Real Estate

how banks checking buyers spending habits is impacting on geelong auction clearance rates

Written by The ReReport

Harcourts, North Geelong agent Joe Grgic said tighter bank conditions was holding back the auction market. Photo: Hamish Blair.

TIGHTER bank lending conditions are putting a bite on what buyers are prepared to pay for properties at auction.
Half the 30 properties taken to auction across Geelong last Saturday were passed in, the lowest clearance rate since a high of 90 per cent six weeks ago.
The weekend result comes as a new CoreLogic report shows Geelong’s clearance rate held up at a healthy 68.6 per cent, slipping 1.6 per cent from the June quarter.


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Harcourts, North Geelong agent Joe Grgic said he had personal experience over the past three years of how much harder it had become to borrow money.

“Three years ago it was straightforward, last year was a bit of a headache and this year I couldn’t believe it. I said to my manager, when does he need my blood sample,” he laughed.
“One of my clients, who is looking at buying, they rang her up and asked what’s this $53 purchase because they were not sure of the company. They are looking at everything.”
Buxton agent Jarrod Leonard said a five to 10 per cent clawback in the amount banks were lending was having an impact on buyers’ spending power.
It showed buyers needed to be organised, he said.
“That means having conversations with their broker or bank so when the time comes, or they do find their dream home, they’ve progressed a fair way down the line so they don’t miss out,” he said.

Auction at 58 Anderson St, East GeelongBuxton Jarrod Leonard auctioneer said homebuyers needed to be organised to have the best chance of buying at auction. Picture: Mark Wilson

Mr Leonard said for most buyers in the sub-$600,000 price bracket it was mostly waiting for approval.
“Compared to Melbourne, the purchasing power at the sub-$600,000 level you’re getting great homes and great blocks and offer people a wide variety of things, while first-home buyers could access stamp duty savings which helps.”
“They’ve got to be organised with their finance, but there’s no real major concern in terms of lending.”
Diamond Finance mortgage broker Suzie Rankine said banks required four to six months of transaction statements showing buyers’ income and expenditure in a crackdown as the industry was under the spotlight of a Royal Commission.

Australia’s Big Four banks had tightened lending rules as a Royal Commission investigated misconduct in the industry.

She said some banks were cross-checking statements with other institutions and had denied loans where understated their spending.
“Where there used to be grey areas, there’s now black and white,” she said.
Ms Rankine said many borrowers had a better chance through second-tier lenders, which cost 50 to 60 basis points in higher interest.
“You need to get rid of all your debt, so any car loans, credit cards. It’s not what you owe, it’s the limit — You are assessed on the limit.
“You might have a $20,000 credit card but you only owe $2000, but you’ve got the capacity to take it out by $20,000. That $20,000 affects your borrowing capacity by $100,000.”
The CoreLogic data showed Geelong was the best-performing major auction market with a September quarter clearance rate well ahead of a 56.6 per cent sale rate in Melbourne.

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