The sentiment cycle has turned in text-book fashion…
Domain was running an interesting story about mortgage brokers inundated with work, as FOMO (fear of missing out) grips property buyers across the country:
Mortgage brokers report they have been inundated with inquiries and home loan applications during what would traditionally be a holiday break.
Most interest has come from owner-occupiers including first-home buyers, while some investors are also keen, according to mortgage brokers…
Melbourne-based Foster Ramsay Finance principal mortgage broker Chris Foster-Ramsay said he was “flat out” processing applications since November.
“I’ve postponed my usual two-week break over Christmas and New Year’s,” he said, adding that his appointments are up 200 per cent year-on-year to date…
Melbourne-based 40Forty Finance director and mortgage broker Will Unkles said business was booming.
“In terms of inquiries and the keenness of buyers to be ready, it’s significantly stronger than six months ago,” Mr Unkles said, adding loosening lending policies have helped more applicants qualify for home loans in recent weeks…
“Deals are going through far easier, there are less questions from banks,” he said. “No bank will admit that but I’m finding from experience that lenders are being less critical.”
Cry me a river, mortgage brokers. Too busy making money to take a break.
But I’m getting similar feedback from the mortgage brokers in my network. Yes, there’s been a spike in activity as FOMO takes hold.
FOMO is a natural part of the sentiment cycle.
After a ‘contraction’ or ‘consolidation’ phase (I think you would describe 2019 as a consolidation phases, since peak to trough declines were pretty modest in the scheme of things) – you always get a bit of FOMO as the market turns.
There would have been a lot of buyers waiting in the wings, hoping that property prices would fall and keep falling. They would have been looking to ‘time the bottom’.
However, now that prices have clearly found an actual bottom, and now that they’ve clearly turned the corner and price growth is accelerating (CoreLogic reckon the December quarter saw the strongest price growth in over a decade!) buyers face the prospect of paying more for every day they wait.
There was a brief period where bargains were on offer. That period is coming to an end. If you don’t grab a bargain now, you’ll miss out.
But it’s the second part of this that is most interesting to me. Mortgage brokers are reporting that 2020 is serving up with a much easier credit environment.
The APRA restrictions that put a cap on things over the past couple of years are over. Goneski. They’re a thing of the past.
And if the Hayne Royal Commission put any sort of freeze on things, that’s over as well.
We’re back to business as usual.
That means banks are hungry to lend, and buyers with good credit metrics are getting waved through the starting gate.
Put it together and what have you got?
Easier credit + FOMO = Boomo.
It’s still early days, but there’s a tonne of upside potential in a market like this.