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In a joint statement from the Coalition, shadow minister for social services, Michael Sukkar; shadow treasurer Angus Taylor; and shadow assistant minister for home ownership, Andrew Bragg, said a Dutton government would reform the APRA lending requirements.
The current serviceability buffer of 3 per cent was introduced when rates were at record lows of 0.1 per cent. The Coalition said with rates at 4.1 per cent, the buffer is far too high.
Now, Sukkar said a Coalition government would reduce the buffer to 2.5 per cent.
APRA increased the serviceability buffer from 2.5 per cent to 3 per cent in 2021.
“We will make it clear that APRA must consider the impact of its rules on access to housing – particularly for first-home buyers,” said the statement.
“This one-size-fits-all rule is stopping tens of thousands of Australians from getting a home loan – even when they can meet the repayments with a prudent margin against unexpected future rates rises. That’s not good regulation. It’s a barrier to aspiration.”
Changes to lenders mortgage insurance (LMI) will also be adjusted to remove “systematic bias in favour of inherited wealth.”
“Right now, Australians without access to the ‘Bank of Mum and Dad’ are punished by higher borrowing costs – even when the actual risk is the same or lower. That’s a systemic bias in favour of inherited wealth. We will remove it,” said the Coalition.
There have been talks of reducing the buffer since it was floated in February. Until now, no figure has been given.
The industry is coming together to praise the move. The Finance Brokers Association of Australia (FBAA) has long campaigned for a buffer reduction.
CEO Peter White said the current 3 per cent is locking borrowers out of the market and keeping homeowners in "mortgage prison" with the inability to refinance.
Oliver Hume Property Group CEO Julian Coppini said it will have a "significant and positive impact on the affordability of new homes and reignite the dream of home ownership for thousands of young Australians."
HIA managing director Jocelyn Martin welcomed the announcement, noting the buffer is “one of the most significant barriers to home ownership.”
“HIA has consistently raised concerns about lending regulations that no longer reflect today’s economic reality. The current settings – particularly the 3 per cent serviceability buffer – are unnecessarily restrictive and are [keeping] people out of homes loans they could otherwise adequately service,” she said.
“Access to finance is one of the most significant barriers holding back more Australians into housing and with home ownership rates at record low levels, we need all levels of governments and all parties to look at all options to reverse this worrying trend.
“We urge all parties to put the goal of home ownership at the centre of their housing policy platforms. This is an opportunity to restore greater equity to the system and give more Australians the chance to own their own home.”
Denita Wawn, CEO of Master Builders, also praised the Coalition’s plans, highlighting the importance of funding in boosting home ownership.
“Access to finance is a critical issue for aspiring homeowners. A more balanced approach will help more people access the housing market. We cannot build more homes for Aussies without tackling the bottlenecks in our industry,” said Wawn.
“Funding essential infrastructure, cutting red and green tape, and investing in growing our workforce are crucial measures to support builders and meet our Housing Accord objectives.”
[Related: Coalition pledges to reduce serviceability buffer for home loans]
