Changes to assessment
It's interesting to consider how a new assessment rate for mortgages might impact lending.
A simple but stylised graphic below shows that currently mortgages written under 4¾ per cent could be treated a bit more favourably under the proposed 250 basis points buffer.
Following market pricing for the cash rate - and assuming that those rate cuts are broadly passed on by lenders - then the impact would be felt far more meaningfully for loans written under 5¼ per cent.
It makes good sense, and appears likely to keep a lid on interest-only lending to investors (typically at higher rates), while favouring homebuyers.
It's good to see a dynamic and pragmatic move.
An interesting addendum: were interest rates to increase again in the future then a buffer of 250 basis points would constrain borrowing capacity.
An interesting addendum: were interest rates to increase again in the future then a buffer of 250 basis points would constrain borrowing capacity.
Buyers return: The ScoMo put
No personal grudges, but there sure are a lot of happy people in the mortgage broking, real estate, and development space that Bowen isn't going to be in charge of the coffers.
Investors may still find financing hard work if they're looking at interest-only loans, but there seems to be a good chance that homebuyers might be hoovering up idle housing stock and getting things moving again.
To wit:
Source: Property Chat
Wow, what a difference a week makes.
Enquiries on the up too.
All eyes will be on auction markets when they fire up again.
Sydney's gross rental yields have increased from 3.2 per cent to 3½ per cent over the past year.
But even assuming a couple of rate cuts there's a limit to what Sydney prices can do from here until rental price growth returns, and that's some way off.
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A noticeably brighter mood up in Queensland this week.
I always kind of knew Labor was unpopular up here, but at the moment they are very, very unpopular.
