- Coalition wants to ease lending rules
Peter Dutton is campaigning to shake-up to home lending rules hoping this will make it easier for younger Australians to get their first property.
Middle house prices in every state capital city are beyond the reach of average-income earners on a low, six-figure salary buying on their own.
Australia’s strict lending rules make it even harder to get a loan, with the banks required to assess a prospective borrower’s ability to cope with a three percentage point increase in variable mortgage rates.
Michael Sukkar, the Coalition’s housing spokesman, said this stress test meant more younger home buyers needed help from their parents to buy a property.
‘Right now, Australians without access to the “Bank of Mum and Dad” are punished by higher borrowing costs – even when the actual risk is the same or lower,’ he said.
‘That’s a systemic bias in favour of inherited wealth. We will remove it.
‘The Coalition will not accept a situation where a generation of Australians do not have the same opportunities for home ownership that previous generations have enjoyed.’
The Australian Prudential Regulation Authority has, since November 2021, required lenders to model a potential borrower’s ability to cope with a three percentage point increase in variable mortgage rates.
Peter Dutton is set to announce a major shake-up to home lending rules hoping this will make it easier for younger Australians to get their first property
The banking regulator’s stress test was raised from 2.5 percentage points three years ago, back when the Reserve Bank cash rate was at a record-low of 0.1 per cent.
Mr Sukkar said the stricter stress test was stopping younger people from getting a home loan.
‘We will make it clear that APRA must consider the impact of its rules on access to housing—particularly for first-home buyers,’ he said.
‘That means reducing the overly cautious serviceability buffer, which was introduced when rates were near zero but remains unchanged even as the cash rate sits above four per cent.
‘This one-size-fits-all rule is stopping tens of thousands of Australians from getting a home loan – even when they can meet the repayments with a prudent margin against unexpected future rates rises.’
RBA mortgage rates rose by 4.25 percentage points in 2022 and 2023, as borrowers copped the most severe rate rise pain since the late 1980s.
But rates were cut by 25 basis points in February, from 4.35 per cent to 4.1 per cent.
While the Reserve Bank is expected to leave interest rates on hold on Tuesday, the futures market sees three rate cuts during the coming year.
Australia’s strict lending rules make it even harder to get a loan, with the banks required to assess a prospective borrower’s ability to cope with a three percentage point increase in variable mortgage rates (pictured are houses at Ipswich south-west of Brisbane)
The existing stress test means prospective home buyers could miss out on getting a loan and be locked out of the house market as prices kept on increasing.
House prices are at record highs in Brisbane, Adelaide and regional Queensland.
In March, they rose in every state and territory capital city except Hobart, CoreLogic data showed.
