Consistently Inconsistent

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The complexity of obtaining approvals for mortgage clients has increased exponentially over the last 12 months.

– Changed buffer rates 
– Maximum borrowing capacity 
– What can and can’t be used as income 
– Multiples of gross earnings

Brokers are dealing with up to 40 lenders and in some cases 40 different interpretations of the same policy.
Keeping updated is paramount to ensuring applications find a home at the most suitable lender. That being said, institutions have been very active in changing policy on the run.

Interestingly, in a recent comment from the RBA when discussing housing affordability or a huge decline in housing affordability, the current RBA chairman denied that his organisation was responsible for current numbers.

Just to provide some insight into the latest numbers, average house prices increased 30k in the July quarter alone (the largest increase in history). The RBA passed the responsibility of housing affordability squarely at the government. Experts have immediately put forward a number of proposals, with APRA looking like the organisation with the massive task of improving housing affordability.

Scenarios started to leak into the financial sector and the following possibilities have been mentioned:

– Reduce debt to income ratios across the board
– Maximum debt per borrower 
– Limits on investor lending 
– Increased interest rate buffers 
– Abolishing negative gearing when calculating capacity 

With 60% of all mortgages now completed via the third-party channel, it’s paramount that brokers keep themselves updated on any changes. Historically when these changes are made, they are followed by mass confusion and blurry lines that can change on a whim.

As a rapidly growing aggregator, Vision Aggregation is continuing to monitor the situation, and will always keep you informed. Vision Aggregation values its partnerships with every broker business. Hopefully, if APRA do decide to make changes, there will be reasonable notice and that we can work together to fully understand the next steps.