Anyone involved in a real estate transaction at the moment would know that finance approval is taking much longer than even a month ago. One of the reasons for the change is due to the recent tightening of the banks criteria for loan approval. Financial institutions have imposed tougher checks with buyers having to show savings and requiring 10% deposits. In addition, the banks have been inundated with first home buyer applications and having laid off staff since the credit crunch, this has exacerbated the delays.
Agents, solicitors and conveyancers are now adapting to these new circumstances by agreeing to 10 day “cool off” periods as opposed to 5 day “cool off” periods which has always been standard conveyancing policy. Where formal loan approvals previously took days, they now take weeks.
Since the budget last night has extended the first home buyer grants till 30th September, it might alleviate this finance approval back log.
For those selling and buying at auction where there is no cool off period available, the time frame for finance is even more critical. Agents have expanded auction campaigns from 4 weeks to 5 or even 6 weeks.
So if you are looking to buy a property in the near future and you need finance, see your broker or bank first, before you fall in love with the property and are devastated when you miss out.
The weekend auction clearance rate in our local real estate market was only 33% compared with the 73.5% Sydney wide Home Price Guide result.