But June and July have seen historic movements in interest rates and banking regulation which means it is much easier to get a home loan.
If you’ve got a deposit in your pocket, the finance gods are likely to smile on your loan application.
The Australian Prudential Regulation Authority (APRA), our national banking regulator, announced earlier this month it will no longer require banks to assess home loan applications using a minimum 7 per cent interest rate buffer. This means when a bank assesses your ability to afford your repayments (known as serviceability), they’ve been testing your loan application against interest rates of at least 7 per cent, even if your interest rate was significantly lower.
So APRA has decided that banks “will be able to review and set their own minimum interest rate floor for use in serviceability assessments and utilise a revised interest rate buffer of at least 2.5 per cent over the loan’s interest rate.”
In other words, this keeps the serviceability buffer in check with interest rates. Following two historic rate cuts in June and July, the most competitively priced home loans are in the low 3 per cent range.
The changes took effect when announced on 5 July. So if you think you’re just about ready to borrow, it’s time to talk to your mortgage broker or bank. You may be pleasantly surprised.
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