Have you been calculating mortgage costs and wondering how you’re ever going to be able to afford a home? Chances are you’re not alone, with a new report revealing housing affordability has slumped to near-record lows.
The Housing Industry Association (HIA) and Commonwealth Bank’s Affordability Index, released yesterday, showed rising home values and higher interest rates pushed housing affordability down by more than 30 per cent in the past year.
The index measures affordability by combining interest rates, household incomes and home prices.
According to the index, in the three months to June alone, affordability fell by 9.1 per cent across capital cities and 6.7 per cent in regional markets.
Despite housing being incredibly tough to afford, first time buyers should not be disheartened – particularly with the news this week that lenders are now willing to lend more to us savings-poor and HECS-strapped first home buyers.
There has been some bright news however this week. A home loan deposit totalling tens of thousands of dollars may no longer be necessary, according to recent changes in the lending policies of some lenders.
Several lenders, including Adelaide Bank and Provident Capital, have moved to increase their loan-to-valuation ratio (LVR) limits to 95 per cent, meaning they will now lend borrowers up to 95 per cent of the property purchase price.
This privilege is only available to owner occupiers and demonstration of strong loan serviceability and genuine savings is still necessary, but it’s great news for budding buyers that want to crack the market sooner.