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Credit crunch weakening borrower confidence

by Reporter4 minute read
Aaron Milburn

Lending conditions have heightened concern over borrowing capacity, with over half of consumers either fearing loan rejection or concerned they will fall short of their lending expectations, new research has found.

Non-bank lender Pepper Money has released new research in conjunction with RFI Group, which involved a survey of 1,126 borrowers in January 2019.

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Respondents were asked to list their greatest concerns, with the ability to secure an appropriate home loan rate topping the list (66 per cent).

According to Pepper, borrower concerns have also been heavily influenced by current credit and housing market conditions.

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In light of falling property prices, approximately 40 per cent of borrowers cited receiving a low valuation for their property as a concern.

Conversely, many borrowers said that property prices could prevent them from entering the housing market, with 37 per cent of respondents ranking property prices and their ability to afford the type of property they want as a pressing concern.

Further, amid increased credit scrutiny off the back of the banking royal commission, 37 per cent of borrowers said they were concerned that they would not receive approval for the loan size they wanted, with a further 15 per cent fearing that their loan application would be declined by a bank.

However, 39 per cent of respondents also stated that they were concerned they would not be able to meet loan repayments.

Pepper’s director of sales and distribution, Aaron Milburn, encouraged mortgage brokers to carefully consider the concerns of their clients when assisting them through the lending process.  

“Brokers should be paying close attention to what borrowers are saying worries them, so they can help reassure them that alternatives are available to help them,” he said.

“With a volatile property market and pullback from the big banks in certain parts of the lending market, consumers will be looking to trusted experts more than ever to help them determine the best solution for their individual situation.

“Consumers look to brokers and to lenders to help them navigate the complexities of the lending process. Their minds are on bigger issues, like how to get the best rate possible and whether their property will get a decent valuation.

Mr Milburn concluded: “There’s a wide array of lending solutions available because of alternative, non-bank lenders like Pepper Money. Consumers need to know that there are quality alternatives beyond the big banks, who they may find are tightening their lending criteria.”

[Related: Pepper to launch into commercial real estate space]

 

 

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