The banks are still lending.
As a finance broker I get to see a broad cross section of the Sunshine Coast economy. It is interesting to read and see all the doom and gloom in the press and compare that to what I am experiencing. Every week I am getting calls from banks and financiers to ask what loan applications I am able to refer to them. They still have the funds and they are still lending.
Some areas of lending have been wound back such as the no deposit and low/no doc, (no questions asked) lending. Banks have not withdrawn from this lending but most have tightened their criteria and probably rightly so. The changes differ from lender to lender but the overall trend is a move towards more conservative lending in this area of investment property and home mortgages.
Admittedly funding for a new residential property development would have to be scrutinised carefully but some banks are still prepared to consider it.
Applicants with a good track record, ability to service and adequate security are still able to obtain finance.
Some recent examples of new lending and bank confidence that I have seen are as follows.
- One bank is still actively seeking and recruiting new lending staff.
- There has been some large business banking transactions in excess of one million dollars where there has been considerable reliance on the cash flow or business assets to support the loan. In other words, the lending has exceeded the market value of the real estate offered as security.
- New products such as lending to self managed super funds are coming into the market. The banks have large budgets to lend into this area.
- Lending to franchises is still available.
- Funds are still available for some of the more risky asset classes such as motels, hotels and caravan parks.
- One bank is even experiencing processing delays due to the high level of new loan applications.
- The banks are still advertising.
The credit history and track record of the applicant will now take on a greater importance.
This downturn is all about perception and confidence. If you need funds for any purpose and it makes sense, make an enquiry. The banks are still keen to assist.