Home buyers are set to receive a borrowing boost in the order of $100,000 because of expected changes to lending standards and interest rates, new modelling shows.
A single borrower with an annual income of $80,000, no other debts and average living expenses could today expect to be approved for a maximum loan of $512,000.
This would increase to $567,000 under the proposed relaxation of loan serviceability rules flagged by APRA, according to modelling by Independent Mortgage Planners. It would increase again to $598,000, if the Reserve Bank reduces the official interest rate.
Mortgage broker Louise Lucas of The Property Education Company says the industry expects significant changes to be in place by mid-June, after APRA has consulted with the lending sector about the new assessment levels.
The major banks currently assess borrowers at 7.25% but the new assessment level is likely to be less than 6%, Lucas says.
The impact will be considerable and prospective buyers are already reacting.
“It’s all on again – people are buying again,” Lucas says. “Many people are very happy with the Election result and, if there were people holding back before, there’s none now.”
Combined with the defeat of Labor’s negative gearing reforms and the Federal Government’s new scheme to help first-time buyers, analysts are tipping an end to property price falls in Sydney and parts of Melbourne.
“We think these events will lift sentiment – especially in the housing market,” ANZ economists David Plank and Felicity Emmett, wrote in a note to clients.