Blink and you’ll miss it. Well, at least that’s how it feels when mustering up the effort to keep pace with the 24-hour news cycle these days. In case you blinked at just the wrong time, here’s a good ol’ fashioned post-budget property news round-up.
After a 2017 federal budget aimed to curb housing affordability, the issue is on the back-burner this year.
Here’s a quick round up of all the latest property announcements over the last month to help you get your ducks in a row.
APRA to remove growth cap on lending to property investors
Before we even start dissecting the federal budget, I want to touch upon some good news for potential property investors.
Earlier this month APRA announced it will scrap its housing investor loan cap.
The 10% benchmark on investor loan growth was introduced in 2014 to reduce higher risk lending and improve practices.
In recent years, authorised deposit-taking institutions (ADIs) have taken steps to improve the quality of lending, raise standards and increase capital resilience. So APRA believes the job is done.
As a result, the 10% benchmark will no longer apply.
What does this mean for you?
Well, it means that now is a prime time to get approval for an investment property.
That’s because we’ll likely see a lowering of interest rates on investment loans because ADIs will be keen to start pursuing investors again with big discounts.
So if you’d like to know more about getting approval for an investment property, get in touch.
The Federal Budget
Now, the budget obviously wasn’t the best of news for prospective first home buyers. But it did throw out the odd goodie for others in the market. Let’s take a look.
1. Expanding the Pension Loan Scheme: This scheme will allow pensioners to borrow against the value of their home without having to sell up. The loan is paid out fortnightly and can be up to 150% of the maximum fortnightly pension amount. The spend now, pay later initiative attracts a compounding interest rate of 5.25% until the loan is repaid.
The government is hoping to normalise the idea of borrowing against the family home in retirement. In turn, this could incentivise banks to offer innovative reverse mortgages.
If you need help wrapping your head around the scheme, get in touch and we’ll be happy to talk you through it.
2. Reduced tax incentives on “land banking”: This move is to stop property developers leaving land sitting empty and claiming expenses such as council rates and maintenance costs in their tax returns. The measure, which will take effect from 1 July 2019, aims to curb land banking and free up land for housing or other developments.
3. Better housing affordability data: The government will allocate $4.8 million over four years from 2018-19 to the Australian Bureau of Statistics to construct better estimates of the stock of affordable housing. Better data will hopefully give us all a better chance of finding the most affordable homes out there!
Housing affordability to improve
Last but certainly not least, in other news Moody’s Investors Service says Australian housing affordability is in its best shape in ten years. Better yet, they believe it could continue to improve for the remainder of the year.
Moody’s told News Corp that homes with two income earners and 80% loan-to-value mortgage needed 28.2% of their monthly income to meet monthly mortgage repayments in March 2018.
That’s down from 28.7% in September 2017.
“Looking at the rest of 2018, we expect housing affordability to continue to improve moderately on average,” a Moody’s spokesperson says.
Get in touch
If you’d like to take advantage of the improving market conditions, then get in touch.
We’ll not only help you secure a fantastic loan, but we’ve got our ear to the ground when it comes to the latest property schemes and initiatives – which will help keep you one step ahead of others in the property market.
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