Why your borrowing capacity is probably lower than six months ago

1 min read

Why your borrowing capacity is probably lower than six months ago

The increase in interest rates over the past six months has made it harder for Australians to qualify for a home loan, and made it more important they get help from a mortgage broker.

Every rate increase of 0.50 percentage points reduces an average borrower’s maximum loan size by about 5%, according to the Reserve Bank’s head of domestic markets, Jonathan Kearns.

Since May, the Reserve Bank has increased the cash rate by 2.50 percentage points – which means the average person’s borrowing capacity has fallen by about 25%.

The key words here are ‘average’ and ‘about’ – because borrowing capacity varies not just from person to person but lender to lender. Two banks can offer the same borrower very different maximum loan amounts; sometimes, they might be more than $100,000 apart.

With borrowing conditions getting harder, it’s vital you seek guidance from an expert broker.

I work with a large panel of lenders, so I know which lenders would be more likely to offer finance to someone with your scenario. I can then present your application in such a way as to maximise your chances of approval.

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