One in five new mortgages high risk, Australia tops global property price growth and new money tool launched for under-21s. Here are five things you may have missed this week.
One in four new mortgages are risky, according to bank regulator
The latest lending figures show one in four (24%) home loans taken out in the December 2021 quarter had a debt-to-income ratio of six times or more – APRA’s benchmark for ‘high risk’. This represents a 17% increase in high-risk loans over the past 12 months.
The rise in risky mortgages is a flow-on effect of double-digit property price growth combined with wages that crept up by just 2.3% in 2021.
APRA has already stepped in to limit risky lending. In 2021 the regulator increased the banks’ ‘stress test’ interest rate from 2.5% to 3%. It means lenders need to check how well a borrower would manage loan repayments assuming interest rates were 3% higher than the actual loan rate.
Industry experts believe APRA is unlikely to further increase the stress test rate given slower property price growth and rising expectations of a Reserve Bank rate hike.
If rates do head north, plenty of homeowners could experience serious mortgage stress.
Australia tops global property price growth
It’s official. Australian home values grew at the fastest pace globally in 2021.
Knight Frank has released its Global House Price Index, with Australia taking out the dubious top spot as the country with the highest rate of annual property price growth.
House prices worldwide…
