Lenders urged to give off-the-plan buyers a fair go
A property company has called on lenders to give a fairer go to off-the-plan buyers.
A recent report from CoreLogic RP Data suggested off-the-plan settlements could be put at risk as lenders tighten their criteria and apartment stock floods the market over the next 24 months. In the wake of the report, iBuyNew chief executive Mark Mendel has urged banks to provide funding pre-approval that will last off-the-plan buyers until settlement.
Mendel said if banks are willing to fund developers, they should take the same approach toward funding off-the-plan buyers.
“Buyers of off-the-plan apartments should be able to go to the bank that funds the construction and take out a pre-approval that will last them until settlement. This reduces a part of the risk for the buyer as they don’t have finance risk,” Mendel said.
Mendel said banks would also win out in the scenario, as the risk to developers would also be mitigated. He argued that the onus was on banks to assess the economic landscape and offer borrowers pre-approvals that will last until settlement.
“Banks have research teams who will have a better idea of what will play out economically over the next 18 months. Some lenders are in a position to provide mortgage pre-approvals of up to 12 months, which would better protect customers purchasing off-the-plan,” Mendel said.
There does appear to be some good news for off-the-plan buyers, however. In a note to mortgage brokers, Westpac said it would ease deposit requirements for investors, lending up to 90% of a property’s value.