Stricter Lending Criteria Affect Homebuyers and Home Sales

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Houses for sale in Australia are now experiencing longer listing times now that banks have tightened their lending criteria for potential homebuyers. In Sydney alone, homes were taking 43 days on average to sell based on data from CoreLogic. Darwin had the slowest turnover with 93 days while properties in Hobart were selling the fastest.

A mortgage shopping study showed that while investors could avail of up to $1 million in loans, owner-occupiers could only avail of $600,000 or less even if they are on the same income level. From 2015, the average loan capacity for owner-occupiers dropped from $700,000 to $600,000.

With tighter lending standards, mortgage holders who borrowed prior to the new lending rules are having difficulty refinancing their loans and are stuck with their current lender. Investors particularly those who took interest-only loans are not exempted as they are now forced to refinance their loans.

Real Estate Institute of Australia president Malcolm Gunning earlier said real estate agents who are better qualified, more skilled and connected with established agencies have a better chance of successfully selling properties.

The Australian Prudential Regulation Authority (APRA), Australia’s banking regulator, decided to implement stricter lending policies as a way to prevent excessive lending notably in Melbourne and Sydney. According to APRA chairman Wayne Byres, banks are urged to better manage their borrower expenses and debt commitments. He also revealed that 13 of the Australia’s largest banks had passed ‘severe but plausible’ stress tests and that further changes would be marginal. In 2014, APRA also required banks to assess the repayment capacity of borrowers.

Research has shown that APRA’s move to impose stricter lending policies had a good purpose. Apart from managing loans from borrowers, among its major goals were to help in stabilizing the Australian economy and limit speculation in the residential property market.

Looking to buy in Melbourne and sick of missing out at auction? Talk to me about how I can help you buy your new home faster, for less.

Give me a call on 03 9686 2288 to discuss how I can help. I offer a free consultation, so why not call today?

Wendy Chamberlain from Chamberlain Property Advocates





By Wendy Chamberlain
Copyright 2018 | All Rights Reserved


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With a passion for all things real estate spanning over 20 years, Wendy loves that her role as a Buyers Agent and Sellers Advocate gives her buying and selling clients an experienced voice they can trust when it comes to negotiating to buy or sell something as important as their home or investment. Wendy considers it a privilege to be asked to help others realise such an important goal as home ownership and to be trusted with that honour. Get in touch today via for a no obligation chat about how Wendy can work with you and help you save time and money to secure your new home sooner.