Real Estate Investor Loan Programs-At A Look

Land buyers have been urged by real estate experts to get in early to avoid the panic when cash-rich baby boomers move their money from the stock market to the real estate market. This may seem to be a plausible argument, given that many Australians, especially those approaching retirement age, believe they have a good understanding of real estate as an investment. It’s something they can see and touch, while the financial exchange operates in enigmatic ways that they don’t completely comprehend. The global downturn in share prices over the last 18 months has solidified this position, and investors are looking to preserve what is left of their retirement assets rather than risk being burned by further stock market declines.You can get additional information at Real Estate Investor Loan Programs.

However, the expected growth in property investments has yet to materialise, according to the most recent lending results.

Instead of real estate developers, first-time buyers are flooding into the market, aided in part by government stimulus spending. No, why aren’t real estate developers following suit? There are a variety of reasons why developers may be hesitant to join the real estate industry.

Tougher lending standards

Banks have raised the criteria for borrowers (and owner occupiers) to apply for a mortgage as a result of the Global Financial Crisis (GFC). No-deposit loans, which are blamed in part for the subprime debacle, are becoming extremely scarce, with many lenders requiring a minimum 20% deposit and a track record of lending before offering mortgage financing. With capital being more difficult to come by, there may be developers who want to buy land but can’t.

It has been proposed that tighter lending conditions would help prevent the Australian real estate industry from seeing the same kind of declines as the US and UK property markets. In fact, the banks that provide mortgage financing, not the real estate owners, would be covered by the stricter lending conditions. If a homeowner or owner occupier finds themselves struggling to make home loan repayments due to unemployment or increasing interest rates, a gearing ratio of 80 percent or below is unlikely to help. Because of the stringent loan requirements, whether the bank wants to sell the house to recoup the funds it borrowed in mortgage funding, it would be willing to do that even if it has to sell at a substantial discount to the initial selling price, simply because the real estate value has dropped or because they choose to get their capital back fast.