Last week, the regulator APRA stepped in, announcing tougher serviceability tests. From November 1, all new real estate loan applications need to show they’re capable of paying a much higher interest rate (when it inevitably rises in the future).
The minimum rate buffer on applications has increased from two to five percentage points, to counteract the sharp 20.3% increase in residential value in the past year. If you apply for a home loan at 2%, the bank will now assess the application based on repayments with the mortgage rate up to 5%.
While this won’t affect the interest rate, it will make it harder for people looking for a house for sale in the Adelaide Hills to get a mortgage – particularly for first home buyers and investors, the largest segment of purchasers.
This is good news for Adelaide Hills real estate
National house prices have risen at the fastest pace in more than three decades. This move ensures that the market doesn’t run out of control, where we end up bursting the housing bubble. It’s a positive counterweight to the extraordinary selling conditions. To ensure the banks are lending to all borrowers who can afford the level of debt, now and into the future.
If you’re a first-home buyer who wants to join the market or an investor gearing your portfolio as much as you can, this serviceability measure might make your next move a little more challenging.
It is, however, good news if you’re a buyer-seller. By thinning out the buyer pool, more opportunities can come your way. It’s been a difficult time trying to buy and sell a house simultaneously, so if you’ve had the confidence knocked out of you, it might the time to reconsider.
Talk to your broker and sit down with our team of real estate agents to help advise your next move – whether you’re buying, selling a property, or renting in the Adelaide Hills. This is the most thrilling, fast-paced, and historic times for the housing market. We’re here to help guide you make informed, empowered decisions. Get in touch with our family of real estate agents.