Further to the snippets of information we've shared during the week, here's a round up of specific news we wanted you to be aware as we all navigate this uncertain environment.
We will never try to predict the future, nor will we repeat what you will see in the mainstream news.
Consider this relevant facts and opinions from the lenders that we are hearing, that will allow you to read between the headlines.
This will enable you to to think about what steps you can take:
in planning ahead
to move on opportunities as they present themselves
in the event of impending hardship
The official interest rate has dropped but:
ANZ is the only bank to have passed some of it on in terms of variable home loan rates
CBA and NAB have led with very large reductions in fixed rate home loans and small business lending rates (for new and existing loans).
Watch this space to see how smaller lenders, without large business books respond
Also keep an eye out for your lender's communication in relation to drops and timing.
Remember that the recent drop announced on 3rd March is yet to flow through to some existing home mortgages.
New or refinance lending for PAYG
One lender so far has announced the temporary suspension of shares income, holiday rentals, short term accomodation, overtime, commissions and bonuses. With these income sources at risk, we need to consider whether they are sustainable and have a strong case for inclusion in assessment calculations.
Essential services employees are of course exempt.
For non-effected salary earners, rates are incredibly low and the banks are very much open for new business, including preparation for future transactions.
New or refinance lending for SMEs
Although assessments are still based on historical financials, lenders are looking closely at specific industries and expect to see how a business is responding to the impending period.
Where additional lending makes sense either to take advantage or weather the storm without hardship, we press ahead.
Expect to need to document a summary of the strategy.
Specialist Lending vs Banks
Specialist lenders are also known as non-conforming lenders and are backed by securitisation and private funders, rather than a bank's balance sheet. Brands include La Trobe, Bluestone, Pepper, Liberty. They have traditionally catered to specific SME lending and credit impaired clients. More recently, they have hit the market with low interest rate offerings for "prime" clients with near clear credit history.
These lenders appear to be retreating a little and are focussed on managing their existing exposure for their investors. Bluestone has already announced a 0.35% increase (to new loans only) on the day of the 0.25% reduction, and have ruled out tourism, hospitality, entertainment and retail as acceptable industries.
If we see this as a sign of things to come, we need to move quickly to sure up positions, or be ready to weather the storm without additional funding from these lenders.
In such unprecedented times, it is inevitable that unexpected financial difficulty is going to be very real for many. The government is responding with a number of measures that will become clearer over coming weeks and months.
The Government, Lenders, ASIC and APRA have all moved very quickly to announce yesterday that measures will be put in place to defer lending payments for small businesses and landlords on all types of lending for up to 6 months.
It is subject to ACCC approval on Monday but you can read more about it here.
If you are facing immedate hardship, please contact your lender in the first instance to understand the timeframe and options they have available to you, as they will make these assessments on a case by case basis and not involve us at all in the conversation. Then please, contact us to discuss further.
Above all else, stay safe, healthy and positive. We're here to support you when and as you need.
Lanie, Nic & the Surf Coast Finance Team