RBA gives APRA’s use of macro tools a tick of approval
Ahead of an expected move to impose tougher lending rules on the banks, the Reserve Bank has looked into previous attemp...
An ever-changing regulatory environment is creating not only economic turmoil, but an opportunity for sophisticated investors who engage with a mortgage broker, an industry expert has explained.
In a recent episode of The Smart Property Investment Show, former mortgage broker Ross Le Quesne said a simple change could have a long-term impact on investors’ portfolios.
Mr Le Quesne believes most sophisticated property investors have a mortgage broker who will help them secure the best price for an investment property.
“It’s a great time to be a mortgage broker because there are the lowest rates we’ve ever seen, cashback for refinancing unlike we’ve ever seen, up to $4,000 as an incentive,” he said.
Five years ago, rates were around 7 per cent, with an average rate over time being around the same mark. Mr Le Quesne explained that today, however, a good mortgage broker can get owner-occupiers nearly 5 percentage points less.
“The reason it is more important than ever to use a mortgage broker is because things are changing so quickly. The banks are changing their policy almost on a daily basis on who they will lend money to.
“A lot of what has happened with the COVID-19 stuff is around what industry you work in, and will they lend to you in that industry, or will they allow you cash-out to different things?”
“If you’re a broker that is on their game and keeping up to date with everything, you have a real opportunity in this market,” Mr Le Quesne explained.
The mortgage broker also highlighted the opportunity that record-low interest rates are creating for investors due to the expenses incurred on interest rates.
“The biggest expense in any investment portfolio is the interest by far. Many clients are sitting on interest rates with 4 in front of them.”
“If you can get down onto the high 2s on an interest-only product, if you have 1 per cent on a million-dollar property portfolio, that is massive money.
“For clients with $3 [million] or $4 million portfolio, we’re talking a [$30,000] to $40,000 going back in your pocket.
“That’s why it is important to look into your rates, as it is your biggest expense,” Mr LeQuesne concluded.