Australian Prudential Regulation Authority

Major home loan crackdown announced

PHOTO: Mortgages

  • Australian Prudential Regulation Authority has announced loan crackdown
  • Banks have to model how borrower would cope with 3 percentage point rate rise
  • National property prices surged by 20.3 per cent in the year to September 2021
  • Median-priced $674,848 Australian home unaffordable for $90,300 earner

Australian borrowers will soon have a tougher time getting a home loan with the banking regulator announcing new rules to tackle the dangerous surge in debt levels.

National property prices in September soared by 20.3 per cent – the fastest annual growth pace since June 1989.

The Australian Prudential Regulation Authority,  the banking regulator, on Wednesday announced stricter new lending standards, with typical homes even outside Sydney and Melbourne now very unaffordable for ordinary borrowers.

Under the new rules, the banks will have to model how a borrower would cope with mortgage rates climbing by 3 percentage points, which would add more than $900 a month to median mortgage repayments.

Australian house prices surges

SYDNEY: Up 28.9 per cent to $1,311,641

MELBOURNE: Up 18 per cent to $962,250

BRISBANE: Up 22.2 per cent to $709,136

ADELAIDE: Up 21.4 per cent to $575,949

PERTH: Up 18.5 per cent to $548,351

HOBART: Up 25.8 per cent to $704,321

DARWIN: Up 18.5 per cent to $563,357

CANBERRA: Up 28 per cent to $956,119

Source: CoreLogic Home Value Index median house price data annual increases in September 2021