Recently, treasurer Josh Frydenburg announced we could see changes in the coming months from financial regulators to reduce the amount of debt Australians are taking on as a result of record low interest rates. This could see borrowers at risk when interest rates eventually rise.
Restricting debt-to-income ratio limits to 6 was an option flagged which would see a person earning an average wage of $85,000 being able to borrow approximately $510,000 ($85,000 x 6)
Looking at the number of transactions for each price bracket in the Ballarat property market from January 2021 to date, we can see that 81% of transactions have been below $700,000.
Source: Corelogic, ABS
If lending restrictions are tightened, the natural consequence will be that higher income earners will have reduced borrowing capacity and be forced to reduce their budget which will ultimately place more pressure on the lower price points.
This will make it difficult for first home buyers and mum and dad investors who are already struggling to break into a competitive market.
If you would like to discuss how these potential changes may affect your property goals, please book a free consultation with us by clicking on the link below.
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