Tuesday's budget announcement has been labelled many things, but what does it actually mean for the lending industry, and indirectly, for the property market as a whole?
Loan Market broker Marios Rokka says the budget's new focus on pensioners could result in certain areas being transformed.
“The Budget’s housing centrepiece is a $112m trial program to assist the elderly to downsize their homes without affecting pensions, via a means test exemption of up to $200,000 for 10 years. It is designed to remove the disincentive for seniors to relocate to more age-appropriate housing, but will also open up more suburbs for gentrification and redevelopment,” he says.
Overall, Rokka says he was impressed by the level of honesty portrayed in the state of the nation, but that he was surprised by the deficit and the fact that Australia won’t likely see a surplus until 2016/17.
“The way the budget was delivered spoke volumes about our economy… This clearly shows that we are not in a strong economic position and although we are not in a weak position either, the government is telling us that this is just where we are at. With some structure and no-nonsense cuts, we will not worsen the economic position of the country.”
Independent Mortgage Planners managing director Craig Morgan largely agrees, but says he is not convinced the cut-back measures go far enough.
“I’m a bit concerned that they’ve still gone forward with some big ticket long-term expenditure… You can’t keep spending more than you earn and hope it’s going to get better,” says Morgan.
In terms of how the announcements will affect the home loan market, Rokka remains cautiously optimistic.
“I feel that the Budget will cause further household tightening and give people more opportunity to repay debt and secure rates at historic lows. This could keep our rates at historic lows a little longer than previously expected,” says Rokka.
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