APRA's new lending rules starting November 1 add a 2.5% buffer to interest rates in serviceability tests, cutting borrowing capacity by roughly 5%. Dax Stanley expects a rush of pre-approvals and purchases before the change takes effect, likely driving prices up in the short term.
Chapters
So we are in the last quarter of the year. What a crazy unusual year we have. Property prices have increased heaps and the market's still booming in many sectors. And I thought I'd jump on today just to talk a little bit about the new APRA rules. They're our lending regulators. They're implementing new rules on the 1st of November and they're testing not up to 2.5% more than your current loan price. So for example, if you're looking to get a loan for 2%, they will test your lending capacity on an extra 2.5%. So they'll be testing it at 5% to see if you can do those repayments. Now it used to be only 2, so they've increased it by 5 points. Now what does that mean? It probably means that you can borrow 5% less than what you could before the 1st of November. Now what does that mean in the marketplace? And that's what I wanted to jump on and talk a little bit more about to you because there's actually, we're looking probably a mini boom coming on. And what that means is there's probably two types of investors that will be really jumping into the market right now. Okay, the first type of person investor that's jumping in the market are the people that have had pre approvals. Okay. If you've already got a pre approval in the current rulings, they will be jumping in to buy something between now and the 1st of November and that will stimulate the market. The prices will go up because more people want to get in before that new rule comes in and reduces their borrowing capacity. The other investor is somebody who's almost ready to buy, ready to invest, and they haven't got their finances approved. But they'll want to jump on right now because they know they can borrow 5% more than what they will in the coming months. And that's quite important because the more you can borrow, the more it'll grow as well in terms of equity. And you may be able to get a higher cash flow as well. So you can get more cash in your pocket per month. So I hope that's helped if you're in either of those buckets. If you've got pre approval and ready to buy, definitely give us a shout. Click the link below, I'll send out a message, we can have a chat. Or if you think you're ready to buy, you haven't gone for approvals, let's have a quick chat, 10, 15 minute chat and see how we can help you get into the market before these changes happen. I hope you have an awesome last quarter of the year and your investors investments keep growing and I look forward to talking to you soon. Cheers.
