An inquiry into home lending is expected to recommend several changes to help first home buyers. The recommendations may include an easing of lending rules which restrict how much money banks can loan out.
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00:00Some of the main recommendations are really around helping first home buyers get easier
00:08access to finance.
00:10And at the moment, there's something called a mortgage serviceability buffer.
00:14So when you go to a bank and they offer you a variable interest rate, say that variable
00:18interest rate is 6%, the buffer is currently set at 3%.
00:23So the bank will assess you on your ability to repay the loan at 9%.
00:27So that's 6% plus 3%, 9% is the rate they assess you at.
00:32This inquiry is saying that serviceability buffer is too high.
00:36It's stopping first home buyers being able to get a loan.
00:39And so we should reduce that buffer.
00:42Now of course, APRA came out this week and said we should leave the buffer where it is.
00:46The argument that APRA put, and a lot of consumer groups had put to the inquiry, is that the
00:53current buffer is good where it is.
00:56It's there to protect against risk in the system, that is vulnerable Australians taking
01:01on too much debt.
01:03And we know interest rates have risen.
01:04We know that there are a lot of people already in mortgage hardship.
01:08And so their view is that this just increases too much risk in the system and leaves people
01:13more vulnerable to taking on too much debt and potentially then losing their homes.