Whether you’re looking to buy or sell a home in Mount Gambier, recent home loan rule changes may have an impact on the final outcome. Here’s an outline of what you need to know:

Home loan regulations: what has changed?

In October, the Australian Prudential Regulation Authority (APRA) increased the minimum interest rate buffer for borrowers from 2.5 to 3 percentage points. This means that the borrower’s maximum borrowing power will be cut by around 5%. The APRA’s aim is to ensure borrowers will be able to maintain their repayments if and when interest rates rise above their current record low. 

The Reserve Bank of Australia (RBA) responded to APRA’s changes by stating that they expect it will take some time for the effect to trickle down. They predict that it will take a few weeks before the restrictions hit home loan applicants (most current buyers already have pre-approval from their lender) and it will be months before the changes take full effect and have an impact on house prices. They also expect the new rules to affect investors and first home buyers the most.

After a very big year and dramatic price increases, the property market is finally starting to plateau somewhat. The RBA is also under growing pressure to raise interest rates before their initially intended date of 2024. On November 3 they announced that rates will not rise in 2022 but are likely to rise sometime between 2023 and mid-2024. 

Time will tell when it comes to interest rates and their impact on property prices, but here are some other things to bear in mind if you’re thinking of selling.

Are the changes to lending regulations good or bad?

The regulation changes mean the bank will not lend to people unless they can prove they can afford to make repayments at a higher interest rate. The result is a lower pre-approval amount.

While the regulation update means buyers will have less to spend on new properties, it also means that they will have less chance of forfeiting on their home loan in the future. There are still plenty of buyers about, though, so the property market will keep moving. The changes will, however, potentially stop house prices from getting out of control. Overall, the rule changes are most likely to stabilise the market.

Will the changes affect house prices?

As a seller who is looking to move on from their current property, the changes may increase your urgency to reach the market. However, it is unlikely prices will plummet, especially in Mount Gambier, as people are still looking to move to the region and overall interest rates remain low, meaning that people still have healthy budgets. You still have time to prepare your property for sale and achieve a healthy price for it. 

In terms of affecting house prices, it is more likely that highly overpriced areas such as capital cities will see a correction, as banks prevent people from extending their budget to the limit (although you never truly know what will happen next in the property market). Mount Gambier remains an affordable place to purchase a home, given its location and the lifestyle on offer here.

Tell me more about how this will affect sellers

As a seller, you’d think steeply rising prices are a good thing.  But, while getting the most for your property is always desirable, most sellers are also buyers. Unless you are selling out entirely, you are likely to be buying in the same market. If you want to buy a new home or continue investing in the property market, out of control prices aren’t great for you either.

In these uncertain times, it’s worth getting in touch with a dedicated local real estate agent. Your property is your biggest asset, and when it’s time to sell your Mount Gambier home, we’re always happy to advise and share our in-depth knowledge of market trends and help you prepare your home for sale. 

Thinking of selling and want to talk through your options? Contact Complete Real Estate now for detailed advice about buying and selling in Mount Gambier.