Westpac forecasts higher interests rates: Borrowers warned to brace for higher repayments
Monthly repayments could soon cost borrowers a lot more cash if Westpac’s predictions for rate rises do come to fruit...
Investors are approximately $100,000 better off following the update to APRA’s serviceability floor for residential mortgages, new research has suggested.
The figures released by Dream Design Property showed that the removal of the 7 per cent floor and updating it to 2.5 per cent plus the loan’s interest rate meant that investors have more freedom in this low interest market.
APRA chair Wayne Byres was quick to highlight that this is not a lessening of standards but a reaction to current market conditions.
“This updated guidance provides ADIs with greater flexibility to set their own serviceability floors while maintaining a measure of prudence through the application of an appropriate buffer that reflects the inherent uncertainty in credit assessment,” Mr Byres stated.
However, the founder of Dream Design Property, Zaki Ameer, was critical of APRA’s response following the official cash rate falling.
“They (APRA) need to be much quicker. They currently wait for the market to change and then react, versus changing with the market. Once the property market dropped and interest rates are low, they try to make investment lending easier in order to ramp up the market,” Mr Ameer said.
According to Dream Design Property, if an investor took out a mortgage at 3.3 per cent interest: