APRA changes make borrowing easier. Post the federal election, the mood in the property market looks active and very promising. There are many good indicators that indicate we are entering a new property cycle.
A move that’s going to make it easier for everyday Australians to qualify for a loan.
One of those indicators is the recent announcement from Australian Prudential Regulation Authority (APRA). A move that’s going to make it easier for everyday Australians to qualify for a loan. APRA has recommended that banks remove the 7 percent serviceability buffer. TA serviceability calculator is used by the banks to ascertain if you can afford the loan if interest rates were 7%.
We appreciate the banks taking on a conservative approach to borrowing money, but in many case in the current lending market this 7 percent buffer is up to double the rate in comparison to interest rates.
How will this help property buyers?
When apply for a home loan, banks assess your borrowing capacity in an inflated interest rate buffer, also known as a ‘serviceability test’ to ensure you are capable of servicing the repayments if interest rates increased in the future. It looks as though the 7 percent buffer may drop to about 6 per cent. This will allow many buyers to potentially purchase properties that were previously non-achievable. Previously rejected applicants may also revisit their circumstances if they can meet the ‘serviceability test’.
We always encourage our clients to obtain financial advice prior to buying a property. If you’d like to explore your options, please feel free to contact us.
If you’d like to learn more about buying an investment property, please don’t hesitate to contact us. We would welcome the opportunity to help with your property purchase. Our YouTube channel and Market Insights also provide a wealth of information to assist you with many areas relating to property investments.
While we have taken care to ensure the information above is true and correct at the time of publication, changes in circumstances and legislation after the displayed date may impact the accuracy of this article. If you want to learn more, please contact us. We welcome the opportunity to assist you.
May 2019
