Australian First Home Buyers to Suffer as Lending Rules Tighten: Experts

First home buyers and low-income borrowers in Australia will have a more difficult time breaking into the housing market after the Australian Prudential Regulation Authority (APRA) decreased their potential borrowing capacity. The move by APRA to increase the minimum interest rate buffer on home loans from 2.5 percent to 3 percent from the end of October was designed as a way to quell Australia’s red hot housing market. APRA estimates that the increase will reduce maximum borrowing capacity for a first home buyer or low-income earner by around 5 percent. However, experts argue that the buffers will have a limited dampening effect on the market, noting it will simply make it more difficult for first home buyers and lower-income workers to break into the market. Rich Harvey, the founder and CEO of Buyers agency Propertybuyer, welcomes the move as a sensible step to quell the market exuberance but says the one-shot measure is …

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