Newington Market Update July 2019

Agent Stevan summarises the biggest property market events over the last four weeks between mid June till mid July 2019.

– Interest rate cut

– Changes to home-loan serviceability floor rates

– Newington, NSW market update

NZ and Westpac have changed their respective home-loan serviceability floor rates while increasing their buffer rates to 2.5%. Westpac will assess home loan borrowers against their capacity to repay the loan at 5.75 per cent, a reduction from 7.25 per cent, in a move that should make it easier for people to secure loans.

The bank moved just days after the ANZ Banking Group became the first lender to pass on the benefit of the loosened lending limits. The Australian Prudential Regulation Authority (APRA) announced earlier this month that it would relax rules to allow banks to assess a borrower’s ability to repay their mortgage if interest rates rose to 7 per cent. Under the change in rules, banks would now only have to apply a 2.5 per cent “sensitivity margin” on current interest rates when assessing home loan eligibility.

ANZ told mortgage brokers it would lower its mortgage assessment floor to 5.5 per cent as of yesterday. RateCity estimates that if a bank used an assessment rate of 6 per cent instead of the current 7.25 per cent, a family of four with an average household income of $109,688 would see their borrowing capacity rise by $77,000. Commonwealth Bank and National Australia Bank are reviewing their serviceability requirements.

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*article source Property Observer

Posted in Buy, Latest news, News, Sell on 19th July, 2019