As the lockdown is being lifted up, it is expected that property prices may increase and many will take the chance of bringing home the keys after an auction sale. Banks will most likely be filled up with property buyers lining up for a mortgage loan.
APRA anticipated this to happen thus, making a precaution to avoid the increase in home loan delinquency by increasing the assessment rate from 2.5% to 3% per annum. With this, it is expected that a typical borrower’s maximum lending capacity will be reduced by 5%.
When this APRA policy comes into place, a couple wanting to buy a midrange property would require an annual income above $100,000. And for people who can’t afford to buy their dream house because of the assessment rate increase may end up buying a house at a lower price bracket.
It may be too early to predict the actual effect of this change to Australia’s booming housing market, but we are seeing either one of these two things will rather happen:
1. Some people may not be able to get the property they want and consider a home more within their budget, thus may help cool the market; or,
2. Property sellers may adjust their prices down to compete with other sellers in order to sell their property faster.
Whatever lies in the future may be unpredictable for now, but what we are sure of is that Lionel Finance is always here to help you. You may also visit our website or book your FREE call whenever you need help in loan advising service, or processing residential mortgages.