There appears to be some good news on the horizon for those buying a home. Today, the Australian Prudential Regulation Authority (APRA) announced that it proposes to reduce its guidance on mortgage lending. APRA has begun consultation on revisions to its guidance on the serviceability assessments that banks and other lenders must perform on residential mortgage loan applications.
APRA serviceability guidelines
APRA’s guidance has been used by banks in assessing whether an individual can afford to repay their home loan. The guidance has been based on an interest rate of at least 7 per cent. APRA first introduced the serviceability guidance in December 2014 as part of its efforts to reinforce sound residential lending standards. APRA has proposed removing its guidance and allowing banks to review and set their own minimum interest rate floor for use in serviceability assessments.
In a statement released today APRA Chair Wayne Byres said: “With interest rates at record lows, and likely to remain at historically low levels for some time, the gap between the 7 per cent floor and actual rates paid has become quite wide in some cases – possibly unnecessarily so.” The changes, if carried through, are likely to increase the maximum borrowing capacity for many borrowers.
APRA’s statement about the proposed changes to its guidelines can be found on its website.
Other good news for those buying a home
Other good news for those buying a home in New South Wales is also only a few sleeps away. From 1 July 2019, stamp duty brackets in NSW will be indexed to the Consumer Price Index. While the impact of the stamp duty changes will be minimal at first, the savings for home buyers will be more evident over the longer term. For example, if stamp duty brackets had been indexed to CPI 15 years ago, the amount payable on a $500,000 home would be around $2000 lower today; the amount payable on a $1.5 million home would be around $6400 lower.
In the months and years ahead, with a potentially higher borrowing capacity and reduced stamp duty burden, NSW looks like becoming a great market for home buyers and property investors.
Fixed fee conveyancing package
Killen & Associates offers a competitive and value-packed fixed fee conveyancing package for its client. We love to give our clients value over and above what they have come to expect from a law firm. But, don’t take our word for it, see what our clients are saying about the service we deliver on our testimonials page.
If you are planning on buying or selling a home in New South Wales, no matter where you are, call us on 02 6332 6655. Our friendly and experienced conveyancing team will be only too pleased to answer any questions that you may have, with no obligation to instruct us. But, after you’ve spoken with us, we believe you will want to.
You can find more information about our conveyancing services for home buyers and sellers on our conveyancing page.
David is the Principal of Killen & Associates and leads our commercial and property practice. David is experienced in Conveyancing and Real Property Law, Intellectual Property Law, Business and Commercial Law, and Information Technology Law.
Melissa is an experienced paralegal who has worked in conveyancing since 2010. Together with David, Melissa deals with all aspects of conveyancing.
Jennie is a paralegal assisting David and Melissa in conveyancing as well as assisting our solicitors in all aspects of legal work. Jennie’s ‘DON’T PANIC’ attitude helps relax both staff and clients.