Analysts have hosed hopes that APRA’s reduction in its interest rate buffer to 2.5% and interest rate cuts by the RBA will generate a strong housing rebound:
APRA’s change to how banks assess a borrower’s ability to repay their mortgage if interest rates rise has had a neutral effect at the low-end of the market, according to economists and brokers. What has a bigger impact is an applicant’s expenses, their income and their total debt to income ratio – criteria that generally disadvantage lower-end mortgage applicants.
“The reality is lending standards remain pretty tight,” said AMP Capital chief economist Shane Oliver. “If you show up wanting to get a loan, banks still put you through the wringer in terms of your expenses, your Ubers, your lattes, your total debt levels, the balance on your credit cards and if you have other loans.
