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How looming home loan crackdown will drive house prices DOWN by $200,000

PHOTO: Sydney, Australia

  • The Australian Prudential Regulation Authority which oversees banks is worried
  • The proportion of loans where borrowers owe six times their salary has soared
  • Federal government financial regulators flagged tougher new home loan rules 
  • Treasurer Josh Frydenberg flagged new rules targeting borrower income levels
  • Sydney house prices fell 15.3 per cent or $160,000 between 2017 and 2019
  • This occurred during the last banking regulator crackdown on lending rules 

Australians earning average salaries could soon struggle to get home loan approval to buy a house in Sydney or Melbourne under a looming mortgage crackdown that could drive down property prices.

Houses in Australia’s two biggest cities are typically selling for more than $1million which would put them out of reach for a single borrower earning an average, full-time salary of $90,329.

A typical Sydney couple with kids earning a combined income of $137,600, with one parent working part-time, would be unable to get a loan for an ordinary, mid-market house with a backyard.

That’s because the Australian Prudential Regulation Authority, the banking regulator, considers a debt-to-income ratio of six or more to be risky, especially when national house prices are surging at 18 per cent – the fastest annual pace since the late 1980s as wages barely grow.

Australians on average salaries could soon struggle to get home loan approval to buy a house in Sydney or Melbourne under a mortgage crackdown. Houses in Australia's two biggest cities are typically selling for more than $1million which would put them out of reach for a potential borrower earning an average, full-time salary of $90,329 (pictured is Constitution Hill in Sydney's west)

Australians on average salaries could soon struggle to get home loan approval to buy a house in Sydney or Melbourne under a mortgage crackdown. Houses in Australia’s two biggest cities are typically selling for more than $1million which would put them out of reach for a potential borrower earning an average, full-time salary of $90,329 (pictured is Constitution Hill in Sydney’s west) 

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