April Market Review

May 4, 2017

We’re coming to you today from Searle Financial, across from Queens Park in Toowoomba, to discuss recent talks of policy changes to mortgage lending.

In light of rising house prices in Australia, subdued income growth and unmanageable household debt, the Australian Prudential Regulation Authority (APRA) has sought to cool Australia’s hot property market by clamping down on interest-only loans and tightening investor lending. The perceived ‘hot market’ has been driven from skyrocketing Sydney prices.

The regulation started in 2014 when APRA first introduced restrictions and since then, lending has been getting stricter. APRA have now banded together with ASIC and the Reserve Bank to put in place further measures to restrict borrowing, and ensure that borrower’s can actually afford their repayments if interest rates were to increase again, or after the interest only period runs its course.

The restrictions that are being encouraged are to limit the flow of new interest only lending to 30% of new residential mortgage lending and within that, they want to place strict limits on the volume of interest-only lending to loan-to-value ratios (or LVR) above 80 per cent. Essentially they don’t want to lend too much money to people above 80 per cent and furthermore want to insure there is strong scrutiny and justification of any instances of interest only lending at an LVR above 90 per cent.

We will aim to follow any changes that occur and keep you updated. To help you navigate this minefield with your next purchase, make sure you have a chat to your mortgage broker. We recommend Andrew Searle from Searle Financial or Scott Butler from Edge Financial. We will provide their details below.

In terms of sales, our office has enjoyed an uptick of contracts this month with a total of 31. This is particularly encouraging as buyers continue to be patient when making decisions to purchase. There is a lot of opportunity for buyers to consider and they are using this to their advantage, as they deliberate over acquiring another home or their next investment. If you are considering selling, price and representing the best value in the market place is now more important than ever.

As we turn our attention to the rental market in Toowoomba, in April alone, RE/MAX Success serviced 950 unique tenant enquiries, conducted 219 property inspections, processed 87 tenancy applications and secured 36 new tenancies. Our process delivers proven results. We can report our vacancy rate as at 30th April 2017 is 2.25%, which is significantly lower than the average in our area.

Thank you for watching, we look forward to keeping you updated over the years.