Home News Tougher borrowing conditions for first home buyers to come?

Tougher borrowing conditions for first home buyers to come?

Font size :
Australia’s white-hot property market may be in a period of historically low interest rates, but first home buyers are still being priced out of the market because of the need for a bigger deposit. The tremendous growth in the housing market has made inner city homes unaffordable for first home buyers, hence pushing them into the suburbs.

However, the rising property prices are not the only hurdles along the path of first homebuyers. Lenders are also partly to blame. According to broker Mortgage Choice, lenders might impose tougher borrowing conditions in the months to come. In fact, many buyers who once qualified for a loan are now being pushed out of the market because of stress testing.

Stress tests determine whether buyers are able to pay back their mortgages even if their life circumstances change. Even if interest rates are at a record low, lenders assume that nothing lasts forever. Since mortgages are long-term obligations, lenders have to consider what will happen to homebuyers once the rates start to increase. They need to make sure that they have the ability to repay in all types of situations.

For first homebuyers, the rising property prices might be a bad thing. However, once they get to enter the upwards-trending property market, their net value immediately goes up. For instance, Melbourne property prices have experienced five years of 15 per cent growth. On the other hand, buying into a declining market is bad for first homebuyers.

Similarly, fewer homebuyers in the market may not be beneficial for first home buyers in the short term. However, once more buyers enter the market, this could push lenders to relax their mortgage screening procedures.

Whether you are looking to buy your first home, move home, refinance, or invest in property, a mortgage broker can help. Access loans from all the major lenders, get help with paperwork – plus there is no charge for this service. Get help from a local mortgage broker

Mortgage News and Articles

Mortgage applications drop in second quarter Mortgage applications drop in second quarter

This marks the “beginning” of a downward trend, says Equifax executive Read more

To break monopoly, many smaller lenders could become banks To break monopoly, many smaller lenders could become banks The proposed change could break the Big Four’s monopoly over the mortgage market and help families get cheaper home loan rates ... Read more

Borrowing against the home: A strategy to pay for aged care Borrowing against the home: A strategy to pay for aged care Such debts can generally be divided into long-term and short-term loans ... Read more

NAB slashes growth forecasts for houses, units NAB slashes growth forecasts for houses, units Numerous factors, including tighter credit rules and the growing supply of new stock, have reined in Australia’s seemingly unstoppable housing market boom ... Read more

More mortgage news and articles

Sponsored Links

Saturday, Jul 22, 2017
Top Featured Rates
Top Bank Rates

Get help choosing the right home loan

Whether you're a first homebuyer, looking to refinance, or investing, it's important to have the right loan for your needs. Just fill in a few details below and one of our trusted mortgage advisers will contact you.

A quick & easy way to find the right home loan
  • Purpose of mortgage
  • Household Income
    $
  • How much do you want to borrow?
    $
  • How much deposit do you have?
    $
  • How much is your house worth?
    $
  • How much do you still owe on your mortgage?
    $
  • What type of mortgage do you have?


  • How much is your new home?
    $
  • How much do you want to borrow?
    $
  • How soon do you want a mortgage?
Next
  • First name
  • Last name
  • Where do you live?
  • Phone number

Special Offers

Related Keywords