30 Sep 2021 High-Debt Home Loans Under Scrutiny
Those of us older than 60 will remember the hoops we had to jump through to qualify for a home loan; loans approved based on a multiple of savings over a certain period of time and capped based on the earnings to the main breadwinner, the wife’s earnings were ignored. My, how times have changed!
With Melbourne house prices showing no signs of slowing something’s got to give! An interesting article from The Urban Developer tells us that, finally, the federal government is indicating they may take action to try slow price growth.
Pressure is building on the Australian government to crack down on high-debt home loans, while the Australian Prudential Regulation Authority is weeks away from releasing macro-prudential policy framework.
In a speech to the Australian Council of Financial Regulators Treasurer Josh Frydenberg said he would support a clampdown on high-debt loans, following in the footsteps of New Zealand, which had recently brought in stringent loan-to-value ratio restrictions for mortgage lending.
Australian Prudential Regulation Authority data shows one in five households is borrowing up to six times their income to buy a house, which presents significant exposure for banking institutions if interest rates go up ahead of the central bank’s forecast of 2024.
Read the full Domain article here >>>
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