Borrowing Capacity Index – February 2023
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Loanscape has today released its Borrowing Capacity Index for Q3/2023. It shows that the borrowing capacities of Australian individuals and families continue to decline.
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Measuring Borrowing Capacity – A New Index
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Loanscape has created a new index which is a direct measure of the changes to borrowing capacity for prospective home buyers. Known as the Loanscape Borrowing Capacity Index it is an expression of the relative change in borrowing capacity for singles and couples among a basket of lenders.
Read MoreHave the lending floodgates really opened?
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n June the Australian Prudential and Regulation Authority (APRA) announced its first relaxation of credit controls imposed on the banks since its imposition of much tighter controls in 2017. These had been imposed to wind back a ramp in lending to property investors, to put a ceiling on interest-only lending, and to force the banks to more thoroughly consider individual borrower’s living expenses.
From APRA’s perspective, this has had the intended effect on the property market. The rampant growth in capital city property prices was controlled, and risks to the financial system implicit in highly geared investors, and even owner-occupiers holding interest-only loans in a property market “bubble”.
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Loanscape has today released its Borrowing Capacity Index for Q4/2024. It confirms the forecast trend that borrowing capacities of Australian individuals and families are recovering from their low levels which coincided with the last of the recent increases to borrowing rates initiated by the Reserve Bank of Australia.