Borrow
Why another credit boom could be coming to Australia
The banking regulator’s plans to loosen its loan serviceability measures could see a resurgence of mortgage growth, according to one ratings agency.
Why another credit boom could be coming to Australia
The banking regulator’s plans to loosen its loan serviceability measures could see a resurgence of mortgage growth, according to one ratings agency.
This week, APRA proposed adjusting its 7 per cent interest rate test for home loan applications. This means applicants wouldn’t have to prove that they can repay a loan on an interest rate as high as 7 per cent.
In response, ratings agency Moody’s said this move would likely stimulate growth quicker than expected in the mortgages market.
“The proposal is likely to increase borrowing capacity, with some banks reporting that the interest rate floor has been a key contributor to the decline in borrowing capacity in recent years,” Moody’s said.
“Improving access to credit will support credit growth for the banks, which has declined significantly from its peak in 2014 and, in turn, stem the fall in house prices,” it said.
“Falling house prices are dampening household consumption and contributing to a weaker growth outlook for Australia,” it said.
While there’s merits to a flux of buying and lending activity, there’s also risk of “excessive” credit growth, Moody’s said.
“Despite declining house prices, high household leverage remains a key risk to Australian banks,” Moody’s noted.
“[There] is a risk that the lowering of the interest rate floor, in combination with the potential for the Reserve Bank of Australia to lower the cash rate later this year, could drive a resurgence in excessive credit growth and another house-price boom.”
This email address is being protected from spambots. You need JavaScript enabled to view it.
Loans
Responsible lending axed: Who will win and who will lose?
The announcement that the Australian government would be loosening responsible lending restrictions has been met with mixed feelings from the financial sector – so who might be better off as a resul...Read more
Loans
Government eases back responsible lending laws
The Morrison government wants to roll back credit standards set a decade ago to help aid in the national recovery. ...Read more
Loans
Banks slash rates prior to October cash call
Three of Australia’s largest financial institutions have all cut their variable rate charged on mortgages as speculation increases for an October cash rate cut. ...Read more
Loans
Looking for a loan pre-approval? Here are 5 things you need to know
Applying for a mortgage pre-approval can be a real boost for anyone looking to purchase property – but it’s important that would-be home owners do have a good understanding of what a pre-approval ...Read more
Loans
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner. ...Read more
Loans
4 little-known benefits of using a mortgage broker
Mortgages can be confusing at the best of times. Add in a myriad of lenders offering different rates with various benefits, plus an extremely cautious banking system, and it may be easier to get an e...Read more
Loans
Big 4 bank estimates 15k customers cannot pay mortgage
One of Australia’s big four banks has estimated that up to 15,000 of its mortgage customers may not be able to resume repayments, as the bank begins a two-month engagement process to assess the impa...Read more
Loans
Banks call customers as mortgage deferral period ends
A small but growing number of borrowers who have put their mortgage or business loan on hold during the COVID-19 pandemic are beginning to pay their debts as the first six-month deferral period comes ...Read more
Loans
Responsible lending axed: Who will win and who will lose?
The announcement that the Australian government would be loosening responsible lending restrictions has been met with mixed feelings from the financial sector – so who might be better off as a resul...Read more
Loans
Government eases back responsible lending laws
The Morrison government wants to roll back credit standards set a decade ago to help aid in the national recovery. ...Read more
Loans
Banks slash rates prior to October cash call
Three of Australia’s largest financial institutions have all cut their variable rate charged on mortgages as speculation increases for an October cash rate cut. ...Read more
Loans
Looking for a loan pre-approval? Here are 5 things you need to know
Applying for a mortgage pre-approval can be a real boost for anyone looking to purchase property – but it’s important that would-be home owners do have a good understanding of what a pre-approval ...Read more
Loans
The remarkably simple way to pay off your mortgage sooner
For those looking to get out of debt quicker, a mortgage broker has explained a remarkably simple trick to pay off a home loan sooner. ...Read more
Loans
4 little-known benefits of using a mortgage broker
Mortgages can be confusing at the best of times. Add in a myriad of lenders offering different rates with various benefits, plus an extremely cautious banking system, and it may be easier to get an e...Read more
Loans
Big 4 bank estimates 15k customers cannot pay mortgage
One of Australia’s big four banks has estimated that up to 15,000 of its mortgage customers may not be able to resume repayments, as the bank begins a two-month engagement process to assess the impa...Read more
Loans
Banks call customers as mortgage deferral period ends
A small but growing number of borrowers who have put their mortgage or business loan on hold during the COVID-19 pandemic are beginning to pay their debts as the first six-month deferral period comes ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
