APRA, Australia’s banking regulator, has signalled that it may relax serviceability assessments for new residential mortgage loan applications, potentially allowing home buyers to borrow more to fund their purchase property.
With mortgage rates already sitting at multi-decade lows, and likely to fall further given widespread expectations that the RBA will reduce official interest rates in the months ahead, Cameron Kusher, Analyst at CoreLogic, says the proposed changes are “sensible”, although he doesn’t expect that it will reignite property prices.
“The proposed APRA changes seem sensible given the interest rate environment with the expectation that rates will fall from here and remain lower for longer,” Kusher wrote following the APRA announcement.
“While these changes are welcome and will help some borrowers that can’t quite access a mortgage currently to get one, it is unlikely to result in a rebound in the housing market.
“It will remain more difficult to obtain a mortgage than it has done in the past and we would expect that if or when the market bottoms a rapid re-inflation of dwelling values is unlikely.”
Rather than leading to a rebound in property prices, Kusher says the proposed changes will likely help to stabilise market conditions in the months ahead.
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