After a record-breaking year of property growth, the regulator has announced limitations on how much the banks can lend. Accredited Broker believes that this will have a minimal impact.
In an effort to stop stellar growth, the banking regulator (APRA) will be requiring the banks to increase the interest rate at which they assess mortgage applications – which will inevitably reduce how much we can borrow.
However, according to many economists, the market was already reaching a plateau. In a recent note, Corelogic said that even before APRA announced these policy changes, “the monthly rate of growth has eased back to 1.5 per cent” and AMP predicted an even more modest seven per cent annual growth in 2022.
Where these changes will have an impact is for those borrowers who had maxed out their borrowing capacity – the very people who were finding they could not get enough of a loan – as prices had stretched beyond them.
Accredited Broker believes these changes are a case of locking the stable door after the horse has bolted.
Despite commentary about Liar Loans, most banks have maintained very high lending standards – as the Reserve Bank recently noted.
So, are these changes much ado about nothing – or are there more on the way?