Property sellers considering selling ASAP to beat APRA changes on home borrowing

Property sellers considering selling ASAP to beat APRA changes on home borrowing

Some home sellers have brought forward their listings in hopes of getting the best price before new mortgage rules kick in and reduce the budgets of potential buyers.

Potential home buyers who are hoping to borrow the maximum amount are also rushing to get in before the cut-off at the end of October, although some will be disappointed as a few banks have already become more cautious about how much they will lend, and investors with multiple properties are already having to reduce their budgets for their next purchase.

Property buyers will be assessed to ensure they could repay their loans should interest rates rise 3 percentage points, up from 2.5 per cent previously, under recently announced rules by bank regulator the Australian Prudential Regulation Authority that are likely to cut buyers’ maximum borrowing capacity by about 5 per cent.

But with only 8 per cent of applicants borrowing their maximum, on Commonwealth Bank figures, most buyers are unaffected, meaning property prices are likely to keep pushing higher, albeit not at the same pace.

“It’s very much on the top of sellers’ minds to try to get a deal together before the market could be impacted,” The Agency Epping’s Catherine Murphy said.

Last time APRA made it harder to get a home loan, the decision preceded the financial services royal commission that threw bank lending practices into the spotlight, as well as the uncertainty of the federal election, and property prices fell.

Ms Murphy does not expect as much of an impact as last time, tipping prices to keep rising but at a more modest pace.

Domain reports!