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$vuetify.icons.faPhone1300 650 620

APRA taps the brakes

Media Release

APRA taps the brakes

Media Release
Over 90 per cent of renters aspire to own their own home but less than half of them expect that they will ever achieve this goal. Today’s announcement by APRA will make this goal even harder,” stated HIA’s Chief Economist, Tim Reardon

“Australia has an unquestionably strong financial sector. It has withstood significant shocks, such as the Global Financial Crisis and the COVID recession, without the emergence of financial contagion.

“The share of loans that are impaired is exceptionally low, at around 0.4 per cent of all loans issued. This is significantly lower than in other developed economies.

“The very low levels of mortgage delinquency in Australia reflect the restrictive lending regulations imposed by financial regulators in Australia. Since 2010, financial regulations have made it increasingly conservative making it progressively more difficult for first home buyers to enter the market.

“Despite the lows levels of mortgage delinquency, APRA announced this morning that it has increased the ‘serviceability buffer’ for a new mortgage from 2.5 per cent to 3 per cent.

“First home buyers accounted for 35 per cent of owner occupier loans issued in August 2021 and these measures will make it harder to access a loan.

“This additional constraint is being imposed despite the share of loans with a 10 per cent deposit or less declining since December 2020. This share is well below those observed over the past decade.

“First home buyers are the group who are typically constrained by serviceability thresholds. It is this group that will be hit the hardest by these changes.

“Restricting access to credit for new households seeking to enter the housing market will put further downward pressure on the rate of home ownership in Australia,” concluded Mr Reardon.

                                                     

Residential Lending to Household
Share of loans in arrears/impaired

For more information:

Tim Reardon

Chief Economist
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Breaking news
View all $vuetify.icons.faArrowRight
21 Jan
Third party review for structural designs introduced

Northern Territory government announced that any significant and complex building work that requires building approval will need to have its structural design reviewed.

21 Jan
Scarcity of residential land sees prices surge

A significant increase in the price of land indicates that supply is not keeping pace with demand

20 Jan
Pandemic drives ‘super cycle’ of housing demand

Sales of new detached homes increased by a further 11.3 per cent in December.

19 Jan
Record year for new homes starts

More detached homes commenced construction in the 12 months to September 2021 than in any previous period,