Your Lending Update
We are well and truly into January, and the Lydian Financial team would like to wish you a very Happy New Year. We hope you managed to have a nice break or are (very luckily) still holidaying.. if the latter, so sorry for interrupting your vacay with a bit of light reading!
We're pleased to bring you a Lending January Update.?
RBA and the cash rate.
It will be interesting to hear from the RBA after their break and it is amazing how much has changed in 2 months.
The summary in December was that we were back on track for opening the economy, spending up, business’ recovering... then Omicron stamps on the brakes!?
The RBA has made it clear that this year there will be no change in rates (per the no cash rate change for 2022 commitment)
Inflation is on their radar….CPI between 2-3% is their target and we have seen the September figure at the top end of this range.
Typically, the increase in inflation is part and parcel of economic growth. In this instance a complicated demand/supply/logistics situation has popped up along with our post vaccination open and we are all trying to find some firm footings for our “normal” living with Covid.
Secondly, the RBA funding programme for 2020/2021 flooded the banks with cheap cash, hence the extremely low rates.
In December, the RBA confirmed the tapering of this cash support, with a disclaimer that if another serious economic setback, a different set of options may be considered.
So bringing this into land, what does this mean for our banks and lending??
CBA kicked off a 2022 5 year bond issue last week of $4 Billion a mix of variable 0.80%?ish (BBSW +70) and smaller split on fixed 2.20%?ish (5 year treasury plus 75).
The RBA charted the Net Interest Margin of the majors with a current 2.00% margin for our lenders.? (60% of this funding is via deposits and savings and not funding as above).
Bank Interest rates will go up this year!
Interest Rates
Variable Rates Own Home P&I
These rates must be under pressure to increase!
Interestingly, pricing requests for retention at CBA lately have been unsuccessful…they are not budging on rates for existing customers (or not much anyway.)
Fixed Rates Own Home P&I
You can see how this yield curve has steepened over the last 3-6 months from our crazy 1.99% 3 years fixed!
领英推荐
Lenders Innovation
This year the lending industry and its clients will continue to benefit from digital innovation of the loan process.
As Brokers, one of our business frustrations is turnaround times and managing expectations for our clients and referring partners.
ANZ, Suncorp, BOQ, Citibank, ME, Firstmac, to name a few, have been market leaders in low rates, but their “system” has been unable to process the volume of deals with turnaround times blown out to 25+ days in some cases.
The lenders who have their process digitised and their business’ properly resourced such as Macquarie Bank, Pepper, Adelaide Bank and NAB have been gaining market share and in our BID commentary recommendations for lenders are now influenced by service and turnaround times... Process.
Watch this space as open banking allows further positive change for Brokers and Borrowers alike.
Property Market
It is great to see supply overarching demand in the tight Sydney, Melbourne and Brisbane markets.
Clearance rates at the end of December 18 sourced from Domain :-
This would suggest for Sydney and Melbourne we are taking a breather.? Brisbane has the Olympics vibe!
Happy to get a Bank Val and lock in equity release at these current property levels if you are considering investing or this is a great time to consider renovating.
Reach out if you are considering investing in property in 2022…we have great partners who provide advice in support of your purchase.
?Summary
Sailing Results
Div 5 Ransa ..Echo II got her first last week in a windy 30 knot breeze, only 2 boats finished, 6th?last night…a little slower, less breeze, more beer.
Enjoy the rest of your month, and I hope you have a great year ahead. Thank you for your ongoing support for Lydian Financial Services!?
Cheers,?
Boothy