First home buyers should be able to borrow more money to get a home loan, according to a federal inquiry into home lending, which is expected to recommend the government ease restrictions on how much banks can lend out. The inquiry, headed by Liberal Senator Andrew Bragg, is also expected to recommend that the nation’s banking regulator, the Australian Prudential Regulation Authority (APRA), be given a new mandate to specifically consider the plight of borrowers when setting policies. The inquiry heard evidence that as the Reserve Bank started increasing interest rates in May 2022, more first home buyers have been unable to access finance. One of the ways lenders are restricted from allowing Australians to take on too much debt is that, when they assess a borrower for a home loan, they must consider whether that person can meet repayments for the loan at a higher rate. Currently, the mortgage serviceability buffer set by APRA is 3 per cent. That buffer means that if today, you go to a lender and they offer you a variable rate of 6 per cent, the lender will be assessing your ability to repay the loan at 9 per cent. Senator Bragg says that buffer is locking too many young Australians out of home ownership and it’s time to ease the rules. But Labor and Greens Senator Barbara Pocock are against lowering the buffer, arguing that easing it could increase the risk that people default on home loans. Senator Pocock suggests a better strategy to solve housing affordability is to build more affordable housing and curb property tax breaks for investors.
#ABCBusiness
Subscribe: http://ab.co/1svxLVE
ABC News provides around the clock coverage of news events as they break in Australia and abroad. It’s news when you want it, from Australia’s most trusted news organisation.
For more from ABC News, click here: https://ab.co/2kxYCZY
Watch more ABC News content ad-free on ABC iview: https://ab.co/2OB7Mk1
Go deeper on our ABC News In-depth channel: https://ab.co/2lNeBn2
Like ABC News on Facebook: http://facebook.com/abcnews.au
Follow ABC News on Instagram: http://instagram.com/abcnews_au
Follow ABC News on X (Twitter): http://twitter.com/abcnews
Note: In most cases, our captions are auto-generated.
#ABCNews #ABCNewsAustralia