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Lending restrictions can make it hard for young borrowers looking to enter the property market.
According to HIA economist Maurice Tapang, as the years go by so too do lending restrictions tighten.
“Restrictions on lending have been progressively tightened over the past 15 years making it increasingly difficult for banks to lend to first home buyers. Despite this increase in lending restrictions and the cost of lending, mortgage delinquency in Australia remains exceptionally close to zero,” said Tapang.
“Just as tightening lending conditions have not seen a fall in mortgage delinquency, so too an easing in these conditions are not likely to see them increase.”
While recent data from the Australian Bureau of Statistics (ABS) has shown increased home buyer activity, easing of restrictions could see these figures increase further.
“Even without a cut to the cash rate, home buyers of all types from investors to first home buyers and non-first home buyers have already started coming back to the market,” Tapang said.
With delinquency rates “exceptionally close to zero,” Tapang believes there is no need for tightened restrictions.
The need for change was mirrored by Property Council of Australia, with calls for an interest rate cap to be enacted to better support first home buyers.
The cap has been proposed as either the official RBA cash rate or 5 per cent, whichever is greater, for the next five years.
According to the council, the average variable mortgage rate is currently 6.51 per cent, well ahead of the current RBA cash rate of 4.35 per cent, pending today’s (18 February) meeting.
Property Council CEO Mike Zorbas said that the government needs to consider first home buyers in the upcoming election.
“Helping more Australians into homes should be everyone’s highest priority this coming election. With cost-of-living pressures and housing affordability consistently the two issues of most concern for Australians, the government can and should use its balance sheet to support first-home buyers and the delivery of new homes,” he said.
“Our proposal will help first-home buyers save up to $1,087 every month and $13,044 annually. This policy requires zero up-front government spending and would be subject to appropriate credit checks and serviceability assessments, meaning future exposure will be minimal.
“The scheme should be targeted, regularly reviewed and applied where it is driving new supply. Done right, it will help thousands of Australians onto the property ladder.”
Further to the rate cap, Property Council Australia is calling for:
- The establishment of a Housing Sub-Committee of Cabinet, to be chaired by the Minister for Housing and including the Treasurer and the ministers for Industry, Environment, Industrial Relations, Infrastructure, and Cities.
- Doubling the committed $3 billion performance-based New Home Bonus and the $500 million Housing Support Program for states and territories that surpass their targets under the National Housing Accord.
- A Housing Accord-related fast-track pathway for Environmental Protection Biodiversity and Conservation (EPBC) assessments with dedicated resources, experts, and agreed decision making time frames for applications that relate to residential development projects that will have homes complete by 30 June 2029.
- Simple and no-cost changes to the superannuation regulatory environment to encourage greater supply-boosting investment into new homes.
- More age-friendly housing supply that keeps older Australians out of taxpayer-funded aged care facilities.
- Better investment settings for purpose-built student accommodation (PBSA) to provide greater housing choice for students and reduce pressure on the broader rental market.
