keep lending throughout the crisis as RBA and Gov will be supporting/insisting vs GFC where we had straight up seizing/liquidity issues?
     
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  4. Redom

    Redom Mortgage Broker Business Plus Member

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  5. berten

    berten Well-Known Member

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    Cool, thanks for that! Interesting distinction.
     
  6. K974

    K974 Well-Known Member

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    yes i believe so, a major squeeze on credit, hence my effectively closed for business comments.,

    more educated smarter people on here think it wont happen so i maybe incorrect

    i base my comments on 2008 (in other countries) and what i lived through.
    i think people are believing far too much of the rubbish the economist and banks are putting out there.,
    exact same in 2008 , soft landing , solid fundamentals etc etc, you only need to look back 1 week when westpac's bill evans said unemployment would hit 7%, would you believe anything they are spruiking this week?

    but i could be wrong , but would be happy to take a bet on it if i had too.

    i have said tho it will be short lived.
     
  7. Woodjda

    Woodjda Well-Known Member

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    I don't think the banks stopping lending is the issue. With unemployment about to go through roof it's just a simple fact that less people will be able to afford the loans. Add in that rents will drop significantly and anyone who was close to the edge on leverage before this will likely be over the edge now.

    So even if the banks are happy to lend you get the situation where far fewer can afford the loans and some additional people are forced sellers. The only outcome is a significant price drop until you get buyers.
     
    TheSackedWiggle and Redom like this.
  8. Redom

    Redom Mortgage Broker Business Plus Member

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    Some lending policy changes from Macq today;

    In line with this approach, we are monitoring industries especially impacted by the coronavirus situation. The identified industries at this time are:
    tourism
    transportation, excluding public transportation and delivery services
    hospitality
    retail
    sport, arts and recreation.
    For PAYG applicants within the above industries:
    the application must include a bank account statement showing a salary credit no older than 14 days at the time of formal approval, matching the most recent payslip
    alternatively, our credit assessor will need to speak to the applicant’s employer to confirm employment status and current income
    where the applicant is on paid leave or unpaid leave, our credit assessor will need to speak to the applicant’s employer to confirm employment status and current income.
    For all self-employed applicants, regardless of industry, the application must include our normal requirement of the last two years financials and:
    business activity statements (BAS) covering the period from the most recent financial statements to the application date. From 1 April 2020 we’ll require the March quarter BAS, and
    bank statements from at least 1 March 2020 onwards (and no older than 14 days at time of approval) showing credits or deposits evidencing consistent trading income.
     
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  9. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

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    It will be a matter of time before other lenders follow with the self employed part.
     
  10. Woodjda

    Woodjda Well-Known Member

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    These aren't changes to lending standards. They're just ensuring that people actually met those standards and the income they claim hasn't suddenly disappeared. Given the changed in unemployment the impact will be the same though. Far lower lending.
     
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  11. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    humans have emotions and react, sometimes even respond

    data does not

    ta
    rolf
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    alrady are

    prudent


    ta
    rolf
     
  13. Human

    Human Active Member

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    Most workers i know are affected already, partially or fully.
     
  14. euro73

    euro73 Well-Known Member Business Member

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    ANZ have lowered fixed rates again...

    Screenshot 2020-04-01 09.33.51.png
     
  15. Lacrim

    Lacrim Well-Known Member

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    I thought they were offering 2.19% fixed for 2 years?
     
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  16. Jezzah

    Jezzah Well-Known Member

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    Also QBE announced it was suspending LMI for home buyers in affected industries. To the mortgage brokers here, have you had clients affected by this yet?

    “Effective immediately a temporary embargo is in place on all new applications received for applicants working in the industries directly impacted by COVID-19, for example those working in gymnasiums, beauty salons, tourism and hospitality industries.

    “Exceptions may be considered by the mortgage insurers on a case by case basis.”

    QBE reins in LMI coverage

    Of course you'd have to be pretty brave right now to go for a loan at LVR 80%...
     
  17. bumskins

    bumskins Well-Known Member

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    Makes refinancing harder too.
     
  18. euro73

    euro73 Well-Known Member Business Member

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    Yes...but that was announced last week, and a TV campaign has started around that as well.... These are reductions to other fixed rates that were not changed when the 2.19% was launched, and are effective today.
     
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  19. albanga

    albanga Well-Known Member

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    Not Rocket Science but another one which was always going to happen.
    I definitely stand hard in my view that in terms of lending essential services are going to be looked upon as rockstar millionaires.

    Effected industries will be looked upon as lo doc borrowed with a 100 rated credit file.

    This doesn’t mean by a long shot lending is shut as some others believe. It just means it’s shut for some and WIDE open for others.

    QBE won't offer LMI cover for borrowers from hard-hit sectors
     
  20. essendonfan

    essendonfan Well-Known Member

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    Some lenders are starting to ask impacts of the Corona and ensuring they have 6 months living expenses buffer post-settlement.

    If this is the trend - this will not knock out the high LVR OO purchase market.

    Will this stop the FHB market, especially with the government scheme?
     

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