Borrowing Capacity Index – February 2023
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Loanscape has today released its Borrowing Capacity Index for Q3/2023. It shows that the borrowing capacities of Australian individuals and families continue to decline.
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Measuring Borrowing Capacity – A New Index
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Loanscape has created a new index which is a direct measure of the changes to borrowing capacity for prospective home buyers. Known as the Loanscape Borrowing Capacity Index it is an expression of the relative change in borrowing capacity for singles and couples among a basket of lenders.
Read MoreLooming loan restrictions could mean a shift in property prices
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With demand greatly outweighing supply, houses are selling well over reserve at auction and recent COVID-19 restrictions have affected property sellers’ willingness to go to market.
While this property boom strengthens some sectors of the economy, there are numerous economic implications. With houses skyrocketing in price, Australians yet to enter the market are seeing their chances of buying a property grow slimmer.
However, there is still high activity in the market for those with the capital to spare. But with higher prices comes higher property loans, as Australians are borrowing more in order to secure a property. Around 22% of all borrowers are now taking out loans that are six times larger than their annual income.
Read MoreAxing stamp duty is a great idea, but NSW is going about it the wrong way
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Republished from The Conversation.
In tax as in many endeavours, it’s easy to work out how things should be; harder to work out how to get there.
In NSW, Treasurer Dominic Perrottet wants to replace the one-off stamp duty on real estate transactions with an annual land tax.
In the long run, this one single reform could produce the biggest possible gains of any tax reform, state or federal.
Read MoreNone of the justifications for weakening bank lending standards quite make sense
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Republished from The Conversation.
The budget plan to scrap Australia’s decade-old responsible lending obligations warrants detailed examination.
It is hard to see how the stated reasons for easing what’s asked of banks and other lenders make much sense, and the timing is strange.
Introduced in 2009, the responsible lending obligations made it illegal to offer credit that was unsuitable for a consumer based on their needs and capacity to make payments.
Read MoreCold-call Consumer Credit Insurance sales to be banned next year
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Earlier this year, the Australian Securities and Investments Commission (ASIC) warned that the design and sale of consumer credit insurance (CCI) had “consistently failed consumers”.
It has also commenced enforcement action against several lenders, called for customer remediation, and warned CCI vendors to adhere to new rules or cease selling it altogether.
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Loanscape has today released its Borrowing Capacity Index for Q2/2024. It shows that the borrowing capacities of Australian individuals and families have stabilised after the sharp decline over the past 2 years. Lower income borrowers continue to be disproportionately impacted by interest rate increases: the family income required to qualify for the average size loan in Australia is 35% higher than 2 years ago.