Getting a home loan approved is now far more difficult than before, hindering buyers from breaking into the market, a new poll by CoreLogic found.
Around 45% of Australian borrowers said it has become harder to get the go-signal from lenders, up from 39% in 2017. This could be due to the greater scrutiny by lenders on individual borrowers’ expenses, said CoreLogic research director Tim Lawless.
"The severe tightening of credit availability following stronger prudential regulation and outcomes related to the royal commission is hurting Australians, who are struggling to get a loan," he said.
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This echoed the sentiments of different property experts who attended the Australian Financial Review Property Summit in Sydney last week.
"Personally, I just settled myself, and it was a very painful process. It's torturous. People tell us about being assessed on how many coffees they drink. It can get nonsensical about how much scrutiny there is," said Mirvac chief executive Susan Lloyd-Hurwitz.
Even treasurer Josh Frydenberg warned regulators not to be "overly sheepish" in enforcing lending restrictions, saying doing so would only negatively impact consumer behaviour.
"It is in everyone's interest that the aspirations of hard-working families are not collateral damage in this regulatory process," he said.
CoreLogic's poll also found that affordability ratios remain elevated — a typical Australian household spends 6.5 times their gross annual income to buy a median-priced house at $524,000. Furthermore, they spend 35% of their income to meet mortgage repayments.
The sluggish growth in wages was also cited in the poll as a considerable drag. The limited income growth has resulted in many Australians struggle to come up with a home-loan deposit.
