October 2nd 2020
There is no doubt that 2020 has dealt out its fair share of financial woes but there appears to be light at the end of the tunnel. Firstly, the announcement of relaxed Responsible Lending Laws. Secondly, the anticipation of further cuts to the already rock bottom Cash Rate in November.
Will this be enough to kick the economy back into gear? Are further extensions to home buyers grants, stamp duty concessions and other first home buyer stimulants required to get us where we need to be?
RATE CUTS ON THEIR WAY
It looks like rate cuts may be on the way, but they are likely to be delayed until after the budget has been delivered in October. Further cuts to the cash rate is expected by the RBA in November. The delay of one month will allow the RBA to fully assess the Budget measures and will build on expectations that the building blocks for economic recovery are stacking up.
RELAXATION OF RESPONSIBLE LENDING LAWS
Further, the Federal Government has unveiled plans to relax some elements of the credit process for residential or investment mortgage loans applicants.
The proposed reforms also involve a shift from a “lender beware” model to a “borrower responsibility” model. This means that lenders will be able to rely on the information provided by borrowers. Will this, however, result in lenders relaxing enough? Will they still want to know if you spent more on a bottle of wine last month or an expensive pair of shoes? It is too early to tell if this will have a major impact on borrowers obtaining a home loan, but clearly this is a step in the right direction in the push to stimulate the economy.
The budget will be one to watch this year with the promise of both monetary and fiscal changes. Watch this space…