AVERAGE mum-and-dad buyers are finding it increasingly difficult to sell and purchase homes, with many feeling that the current conditions are setting people up to fail.
Some brokers have noted that the challenging environment is not only impacting their clients but also making business harder for them.
While a few local brokers acknowledge that “it is what it is” and are working to adapt to the circumstances, one local banker wants a call for a review to “loosen the reins a little bit” on borrowing.
They expressed hope that the Government is making the right decisions to reduce the risk of more people losing their homes but felt times have changed and they really need to re think their decisions.
The Finance Brokers Association of Australia (FBAA) is urging the Government to step in after APRA chose to keep the mortgage serviceability buffer at 3%.
The FBAA has labelled the move as “nonsensical”, claiming it does not adequately meet the needs of Australian home loan borrowers.
FBAA managing director Peter White has criticised the regulator for keeping the serviceability buffer at such a high level, arguing that it is preventing many Australians from buying homes and leaving others stuck in “mortgage prison” without the ability to refinance.
“Across Australia, people who have been meeting their mortgage obligations are now being blocked from refinancing to loans with more manageable monthly payments,” Mr White said.
He also pointed out that while the 3% buffer may have been reasonable when interest rates were historically low, it is now outdated and unsuitable in the current economic environment, describing the decision as “ridiculous”.
The Mortgage and Finance Association of Australia has also expressed concerns regarding the effect of the serviceability buffer.
Earlier this year, MFAA CEO Anja Pannek said:
“In our refinancing and mortgage stress survey results released earlier this year, our members confirmed that serviceability continues to be the number one barrier for clients looking to refinance, with the 3% APRA serviceability buffer rate being a key factor in borrowers being unable to meet serviceability requirements.
“We believe there should be greater flexibility for lenders to assess applications using the 1% buffer, for like-for-like refinances so people can move to a loan better suited to their current needs.”
The MFAA’s third survey on refinancing and mortgage stress, conducted in August 2024, built on the previous surveys from July 2023 and February 2024.
It gathered feedback from 372 mortgage brokers, providing valuable insights into the challenges they are facing with refinancing and the ongoing issue of mortgage stress.
Ms Pannek added, “From the first survey we conducted in July 2023 to today there has been a number of shifts in the economic and lending landscape, which can be seen in the findings of our latest survey results. Serviceability continues to be the number one challenge for home loan borrowers looking to refinance. We have however seen that this is less of a factor around being able to refinance compared to our first member sentiment survey, in February 2023.”
Disclaimer: The information provided in this article is for general informational purposes only and reflects the opinions and views of the individuals quoted. It is not intended as financial or professional advice.
