With a royal commission, elections and an uncertain eastern-state housing market last year, many new homebuyers were left uncertain whether it was the right time to enter the property market. Homebuyers commonly found that lending institutions were tightening their belts, and getting finance for a mortgage was tougher than ever.
But the good news is, because of recent changes to lending getting a home loan has just gotten a whole lot easier. Here’s the run down…
On July 5th the Australian Prudential Regulation Authority (ARPA) announced they will proceed with loosening the restrictions to serviceability assessments authorised by lending institutions. Lenders will no longer be expected to access home loan applications using a minimum interest rate of 7% – but instead use 2.5% over the loan’s interest rate.
What this means is banks will assess if you can pay a loan 2.5% more than the current amount, a significant reduction.
In short, this means that you as a homebuyer will be able to borrow more money for a mortgage – in some cases up to 14% more than previously.
According to financial comparison site RateCity “A family, earning an household income of $109,688, would be able to borrow up to $60,000 more, if their loan was assessed at 6.25 per cent instead of 7.25 per cent.”
Combined with record low interest rates, if you have been holding off building your new home because you were disappointed with your borrowing capacity – now is the time to speak with your lender again.
Buyer Confidence Is Returning
“Low interest rates in conjunction with APRA relaxing restrictions is motivating a lot of prospective buyers to return to the market,” says Lanser’s Managing Director Jason Green.
“It’s a bit like a perfect storm for new home buyers at the moment, because of APRA changes, the RBA’s back-to back rate cuts and incentives for first home buyers – it’s a very attractive time to build a new home, especially in the traditionally steady South Australian market,” said Green.
With land available across South Australia starting from $120,500, Lanser has a variety of allotments to choose from.
“For buyers looking to build their dream homes, many don’t want to compromise – and were happy to hold off until they can get premium inclusions. Because of this we are seeing buyers who were turned down for finance last year returning.”
“If last year you were struggling to finance your dream home and are uncertain if this affects you, get in touch with our team,” said Green.
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