Insights

We’ve constantly been inundated by the fact that banks lending has significantly tightened with many unable to receive the finances and appease the lending criteria needed in order to buy a home. However, the Australian Prudential Regulation Authority (APRA) recently released a proposal suggesting that banks ease lending rules to stimulate activity in the housing market.

Lowering the current loan buffer would dramatically improve the average home buyer’s borrowing capacity, increasing their borrowing ability by around 5% as well as increase demand in what’s been a weak and volatile housing market.

The proposed ease on bank lending rules and predicted boost of borrowing capacity, combined with the expected rate cuts by the Reserve Bank of Australia are anticipated to put Victorians in an optimal position to buy and invest, as well as rekindle the health of the property market.

Australian couples earning a combined annual salary of $160,000 residing with two children would now be eligible to borrow as much as $797,000 under the new APRA rules and $841,000 should interest rates fall. This is a considerably notable jump from the $719,000 they can take on with the current regulations and interest rate.

The above further contributes to the big economic and political changes in the past few weeks, that have already positively contributed to early signs of a turnaround in property market confidence.