Lending curbs set to impact housing market singles

PR Newswire

Broadbeach Waters, Qld., Sep. 30, 2021 /Medianet/ --

Lending curbs set to impact housing market singles


Lending restrictions possible in 2022


The Reserve Bank of Australia dropped its strongest hint yet that cooling macroprudential measures may be introduced to curb the property market in 2022.


Pete Wargent, the co-founder of Australia’s first national property buyer’s agent network BuyersBuyers, says that this time around the rules will most impact single income earners.


Mr Wargent of BuyersBuyers said that “when restrictions were introduced to cool the Australian housing market in 2017 the stated aim was clearly to quell the risks of too much interest-only lending, especially to investors, which had become very prevalent at that time”.


“Those aims were achieved, and interest-only lending is no longer a systemic risk in Australia. And while investor credit growth is now clearly on the rise, we actually need landlords in the market right now, with rental vacancies away from the Sydney and Melbourne CBD areas as tight as we’ve ever seen them” Mr Wargent said.


Figure 1 – Share of interest-only lending by value


Doron Peleg, CEO of RiskWise Property Research said “there has been some low deposit lending through the first homebuyer stimulus and boom, but that’s now largely washed through. So that leaves higher debt-to-income lending as the sector of the mortgage market most likely to be targeted by curbs in 2022”.


“In particular, regulators are taking a keen interest in lending at debt-to-income levels of above 6 times, which has been increasing since the third quarter of 2020”.


“In plain English, borrowers might not be able to borrow as much next year, and those with single incomes will likely be the most impacted” Mr Peleg said.


Figure 2 – Housing loan characteristics


Mr Wargent of BuyersBuyers said that although there might some marginal benefits in reducing the risk of mortgage default, the curbs would be most likely be detrimental to single income earners.


Mr Wargent said “single income earners might find that they can’t borrow as much next year, which will make life tricky for those struggling to get into the housing market. We have a shortlist of affordable suburbs around the states that we recommend buyers take a look at, especially first homebuyers”.


“Similar measures have been used in other markets, including the UK, and the results were mixed. For example, there was a sharp increase in joint income borrowers and a marked decline in first homebuyers on a single income”.


“Debt to income caps would be likely to change the shape of the mortgage market, but while some lenders might reduce their volume of lending at higher multiples of income, others might step into the fold or increase mortgage sizes to compensate”.


“The benefits to financial stability are up for debate, but it’s very likely that such a move would knock more first homebuyers and single income earners out of the market, at the expense of higher-income upgraders and joint income loan applicants” Mr Wargent said.


“We think the more affordable capital city suburbs will be very much in focus next year as a result First homebuyers looking to make their move may be wise to do so before any such restrictions come into play”.




For all media enquiries, contact Media Manager Alison Sollory,



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