Home News Why borrowers need guidance on home lending shifts

Why borrowers need guidance on home lending shifts

Font size :

HIA said that it is important to aid borrowers as housing cycle turns

The Housing Industry Association (HIA) put the spotlight on the importance of having a clear guidance for any potential changes that an Aussie may encounter in home lending.

This is relevant because Melbourne and Sydney housing markets are currently cooling and borrowers are still bothered with any potential increase in their borrowing costs despite the steady cash rate.

The lack of direction or assistance from concerned sectors has caused inconvenience to households. After the Global Financial Crisis, lenders frequently modified home loan rates independently of movements in the official cash rate to ensure that their lending rates more accurately reflect their true cost of capital.

Lenders have also been recently squeezed by regulators, resulting in a degree of credit rationing and higher borrowing costs for investors and those wishing to borrow in interest only terms.

Further, it was noted that APRA’s interventions significantly affected market trends and having no clear guidance could burden borrowers even more.

“APRA’s interventions were appropriate at the time that they were implemented – acting to curb growth in risky lending and the by-product was to cool the housing market. The housing downturn now has its own momentum and does not need additional assistance from the regulator,” HIA Senior Economist Geordan Murray said.

Murray further cited the figures from RBA that showed growth in housing credit to investors dropping to a new low, as well as the slowdown in owner-occupier lending growth.

“The housing market is now in a very different position to the time when APRA imposed the restrictions. We have already seen the speed limit on investor lending dropped but other restrictions remain, “he said.

In the end, Murray asked the central bank and the sectors of the government to work hand in hand in order to undergo the housing cycle turns successfully.

“It will be important for the RBA, APRA and the federal government to monitor developments in the housing market and ensure that we have appropriate policy settings to ride out the cyclical downturn smoothly,” he concluded.

With interest rates at their lowest for more than 50 years, there are some great rates available. The best thing to do is to compare rates from all the lenders. Let us help take the leg work out of doing this - Compare Home Loans now

Mortgage News and Articles

What could be discouraging Australians from taking out a home loan? What could be discouraging Australians from taking out a home loan?

The number of first-home buyers planning to apply for a mortgage declined significantly Read more

Bendigo embraces fintech to offer instant home loans Bendigo embraces fintech to offer instant home loans The service is expected to become available to customers in early 2019 ... Read more

Labor's negative gearing overhaul to prolong housing downturn Labor's negative gearing overhaul to prolong housing downturn Industry experts predict a 19% two-year price decline should policies change ... Read more

Former CBA executive to be the CFO of a new digital bank Former CBA executive to be the CFO of a new digital bank Following its merger with Finsure, Goldfields Money appoints a new CFO ... Read more

More mortgage news and articles

Sponsored Links

Monday, Nov 19, 2018
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Let us help you find the right home loan for your needs.

Tell us a bit about your circumstances:
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords