The Australian Prudential Regulation Authority’s (APRA) change in the assessment interest rate has sent shivers through parts of the property industry.
However, in reality, it should only affect a few mortgage holders.
Some buyers with pre-approvals and anyone applying for a mortgage from November 1 will be impacted by APRA’s requirement for authorised deposit-taking institutions to increase their assessment of all new applicants’ ability to meet their loan repayments up to 3 per cent above a loan’s product rate.
From November, a person who signs up for a repayment rate of 2 per cent, for example, will be assessed as to whether they have the capacity to still make the repayments at a rate of 5 per cent interest rate, within the given term.
Possibly owner-occupiers will be impacted by the APRA decision more than investors who have been coming into the market as they take advantage of the boost in their own home’s value.
Originally posted on Sunshine Coast News.