One of the biggest players in the WA home construction industry has welcomed moves by the banking regulator to make it easier for struggling homebuyers to get a foot on the property ladder.
The Australian Prudential Regulation Authority this week suggested banks change the way they assess a customer’s ability to meet their mortgage repayments by removing guidance that they should be able to repay their loan if interest rates increase to at least 7 per cent.
Home loan testing currently assesses the borrower’s ability to manage repayments against either an interest rate of 7 per cent or a 2 per cent “buffer” over the loan’s actual rate.
APRA has now recommended lenders instead make serviceability calculations using a 2.5 per cent rate buffer. Persistently low interest rates and competition among banks for new customers means lenders could move closer to a 6 per cent assessment rate.
Analysts say the decision will increase the number of people who can borrow, and could also help to stem the national fall in house prices.
ABN Group managing director Dale Alcock welcomed the “extremely positive step” and said it would allow more West Australians to qualify for a loan.
Source: The West Australian Thursday, 23 May 2019 11:08AM