Good News For Bad Payers
Sydney Morning Herald
Thursday January 18, 2001
If you're a poor credit risk, home loans have become easier and cheaper through non-traditional lenders.
Didn't qualify for a home loan because of a poor credit record; not enough deposit or a lack of financial records to prove your income? It could be your lucky day. Your application for a home loan may no longer face automatic rejection with the emergence of non-conforming lenders.
The other good news for those battling for home loan approval is that interest rates for non-conforming loans are no longer usurious. They have fallen from as high as 20 per cent to between 8.5 and 11 per cent, says Glenn Maynard of The Mortgage Store.
One non-conforming lender, GE Mortgages, will lend up to 90 per cent of the value of a property without mortgage insurance provided borrowers can demonstrate they can afford the loan repayments. The GE loan allows the deposit to be borrowed elsewhere.
Other non-conforming lenders specialise in "low-doc" loans for people who are behind in their tax returns, who have recently become self-employed or are self-employed and unable to demonstrate sufficient income because of high deductions.
Low-doc loans require a minimum 25 per cent equity or deposit.
"The emergence of larger finance companies offering non-conforming loans has resulted in more competitive loans being available to borrowers," Maynard says. "In the past, home buyers had to obtain loans through solicitors with interest rates as high as 10 to 20 per cent."
Many borrowers are unaware of the non-conforming loan option because many such lenders do not advertise or deal only with mortgage brokers. Maynard says a good broker can find the lender who is most likely to approve a non-conforming loan and offer the most competitive rate.
"The variation between non-conforming loan interest rates is much higher than traditional home loans. The difference can be as much as three to five per cent compared with 0.5 to one per cent for traditional loans."
Once "problem" borrowers have obtained a loan they can refinance with a traditional bank or non-bank lender at a lower interest rate when they have built up a repayment history and some equity in the property.
The growth in non-conforming loans follows a similar trend in the US and the UK, where one lender, the Kensington Mortgage Company, has written 25,000 non-conforming loans totalling more than $4 billion since 1995.
More information: www.mortgagestore.com.au
Loan handouts
Banks want you
You know banks are anxious to lend you money when Westpac Bowral puts out a sign: "Application forms not required. Instant decisions". Commonwealth Bank has just announced another cut in its one-year honeymoon rate to 6.2 per cent, and cuts to its one- and three-year fixed rates, now 6.95 per cent. AMP, ANZ, Aussie and Colonial State have also dropped fixed-interest rates below 7 per cent.
Remote living
Intelligent housing
Yet more "smart home" technology has been launched. The Smart Box is a central control unit for phone, home entertainment, broadband Internet access, utility metering, security and lighting that can be controlled by email or mobile phone. A basic system costs $5,000 to $15,000 if installed during construction. Showroom at Level 1, 11-17 Buckingham Street, Surry Hills, 9332 4700.
Builders sharpen pencils
Buy now, pay later
Project builders are countering the building slump by screwing better rates out of their suppliers and trades and chancing a few new marketing ideas. Henley has pulled 600 orders with Henley Select which accepts the Government's $7,000 grant for first-home buyers as full deposit.
Masterton Homes has developed standard designs for dual occupancy and duplex housing, bringing project home techniques and pricing to what has been the province of custom builders and architects. One of the designs is displayed at Masterton Park, Sappho Road, Warwick Farm.
Allam Homes is one of a number of builders returning to the "speccie" business which died during the pre-GST boom when builders' order books were so full they didn't have the time or the need to build spec houses. Its new Homepac operation is offering 100 per cent finance on homes at Rouse Hill, Quakers Hill, Glenwood, Glenmore Park and Narellan.
Pretty vacant
Renters' market
Vacancy rates in the inner suburbs continued to soften in December while they remained firm in the outer suburbs. According to the latest Real Estate Institute figures, 3.8 per cent of inner rental properties are vacant compared with just 1.4 per cent last February. At the same time the vacancy factor in the outer suburbs has tightened from 2.7 to 1.7 per cent. Middle-ring vacancies have blown out from 1.7 to 2.8 per cent.
House sales in september
Seven-figure Sydney
Despite the Olympics, 320 Sydney house sales over $1 million were recorded in the September quarter last year, and just 42 in Melbourne - with no Olympics. Blame the harbour.
No rise in high rise
Down to earth
Despite the reported rush to apartment living, only 11 per cent of Australians live in them. Townhouses, villas and duplexes account for another 9 per cent, says the Australian Bureau of Statistics. So who is buying all those inner-city apartments, asks researcher Michael Matusik? He questions industry claims that empty-nesters are selling their homes en masse to move into apartments, given ABS figures that singles are the main occupiers of "attached" housing.
© 2001 Sydney Morning Herald
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