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Speaker 1: You're listening to the Saturday Morning with Jack Team podcast

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Speaker 1: from News Talks AB.

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Speaker 2: And it is time to talk money. And joining me

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Speaker 2: now is Ed McKnight from Opie's Partners. And there might

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Speaker 2: be some good news on the horinas. On the horizon

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Speaker 2: for homeowner's Ed.

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Speaker 3: There is, and it's all to do with the income

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Speaker 3: side of your mortgage application. And the impact of it

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Speaker 3: is that first home buyers, investors, and anybody looking to

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Speaker 3: take out a lot at a loan might find it

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Speaker 3: slightly easier. And it's not even just on the horizon,

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Speaker 3: it's already happened. So for example, we've just had National's

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Speaker 3: tax cuts come in and that gives some people twenty

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Speaker 3: dollars a week extra in their pocket. Well, if both

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Speaker 3: you and your partner get that twenty dollars a week

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Speaker 3: and you're a first home buyer, that could help your

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Speaker 3: mortgage application to the tune of about twenty two thousand dollars.

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Speaker 3: So if you're a bit tight on income that's what's

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Speaker 3: stopping the bank from giving you a mortgage, might help

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Speaker 3: you out a little bit there For invests slightly more,

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Speaker 3: that same twenty dollars a week each for a couple

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Speaker 3: that could give you an extra thirty two thousand dollars.

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Speaker 2: So is there any other criteria around getting a mortgage

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Speaker 2: changing at the moment.

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Speaker 3: Well, I'm glad you brought that up, because, of course,

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Speaker 3: there are two sides to a mortgage application. You've got

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Speaker 3: to have enough deposit and you've got to have enough income,

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Speaker 3: and the tax can't certainly help the income side. On

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Speaker 3: the deposit side, though, the Reserve Bank has changed some

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Speaker 3: of the rules. I think it was later earlier this month,

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Speaker 3: maybe the month before, that just went that first time

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Speaker 3: buyers a few more of them will be able to

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Speaker 3: get lower deposits, So that means that it's a bit

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Speaker 3: more likely that they'll be able to get a mortgage

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Speaker 3: with a ten percent deposit. One other change that I

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Speaker 3: want to highlight that literally happens this week is that

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Speaker 3: when you put in your mortgage application, the bank's not

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Speaker 3: going to see if you can afford it based on

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Speaker 3: the interest rate you're actually going to pay, which might

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Speaker 3: be call it six and a half percent. Up until recently,

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Speaker 3: they've been testing your mortgage application at nine percent. Well

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Speaker 3: that's all changed this week. It's come down by a

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Speaker 3: little bit, and the impact is that for a first

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Speaker 3: home buyer, if you could borrow five hundred k before,

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Speaker 3: you're now going to be able to afford an extra

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Speaker 3: eleven k. And for an investor, it's about in an

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Speaker 3: extra eighteen grand.

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Speaker 2: So ed, why were they calculating that on such a

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Speaker 2: high rate to begin with?

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Speaker 3: Well, the banks want to make sure that even if

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Speaker 3: interest rates go up, that you can still afford that mortgage,

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Speaker 3: and that's really important. We've seen why that's so important recently.

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Speaker 3: You know, back when interest rates were two point two

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Speaker 3: two point three percent, the banks we're using about a

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Speaker 3: six percent what we call a test rate, and that's

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Speaker 3: just to make sure that as interest rates go up

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Speaker 3: and they have recently, that you'd still be able to

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Speaker 3: make those mortgage payments and that you wouldn't have to

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Speaker 3: go to mortgage g sales. So it's very important that

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Speaker 3: the banks do this. But now that they're seeing those

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Speaker 3: interest rates come down, they're starting to say, hey, we

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Speaker 3: can use a lower test rate.

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Speaker 2: Have I gone far enough with these changes, do you think? Well?

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Speaker 3: I'm looking forward to seeing some more changes. I think

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Speaker 3: we'd all like to see those test rates even lower.

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Speaker 3: But the banks need to be cautious and it's important

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Speaker 3: that they are. There are some other changes coming on

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Speaker 3: the horizon, the Triple CFA. That's the law that do

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Speaker 3: you remember back on the day for a couple of

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Speaker 3: years ago, we had all of these articles about if

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Speaker 3: you spent too much on coffee or you spent too

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Speaker 3: much on Uber each.

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Speaker 2: I've got too many streaming services?

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Speaker 3: Ed, Oh, do you know what? I was applied for

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Speaker 3: wokts the other day for Chesca, and the walk breaker

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Speaker 3: comes back to me and says, can you please explain

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Speaker 3: the nature of these expenses? And one of them was Netflix,

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Speaker 3: And I said, I'm not sure what you want me

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Speaker 3: to explain, pretty straightforward, but we are sex of changes

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Speaker 3: already come and west Pax loosen some of the criteria

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Speaker 3: specifically for investors. That means an investor might be able

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Speaker 3: to borrow extra eighty thousand dollars. I'm looking forward to

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Speaker 3: seeing some changes once the law is actually passed, or

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Speaker 3: the updated laws actually passed. It's going to be really

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Speaker 3: good for the first time buyas Ed.

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Speaker 2: Thanks so much for your thoughts this morning. Appreciate it.

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Speaker 3: Thanks Francis.

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Speaker 1: For more from Saturday Morning with Jack Tame, listen live

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