Back in July, my Rambles column talked about a potential credit squeeze.<\/p>\n
Well, it\u2019s certainly happening. Banks are now scrutinising finance applications with a fine-toothed comb and even ringing people up to query:\u201cWhat\u2019s this expenditure on your credit card that you didn\u2019t list in your budget?\u201d<\/p>\n
The banks have changed from simply believing what\u2019s put on application forms by mortgage brokers to now scrutinising, much more closely, applicants\u2019 expenditure \u2013 particularly on credit cards \u2013 versus their stated budget plan.<\/p>\n
Previous practices that might have been too loose have been very much tightened.<\/p>\n
The effect of this has dampened the previous home-buyer demand somewhat so that prices, particularly in Melbourne, are now diminishing.<\/p>\n
The benefit of this to the average buyer is that speculators will now exit the market since they can\u2019t rely on rising prices for profit-taking.<\/p>\n
This will create some stability, even savings, for the budding home-buyer.<\/p>\n
With this in mind, it was a surprise that Westpac recently put up its interest rates. The Reserve Bank, by contrast, has just again maintained interest rates at a record low of 1.5 per cent \u2013 for the 25th month in a row.<\/p>\n
It seems reckless that the big banks are increasing rates, and increasing mortgage stress, knowing that the property market had peaked with signs of slowing down. Maybe it is in advance of any pending grilling at the banking royal commission.<\/p>\n
As I say, most of this slowing of activity is in metropolitan Melbourne, where prices have reached dizzy heights compared to Geelong and the Surf Coast.<\/p>\n
But the price gap between Melbourne and Geelong remains significant and will maintain a competitive edge for Geelong and the coast.<\/p>\n
So the upshot locally is positive \u2013 and you can anticipate that the Geelong market will remain reasonably strong for the medium term.<\/p>\n","protected":false},"excerpt":{"rendered":"
Back in July, my Rambles column talked about a potential credit squeeze. Well, it\u2019s certainly happening. Banks are now scrutinising finance applications with a fine-toothed comb and even ringing people up to query:\u201cWhat\u2019s this expenditure on your credit card that you didn\u2019t list in your budget?\u201d The banks have changed from simply believing what\u2019s put […]<\/p>\n