A soaring property market has prompted the nation’s prudential authority to tighten home loan criteria for buyers and investors to try and temper high sale prices.
Borrowing approvals are an indicator of property prices and right now they are following a path that APRA, the Australian Prudential Regulatory Authority, does not like.
With interest rates so low and property buying up higher than normal, as well as higher than usual market values, APRA is concerned about people’s ability to afford their repayments as rates increase in the future.
“Adding this buffer, it is definitely adding that security blanket so if the interest rates do increase, they can still afford their repayments,” Mortgage Choice Ormeau broke Morgan Stevenson said.
The changes, set to take effect from the end of October, will raise the current buffer brokers use to measure borrowing capacity by about 0.5 per cent.
Ms Stevenson said this will help reduce the chance that people will buy out of their depth.
“It’s really going to affect those clients that are stretching their capacity,” she said.
Springwood resident Paul McMahon, who is selling his family home after 48 years, said APRA’s move is good in principle.
“It’s a good idea because sometimes you can borrow more than you repay, and when the interest rates rise, your repayments rise as well, so what they’re trying to do is cover any rise,” he said.
Major changes to median housing price in Logan hint at the potential for future price hikes APRA is concerned about, while new data released by Domain showed owner-occupier loans increased 112 per cent from May 2020 to January 2021.
Browns Plains Real Estate’s Neil Giles told MyCityLogan in September that median prices in several suburbs around Logan were catching up to Brisbane areas, which he had not seen before.
The REIQ agrees. It found Underwood, Daisy Hill, and Rochedale South were competing with Brisbane markets.
“While Logan LGA still offers great affordability with the annual median house price sitting under $500,000, we can see there are a number of standout suburbs like Underwood, Daisy Hill, and Rochedale South that are experiencing double-digit growth and edging closer to the Brisbane LGA median,” REIQ CEO Antonia Mercorella said.
The trick is finding a property to buy. Property Hub sales consultant Linda McCabe said in today’s market they are “very hard to come by”.
