The share of home loans with a debt-to-income ratio of six or more in the March quarter was 5.2 per cent.Experts say it indicates wealthy buyers are driving the property market.The share of highly indebted home borrowers has cratered in the wake of one of the steepest rate hiking cycles in the Reserve Bank’s history, further fuelling concerns that Australians without access to wealth have been shut out of the property market.
This has reduced the chances of middle-income households with skinny deposits being able to buy a home, while buyers who already have a substantial deposit can still purchase. Buyers with access to wealth were using it to top up deposits to be able to afford homes they otherwise couldn’t after borrowing capacities were slashed by rate hikes.“It’s good that we have that prudential lending environment … because APRA essentially got ahead of rate rises so they probably reduced some of the fallout in mortgage stress we might otherwise have seen,” she said.
She said buyers in the market are now taking smaller loans relative to their incomes because they have larger deposits – which is why property prices are still so high, even as interest rates have shot up. Some are selling a property and putting the capital gains towards their next home, some are wealthier or higher income, and some are first home buyers getting assistance with their deposit, she said.
“We’ve seen a much bigger lift in lending to investors rather than first home buyers, and investors are generally higher income.” “Most loans generally seem to be challenging. Seventy-five per cent of them are challenging to get through,” he said. “The bank policies have tightened so much around that 3 per cent buffer.
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