• 15/08/2022

Why Todays Announcement Won’t Impact the Property Market that Much

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?

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  • Certainly the feedback from my clients has been in a very short period of time that they are worried about the changes and potential impact it may have on their borrowing capacity.
    So in the short term this may actually cause a bit of a rush for buyers to get out and use the pre approval that is already in place.
    For some time I have thought that we are set for another short term uptick in the market as the Covid restrictions start to lift, coinciding with a traditionally strong selling period.
    However I agree that at the end of the day we were close to the top of the market, the natural attrition of affordability was stating to kick in, and see that the recent discussion around increasing assessment rates is probably intended to ensure that the market does get to its peak sooner rather than later.
    And critically that it lands softly, The last thing we need is a crash.
    Yes the horse has already bolted.

    • Agreed

  • While these macro-prudential changes often serve to restrict capital city property prices, they are a kick in the teeth for most regional areas. How about a geographic approach like applying this to property acquisitions in the areas that need restricting??

    • Makes sense. I think they do something like that in NZ

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Accredited Broker